þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
New York | 13-3690700 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
285 Madison Avenue, New York, N.Y. | 10017 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer ¨ | Accelerated filer ¨ | |
Non-accelerated filer þ | Smaller reporting company ¨ | |
Emerging growth company ¨ |
Page | ||||
Part I | ||||
Item 1. | ||||
Item 1A. | ||||
Item 1B. | ||||
Item 2. | ||||
Item 3. | ||||
Item 4. | ||||
Part II | ||||
Item 5. | ||||
Item 6. | ||||
Item 7. | ||||
Item 7A. | ||||
Item 8. | ||||
Item 9. | ||||
Item 9A. | ||||
Item 9B. | ||||
Part III | ||||
Item 10. | ||||
Item 11. | ||||
Item 12. | ||||
Item 13. | ||||
Item 14. | ||||
Part IV | ||||
Item 15. | ||||
• | differences between actual experience and actuarial assumptions and the effectiveness of our actuarial models; |
• | higher risk management costs and exposure to increased market and counterparty risk due to guarantees within certain of our products; |
• | the potential material adverse effect of changes in accounting standards, practices and/or policies applicable to us, including changes in the accounting for long-duration contracts; |
• | the effect adverse capital and credit market conditions may have on our ability to meet liquidity needs and our access to capital; |
• | the impact of changes in regulation and in supervisory and enforcement policies on our insurance business or other operations; |
• | the effectiveness of our risk management policies and procedures; |
• | the availability of reinsurance and the ability of our counterparties to our reinsurance or indemnification arrangements to perform their obligations thereunder; |
• | heightened competition, including with respect to service, product features, scale, price, actual or perceived financial strength, claims-paying ratings, financial strength ratings, e-business capabilities and name recognition; |
• | our ability to market and distribute our products through distribution channels; |
• | any failure of third parties to provide services we need, any failure of the practices and procedures of these third parties and any inability to obtain information or assistance we need from third parties, including MetLife; |
• | whether all or any portion of the tax consequences of the Separation are not as expected, leading to material additional taxes or material adverse consequences to tax attributes that impact us; |
• | the uncertainty of the outcome of any disputes with MetLife over tax-related or other matters and agreements, including the potential of outcomes adverse to us that could cause us to owe MetLife material tax reimbursements or payments, or disagreements regarding MetLife’s or our obligations under our other agreements; |
• | the impact on our business structure, profitability, cost of capital and flexibility due to restrictions we have agreed to that preserve the tax-free treatment of certain parts of the Separation; |
• | the potential material negative tax impact of potential future tax legislation that could decrease the value of our tax attributes and cause other cash expenses, such as reserves, to increase materially and make some of our products less attractive to consumers; |
• | whether the Separation will qualify for non-recognition treatment for federal income tax purposes and potential indemnification to MetLife if the Separation does not so qualify; |
• | the impact of the Separation on our business and profitability due to MetLife’s strong brand and reputation, the increased costs related to replacing arrangements with MetLife with those of third parties and incremental costs as a public company; |
• | whether the operational, strategic and other benefits of the Separation can be achieved, and our ability to implement our business strategy; |
• | our ability to attract and retain key personnel; and |
• | other factors described in this report and from time to time in documents that we file with the U.S. Securities and Exchange Commission (“SEC”). |
• | licensing companies and agents to transact business; |
• | calculating the value of assets to determine compliance with statutory requirements; |
• | mandating certain insurance benefits; |
• | regulating certain premium rates; |
• | reviewing and approving certain policy forms and rates; |
• | regulating unfair trade and claims practices, including through the imposition of restrictions on marketing and sales practices, distribution arrangements and payment of inducements, and identifying and paying to the state benefits and other property that are not claimed by the owners; |
• | regulating advertising and marketing of insurance products; |
• | protecting privacy; |
• | establishing statutory capital (including risk-based capital (“RBC”)) reserve requirements and solvency standards; |
• | specifying the conditions under which a ceding company can take credit for reinsurance in its statutory financial statements (i.e., reduce its reserves by the amount of reserves ceded to a reinsurer); |
• | fixing maximum interest rates on insurance policy loans and minimum rates for guaranteed crediting rates on life insurance policies and annuity contracts; |
• | adopting and enforcing suitability standards with respect to the sale of annuities and other insurance products; |
• | approving changes in control of New York-domiciled insurance companies; |
• | restricting the payment of dividends and other transactions between affiliates; and |
• | regulating the types, amounts and valuation of investments. |
• | reducing new sales of insurance products and annuity products; |
• | adversely affecting our relationships with independent sales intermediaries; |
• | increasing the number or amount of policy surrenders and withdrawals by contract holders and policyholders; |
• | requiring us to reduce prices for many of our products and services to remain competitive; |
• | providing termination rights for the benefit of our derivative instrument counterparties; |
• | adversely affecting our ability to obtain reinsurance at reasonable prices, if at all; and |
• | subjecting us to potentially increased regulatory scrutiny. |
(i) | liabilities for future policy benefits; |
(ii) | accounting for reinsurance; |
(iii) | capitalization and amortization of DAC and the amortization of value of business acquired (“VOBA”); |
(iv) | estimated fair values of investments in the absence of quoted market values; |
(v) | investment impairments; |
(vi) | estimated fair values of freestanding derivatives and the recognition and estimated fair value of embedded derivatives requiring bifurcation; |
(vii) | measurement of income taxes and the valuation of deferred tax assets; and |
(viii) | liabilities for litigation and regulatory matters. |
• | Net investment gains (losses); |
• | Net derivative gains (losses) except earned income on derivatives and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment (“Investment Hedge Adjustments”); and |
• | Amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses) and certain variable annuity GMIB fees (“GMIB Fees”). |
• | Amounts associated with benefits and hedging costs related to GMIBs (“GMIB Costs”); |
• | Amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and market value adjustments associated with surrenders or terminations of contracts (“Market Value Adjustments”); and |
• | Amortization of DAC and VOBA related to (i) net investment gains (losses), (ii) net derivative gains (losses), (iii) GMIB Fees and GMIB Costs and (iv) Market Value Adjustments. |
Component of Adjusted Earnings | How Derived from GAAP (1) | ||
(i) | Fee income | (i) | Universal life and investment-type policy fees (excluding (a) unearned revenue adjustments related to net investment gains (losses) and net derivative gains (losses) and (b) GMIB Fees) plus Other revenues (excluding other revenues associated with related party reinsurance) and amortization of deferred gain on reinsurance. |
(ii) | Net investment spread | (ii) | Net investment income plus Investment Hedge Adjustments and interest received on ceded fixed annuity reinsurance deposit funds reduced by Interest credited to policyholder account balances and interest on future policy benefits. |
(iii) | Insurance-related activities | (iii) | Premiums less Policyholder benefits and claims (excluding (a) GMIB Costs, (b) Market Value Adjustments, (c) interest on future policy benefits and (d) amortization of deferred gain on reinsurance plus the pass through of performance of ceded separate account assets. |
(iv) | Amortization of DAC and VOBA | (iv) | Amortization of DAC and VOBA (excluding amounts related to (a) net investment gains (losses), (b) net derivative gains (losses), (c) GMIB Fees and GMIB Costs and (d) Market Value Adjustments). |
(v) | Other expenses, net of DAC capitalization | (v) | Other expenses reduced by capitalization of DAC |
(vi) | Provision for income tax expense (benefit) | (vi) | Tax impact of the above items. |
(1) | Italicized items indicate GAAP statement of operations line items. |
• | We sometimes refer to sales activity for various products. Statistical sales information for life sales are calculated using the LIMRA (Life Insurance Marketing and Research Association) definition of sales for core direct sales, excluding company sponsored internal exchanges, corporate-owned life insurance, bank-owned life insurance, and private placement variable universal life insurance. Annuity sales consist of 10% of direct statutory premiums, excluding company sponsored internal exchanges. These sales statistics do not correspond to revenues under GAAP but are used as relevant measures of business activity. |
• | Allocated equity is the portion of common stockholder’s equity that management allocated to each of its segments prior to 2018. See “— Segment Capital” and Note 2 of the Notes to the Financial Statements for further information. |
Years Ended December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Revenues | |||||||
Premiums | $ | 37,028 | $ | 26,268 | |||
Universal life and investment-type product policy fees | 101,890 | 103,736 | |||||
Net investment income | 99,791 | 86,327 | |||||
Other revenues | (58,180 | ) | (46,266 | ) | |||
Net investment gains (losses) | (7,194 | ) | (1,178 | ) | |||
Net derivative gains (losses) | (18,286 | ) | (157,222 | ) | |||
Total revenues | 155,049 | 11,665 | |||||
Expenses | |||||||
Policyholder benefits and claims | 7,488 | (4,774 | ) | ||||
Interest credited to policyholder account balances | 37,852 | 39,423 | |||||
Capitalization of DAC | (29,860 | ) | (17,089 | ) | |||
Amortization of DAC and VOBA | 732 | (39,997 | ) | ||||
Other expenses | 95,910 | 83,042 | |||||
Total expenses | 112,122 | 60,605 | |||||
Income (loss) before provision for income tax | 42,927 | (48,940 | ) | ||||
Provision for income tax expense (benefit) | 5,077 | (100,725 | ) | ||||
Net income (loss) | $ | 37,850 | $ | 51,785 |
Years Ended December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
GMLB Riders | $ | 1,041 | $ | (121,508 | ) | ||
Other derivative instruments | (1,168 | ) | (1,636 | ) | |||
Net investment gains (losses) | (7,194 | ) | (1,178 | ) | |||
Other adjustments | 494 | 229 | |||||
Pre-tax adjusted earnings | 49,754 | 75,153 | |||||
Net income (loss) before provision for income tax | 42,927 | (48,940 | ) | ||||
Provision for income tax expense (benefit) | 5,077 | (100,725 | ) | ||||
Net income (loss) | $ | 37,850 | $ | 51,785 |
• | a charge recognized in the prior period from the recapture of ceded reinsurance agreements covering certain risks of our variable annuity business; |
• | a net favorable change to our variable annuity embedded derivatives, as the favorable impacts to the ceded reinsurance driven by lower equity markets, was only partially offset by unfavorable changes on the directly written; and |
• | a favorable change in the fair value of the Shield Annuities embedded derivatives, which was partially offset by the unfavorable change in the equity options hedging against this change in fair value. |
• | lower adjusted earnings discussed in detail below; and |
• | higher current period net losses on the sale of fixed maturity securities compared to the prior period. |
Years Ended December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Net income (loss) | $ | 37,850 | $ | 51,785 | |||
Add: Provision for income tax expense (benefit) | 5,077 | (100,725 | ) | ||||
Net income (loss) before provision for income tax | 42,927 | (48,940 | ) | ||||
Less: GMLB Riders | 1,041 | (121,508 | ) | ||||
Less: Other derivative instruments | (1,168 | ) | (1,636 | ) | |||
Less: Net investment gains (losses) | (7,194 | ) | (1,178 | ) | |||
Less: Other adjustments | 494 | 229 | |||||
Adjusted earnings before provision for income tax | 49,754 | 75,153 | |||||
Less: Provision for income tax expense (benefit) | 7,184 | (57,292 | ) | ||||
Adjusted earnings | $ | 42,570 | $ | 132,445 |
Years Ended December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Fee income | $ | 145,984 | $ | 156,871 | |||
Net investment spread | 45,134 | 29,672 | |||||
Insurance-related activities | (51,332 | ) | (46,525 | ) | |||
Amortization of DAC and VOBA | (23,982 | ) | 1,088 | ||||
Other expenses, net of DAC capitalization | (66,050 | ) | (65,953 | ) | |||
Pre- tax adjusted earnings | 49,754 | 75,153 | |||||
Provision for income tax expense (benefit) | 7,184 | (57,292 | ) | ||||
Adjusted earnings | $ | 42,570 | $ | 132,445 |
• | higher amortization of DAC and VOBA due to: |
◦ | the impact from a favorable change in the annual actuarial review in the prior period; and |
◦ | unfavorable equity market performance in the current period compared to the prior period; |
• | lower fee income due to: |
◦ | lower retained fees related to the recapture and novation of ceded reinsurance agreements covering certain variable annuity contracts in the prior period; and |
◦ | the unfavorable impact from a benefit recognized in the prior period from the recapture of yearly renewable term reinsurance in our life business; |
• | higher costs from insurance-related activities due to: |
◦ | unfavorable change in the fair value of the underlying ceded separate account assets under a related party reinsurance agreement for certain variable annuity contracts; and |
◦ | a benefit recognized in the prior period from a change in the amortization period for deferred sales inducements in connection with the annual actuarial review; partially offset by |
◦ | lower net costs of reinsurance in our life business from the recapture of reinsurance agreements in the prior period. |
A.M. Best | Fitch | Moody’s | S&P | ||||
“A++ (superior)” to “S (suspended)” | “AAA (exceptionally strong)” to “C (distressed)” | “Aaa (highest quality)” to “C (lowest rated)” | “AAA (extremely strong)” to “SD (Selective Default)” or “D (Default)” | ||||
Brighthouse Life Insurance Company of NY | A | NR | NR | A+ (1) | |||
3rd of 16 | 5th of 22 |
• | the estimated fair value of our interest rate sensitive exposures resulting from a 100 basis point change (increase or decrease) in interest rates; |
• | the estimated fair value of our equity positions due to a 10% change (increase or decrease) in equity market prices; and |
• | the U.S. dollar equivalent of estimated fair values of our foreign currency exposures due to a 10% change (increase in the value of the U.S. dollar compared to the foreign currencies or decrease in the value of the U.S. dollar compared to the foreign currencies) in foreign currency exchange rates. |
• | interest sensitive liabilities do not include $728 million of insurance contracts, which are accounted for on a book value basis. Management believes that the changes in the economic value of those contracts under changing interest rates would offset a significant portion of the fair value changes of interest sensitive assets; |
• | the market risk information is limited by the assumptions and parameters established in creating the related sensitivity analysis, including the impact of prepayment rates on mortgage loans; |
• | foreign currency exchange rate risk is not isolated for certain embedded derivatives within host asset and liability contracts, as the risk on these instruments is reflected as equity; |
• | for derivatives that qualify for hedge accounting, the impact on reported earnings may be materially different from the change in market values; and |
• | the model assumes that the composition of assets and liabilities remains unchanged throughout the period. |
December 31, 2018 | |||||||||||
Notional Amount | Estimated Fair Value (1) | 100 Basis Point Increase in the Yield Curve | |||||||||
(In thousands) | |||||||||||
Financial assets with interest rate risk | |||||||||||
Fixed maturity securities | $ | 2,433,633 | $ | (175,850 | ) | ||||||
Mortgage loans | $ | 447,510 | (23,298 | ) | |||||||
Premiums, reinsurance and other receivables | $ | 17,826 | (489 | ) | |||||||
Embedded derivatives within asset host contracts (2) | $ | 298,112 | (91,402 | ) | |||||||
Increase (decrease) in fair value of assets | (291,039 | ) | |||||||||
Financial liabilities with interest rate risk (3) | |||||||||||
Policyholder account balances | $ | 949,916 | 18,244 | ||||||||
Embedded derivatives within liability host contracts (2) | $ | (13,194 | ) | 29,478 | |||||||
(Increase) decrease in fair value of liabilities | 47,722 | ||||||||||
Derivative instruments with interest rate risk | |||||||||||
Interest rate contracts | $ | 800,000 | $ | 9,284 | 9,198 | ||||||
Equity contracts | $ | 2,154,321 | $ | 10,293 | 10,629 | ||||||
Foreign currency contracts | $ | 110,837 | $ | 8,713 | (998 | ) | |||||
Increase (decrease) in fair value of derivative instruments | 18,829 | ||||||||||
Net change | $ | (224,488 | ) |
(1) | Separate account assets and liabilities, which are interest rate sensitive, are not included herein as any interest rate risk is borne by the contract holder. |
(2) | Embedded derivatives are recognized in the balance sheet in the same caption as the host contract. |
(3) | Excludes $728 million of liabilities, at carrying value, pursuant to insurance contracts reported within future policy benefits and other policy-related balances. Management believes that the changes in the economic value of those contracts under changing interest rates would offset a significant portion of the fair value changes of interest sensitive assets. |
Page | |
Financial Statements at December 31, 2018 and 2017 and for the Years Ended December 31, 2018, 2017 and 2016: | |
Notes to the Financial Statements | |
Financial Statement Schedules at December 31, 2018 and 2017 and for the Years Ended December 31, 2018, 2017 and 2016: | |
2018 | 2017 | |||||||
Assets | ||||||||
Investments: | ||||||||
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $2,469,801 and $2,165,134, respectively) | $ | 2,433,633 | $ | 2,221,563 | ||||
Mortgage loans (net of valuation allowances of $1,937 and $1,747, respectively) | 448,105 | 394,863 | ||||||
Other invested assets, principally at estimated fair value | 35,815 | 3,784 | ||||||
Total investments | 2,917,553 | 2,620,210 | ||||||
Cash and cash equivalents | 120,130 | 86,154 | ||||||
Accrued investment income | 20,605 | 18,323 | ||||||
Premiums, reinsurance and other receivables | 580,480 | 572,609 | ||||||
Deferred policy acquisition costs and value of business acquired | 185,586 | 131,059 | ||||||
Other assets | 37,348 | 36,317 | ||||||
Separate account assets | 4,268,423 | 5,021,633 | ||||||
Total assets | $ | 8,130,125 | $ | 8,486,305 | ||||
Liabilities and Stockholder's Equity | ||||||||
Liabilities | ||||||||
Future policy benefits | $ | 718,599 | $ | 674,046 | ||||
Policyholder account balances | 1,692,498 | 1,343,330 | ||||||
Other policy-related balances | 9,288 | 12,733 | ||||||
Payables for collateral under derivative transactions | 23,581 | 5,384 | ||||||
Current income tax payable | 1,755 | 2,064 | ||||||
Deferred income tax liability | 107,853 | 112,498 | ||||||
Other liabilities | 471,490 | 471,130 | ||||||
Separate account liabilities | 4,268,423 | 5,021,633 | ||||||
Total liabilities | 7,293,487 | 7,642,818 | ||||||
Contingencies, Commitments and Guarantees (Note 12) | ||||||||
Stockholder's Equity | ||||||||
Common stock, par value $10 per share; 200,000 shares authorized, issued and outstanding | 2,000 | 2,000 | ||||||
Additional paid-in capital | 415,931 | 415,931 | ||||||
Retained earnings (deficit) | 433,778 | 395,928 | ||||||
Accumulated other comprehensive income (loss) | (15,071 | ) | 29,628 | |||||
Total stockholder's equity | 836,638 | 843,487 | ||||||
Total liabilities and stockholder's equity | $ | 8,130,125 | $ | 8,486,305 |
2018 | 2017 | 2016 | |||||||||
Revenues | |||||||||||
Premiums | $ | 37,028 | $ | 26,268 | $ | 50,739 | |||||
Universal life and investment-type product policy fees | 101,890 | 103,736 | 103,000 | ||||||||
Net investment income | 99,791 | 86,327 | 57,780 | ||||||||
Other revenues | (58,180 | ) | (46,266 | ) | 29,192 | ||||||
Net investment gains (losses) | (7,194 | ) | (1,178 | ) | (3,737 | ) | |||||
Net derivative gains (losses) | (18,286 | ) | (157,222 | ) | 67,726 | ||||||
Total revenues | 155,049 | 11,665 | 304,700 | ||||||||
Expenses | |||||||||||
Policyholder benefits and claims | 7,488 | (4,774 | ) | 51,980 | |||||||
Interest credited to policyholder account balances | 37,852 | 39,423 | 39,914 | ||||||||
Amortization of deferred policy acquisition costs and value of business acquired | 732 | (39,997 | ) | 23,217 | |||||||
Other expenses | 66,050 | 65,953 | 57,027 | ||||||||
Total expenses | 112,122 | 60,605 | 172,138 | ||||||||
Income (loss) before provision for income tax | 42,927 | (48,940 | ) | 132,562 | |||||||
Provision for income tax expense (benefit) | 5,077 | (100,725 | ) | 42,152 | |||||||
Net income (loss) | $ | 37,850 | $ | 51,785 | $ | 90,410 |
2018 | 2017 | 2016 | |||||||||
Net income (loss) | $ | 37,850 | $ | 51,785 | $ | 90,410 | |||||
Other comprehensive income (loss): | |||||||||||
Unrealized investment gains (losses), net of related offsets | (61,899 | ) | 34,971 | (3,066 | ) | ||||||
Unrealized gains (losses) on derivatives | 5,320 | (4,248 | ) | 1,529 | |||||||
Other comprehensive income (loss), before income tax | (56,579 | ) | 30,723 | (1,537 | ) | ||||||
Income tax (expense) benefit related to items of other comprehensive income (loss) | 11,880 | (5,502 | ) | 538 | |||||||
Other comprehensive income (loss), net of income tax | (44,699 | ) | 25,221 | (999 | ) | ||||||
Comprehensive income (loss) | $ | (6,849 | ) | $ | 77,006 | $ | 89,411 |
Common Stock | Additional Paid-in Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income (Loss) | Total Stockholder's Equity | ||||||||||||||||
Balance at December 31, 2015 | $ | 2,000 | $ | 340,931 | $ | 258,985 | $ | 5,406 | $ | 607,322 | ||||||||||
Net income (loss) | 90,410 | 90,410 | ||||||||||||||||||
Other comprehensive income (loss), net of income tax | (999 | ) | (999 | ) | ||||||||||||||||
Balance at December 31, 2016 | 2,000 | 340,931 | 349,395 | 4,407 | 696,733 | |||||||||||||||
Capital contribution | 75,000 | 75,000 | ||||||||||||||||||
Net income (loss) | 51,785 | 51,785 | ||||||||||||||||||
Effect of change in accounting principle (Note 1) | (5,252 | ) | 5,252 | — | ||||||||||||||||
Other comprehensive income (loss), net of income tax | 19,969 | 19,969 | ||||||||||||||||||
Balance at December 31, 2017 | 2,000 | 415,931 | 395,928 | 29,628 | 843,487 | |||||||||||||||
Net income (loss) | 37,850 | 37,850 | ||||||||||||||||||
Other comprehensive income (loss), net of income tax | (44,699 | ) | (44,699 | ) | ||||||||||||||||
Balance at December 31, 2018 | $ | 2,000 | $ | 415,931 | $ | 433,778 | $ | (15,071 | ) | $ | 836,638 |
2018 | 2017 | 2016 | ||||||||||
Cash flows from operating activities | ||||||||||||
Net income (loss) | $ | 37,850 | $ | 51,785 | $ | 90,410 | ||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||
Depreciation and amortization expenses | 1,184 | 1,826 | 3,534 | |||||||||
Amortization of premiums and accretion of discounts associated with investments, net | 2,385 | 4,390 | (828 | ) | ||||||||
(Gains) losses on investments, net | 7,194 | 1,178 | 3,737 | |||||||||
(Gains) losses on derivatives, net | 40,876 | 56,628 | (44,031 | ) | ||||||||
Interest credited to policyholder account balances | 37,852 | 39,423 | 39,914 | |||||||||
Universal life and investment-type product policy fees | (101,890 | ) | (103,736 | ) | (103,000 | ) | ||||||
Change in accrued investment income | (2,253 | ) | (1,686 | ) | (404 | ) | ||||||
Change in premiums, reinsurance and other receivables | (14,944 | ) | (290,764 | ) | 433,724 | |||||||
Change in deferred policy acquisition costs and value of business acquired, net | (29,127 | ) | (57,086 | ) | 18,241 | |||||||
Change in income tax | 6,927 | (58,293 | ) | 44,325 | ||||||||
Change in other assets | 95,749 | 102,321 | 103,403 | |||||||||
Change in future policy benefits and other policy-related balances | 41,219 | 52,287 | 77,708 | |||||||||
Change in other liabilities | (14,697 | ) | 354,777 | (334,195 | ) | |||||||
Net cash provided by (used in) operating activities | 108,325 | 153,050 | 332,538 | |||||||||
Cash flows from investing activities | ||||||||||||
Sales, maturities and repayments of: | ||||||||||||
Fixed maturity securities | 407,338 | 548,721 | 140,236 | |||||||||
Mortgage loans | 7,882 | 42,363 | 42,446 | |||||||||
Purchases of: | ||||||||||||
Fixed maturity securities | (702,700 | ) | (845,133 | ) | (379,993 | ) | ||||||
Mortgage loans | (62,891 | ) | (30,679 | ) | (44,325 | ) | ||||||
Cash received in connection with freestanding derivatives | 6,499 | 729 | 54 | |||||||||
Cash paid in connection with freestanding derivatives | (59,019 | ) | (118 | ) | (25 | ) | ||||||
Net change in short-term investments | (3 | ) | (12 | ) | 18,487 | |||||||
Net change in other invested assets | (10,866 | ) | (6 | ) | 2 | |||||||
Other, net | — | — | 183 | |||||||||
Net cash provided by (used in) investing activities | (413,760 | ) | (284,135 | ) | (222,935 | ) | ||||||
Cash flows from financing activities | ||||||||||||
Policyholder account balances: | ||||||||||||
Deposits | 469,810 | 253,911 | 50,745 | |||||||||
Withdrawals | (148,596 | ) | (126,697 | ) | (156,717 | ) | ||||||
Net change in payables for collateral under derivative transactions | 18,197 | (3,558 | ) | 5,642 | ||||||||
Capital contribution | — | 75,000 | — | |||||||||
Net cash provided by (used in) financing activities | 339,411 | 198,656 | (100,330 | ) | ||||||||
Change in cash, cash equivalents and restricted cash | 33,976 | 67,571 | 9,273 | |||||||||
Cash, cash equivalents and restricted cash, beginning of year | 86,154 | 18,583 | 9,310 | |||||||||
Cash, cash equivalents and restricted cash, end of year | $ | 120,130 | $ | 86,154 | $ | 18,583 | ||||||
Supplemental disclosures of cash flow information | ||||||||||||
Net cash paid (received) for: | ||||||||||||
Income tax | $ | (1,683 | ) | $ | (42,132 | ) | $ | (1,314 | ) | |||
Non-cash transactions: | ||||||||||||
Transfer of fixed maturity securities from former affiliates | $ | — | $ | — | $ | 552,113 | ||||||
Transfer of mortgage loans from former affiliates | $ | — | $ | — | $ | 266,557 |
Standard | Description | Effective Date | Impact on Financial Statements |
ASU 2014-09 Revenue from Contracts with Customers (Topic 606) | For those contracts that are impacted, the guidance will require an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled, in exchange for those goods or services. | January 1, 2018 using the modified retrospective method | The adoption did not have an impact on the Company’s financial statements other than expanded disclosures in Note 10. |
Standard | Description | Effective Date | Impact on Financial Statements |
ASU 2018-15, Intangibles- Goodwill and Other-Internal-Use Software (Subtopic 350- 40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract | The amendments to Topic 350 require the capitalization of certain implementation costs incurred in a cloud computing arrangement that is a service contract. The requirements align with the existing requirements to capitalize implementation costs incurred to develop or obtain internal-use software. | January 1, 2020 using the prospective method or retrospective method (with early adoption permitted) | The Company is currently evaluating the impact of this guidance on its financial statements. |
ASU 2018-12, Financial Services -Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts | The amendments to Topic 944 will result in significant changes to the accounting for long-duration insurance contracts. These changes (1) require all guarantees that qualify as market risk benefits to be measured at fair value, (2) require more frequent updating of assumptions and modify existing discount rate requirements for certain insurance liabilities, (3) modify the methods of amortization for deferred acquisition costs, and (4) require new qualitative and quantitative disclosures around insurance contract asset and liability balances and the judgments, assumptions and methods used to measure those balances. | January 1, 2021 using a modified retrospective method for the new market risk benefit guidance and prospective methods for the increased frequency of updating assumptions, the new discount rate requirements and DAC amortization changes. Early adoption is permitted | The Company is in the early stages of evaluating the new guidance and therefore is unable to estimate the impact to its financial statements. |
ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities | The amendments to Topic 815 (i) refine and expand the criteria for achieving hedge accounting on certain hedging strategies, (ii) require the earnings effect of the hedging instrument be presented in the same line item in which the earnings effect of the hedged item is reported, and (iii) eliminate the requirement to separately measure and report hedge ineffectiveness. | January 1, 2019 using modified retrospective method (with early adoption permitted) | The Company does not expect a material impact on its financial statements from adoption of the new guidance. |
ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments | The amendments to Topic 326 replace the incurred loss impairment methodology for certain financial instruments with one that reflects expected credit losses based on historical loss information, current conditions, and reasonable and supportable forecasts. The new guidance also requires that an OTTI on a debt security will be recognized as an allowance going forward, such that improvements in expected future cash flows after an impairment will no longer be reflected as a prospective yield adjustment through net investment income, but rather a reversal of the previous impairment and recognized through realized investment gains and losses. | January 1, 2020 using the modified retrospective method (with early adoption permitted beginning January 1, 2019) | The Company is currently evaluating the impact of this guidance on its financial statements. The Company expects the most significant impacts to be earlier recognition of impairments on mortgage loan investments. |
• | Net investment gains (losses); |
• | Net derivative gains (losses) except earned income on derivatives and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment; and |
• | Amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses) and certain variable annuity GMIB fees (“GMIB Fees”). |
• | Amounts associated with benefits and hedging costs related to GMIBs (“GMIB Costs”); |
• | Amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and market value adjustments associated with surrenders or terminations of contracts (“Market Value Adjustments”); and |
• | Amortization of DAC and VOBA related to: (i) net investment gains (losses), (ii) net derivative gains (losses), (iii) GMIB Fees and GMIB Costs and (iv) Market Value Adjustments. |
Operating Results | ||||||||||||||||
Year Ended December 31, 2018 | Annuities | Life | Corporate & Other | Total | ||||||||||||
(In thousands) | ||||||||||||||||
Pre-tax adjusted earnings | $ | 26,332 | $ | 25,235 | $ | (1,813 | ) | $ | 49,754 | |||||||
Provision for income tax expense (benefit) | 3,389 | 5,305 | (1,510 | ) | 7,184 | |||||||||||
Adjusted earnings | $ | 22,943 | $ | 19,930 | $ | (303 | ) | 42,570 | ||||||||
Adjustments for: | ||||||||||||||||
Net investment gains (losses) | (7,194 | ) | ||||||||||||||
Net derivative gains (losses) | (18,286 | ) | ||||||||||||||
Other adjustments to net income | 18,653 | |||||||||||||||
Provision for income tax (expense) benefit | 2,107 | |||||||||||||||
Net income (loss) | $ | 37,850 | ||||||||||||||
Interest revenue | $ | 63,645 | $ | 34,746 | $ | 1,774 |
Balance at December 31, 2018 | Annuities | Life | Corporate & Other | Total | ||||||||||||
(In thousands) | ||||||||||||||||
Total assets | $ | 7,034,394 | $ | 1,083,641 | $ | 12,090 | $ | 8,130,125 | ||||||||
Separate account assets | $ | 4,268,423 | $ | — | $ | — | $ | 4,268,423 | ||||||||
Separate account liabilities | $ | 4,268,423 | $ | — | $ | — | $ | 4,268,423 |
Operating Results | ||||||||||||||||
Year Ended December 31, 2017 | Annuities | Life | Corporate & Other | Total | ||||||||||||
(In thousands) | ||||||||||||||||
Pre-tax adjusted earnings | $ | 65,637 | $ | 2,692 | $ | 6,824 | $ | 75,153 | ||||||||
Provision for income tax expense (benefit) | 16,104 | 1,533 | (74,929 | ) | (57,292 | ) | ||||||||||
Adjusted earnings | $ | 49,533 | $ | 1,159 | $ | 81,753 | 132,445 | |||||||||
Adjustments for: | ||||||||||||||||
Net investment gains (losses) | (1,178 | ) | ||||||||||||||
Net derivative gains (losses) | (157,222 | ) | ||||||||||||||
Other adjustments to net income | 34,307 | |||||||||||||||
Provision for income tax (expense) benefit | 43,433 | |||||||||||||||
Net income (loss) | $ | 51,785 | ||||||||||||||
Interest revenue | $ | 57,142 | $ | 19,078 | $ | 10,433 |
Balance at December 31, 2017 | Annuities | Life | Corporate & Other | Total | ||||||||||||
(In thousands) | ||||||||||||||||
Total assets | $ | 7,219,139 | $ | 662,546 | $ | 604,620 | $ | 8,486,305 | ||||||||
Separate account assets | $ | 5,021,633 | $ | — | $ | — | $ | 5,021,633 | ||||||||
Separate account liabilities | $ | 5,021,633 | $ | — | $ | — | $ | 5,021,633 |
Operating Results | ||||||||||||||||
Year Ended December 31, 2016 | Annuities | Life | Corporate & Other | Total | ||||||||||||
(In thousands) | ||||||||||||||||
Pre-tax adjusted earnings | $ | 52,855 | 40,561 | $ | 9,665 | $ | 103,081 | |||||||||
Provision for income tax expense (benefit) | 14,623 | 14,197 | 3,014 | 31,834 | ||||||||||||
Adjusted earnings | $ | 38,232 | $ | 26,364 | $ | 6,651 | 71,247 | |||||||||
Adjustments for: | ||||||||||||||||
Net investment gains (losses) | (3,737 | ) | ||||||||||||||
Net derivative gains (losses) | 67,726 | |||||||||||||||
Other adjustments to net income | (34,508 | ) | ||||||||||||||
Provision for income tax (expense) benefit | (10,318 | ) | ||||||||||||||
Net income (loss) | $ | 90,410 | ||||||||||||||
Interest revenue | $ | 27,747 | $ | 17,108 | $ | 13,204 |
Years Ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
(In thousands) | ||||||||||||
Annuities | $ | 102,835 | $ | 106,762 | $ | 125,308 | ||||||
Life | 59,863 | 36,646 | 86,089 | |||||||||
Corporate & Other | 4,369 | 12,789 | 15,135 | |||||||||
Adjustments | (12,018 | ) | (144,532 | ) | 78,168 | |||||||
Total | $ | 155,049 | $ | 11,665 | $ | 304,700 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
Annuity products | $ | 53,025 | $ | 63,813 | $ | 112,018 | |||||
Life insurance products | 27,713 | 19,925 | 70,913 | ||||||||
Total | $ | 80,738 | $ | 83,738 | $ | 182,931 |
December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Annuities | $ | 2,050,867 | $ | 1,675,039 | |||
Life | 359,798 | 346,084 | |||||
Corporate & Other | 9,720 | 8,986 | |||||
Total | $ | 2,420,385 | $ | 2,030,109 |
Variable Annuity Contracts | ||||||||||||
GMDBs | GMIBs | Total | ||||||||||
(In thousands) | ||||||||||||
Direct | ||||||||||||
Balance at January 1, 2016 | $ | 8,089 | $ | 116,730 | $ | 124,819 | ||||||
Incurred guaranteed benefits | 2,272 | 32,338 | 34,610 | |||||||||
Paid guaranteed benefits | (560 | ) | 1 | (559 | ) | |||||||
Balance at December 31, 2016 | 9,801 | 149,069 | 158,870 | |||||||||
Incurred guaranteed benefits | 2,675 | 22,559 | 25,234 | |||||||||
Paid guaranteed benefits | (11 | ) | — | (11 | ) | |||||||
Balance at December 31, 2017 | 12,465 | 171,628 | 184,093 | |||||||||
Incurred guaranteed benefits | 317 | 26,356 | 26,673 | |||||||||
Paid guaranteed benefits | (74 | ) | — | (74 | ) | |||||||
Balance at December 31, 2018 | $ | 12,708 | $ | 197,984 | $ | 210,692 | ||||||
Ceded | ||||||||||||
Balance at January 1, 2016 | $ | 8,578 | $ | 39,920 | $ | 48,498 | ||||||
Incurred guaranteed benefits | 2,215 | 11,570 | 13,785 | |||||||||
Paid guaranteed benefits | (560 | ) | — | (560 | ) | |||||||
Balance at December 31, 2016 | 10,233 | 51,490 | 61,723 | |||||||||
Incurred guaranteed benefits | 2,547 | 9,386 | 11,933 | |||||||||
Paid guaranteed benefits | (11 | ) | — | (11 | ) | |||||||
Balance at December 31, 2017 | 12,769 | 60,876 | 73,645 | |||||||||
Incurred guaranteed benefits | (359 | ) | 10,813 | 10,454 | ||||||||
Paid guaranteed benefits | (74 | ) | — | (74 | ) | |||||||
Balance at December 31, 2018 | $ | 12,336 | $ | 71,689 | $ | 84,025 | ||||||
Net | ||||||||||||
Balance at January 1, 2016 | $ | (489 | ) | $ | 76,810 | $ | 76,321 | |||||
Incurred guaranteed benefits | 57 | 20,768 | 20,825 | |||||||||
Paid guaranteed benefits | — | 1 | 1 | |||||||||
Balance at December 31, 2016 | (432 | ) | 97,579 | 97,147 | ||||||||
Incurred guaranteed benefits | 128 | 13,173 | 13,301 | |||||||||
Paid guaranteed benefits | — | — | — | |||||||||
Balance at December 31, 2017 | (304 | ) | 110,752 | 110,448 | ||||||||
Incurred guaranteed benefits | 676 | 15,543 | 16,219 | |||||||||
Paid guaranteed benefits | — | — | — | |||||||||
Balance at December 31, 2018 | $ | 372 | $ | 126,295 | $ | 126,667 |
December 31, | |||||||||||||||||
2018 | 2017 | ||||||||||||||||
In the Event of Death | At Annuitization | In the Event of Death | At Annuitization | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Annuity Contracts (1), (2) | |||||||||||||||||
Variable Annuity Guarantees | |||||||||||||||||
Total account value (3) | $ | 4,274,326 | $ | 3,483,668 | $ | 5,026,927 | $ | 4,149,482 | |||||||||
Separate account value | $ | 4,266,520 | $ | 3,482,829 | $ | 5,020,107 | $ | 4,149,482 | |||||||||
Net amount at risk | $ | 193,102 | (4) | $ | 274,632 | (5) | $ | 5,262 | (4) | $ | 166,788 | (5) | |||||
Average attained age of contract holders | 67 years | 67 years | 66 years | 66 years |
(1) | The Company’s annuity contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive. |
(2) | Includes direct business, but excludes offsets from hedging or reinsurance, if any. Therefore, the net amount at risk presented reflects the economic exposures of living and death benefit guarantees associated with variable annuities, but not necessarily their impact on the Company. See Note 5 for a discussion of guaranteed minimum benefits which have been reinsured. |
(3) | Includes the contract holder’s investments in the general account and separate account, if applicable. |
(4) | Defined as the death benefit less the total account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death. |
(5) | Defined as the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. This amount represents the Company’s potential economic exposure to such guarantees in the event all contract holders were to annuitize on the balance sheet date, even though the contracts contain terms that allow annuitization of the guaranteed amount only after the 10th anniversary of the contract, which not all contract holders have achieved. |
December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Fund Groupings: | |||||||
Balanced | $ | 2,768,739 | $ | 3,099,888 | |||
Equity | 1,013,778 | 1,513,408 | |||||
Bond | 485,906 | 359,929 | |||||
Money Market | — | 48,408 | |||||
Total | $ | 4,268,423 | $ | 5,021,633 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
DAC: | |||||||||||
Balance at January 1, | $ | 130,967 | $ | 85,032 | $ | 107,474 | |||||
Capitalizations | 29,860 | 17,089 | 4,976 | ||||||||
Amortization related to: | |||||||||||
Net investment gains (losses) and net derivative gains (losses) | 25,226 | 50,228 | (12,163 | ) | |||||||
Other expenses | (25,928 | ) | (10,182 | ) | (11,155 | ) | |||||
Total amortization | (702 | ) | 40,046 | (23,318 | ) | ||||||
Unrealized investment gains (losses) | 25,399 | (11,200 | ) | (4,100 | ) | ||||||
Balance at December 31, | 185,524 | 130,967 | 85,032 | ||||||||
VOBA: | |||||||||||
Balance at January 1, | 92 | 141 | 40 | ||||||||
Amortization related to: | |||||||||||
Net investment gains (losses) and net derivative gains (losses) | (26 | ) | — | — | |||||||
Other expenses | (4 | ) | (49 | ) | 101 | ||||||
Total amortization | (30 | ) | (49 | ) | 101 | ||||||
Balance at December 31, | 62 | 92 | 141 | ||||||||
Total DAC and VOBA: | |||||||||||
Balance at December 31, | $ | 185,586 | $ | 131,059 | $ | 85,173 |
December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Annuities | $ | 163,301 | $ | 107,760 | |||
Life | 22,098 | 23,101 | |||||
Corporate & Other | 187 | 198 | |||||
Total | $ | 185,586 | $ | 131,059 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
DSI: | |||||||||||
Balance at January 1, | $ | 26,923 | $ | 29,647 | $ | 37,114 | |||||
Capitalization | 128 | 155 | 350 | ||||||||
Amortization | (2,844 | ) | (479 | ) | (7,017 | ) | |||||
Unrealized investment gains (losses) | 5,300 | (2,400 | ) | (800 | ) | ||||||
Balance at December 31, | $ | 29,507 | $ | 26,923 | $ | 29,647 | |||||
VODA: | |||||||||||
Balance at January 1, | $ | 8,579 | $ | 9,862 | $ | 11,222 | |||||
Amortization | (1,184 | ) | (1,283 | ) | (1,360 | ) | |||||
Balance at December 31, | $ | 7,395 | $ | 8,579 | $ | 9,862 | |||||
Accumulated amortization | $ | 12,119 | $ | 10,935 | $ | 9,652 |
VOBA | VODA | ||||||
(In thousands) | |||||||
2019 | $ | 62 | $ | 1,073 | |||
2020 | $ | — | $ | 956 | |||
2021 | $ | — | $ | 841 | |||
2022 | $ | — | $ | 730 | |||
2023 | $ | — | $ | 633 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
Premiums | |||||||||||
Direct premiums | $ | 90,979 | $ | 93,196 | $ | 109,733 | |||||
Reinsurance ceded | (53,951 | ) | (66,928 | ) | (58,994 | ) | |||||
Net premiums | $ | 37,028 | $ | 26,268 | $ | 50,739 | |||||
Universal life and investment-type product policy fees | |||||||||||
Direct universal life and investment-type product policy fees | $ | 105,848 | $ | 107,605 | $ | 106,830 | |||||
Reinsurance ceded | (3,958 | ) | (3,869 | ) | (3,830 | ) | |||||
Net universal life and investment-type product policy fees | $ | 101,890 | $ | 103,736 | $ | 103,000 | |||||
Other revenues | |||||||||||
Direct other revenues | $ | 13,450 | $ | 13,016 | $ | 12,494 | |||||
Reinsurance ceded | (71,630 | ) | (59,282 | ) | 16,698 | ||||||
Net other revenues | $ | (58,180 | ) | $ | (46,266 | ) | $ | 29,192 | |||
Policyholder benefits and claims | |||||||||||
Direct policyholder benefits and claims | $ | 98,166 | $ | 105,551 | $ | 128,420 | |||||
Reinsurance ceded | (90,678 | ) | (110,325 | ) | (76,440 | ) | |||||
Net policyholder benefits and claims | $ | 7,488 | $ | (4,774 | ) | $ | 51,980 |
December 31, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Direct | Ceded | Total Balance Sheet | Direct | Ceded | Total Balance Sheet | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Premiums, reinsurance and other receivables | $ | 17,613 | $ | 562,867 | $ | 580,480 | $ | 20,852 | $ | 551,757 | $ | 572,609 | |||||||||||
Liabilities | |||||||||||||||||||||||
Other policy-related balances | $ | 9,288 | $ | — | $ | 9,288 | $ | 12,733 | $ | — | $ | 12,733 | |||||||||||
Other liabilities | $ | 39,997 | $ | 431,493 | $ | 471,490 | $ | 21,643 | $ | 449,487 | $ | 471,130 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
Premiums | |||||||||||
Reinsurance ceded | $ | (37,227 | ) | $ | (51,944 | ) | $ | (44,259 | ) | ||
Universal life and investment-type product policy fees | |||||||||||
Reinsurance ceded | $ | (3,676 | ) | $ | (3,680 | ) | $ | (3,645 | ) | ||
Other revenues | |||||||||||
Reinsurance ceded | $ | (71,706 | ) | $ | (59,272 | ) | $ | 16,701 | |||
Policyholder benefits and claims | |||||||||||
Reinsurance ceded | $ | (89,445 | ) | $ | (99,990 | ) | $ | (71,948 | ) |
December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Assets | |||||||
Premiums, reinsurance and other receivables | $ | 534,487 | $ | 533,388 | |||
Liabilities | |||||||
Other liabilities | $ | 429,656 | $ | 448,210 |
December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||||||||||||||||||
Amortized Cost | Gross Unrealized | Estimated Fair Value | Amortized Cost | Gross Unrealized | Estimated Fair Value | ||||||||||||||||||||||||||||||||||
Gains | Temporary Losses | OTTI Losses | Gains | Temporary Losses | OTTI Losses | ||||||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||||||
Fixed maturity securities: (1) | |||||||||||||||||||||||||||||||||||||||
U.S. corporate | $ | 890,676 | $ | 5,402 | $ | 23,034 | $ | — | $ | 873,044 | $ | 770,385 | $ | 29,246 | $ | 2,007 | $ | — | $ | 797,624 | |||||||||||||||||||
U.S. government and agency | 511,255 | 9,961 | 13,697 | — | 507,519 | 535,757 | 17,023 | 5,717 | — | 547,063 | |||||||||||||||||||||||||||||
Foreign corporate | 368,149 | 1,473 | 17,258 | — | 352,364 | 304,650 | 8,168 | 3,704 | — | 309,114 | |||||||||||||||||||||||||||||
CMBS | 325,491 | 1,481 | 4,121 | — | 322,851 | 197,931 | 3,533 | 1,043 | — | 200,421 | |||||||||||||||||||||||||||||
RMBS | 200,827 | 4,643 | 2,882 | — | 202,588 | 217,857 | 5,626 | 1,703 | — | 221,780 | |||||||||||||||||||||||||||||
ABS | 79,806 | 158 | 1,133 | — | 78,831 | 58,665 | 305 | 98 | — | 58,872 | |||||||||||||||||||||||||||||
State and political subdivision | 66,131 | 4,777 | 1,083 | — | 69,825 | 64,056 | 6,596 | 366 | — | 70,286 | |||||||||||||||||||||||||||||
Foreign government | 27,466 | 140 | 995 | — | 26,611 | 15,833 | 597 | 27 | — | 16,403 | |||||||||||||||||||||||||||||
Total fixed maturity securities | $ | 2,469,801 | $ | 28,035 | $ | 64,203 | $ | — | $ | 2,433,633 | $ | 2,165,134 | $ | 71,094 | $ | 14,665 | $ | — | $ | 2,221,563 |
(1) | Redeemable preferred stock is reported within foreign corporate fixed maturity securities. Included within fixed maturity securities are Structured Securities. |
Due in One Year or Less | Due After One Year Through Five Years | Due After Five Years Through Ten Years | Due After Ten Years | Structured Securities | Total Fixed Maturity Securities | ||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Amortized cost | $ | 58,861 | $ | 340,282 | $ | 863,117 | $ | 601,417 | $ | 606,124 | $ | 2,469,801 | |||||||||||
Estimated fair value | $ | 59,323 | $ | 335,699 | $ | 840,602 | $ | 593,739 | $ | 604,270 | $ | 2,433,633 |
December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||||||||||
Less than 12 Months | Equal to or Greater than 12 Months | Less than 12 Months | Equal to or Greater than 12 Months | ||||||||||||||||||||||||||||
Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | Estimated Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||
Fixed maturity securities | |||||||||||||||||||||||||||||||
U.S. corporate | $ | 483,424 | $ | 15,849 | $ | 131,812 | $ | 7,185 | $ | 118,514 | $ | 898 | $ | 46,372 | $ | 1,109 | |||||||||||||||
U.S. government and agency | 102,447 | 1,925 | 296,265 | 11,772 | 248,434 | 2,895 | 107,253 | 2,822 | |||||||||||||||||||||||
Foreign corporate | 194,924 | 10,156 | 72,803 | 7,102 | 88,724 | 1,540 | 29,552 | 2,164 | |||||||||||||||||||||||
CMBS | 119,412 | 1,909 | 44,775 | 2,212 | 18,430 | 176 | 27,958 | 867 | |||||||||||||||||||||||
RMBS | 57,510 | 1,746 | 28,573 | 1,136 | 24,060 | 162 | 38,454 | 1,541 | |||||||||||||||||||||||
ABS | 51,028 | 985 | 11,699 | 148 | 7,361 | 23 | 8,076 | 75 | |||||||||||||||||||||||
State and political subdivision | 18,260 | 744 | 13,999 | 339 | 9,232 | 110 | 8,111 | 256 | |||||||||||||||||||||||
Foreign government | 7,435 | 716 | 6,782 | 279 | 4,484 | 27 | — | — | |||||||||||||||||||||||
Total fixed maturity securities | $ | 1,034,440 | $ | 34,030 | $ | 606,708 | $ | 30,173 | $ | 519,239 | $ | 5,831 | $ | 265,776 | $ | 8,834 | |||||||||||||||
Total number of securities in an unrealized loss position | 364 | 146 | 131 | 58 |
December 31, | |||||||||||||
2018 | 2017 | ||||||||||||
Carrying Value | % of Total | Carrying Value | % of Total | ||||||||||
(Dollars in thousands) | |||||||||||||
Mortgage loans: | |||||||||||||
Commercial | $ | 310,681 | 69.3 | % | $ | 276,626 | 70.0 | % | |||||
Agricultural | 139,361 | 31.1 | 119,984 | 30.4 | |||||||||
Subtotal | 450,042 | 100.4 | 396,610 | 100.4 | |||||||||
Valuation allowances (1) | (1,937 | ) | (0.4 | ) | (1,747 | ) | (0.4 | ) | |||||
Total mortgage loans, net | $ | 448,105 | 100.0 | % | $ | 394,863 | 100.0 | % |
(1) | The valuation allowances were primarily from collective evaluation (non-specific loan related). |
Recorded Investment | ||||||||||||||||||
Debt Service Coverage Ratios | Total | % of Total | ||||||||||||||||
> 1.20x | 1.00x - 1.20x | < 1.00x | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||
December 31, 2018 | ||||||||||||||||||
Loan-to-value ratios: | ||||||||||||||||||
Less than 65% | $ | 273,681 | $ | 5,000 | $ | 13,447 | $ | 292,128 | 94.0 | % | ||||||||
65% to 75% | 14,257 | — | — | 14,257 | 4.6 | |||||||||||||
76% to 80% | 4,296 | — | — | 4,296 | 1.4 | |||||||||||||
Total | $ | 292,234 | $ | 5,000 | $ | 13,447 | $ | 310,681 | 100.0 | % | ||||||||
December 31, 2017 | ||||||||||||||||||
Loan-to-value ratios: | ||||||||||||||||||
Less than 65% | $ | 243,217 | $ | 17,425 | $ | — | $ | 260,642 | 94.2 | % | ||||||||
65% to 75% | 12,957 | — | — | 12,957 | 4.7 | |||||||||||||
76% to 80% | 3,027 | — | — | 3,027 | 1.1 | |||||||||||||
Total | $ | 259,201 | $ | 17,425 | $ | — | $ | 276,626 | 100.0 | % |
December 31, | |||||||||||||
2018 | 2017 | ||||||||||||
Recorded Investment | % of Total | Recorded Investment | % of Total | ||||||||||
(Dollars in thousands) | |||||||||||||
Loan-to-value ratios: | |||||||||||||
Less than 65% | $ | 133,884 | 96.1 | % | $ | 119,077 | 99.2 | % | |||||
65% to 75% | 5,477 | 3.9 | 907 | 0.8 | |||||||||
Total | $ | 139,361 | 100.0 | % | $ | 119,984 | 100.0 | % |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
Fixed maturity securities | $ | (36,166 | ) | $ | 56,432 | $ | 7,862 | ||||
Derivatives | 5,791 | 471 | 4,718 | ||||||||
Subtotal | (30,375 | ) | 56,903 | 12,580 | |||||||
Amounts allocated from: | |||||||||||
DAC and DSI | 11,299 | (19,400 | ) | (5,800 | ) | ||||||
Deferred income tax benefit (expense) | 4,005 | (7,875 | ) | (2,373 | ) | ||||||
Net unrealized investment gains (losses) | $ | (15,071 | ) | $ | 29,628 | $ | 4,407 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
Balance at January 1, | $ | 29,628 | $ | 4,407 | $ | 5,406 | |||||
Unrealized investment gains (losses) during the year | (87,278 | ) | 44,323 | 3,363 | |||||||
Unrealized investment gains (losses) relating to: | |||||||||||
DAC and DSI | 30,699 | (13,600 | ) | (4,900 | ) | ||||||
Deferred income tax benefit (expense) | 11,880 | (5,502 | ) | 538 | |||||||
Balance at December 31, | $ | (15,071 | ) | $ | 29,628 | $ | 4,407 | ||||
Change in net unrealized investment gains (losses) | $ | (44,699 | ) | $ | 25,221 | $ | (999 | ) |
December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Invested assets on deposit (regulatory deposits) | $ | 1,482 | $ | 1,549 | |||
Invested assets pledged as collateral (1) | 158 | 707 | |||||
Total invested assets on deposit and pledged as collateral | $ | 1,640 | $ | 2,256 |
(1) | The Company has pledged invested assets in connection with derivative transactions (see Note 7). |
December 31, | |||||||||||||||
2018 | 2017 | ||||||||||||||
Carrying Amount | Maximum Exposure to Loss | Carrying Amount | Maximum Exposure to Loss | ||||||||||||
(In thousands) | |||||||||||||||
Fixed maturity securities | $ | 409,699 | $ | 409,699 | $ | 437,800 | $ | 437,800 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
Investment income: | |||||||||||
Fixed maturity securities | $ | 85,966 | $ | 71,779 | $ | 50,386 | |||||
Mortgage loans | 17,201 | 16,665 | 8,734 | ||||||||
Cash, cash equivalents and short-term investments | 1,309 | 261 | 102 | ||||||||
Other | 824 | 778 | 516 | ||||||||
Subtotal | 105,300 | 89,483 | 59,738 | ||||||||
Less: Investment expenses | 5,509 | 3,156 | 1,958 | ||||||||
Net investment income | $ | 99,791 | $ | 86,327 | $ | 57,780 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
Total gains (losses) on fixed maturity securities: | |||||||||||
OTTI losses on fixed maturity securities recognized in earnings | $ | — | $ | — | $ | (870 | ) | ||||
Fixed maturity securities — net gains (losses) on sales and disposals | (5,407 | ) | (1,749 | ) | (1,884 | ) | |||||
Total gains (losses) on fixed maturity securities | (5,407 | ) | (1,749 | ) | (2,754 | ) | |||||
Equity securities — Mark to market and net gains (losses) on sales and disposals | — | — | 6 | ||||||||
Mortgage loans | (234 | ) | (42 | ) | (1,129 | ) | |||||
Other | (1,553 | ) | 613 | 140 | |||||||
Total net investment gains (losses) | $ | (7,194 | ) | $ | (1,178 | ) | $ | (3,737 | ) |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Fixed Maturity Securities | |||||||||||
(In thousands) | |||||||||||
Proceeds | $ | 274,002 | $ | 462,993 | $ | 74,657 | |||||
Gross investment gains | $ | 1,160 | $ | 1,879 | $ | 1,006 | |||||
Gross investment losses | (6,567 | ) | (3,628 | ) | (2,890 | ) | |||||
OTTI losses | — | — | (870 | ) | |||||||
Net investment gains (losses) | $ | (5,407 | ) | $ | (1,749 | ) | $ | (2,754 | ) |
Primary Underlying Risk Exposure | December 31, | ||||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||||
Estimated Fair Value | Estimated Fair Value | ||||||||||||||||||||||||
Gross Notional Amount | Assets | Liabilities | Gross Notional Amount | Assets | Liabilities | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
Derivatives Designated as Hedging Instruments | |||||||||||||||||||||||||
Cash flow hedges: | |||||||||||||||||||||||||
Foreign currency swaps | Foreign currency exchange rate | $ | 82,704 | $ | 5,649 | $ | 187 | $ | 70,307 | $ | 1,571 | $ | 1,357 | ||||||||||||
Derivatives Not Designated or Not Qualifying as Hedging Instruments | |||||||||||||||||||||||||
Interest rate caps | Interest rate | 800,000 | 9,284 | — | — | — | — | ||||||||||||||||||
Foreign currency swaps | Foreign currency exchange rate | 28,133 | 3,395 | 144 | 16,636 | 2,213 | 254 | ||||||||||||||||||
Equity index options | Equity market | 2,154,321 | 10,389 | 96 | — | — | — | ||||||||||||||||||
Total non-designated or nonqualifying derivatives | 2,982,454 | 23,068 | 240 | 16,636 | 2,213 | 254 | |||||||||||||||||||
Total | $ | 3,065,158 | $ | 28,717 | $ | 427 | $ | 86,943 | $ | 3,784 | $ | 1,611 |
Year Ended December 31, 2018 | |||||||||||
Net Derivative Gains (Losses) Recognized for Derivatives (1) | Net Derivative Gains (Losses) Recognized for Hedged Items (2) | Amount of Gains (Losses) deferred in AOCI | |||||||||
(In thousands) | |||||||||||
Derivatives Designated as Hedging Instruments: | |||||||||||
Cash flow hedges (3): | |||||||||||
Foreign currency exchange rate derivatives | $ | 60 | $ | 9 | $ | 5,380 | |||||
Total cash flow hedges | 60 | 9 | 5,380 | ||||||||
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | |||||||||||
Interest rate derivatives | (2,265 | ) | — | — | |||||||
Foreign currency exchange rate derivatives | 1,279 | (253 | ) | — | |||||||
Equity derivatives | (30,755 | ) | — | — | |||||||
Embedded derivatives | 13,265 | — | — | ||||||||
Total nonqualifying hedges | (18,476 | ) | (253 | ) | — | ||||||
Total | $ | (18,416 | ) | $ | (244 | ) | $ | 5,380 |
Year Ended December 31, 2017 | |||||||||||
Net Derivative Gains (Losses) Recognized for Derivatives (1) | Net Derivative Gains (Losses) Recognized for Hedged Items (2) | Amount of Gains (Losses) deferred in AOCI | |||||||||
(In thousands) | |||||||||||
Derivatives Designated as Hedging Instruments: | |||||||||||
Cash flow hedges (3): | |||||||||||
Foreign currency exchange rate derivatives | $ | (9 | ) | $ | — | $ | (4,257 | ) | |||
Total cash flow hedges | (9 | ) | — | (4,257 | ) | ||||||
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | |||||||||||
Foreign currency exchange rate derivatives | (1,609 | ) | 373 | — | |||||||
Embedded derivatives | (156,297 | ) | — | — | |||||||
Total nonqualifying hedges | (157,906 | ) | 373 | — | |||||||
Total | $ | (157,915 | ) | $ | 373 | $ | (4,257 | ) |
Year Ended December 31, 2016 | |||||||||||
Net Derivative Gains (Losses) Recognized for Derivatives (1) | Net Derivative Gains (Losses) Recognized for Hedged Items (2) | Amount of Gains (Losses) deferred in AOCI | |||||||||
(In thousands) | |||||||||||
Derivatives Designated as Hedging Instruments: | |||||||||||
Cash flow hedges (3): | |||||||||||
Foreign currency exchange rate derivatives | $ | 55 | $ | (44 | ) | $ | 1,584 | ||||
Total cash flow hedges | 55 | (44 | ) | 1,584 | |||||||
Derivatives Not Designated or Not Qualifying as Hedging Instruments: | |||||||||||
Foreign currency exchange rate derivatives | 2,114 | (757 | ) | — | |||||||
Embedded derivatives | 66,079 | — | — | ||||||||
Total nonqualifying hedges | 68,193 | (757 | ) | — | |||||||
Total | $ | 68,248 | $ | (801 | ) | $ | 1,584 |
(1) | Includes gains (losses) reclassified from AOCI for cash flow hedges. |
(2) | Includes foreign currency transaction gains (losses) on hedged items in cash flow and nonqualifying hedging relationships and ineffective portion of the gains (losses). |
(3) | All components of each derivative's gain or loss were included in the assessment of hedge effectiveness. |
December 31, | ||||||||||||||||
2018 | 2017 | |||||||||||||||
Derivatives Subject to a Master Netting Arrangement or a Similar Arrangement | Assets | Liabilities | Assets | Liabilities | ||||||||||||
(In thousands) | ||||||||||||||||
Gross estimated fair value of derivatives: | ||||||||||||||||
OTC-bilateral (1) | $ | 29,006 | $ | 411 | $ | 3,903 | $ | 1,482 | ||||||||
Total gross estimated fair value of derivatives (1) | 29,006 | 411 | 3,903 | 1,482 | ||||||||||||
Amounts offset on the balance sheets | — | — | — | — | ||||||||||||
Estimated fair value of derivatives presented on the balance sheets (1) | 29,006 | 411 | 3,903 | 1,482 | ||||||||||||
Gross amounts not offset on the balance sheets: | ||||||||||||||||
Gross estimated fair value of derivatives: (2) | ||||||||||||||||
OTC-bilateral | (365 | ) | (365 | ) | (1,482 | ) | (1,482 | ) | ||||||||
Cash collateral: (3) | ||||||||||||||||
OTC-bilateral | (23,197 | ) | — | (2,367 | ) | — | ||||||||||
Securities collateral: (4) | ||||||||||||||||
OTC-bilateral | (2,212 | ) | (46 | ) | — | — | ||||||||||
Net amount after application of master netting agreements and collateral | $ | 3,232 | $ | — | $ | 54 | $ | — |
(1) | At December 31, 2018 and 2017, derivative assets included income or (expense) accruals reported in accrued investment income or in other liabilities of $289 thousand and $119 thousand, respectively and derivative liabilities included (income) or expense accruals reported in accrued investment income or in other liabilities of ($16) thousand and ($129) thousand, respectively. |
(2) | Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals. |
(3) | Cash collateral received is included in cash and cash equivalents, and the obligation to return it is included in payables for collateral transactions on the balance sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At December 31, 2018 and 2017, the Company received excess cash collateral of $384 thousand and $3.0 million, respectively, and did not provide any excess cash collateral, which is not included in the table above due to the foregoing limitation. |
(4) | Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but at December 31, 2018, none of the collateral had been sold or re-pledged. Securities collateral pledged by the Company is reported in fixed maturity securities on the balance sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or re-pledge this collateral. The amount of securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. At December 31, 2018 and 2017, the Company received excess securities collateral with an estimated fair value of $78 thousand and $0, respectively and provided excess securities collateral with an estimated fair value of $112 thousand and $707 thousand, respectively, for its OTC-bilateral derivatives. |
December 31, | |||||||||
Balance Sheet Location | 2018 | 2017 | |||||||
(In thousands) | |||||||||
Embedded derivatives within asset host contracts: | |||||||||
Ceded guaranteed minimum benefits | Premiums, reinsurance and other receivables | $ | 298,112 | $ | 307,698 | ||||
Embedded derivatives within liability host contracts: | |||||||||
Direct guaranteed minimum benefits | Policyholder account balances | $ | (18,811 | ) | $ | (51,130 | ) | ||
Fixed annuities with equity indexed returns | Policyholder account balances | 5,617 | 11,195 | ||||||
Embedded derivatives within liability host contracts | $ | (13,194 | ) | $ | (39,935 | ) |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
Net derivative gains (losses) (1), (2) | $ | 13,265 | $ | (156,297 | ) | $ | 66,079 |
(1) | The valuation of direct guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustment were $1.9 million, $466 thousand and ($57) thousand for the years ended December 31, 2018, 2017 and 2016, respectively. In addition, the valuation of ceded guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustment were ($56.6) million, ($24.7) million and ($19.0) million for the years ended December 31, 2018, 2017 and 2016, respectively. |
(2) | See Note 5 for discussion of related party net derivative gains (losses). |
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities. The Company defines active markets based on average trading volume for equity securities. The size of the bid/ask spread is used as an indicator of market activity for fixed maturity securities. |
Level 2 | Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. These inputs can include quoted prices for similar assets or liabilities other than quoted prices in Level 1, quoted prices in markets that are not active, or other significant inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. |
Level 3 | Unobservable inputs that are supported by little or no market activity and are significant to the determination of estimated fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. |
December 31, 2018 | |||||||||||||||
Fair Value Hierarchy | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total Estimated Fair Value | ||||||||||||
(In thousands) | |||||||||||||||
Assets | |||||||||||||||
Fixed maturity securities: | |||||||||||||||
U.S. corporate | $ | — | $ | 869,498 | $ | 3,546 | $ | 873,044 | |||||||
U.S. government and agency | 389,491 | 118,028 | — | 507,519 | |||||||||||
Foreign corporate | — | 342,600 | 9,764 | 352,364 | |||||||||||
CMBS | — | 318,120 | 4,731 | 322,851 | |||||||||||
RMBS | — | 202,588 | — | 202,588 | |||||||||||
ABS | — | 78,831 | — | 78,831 | |||||||||||
State and political subdivision | — | 69,825 | — | 69,825 | |||||||||||
Foreign government | — | 26,611 | — | 26,611 | |||||||||||
Total fixed maturity securities | 389,491 | 2,026,101 | 18,041 | 2,433,633 | |||||||||||
Derivative assets: (1) | |||||||||||||||
Interest rate | — | 9,284 | — | 9,284 | |||||||||||
Foreign currency exchange rate | — | 8,572 | 472 | 9,044 | |||||||||||
Equity market | — | 10,389 | — | 10,389 | |||||||||||
Total derivative assets | — | 28,245 | 472 | 28,717 | |||||||||||
Embedded derivatives within asset host contracts (2) | — | — | 298,112 | 298,112 | |||||||||||
Separate account assets | — | 4,268,423 | — | 4,268,423 | |||||||||||
Total assets | $ | 389,491 | $ | 6,322,769 | $ | 316,625 | $ | 7,028,885 | |||||||
Liabilities | |||||||||||||||
Derivative liabilities: (1) | |||||||||||||||
Foreign currency exchange rate | $ | — | $ | 331 | $ | — | $ | 331 | |||||||
Equity market | — | 96 | — | 96 | |||||||||||
Total derivative liabilities | — | 427 | — | 427 | |||||||||||
Embedded derivatives within liability host contracts (2) | — | — | (13,194 | ) | (13,194 | ) | |||||||||
Total liabilities | $ | — | $ | 427 | $ | (13,194 | ) | $ | (12,767 | ) |
December 31, 2017 | |||||||||||||||
Fair Value Hierarchy | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total Estimated Fair Value | ||||||||||||
(In thousands) | |||||||||||||||
Assets | |||||||||||||||
Fixed maturity securities: | |||||||||||||||
U.S. corporate | $ | — | $ | 750,891 | $ | 46,733 | $ | 797,624 | |||||||
U.S. government and agency | 420,084 | 126,979 | — | 547,063 | |||||||||||
Foreign corporate | — | 259,897 | 49,217 | 309,114 | |||||||||||
RMBS | — | 207,338 | 14,442 | 221,780 | |||||||||||
CMBS | — | 195,306 | 5,115 | 200,421 | |||||||||||
State and political subdivision | — | 70,286 | — | 70,286 | |||||||||||
ABS | — | 58,872 | — | 58,872 | |||||||||||
Foreign government | — | 16,403 | — | 16,403 | |||||||||||
Total fixed maturity securities | 420,084 | 1,685,972 | 115,507 | 2,221,563 | |||||||||||
Derivative assets: (1) | |||||||||||||||
Foreign currency exchange rate | — | 3,784 | — | 3,784 | |||||||||||
Embedded derivatives within asset host contracts (2) | — | — | 307,698 | 307,698 | |||||||||||
Separate account assets | — | 5,021,633 | — | 5,021,633 | |||||||||||
Total assets | $ | 420,084 | $ | 6,711,389 | $ | 423,205 | $ | 7,554,678 | |||||||
Liabilities | |||||||||||||||
Derivative liabilities: (1) | |||||||||||||||
Foreign currency exchange rate | $ | — | $ | 1,611 | $ | — | $ | 1,611 | |||||||
Embedded derivatives within liability host contracts (2) | — | — | (39,935 | ) | (39,935 | ) | |||||||||
Total liabilities | $ | — | $ | 1,611 | $ | (39,935 | ) | $ | (38,324 | ) |
(1) | Derivative assets are presented within other invested assets on the balance sheets and derivative liabilities are presented within other liabilities on the balance sheets. The amounts are presented gross in the tables above to reflect the presentation on the balance sheets. |
(2) | Embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables on the balance sheets. Embedded derivatives within liability host contracts are presented within policyholder account balances on the balance sheets. |
December 31, 2018 | December 31, 2017 | Impact of Increase in Input on Estimated Fair Value | |||||||||||||
Valuation Techniques | Significant Unobservable Inputs | Range | Range | ||||||||||||
Embedded derivatives | |||||||||||||||
Direct, assumed and ceded guaranteed minimum benefits | • | Option pricing techniques | • | Mortality rates: | 0.02% | - | 11% | 0.02% | - | 12% | Decrease (1) | ||||
• | Lapse rates: | 0.25% | - | 16% | 0.25% | - | 16% | Decrease (2) | |||||||
• | Utilization rates | 0% | - | 25% | 0% | - | 25% | Increase (3) | |||||||
• | Withdrawal rates | 0.25% | - | 10% | 0.25% | - | 10% | (4) | |||||||
• | Long-term equity volatilities | 16.50% | - | 22% | 17.40% | - | 25% | Increase (5) | |||||||
• | Nonperformance risk spread | 1.91% | - | 2.66% | 0.64% | - | 1.43% | Decrease (6) |
(1) | Mortality rates vary by age and by demographic characteristics such as gender. Range shown reflects the mortality rate for policyholders between 35 and 90 years old, which represents the majority of the business with living benefits. Mortality rate assumptions are set based on company experience and include an assumption for mortality improvement. |
(2) | Range reflects base lapse rates for major product categories for duration 1-20, which represents majority of business with living benefit riders. Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges. A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in-the-money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. |
(3) | The utilization rate assumption estimates the percentage of contract holders with a GMIB or lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible in a given year. The range shown represents the floor and cap of the GMIB dynamic election rates across varying levels of in-the-money. For lifetime withdrawal guarantee riders, the assumption is that everyone will begin withdrawals once account value reaches zero which is equivalent to a 100% utilization rate. Utilization rates may vary by the type of guarantee, the amount by which the guaranteed amount is greater than the account value, the contracts withdrawal history and by the age of the policyholder. |
(4) | The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. For GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value. |
(5) | Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. |
(6) | Nonperformance risk spread varies by duration. For any given contract, multiple nonperformance risk spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the embedded derivative. |
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||||||||||||||
Fixed Maturity Securities | Net Embedded Derivatives (2) | |||||||||||||||
Corporate (1) | Structured Securities | Net Derivatives (8) | ||||||||||||||
(In thousands) | ||||||||||||||||
Balance, January 1, 2017 | $ | 72,291 | $ | 31,423 | $ | — | $ | 403,037 | ||||||||
Total realized/unrealized gains (losses) included in net income (loss) (3) (4) | 3 | 415 | — | (156,297 | ) | |||||||||||
Total realized/unrealized gains (losses) included in AOCI | 5,969 | 1,051 | — | — | ||||||||||||
Purchases (5) | 26,542 | — | — | — | ||||||||||||
Sales (5) | (2,320 | ) | (8,398 | ) | — | — | ||||||||||
Issuances (5) | — | — | — | — | ||||||||||||
Settlements (5) | — | — | — | 100,893 | ||||||||||||
Transfers into Level 3 (6) | — | — | — | — | ||||||||||||
Transfers out of Level 3 (6) | (6,535 | ) | (4,934 | ) | — | — | ||||||||||
Balance, December 31, 2017 | 95,950 | 19,557 | — | 347,633 | ||||||||||||
Total realized/unrealized gains (losses) included in net income (loss) (3) (4) | (216 | ) | (13 | ) | — | 13,265 | ||||||||||
Total realized/unrealized gains (losses) included in AOCI | (368 | ) | (142 | ) | 472 | — | ||||||||||
Purchases (5) | — | — | — | — | ||||||||||||
Sales (5) | (4,822 | ) | (229 | ) | — | — | ||||||||||
Issuances (5) | — | — | — | — | ||||||||||||
Settlements (5) | — | — | — | (49,592 | ) | |||||||||||
Transfers into Level 3 (6) | 1,319 | — | — | — | ||||||||||||
Transfers out of Level 3 (6) | (78,553 | ) | (14,442 | ) | — | — | ||||||||||
Balance, December 31, 2018 | $ | 13,310 | $ | 4,731 | $ | 472 | $ | 311,306 | ||||||||
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2016: (7) | $ | (64 | ) | $ | 249 | $ | — | $ | 71,709 | |||||||
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2017: (7) | $ | 1 | $ | 441 | $ | — | $ | (141,133 | ) | |||||||
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2018: (7) | $ | 12 | $ | (13 | ) | $ | — | $ | (20,448 | ) | ||||||
Gains (Losses) Data for the year ended December 31, 2016: | ||||||||||||||||
Total realized/unrealized gains (losses) included in net income (loss) (3) (4) | $ | 64 | $ | 249 | $ | — | $ | 66,079 | ||||||||
Total realized/unrealized gains (losses) included in AOCI | $ | (1,769 | ) | $ | 152 | $ | — | $ | — |
(1) | Comprised of U.S. and foreign corporate securities. |
(2) | Embedded derivative assets and liabilities are presented net for purposes of the rollforward. |
(3) | Amortization of premium/accretion of discount is included within net investment income. Impairments charged to net income (loss) on securities are included in net investment gains (losses). Lapses associated with net embedded derivatives are included in net derivative gains (losses). Substantially all realized/unrealized gains (losses) included in net income (loss) for net embedded derivatives are reported in net derivative gains (losses). |
(4) | Interest accruals, as well as cash interest coupons received, are excluded from the rollforward. |
(5) | Items purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are included in settlements. |
(6) | Gains and losses, in net income (loss) and OCI, are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and then out of Level 3 in the same period are excluded from the rollforward. |
(7) | Changes in unrealized gains (losses) included in net income (loss) relate to assets and liabilities still held at the end of the respective periods. Substantially all changes in unrealized gains (losses) included in net income (loss) for net embedded derivatives are reported in net derivative gains (losses). |
(8) | Freestanding derivative assets and liabilities are presented net for purposes of the rollforward. |
December 31, 2018 | |||||||||||||||||||
Fair Value Hierarchy | |||||||||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | Total Estimated Fair Value | |||||||||||||||
(In thousands) | |||||||||||||||||||
Assets | |||||||||||||||||||
Mortgage loans | $ | 448,105 | $ | — | $ | — | $ | 447,510 | $ | 447,510 | |||||||||
Premiums, reinsurance and other receivables | $ | 20,001 | $ | — | $ | 2,314 | $ | 15,512 | $ | 17,826 | |||||||||
Liabilities | |||||||||||||||||||
Policyholder account balances | $ | 1,056,419 | $ | — | $ | — | $ | 949,916 | $ | 949,916 | |||||||||
Other liabilities | $ | 10,399 | $ | — | $ | 10,399 | $ | — | $ | 10,399 |
December 31, 2017 | |||||||||||||||||||
Fair Value Hierarchy | |||||||||||||||||||
Carrying Value | Level 1 | Level 2 | Level 3 | Total Estimated Fair Value | |||||||||||||||
(In thousands) | |||||||||||||||||||
Assets | |||||||||||||||||||
Mortgage loans | $ | 394,863 | $ | — | $ | — | $ | 395,894 | $ | 395,894 | |||||||||
Premiums, reinsurance and other receivables | $ | 20,489 | $ | — | $ | 900 | $ | 19,728 | $ | 20,628 | |||||||||
Liabilities | |||||||||||||||||||
Policyholder account balances | $ | 1,154,733 | $ | — | $ | — | $ | 1,140,886 | $ | 1,140,886 |
Years Ended December 31, | ||||||||||||||
Company | State of Domicile | 2018 | 2017 | 2016 | ||||||||||
(In thousands) | ||||||||||||||
Brighthouse Life Insurance Company of NY | New York | $ | 18,778 | $ | 22,166 | $ | (87,290 | ) |
December 31, | ||||||||
Company | 2018 | 2017 | ||||||
(In thousands) | ||||||||
Brighthouse Life Insurance Company of NY | $ | 279,206 | $ | 294,298 |
Unrealized Investment Gains (Losses), Net of Related Offsets (1) | Unrealized Gains (Losses) on Derivatives | Total | |||||||||
(In thousands) | |||||||||||
Balance at December 31, 2015 | $ | 3,333 | $ | 2,073 | $ | 5,406 | |||||
OCI before reclassifications | (5,777 | ) | 1,584 | (4,193 | ) | ||||||
Deferred income tax benefit (expense) | 2,022 | (554 | ) | 1,468 | |||||||
AOCI before reclassifications, net of income tax | (422 | ) | 3,103 | 2,681 | |||||||
Amounts reclassified from AOCI | 2,711 | (55 | ) | 2,656 | |||||||
Deferred income tax benefit (expense) | (949 | ) | 19 | (930 | ) | ||||||
Amounts reclassified from AOCI, net of income tax | 1,762 | (36 | ) | 1,726 | |||||||
Balance at December 31, 2016 | 1,340 | 3,067 | 4,407 | ||||||||
OCI before reclassifications | 33,257 | (4,257 | ) | 29,000 | |||||||
Deferred income tax benefit (expense) | (11,640 | ) | 1,490 | (10,150 | ) | ||||||
AOCI before reclassifications, net of income tax | 22,957 | 300 | 23,257 | ||||||||
Amounts reclassified from AOCI | 1,714 | 9 | 1,723 | ||||||||
Deferred income tax benefit (expense) (2) | 4,652 | (4 | ) | 4,648 | |||||||
Amounts reclassified from AOCI, net of income tax | 6,366 | 5 | 6,371 | ||||||||
Balance at December 31, 2017 | 29,323 | 305 | 29,628 | ||||||||
OCI before reclassifications | (67,310 | ) | 5,380 | (61,930 | ) | ||||||
Deferred income tax benefit (expense) | 13,128 | (195 | ) | 12,933 | |||||||
AOCI before reclassifications, net of income tax | (24,859 | ) | 5,490 | (19,369 | ) | ||||||
Amounts reclassified from AOCI | 5,411 | (60 | ) | 5,351 | |||||||
Deferred income tax benefit (expense) | (1,055 | ) | 2 | (1,053 | ) | ||||||
Amounts reclassified from AOCI, net of income tax | 4,356 | (58 | ) | 4,298 | |||||||
Balance at December 31, 2018 | $ | (20,503 | ) | $ | 5,432 | $ | (15,071 | ) |
(1) | See Note 6 for information on offsets to investments related to future policy benefits, DAC and DSI. |
(2) | Includes the $5.3 million impact of the Tax Act related to unrealized investments gains (losses), net of related offsets. See Note 1 for more information. |
AOCI Components | Amounts Reclassified from AOCI | Statements of Operations Locations | ||||||||||||
Years Ended December 31, | ||||||||||||||
2018 | 2017 | 2016 | ||||||||||||
(In thousands) | ||||||||||||||
Net unrealized investment gains (losses): | ||||||||||||||
Net unrealized investment gains (losses) | $ | (5,410 | ) | $ | (1,761 | ) | $ | (2,745 | ) | Net investment gains (losses) | ||||
Net unrealized investment gains (losses) | — | 47 | 79 | Net investment income | ||||||||||
Net unrealized investment gains (losses) | (1 | ) | — | (45 | ) | Net derivative gains (losses) | ||||||||
Net unrealized investment gains (losses), before income tax | (5,411 | ) | (1,714 | ) | (2,711 | ) | ||||||||
Income tax (expense) benefit | 1,055 | (4,652 | ) | 949 | ||||||||||
Net unrealized investment gains (losses), net of income tax | (4,356 | ) | (6,366 | ) | (1,762 | ) | ||||||||
Unrealized gains (losses) on derivatives - cash flow hedges: | ||||||||||||||
Foreign currency swaps | 60 | (9 | ) | 55 | Net derivative gains (losses) | |||||||||
Gains (losses) on cash flow hedges, before income tax | 60 | (9 | ) | 55 | ||||||||||
Income tax (expense) benefit | (2 | ) | 4 | (19 | ) | |||||||||
Gains (losses) on cash flow hedges, net of income tax | 58 | (5 | ) | 36 | ||||||||||
Total reclassifications, net of income tax | $ | (4,298 | ) | $ | (6,371 | ) | $ | (1,726 | ) |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
Compensation | $ | 13,449 | $ | 13,508 | $ | 8,535 | |||||
Contracted services and other labor costs | 8,999 | 5,210 | 2,011 | ||||||||
Transition services agreements | 10,976 | 11,843 | — | ||||||||
Establishment costs | 5,094 | — | — | ||||||||
Premium and other taxes, licenses and fees | 3,081 | 3,795 | 2,590 | ||||||||
Separate account fees | — | 11 | (46 | ) | |||||||
Volume related costs, excluding compensation, net of DAC capitalization | 18,723 | 22,677 | 23,484 | ||||||||
Other | 5,728 | 8,909 | 20,453 | ||||||||
Total other expenses | $ | 66,050 | $ | 65,953 | $ | 57,027 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
Current: | |||||||||||
Federal | $ | (2,171 | ) | $ | 17,352 | $ | (57,108 | ) | |||
Foreign | 12 | 17 | — | ||||||||
Subtotal | (2,159 | ) | 17,369 | (57,108 | ) | ||||||
Deferred: | |||||||||||
Federal | 7,236 | (118,094 | ) | 99,260 | |||||||
Provision for income tax expense (benefit) | $ | 5,077 | $ | (100,725 | ) | $ | 42,152 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(Dollars in thousands) | |||||||||||
Tax provision at statutory rate | $ | 9,010 | $ | (17,129 | ) | $ | 46,397 | ||||
Tax effect of: | |||||||||||
Rate revaluation due to tax reform (1) | — | (77,308 | ) | — | |||||||
Dividend received deduction | (1,689 | ) | (5,159 | ) | (4,732 | ) | |||||
Prior year tax | (1,062 | ) | (493 | ) | 1,282 | ||||||
Tax credits | (953 | ) | (636 | ) | (797 | ) | |||||
Other, net | (229 | ) | — | 2 | |||||||
Provision for income tax expense (benefit) | $ | 5,077 | $ | (100,725 | ) | $ | 42,152 | ||||
Effective tax rate | 12 | % | 206 | % | 32 | % |
(1) | For the year ended December 31, 2017, the Company recognized a $77.3 million benefit in net income from remeasurement of net deferred tax liabilities in connection with the Tax Act discussed in Note 1. |
December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Deferred income tax assets: | |||||||
Tax credit carryforwards | $ | 2,068 | $ | 3,463 | |||
Net operating loss carryforwards | 2,552 | 3,661 | |||||
Net unrealized investment losses | 4,006 | — | |||||
Investments, including derivatives | 3,015 | — | |||||
Other | 33 | 2,973 | |||||
Total deferred income tax assets | 11,674 | 10,097 | |||||
Deferred income tax liabilities: | |||||||
Investments, including derivatives | — | 958 | |||||
Policyholder liabilities and receivables | 93,702 | 94,717 | |||||
Intangibles | 1,141 | 1,384 | |||||
Net unrealized investment gains | — | 7,875 | |||||
DAC | 24,684 | 17,661 | |||||
Total deferred income tax liabilities | 119,527 | 122,595 | |||||
Net deferred income tax asset (liability) | $ | (107,853 | ) | $ | (112,498 | ) |
Foreign Tax Credits Carryforwards | |||
(In thousands) | |||
Expiration | |||
2019-2023 | $ | 1,000 | |
2024-2028 | 1,068 | ||
2029-2033 | — | ||
2034-2038 | — | ||
Indefinite | — | ||
$ | 2,068 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
(In thousands) | |||||||||||
Balance at January 1, | $ | 976 | $ | 1,204 | $ | 983 | |||||
Additions for tax positions of prior years | — | 49 | 300 | ||||||||
Reductions for tax positions of prior years | (27 | ) | (62 | ) | (23 | ) | |||||
Additions for tax positions of current year | — | 169 | 300 | ||||||||
Reductions for tax positions of current year | — | (318 | ) | — | |||||||
Settlements with tax authorities | — | (66 | ) | (356 | ) | ||||||
Balance at December 31, | $ | 949 | $ | 976 | $ | 1,204 | |||||
Unrecognized tax benefits that, if recognized would impact the effective rate | $ | 949 | $ | 976 | $ | 1,130 |
Types of Investments | Amortized Cost (1) | Estimated Fair Value | Amount at Which Shown on Balance Sheet | |||||||||
Fixed maturity securities: | ||||||||||||
Bonds: | ||||||||||||
U.S. government and agency securities | $ | 511,255 | $ | 507,519 | $ | 507,519 | ||||||
Public utilities | 58,693 | 57,947 | 57,947 | |||||||||
State and political subdivision securities | 66,131 | 69,825 | 69,825 | |||||||||
Foreign government securities | 27,466 | 26,611 | 26,611 | |||||||||
All other corporate bonds | 1,199,535 | 1,166,941 | 1,166,941 | |||||||||
Total bonds | 1,863,080 | 1,828,843 | 1,828,843 | |||||||||
Mortgage-backed and asset-backed securities | 606,124 | 604,270 | 604,270 | |||||||||
Redeemable preferred stock | 597 | 520 | 520 | |||||||||
Total fixed maturity securities | 2,469,801 | 2,433,633 | 2,433,633 | |||||||||
Mortgage loans | 448,105 | 448,105 | ||||||||||
Other invested assets | 35,815 | 35,815 | ||||||||||
Total investments | $ | 2,953,721 | $ | 2,917,553 |
(1) | Amortized cost for fixed maturity securities represents original cost reduced by impairments from other-than-temporary declines in estimated fair value that are charged to earnings and adjusted for amortization of premiums or accretion of discounts; for mortgage loans, cost represents original cost reduced by repayments and valuation allowances and adjusted for amortization of premiums or accretion of discounts. |
Segment | DAC and VOBA | Future Policy Benefits and Other Policy-Related Balances | Policyholder Account Balances | Unearned Premiums (1), (2) | Unearned Revenue (1) | |||||||||||||||
2018 | ||||||||||||||||||||
Annuities | $ | 163,301 | $ | 376,854 | $ | 1,674,013 | $ | — | $ | 2,227 | ||||||||||
Life | 22,098 | 341,313 | 18,485 | 1,070 | — | |||||||||||||||
Corporate & Other | 187 | 9,720 | — | 16 | — | |||||||||||||||
Total | $ | 185,586 | $ | 727,887 | $ | 1,692,498 | $ | 1,086 | $ | 2,227 | ||||||||||
2017 | ||||||||||||||||||||
Annuities | $ | 107,760 | $ | 350,512 | $ | 1,324,527 | $ | — | $ | 2,347 | ||||||||||
Life | 23,101 | 327,281 | 18,803 | 1,033 | — | |||||||||||||||
Corporate & Other | 198 | 8,986 | — | 17 | — | |||||||||||||||
Total | $ | 131,059 | $ | 686,779 | $ | 1,343,330 | $ | 1,050 | $ | 2,347 |
(1) | Amounts are included within the future policy benefits and other policy-related balances column. |
(2) | Includes premiums received in advance. |
Segment | Premiums and Universal Life and Investment-Type Product Policy Fees | Net Investment Income (1) | Policyholder Benefits and Claims and Interest Credited to Policyholder Account Balances | Amortization of DAC and VOBA | Other Expenses | |||||||||||||||
2018 | ||||||||||||||||||||
Annuities | $ | 111,285 | $ | 63,427 | $ | 27,311 | $ | (1,661 | ) | $ | 45,662 | |||||||||
Life | 25,040 | 34,594 | 16,726 | 2,383 | 15,519 | |||||||||||||||
Corporate & Other | 2,593 | 1,770 | 1,303 | 10 | 4,869 | |||||||||||||||
Total | $ | 138,918 | $ | 99,791 | $ | 45,340 | $ | 732 | $ | 66,050 | ||||||||||
2017 | ||||||||||||||||||||
Annuities | $ | 113,225 | $ | 56,936 | $ | 15,118 | $ | (42,603 | ) | $ | 48,171 | |||||||||
Life | 14,425 | 19,018 | 18,501 | 2,585 | 12,868 | |||||||||||||||
Corporate & Other | 2,354 | 10,373 | 1,030 | 21 | 4,914 | |||||||||||||||
Total | $ | 130,004 | $ | 86,327 | $ | 34,649 | $ | (39,997 | ) | $ | 65,953 | |||||||||
2016 | ||||||||||||||||||||
Annuities | $ | 122,830 | $ | 27,632 | $ | 62,676 | $ | 20,927 | $ | 37,537 | ||||||||||
Life | 28,978 | 17,033 | 27,122 | 2,272 | 16,134 | |||||||||||||||
Corporate & Other | 1,931 | 13,115 | 2,096 | 18 | 3,356 | |||||||||||||||
Total | $ | 153,739 | $ | 57,780 | $ | 91,894 | $ | 23,217 | $ | 57,027 |
(1) | See Note 2 of the Notes to the Financial Statements for the basis of allocation of net investment income. |
Gross Amount | Ceded | Assumed | Net Amount | % Amount Assumed to Net | |||||||||||||||
2018 | |||||||||||||||||||
Life insurance in-force | $ | 46,722,071 | $ | 39,986,974 | $ | — | $ | 6,735,097 | — | % | |||||||||
Insurance premium | |||||||||||||||||||
Life insurance (1) | $ | 90,979 | $ | 53,951 | $ | — | $ | 37,028 | — | % | |||||||||
Accident & health insurance | — | — | — | — | — | % | |||||||||||||
Total insurance premium | $ | 90,979 | $ | 53,951 | $ | — | $ | 37,028 | — | % | |||||||||
2017 | |||||||||||||||||||
Life insurance in-force | $ | 48,509,917 | $ | 41,167,006 | $ | — | $ | 7,342,911 | — | % | |||||||||
Insurance premium | |||||||||||||||||||
Life insurance (1) | $ | 93,196 | $ | 66,928 | $ | — | $ | 26,268 | — | % | |||||||||
Accident & health insurance | — | — | — | — | — | % | |||||||||||||
Total insurance premium | $ | 93,196 | $ | 66,928 | $ | — | $ | 26,268 | — | % | |||||||||
2016 | |||||||||||||||||||
Life insurance in-force | $ | 50,748,993 | $ | 43,894,276 | $ | — | $ | 6,854,717 | — | % | |||||||||
Insurance premium | |||||||||||||||||||
Life insurance (1) | $ | 109,733 | $ | 58,994 | $ | — | $ | 50,739 | — | % | |||||||||
Accident & health insurance | — | — | — | — | — | % | |||||||||||||
Total insurance premium | $ | 109,733 | $ | 58,994 | $ | — | $ | 50,739 | — | % |
(1) | Includes annuities with life contingencies. |
2018 | 2017 | ||||||
(In thousands) | |||||||
Audit fees (1) | $ | 875 | $ | 875 | |||
Audit-related fees (2) | $ | — | $ | — | |||
Tax fees (3) | $ | — | $ | — | |||
All other fees (4) | $ | — | $ | — |
(1) | Fees for services to perform an audit or review in accordance with auditing standards of the PCAOB and services that generally only the Company’s independent auditor can reasonably provide, such as comfort letters, statutory audits, attest services, consents and assistance with and review of documents filed with the SEC. |
(2) | Fees for assurance and related services that are traditionally performed by the Company’s independent auditor, such as audit and related services for due diligence related to mergers, acquisitions and divestitures, accounting consultations and audits in connection with proposed or consummated acquisitions and divestitures, control reviews, attest services not required by statute or regulation, and consultation concerning financial accounting and reporting standards. |
(3) | Fees for tax compliance, consultation and planning services. Tax compliance generally involves preparation of original and amended tax returns, claims for refunds and tax payment planning services. Tax consultation and tax planning encompass a diverse range of advisory services, including assistance in connection with tax audits and filing appeals, tax advice related to mergers, acquisitions and divestitures, and requests for rulings or technical advice from taxing authorities. |
(4) | Fees for other types of permitted services, including risk and other consulting services, financial advisory services and valuation services. |
Exhibit No. | Description | |
3.1 | ||
3.1.1 | ||
3.2 | ||
10.1 | ||
23.1* | ||
31.1* | ||
31.2* | ||
32.1* | ||
32.2* | ||
101.INS* | XBRL Instance Document. | |
101.SCH* | XBRL Taxonomy Extension Schema Document. | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. |
BRIGHTHOUSE LIFE INSURANCE COMPANY OF NY | |||
By: | /s/ Lynn A. Dumais | ||
Name: | Lynn A. Dumais | ||
Title: | Vice President and Chief Financial Officer | ||
Date: | March 6, 2019 |
Signature | Title | Date | ||
/s/ Conor E. Murphy | Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) | March 6, 2019 | ||
Conor E. Murphy | ||||
/s/ Lynn A. Dumais | Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | March 6, 2019 | ||
Lynn A. Dumais | ||||
/s/ Kimberly A. Berwanger | Director | March 6, 2019 | ||
Kimberly A. Berwanger | ||||
/s/ Norse N. Blazzard | Director | March 6, 2019 | ||
Norse N. Blazzard | ||||
/s/ David W. Chamberlain | Director | March 6, 2019 | ||
David W. Chamberlain | ||||
/s/ Richard A. Hemmings | Director | March 6, 2019 | ||
Richard A. Hemmings | ||||
/s/ Mayer Naiman | Director | March 6, 2019 | ||
Mayer Naiman | ||||
/s/ Richard C. Pearson | Director | March 6, 2019 | ||
Richard C. Pearson | ||||
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Conor E. Murphy | |
Conor E. Murphy Chairman of the Board, President and Chief Executive Officer |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Lynn A. Dumais | |
Lynn A. Dumais Vice President and Chief Financial Officer |
/s/ Conor E. Murphy | |
Conor E. Murphy Chairman of the Board, President and Chief Executive Officer |
/s/ Lynn A. Dumais | |
Lynn A. Dumais Vice President and Chief Financial Officer |
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Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Mar. 06, 2019 |
Jun. 29, 2018 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | BRIGHTHOUSE LIFE INSURANCE Co OF NY | ||
Entity Central Index Key | 0001167609 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Small Business | false | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 200,000 |
Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Assets | ||
Amortized cost of fixed maturity securities available-for-sale | $ 2,469,801 | $ 2,165,134 |
Mortgage loans valuation allowances | $ 1,937 | $ 1,747 |
Stockholder’s Equity | ||
Common stock, par value | $ 10 | $ 10 |
Common stock, shares authorized | 200,000 | 200,000 |
Common stock, shares issued | 200,000 | 200,000 |
Common stock, shares outstanding | 200,000 | 200,000 |
Statements of Operations - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Revenues | |||
Premiums | $ 37,028 | $ 26,268 | $ 50,739 |
Universal life and investment-type product policy fees | 101,890 | 103,736 | 103,000 |
Net investment income | 99,791 | 86,327 | 57,780 |
Other revenues | (58,180) | (46,266) | 29,192 |
Net investment gains (losses) | (7,194) | (1,178) | (3,737) |
Net derivative gains (losses) | (18,286) | (157,222) | 67,726 |
Total revenues | 155,049 | 11,665 | 304,700 |
Expenses | |||
Policyholder benefits and claims | 7,488 | (4,774) | 51,980 |
Interest credited to policyholder account balances | 37,852 | 39,423 | 39,914 |
Amortization of deferred policy acquisition costs and value of business acquired | 732 | (39,997) | 23,217 |
Other expenses | 66,050 | 65,953 | 57,027 |
Total expenses | 112,122 | 60,605 | 172,138 |
Income (loss) before provision for income tax | 42,927 | (48,940) | 132,562 |
Provision for income tax expense (benefit) | 5,077 | (100,725) | 42,152 |
Net income (loss) | $ 37,850 | $ 51,785 | $ 90,410 |
Statements Of Comprehensive Income (Loss) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ 37,850 | $ 51,785 | $ 90,410 |
Other comprehensive income (loss): | |||
Unrealized investment gains (losses), net of related offsets | (61,899) | 34,971 | (3,066) |
Unrealized gains (losses) on derivatives | 5,320 | (4,248) | 1,529 |
Other comprehensive income (loss), before income tax | (56,579) | 30,723 | (1,537) |
Income tax (expense) benefit related to items of other comprehensive income (loss) | 11,880 | (5,502) | 538 |
Other Comprehensive Income amount including new AOCI guidance, Net of Tax | (44,699) | 25,221 | (999) |
Comprehensive income (loss) | $ (6,849) | $ 77,006 | $ 89,411 |
Statements of Stockholder's Equity - USD ($) $ in Thousands |
Total |
Common Stock |
Additional Paid-in Capital |
Retained Earnings (Deficit) |
Accumulated Other Comprehensive Income (Loss) |
---|---|---|---|---|---|
Beginning Balance at Dec. 31, 2015 | $ 607,322 | $ 2,000 | $ 340,931 | $ 258,985 | $ 5,406 |
Net income (loss) | 90,410 | 90,410 | |||
Other comprehensive income (loss), net of income tax | (999) | (999) | |||
Ending Balance at Dec. 31, 2016 | 696,733 | 2,000 | 340,931 | 349,395 | 4,407 |
Adjustments to Additional Paid in Capital, Capital Contributions from Parent | 75,000 | 75,000 | |||
Net income (loss) | 51,785 | 51,785 | |||
Other comprehensive income (loss), net of income tax | 19,969 | 19,969 | |||
Ending Balance at Dec. 31, 2017 | 843,487 | 2,000 | 415,931 | 395,928 | 29,628 |
Effect of change in accounting principle (Note 1) | 0 | (5,252) | 5,252 | ||
Net income (loss) | 37,850 | 37,850 | |||
Other comprehensive income (loss), net of income tax | (44,699) | (44,699) | |||
Ending Balance at Dec. 31, 2018 | $ 836,638 | $ 2,000 | $ 415,931 | $ 433,778 | $ (15,071) |
Business, Basis of Presentation and Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Business, Basis of Presentation and Summary of Significant Accounting Policies | 1. Business, Basis of Presentation and Summary of Significant Accounting Policies Business “BHNY” and the “Company” refer to Brighthouse Life Insurance Company of NY, a New York domiciled life insurance company. Brighthouse Life Insurance Company of NY is a wholly-owned subsidiary of Brighthouse Life Insurance Company, which is an indirect wholly-owned subsidiary of Brighthouse Financial, Inc. (“BHF,” together with its subsidiaries and affiliates, “Brighthouse Financial”). The Company markets and/or administers traditional life, universal life, variable annuity and fixed annuity products to individuals. The Company is licensed to transact business in the state of New York. The Company offers a range of individual annuities and individual life insurance products. The Company is organized into two segments: Annuities and Life. In addition, the Company reports certain of its results of operations in Corporate & Other. In 2016, MetLife announced its plan to pursue the separation of a substantial portion of its former U.S. retail business (the “Separation”.) Until the completion of the Separation on August 4, 2017, BHF was a wholly-owned subsidiary of MetLife, Inc. MetLife, Inc. undertook several actions, including an internal reorganization involving its U.S. retail business (the “Restructuring”) to include the Company and certain affiliates in the separated business. In connection with the Restructuring, effective April 2017, following receipt of applicable regulatory approvals, MetLife, Inc. contributed certain affiliated reinsurance companies and the Company to Brighthouse Life Insurance. On July 28, 2017, MetLife, Inc. contributed Brighthouse Holdings, LLC, an intermediate holding company, to BHF, resulting in the Company becoming an indirect wholly-owned subsidiary of BHF. On August 4, 2017, MetLife, Inc. completed the Separation through a distribution of 80.8% of MetLife, Inc.’s interest in BHF, to holders of MetLife, Inc. common stock. On June 14, 2018, MetLife, Inc. divested its remaining shares of BHF common stock (the “MetLife Divestiture”). As a result, MetLife, Inc. and its subsidiaries and affiliates are no longer considered related parties subsequent to the MetLife Divestiture. Basis of Presentation The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the financial statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s business and operations. Actual results could differ from these estimates. Reclassifications Certain amounts in the prior years’ financial statements and related footnotes thereto have been reclassified to conform with the current year presentation as discussed throughout the Notes to the Financial Statements. Since the Company is a member of a controlled group of affiliated companies, its results may not be indicative of those of a stand-alone entity. Summary of Significant Accounting Policies Insurance Future Policy Benefit Liabilities and Policyholder Account Balances The Company establishes liabilities for future amounts payable under insurance policies. Insurance liabilities are generally equal to the present value of future expected benefits to be paid, reduced by the present value of future expected net premiums. Assumptions used to measure the liability are based on the Company’s experience, and include a margin for adverse deviation. The principal assumptions used in the establishment of liabilities for future policy benefits are mortality, policy lapse, policy renewal, investment returns, inflation, expenses and other contingent events as appropriate to the respective product type. For traditional long duration insurance contracts (term, whole-life insurance and income annuities), assumptions are determined at issuance of the policy and are not updated unless a premium deficiency exists. A premium deficiency exists when the liability for future policy benefits plus the present value of expected future gross premiums are less than expected future benefits and expenses (based on current assumptions). When a premium deficiency exists, the Company will reduce any deferred acquisition costs and may also establish an additional liability to eliminate the deficiency. To assess whether a premium deficiency exists, the Company groups insurance contracts based on the manner acquired, serviced and the measurement of profitability. In applying the profitability criteria, groupings are limited by segment. In certain cases, the liability for an insurance product may be sufficient in the aggregate, but the pattern of future earnings may result in profits followed by losses. In these situations, the Company may establish an additional liability to offset the losses that are expected to be recognized in later years. Policyholder account balances relate to customer deposits on universal life insurance and deferred annuity contracts and are equal to the sum of deposits, plus interest credited, less charges and withdrawals. The Company issues directly, certain variable annuity products with guaranteed minimum benefits that provide the policyholder a minimum return based on their initial deposit (i.e., the benefit base) less withdrawals. These guarantees are accounted for as insurance liabilities or as embedded derivatives depending on how and when the benefit is paid. Specifically, a guarantee is accounted for as an embedded derivative if a guarantee is paid without requiring (i) the occurrence of specific insurable event, or (ii) the policyholder to annuitize. Alternatively, a guarantee is accounted for as an insurance liability if the guarantee is paid only upon either (i) the occurrence of a specific insurable event, or (ii) annuitization. In certain cases, a guarantee may have elements of both an insurance liability and an embedded derivative and in such cases the guarantee is split and accounted for under both models. Guarantees accounted for as insurance liabilities in future policy benefits include guaranteed minimum death benefits (“GMDBs”), the portion of guaranteed minimum income benefits (“GMIBs”) that require annuitization, and the life-contingent portion of guaranteed minimum withdrawal benefits (“GMWBs”). Guarantees accounted for as embedded derivatives in policyholder account balances include the non life-contingent portion of GMWBs, guaranteed minimum accumulation benefits (“GMABs”) and the portion of GMIBs that do not require annuitization. At inception, the Company attributes to the embedded derivative a portion of the projected future guarantee fees to be collected from the policyholder equal to the present value of projected future guaranteed benefits. Any additional fees represent “excess” fees and are reported in universal life and investment-type product policy fees. Recognition of Insurance Revenues and Deposits Premiums related to traditional life insurance and annuity contracts with life contingencies are recognized as revenues when due from policyholders. Policyholder benefits and expenses are provided to recognize profits over the estimated lives of the insurance policies. When premiums are due over a significantly shorter period than the period over which policyholder benefits are incurred, any excess profit is deferred and recognized into earnings in proportion to insurance in-force or, for annuities, the amount of expected future policy benefit payments. Deposits related to universal life insurance and investment-type products are credited to policyholder account balances. Revenues from such contracts consist of asset-based investment management fees, mortality charges, risk charges, policy administration fees, and surrender charges. These fees are recognized when assessed to the contract holder and are included in universal life and investment-type product policy fees on the statements of operations. Premiums, policy fees, policyholder benefits and expenses are presented net of reinsurance. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles The Company incurs significant costs in connection with acquiring new and renewal insurance business. Costs that are related directly to the successful acquisition or renewal of insurance contracts are capitalized as DAC. These costs mainly consist of commissions, and include the portion of employees’ compensation and benefits related to time spent selling, underwriting or processing the issuance of new insurance contracts. All other acquisition-related costs are expensed as incurred. Value of business acquired (“VOBA”) is an intangible asset resulting from a business combination that represents the excess of book value over the estimated fair value of acquired insurance, annuity, and investment-type contracts in-force as of the acquisition date. The estimated fair value of the acquired contracts is based on projections, by each block of business, of future policy and contract charges, premiums, mortality and morbidity, separate account performance, surrenders, operating expenses, investment returns, nonperformance risk adjustment and other factors. The Company amortizes DAC and VOBA related to term life insurance, non-participating whole-life and immediate annuities over the appropriate premium paying period in proportion to the actual and expected future gross premiums that were set at contract issue. The expected premiums are based upon the premium requirement of each policy and assumptions for mortality, persistency and investment returns at policy issuance, or policy acquisition (as it relates to VOBA), include provisions for adverse deviation, and are consistent with the assumptions used to calculate future policy benefit liabilities. These assumptions are not revised after policy issuance or acquisition unless the DAC or VOBA balance is deemed to be unrecoverable from future expected profits. The Company amortizes DAC and VOBA on deferred annuities, universal life and variable life insurance contracts over the estimated lives of the contracts in proportion to actual and expected future gross profits. The amortization includes interest based on rates in effect at inception or acquisition of the contracts. The amount of future gross profits is dependent principally upon investment returns in excess of the amounts credited to policyholders, mortality, persistency, benefit elections and withdrawals, interest crediting rates, and expenses to administer the business. When significant negative gross profits are expected in future periods, the Company substitutes the amount of insurance in-force for expected future gross profits as the amortization basis for DAC. Assumptions for DAC and VOBA are reviewed at least annually, and if they change significantly, the cumulative DAC and VOBA amortization is re-estimated and adjusted by a cumulative charge or credit to net income. When expected future gross profits are below those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to net income. The opposite result occurs when the expected future gross profits are above the previously estimated expected future gross profits. The Company updates expected future gross profits to reflect the actual gross profits for each period, including changes to its nonperformance risk related to embedded derivatives and the actual amount of business remaining in-force. When actual gross profits exceed those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to net income. The opposite result occurs when the actual gross profits are below the previously expected future gross profits. DAC and VOBA balances on deferred annuities, universal and variable life insurance contracts are also adjusted to reflect the effect of investment gains and losses and certain embedded derivatives (including changes in nonperformance risk). These adjustments can create fluctuations in net income from period to period. Changes in DAC and VOBA balances related to unrealized gains and losses are recorded to other comprehensive income (loss) (“OCI”). DAC and VOBA balances and amortization for variable contracts can be significantly impacted by changes in expected future gross profits related to projected separate account rates of return. The Company’s practice of determining changes in separate account returns assumes that long-term appreciation in equity markets is only changed when sustained interim deviations are expected. The Company monitors these events and only changes the assumption when its long-term expectation changes. Periodically, the Company modifies product benefits, features, rights or coverages that occur by the exchange of an existing contract for a new contract, or by amendment, endorsement, or rider to a contract, or by election or coverage within a contract. If a modification is considered to have substantially changed the contract, the associated DAC or VOBA is written off immediately as net income and any new acquisition costs associated with the replacement contract are deferred. If the modification does not substantially change the contract, the DAC or VOBA amortization on the original contract will continue and any acquisition costs associated with the related modification are expensed. See Note 4 for additional information on DAC and VOBA. The Company also has deferred sales inducements (“DSI”) and value of distribution agreements (“VODA”) which are included in other assets. The Company defers sales inducements and amortizes them over the life of the policy using the same methodology and assumptions used to amortize DAC. The amortization of DSI is included in policyholder benefits and claims. VODA represents the present value of expected future profits associated with the expected future business derived from the distribution agreements acquired as part of a business combination. The VODA associated with past business combinations is amortized over useful lives ranging from 10 to 40 years and such amortization is included in other expenses. Each year, or more frequently if circumstances indicate a possible impairment exists, the Company reviews DSI and VODA to determine whether the assets are impaired. Reinsurance The Company enters into reinsurance arrangements pursuant to which it cedes certain insurance risks to unaffiliated and related-party reinsurers. Cessions under reinsurance agreements do not discharge the Company’s obligations as the primary insurer. The accounting for reinsurance arrangements depends on whether the arrangement provides indemnification against loss or liability relating to insurance risk in accordance with GAAP. For ceded reinsurance of existing in-force blocks of insurance contracts that transfer significant insurance risk, the difference, if any, between the amounts paid, and the liabilities ceded related to the underlying contracts is considered the net cost of reinsurance at the inception of the reinsurance agreement. The net cost of reinsurance is recorded as an adjustment to DAC when there is a gain at inception on the ceding entity and to other liabilities when there is a loss at inception. The net cost of reinsurance is recognized as a component of other expenses when there is a gain at inception and as policyholder benefits and claims when there is a loss and is subsequently amortized on a basis consistent with the methodology used for amortizing DAC related to the underlying reinsured contracts. If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. Deposits received are included in other liabilities and deposits made are included within premiums, reinsurance and other receivables. As amounts are paid or received, consistent with the underlying contracts, the deposit assets or liabilities are adjusted. Interest on such deposits is recorded as other revenues or other expenses, as appropriate. Periodically, the Company evaluates the adequacy of the expected payments or recoveries and adjusts the deposit asset or liability through other revenues or other expenses, as appropriate. The funds withheld liability represents amounts withheld by the Company in accordance with the terms of the reinsurance agreements. Under certain reinsurance agreements, the Company withholds the funds rather than transferring the underlying investments and, as a result, records a funds withheld liability within other liabilities. The Company recognizes interest on funds withheld, included in other expenses, at rates defined by the terms of the agreement which may be contractually specified or directly related to the investment portfolio. Certain funds withheld arrangements may also contain embedded derivatives measured at fair value that are related to the investment return on the assets withheld. The Company cedes the risk associated with the variable annuities with guaranteed minimum benefits to Brighthouse Life Insurance Company. Certain features of the ceded guarantees are accounted for as an embedded derivative and measured at fair value. Index-linked annuities The Company issues index-linked annuities. The crediting rate associated with index-linked annuities is accounted for at fair value as an embedded derivative. The estimated fair value is determined using a combination of an option pricing model and an option-budget approach. Under this approach, the company estimates the cost of funding the crediting rate using option pricing and establishes that cost on the balance sheet as a reduction to the initial deposit amount. In subsequent periods, the embedded derivative is remeasured at fair value while the account value is accreted up to the initial deposit over the estimated life of the contract. Investments Net Investment Income and Net Investment Gains (Losses) Income from investments is reported within net investment income, unless otherwise stated herein. Gains and losses on sales of investments, impairment losses and changes in valuation allowances are reported within net investment gains (losses), unless otherwise stated herein. Fixed Maturity Securities Available-For-Sale The Company’s fixed maturity securities are classified as available-for-sale (“AFS”) and are reported at their estimated fair value. Unrealized investment gains and losses on these securities are recorded as a separate component of OCI, net of policy-related amounts and deferred income taxes. All security transactions are recorded on a trade date basis. Investment gains and losses on sales are determined on a specific identification basis. Interest income and prepayment fees are recognized when earned. Interest income is recognized using an effective yield method giving effect to amortization of premiums and accretion of discounts and is based on the estimated economic life of the securities, which for residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”) considers the estimated timing and amount of prepayments of the underlying loans. The amortization of premium and accretion of discount of fixed maturity securities also takes into consideration call and maturity dates. Amortization of premium and accretion of discount on Structured Securities considers the estimated timing and amount of prepayments of the underlying loans. Actual prepayment experience is periodically reviewed, and effective yields are recalculated when differences arise between the originally anticipated and the actual prepayments received and currently anticipated. Prepayment assumptions for Structured Securities are estimated using inputs obtained from third-party specialists and based on management’s knowledge of the current market. For credit-sensitive Structured Securities and certain prepayment-sensitive securities, the effective yield is recalculated on a prospective basis. For all other Structured Securities, the effective yield is recalculated on a retrospective basis The Company periodically evaluates fixed maturity securities for impairment. The assessment of whether impairments have occurred is based on management’s case-by-case evaluation of the underlying reasons for the decline in estimated fair value, as well as an analysis of the gross unrealized losses by severity and/or age. See Note 6 “— Evaluation of AFS Securities for OTTI and Evaluating Temporarily Impaired AFS Securities.” For fixed maturity securities in an unrealized loss position, an other-than-temporary impairment (“OTTI”) is recognized in earnings when it is anticipated that the amortized cost will not be recovered. When either: (i) the Company has the intent to sell the security; or (ii) it is more likely than not that the Company will be required to sell the security before recovery, the OTTI recognized in earnings is the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions exists, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected is recognized as an OTTI in earnings (“credit loss”). If the estimated fair value is less than the present value of projected future cash flows expected to be collected, this portion of OTTI related to other-than-credit factors (“noncredit loss”) is recorded in OCI. Mortgage Loans Mortgage loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount and any deferred fees or expenses, and are net of valuation allowances. Interest income and prepayment fees are recognized when earned. Interest income is recognized using an effective yield method giving effect to amortization of premiums and accretion of discounts. Other Invested Assets Other invested assets consist principally of freestanding derivatives with positive estimated fair values which are described in “— Derivatives” below. Derivatives Freestanding Derivatives Freestanding derivatives are carried on the Company’s balance sheet either as assets within other invested assets or as liabilities within other liabilities at estimated fair value. The Company does not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement. If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are reported in net derivative gains (losses). Hedge Accounting The Company primarily designates derivatives as a hedge of a forecasted transaction or a variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”). When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in fair value are recorded in OCI and subsequently reclassified into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item. To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. In its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness and the method that will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item; (ii) the derivative expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; or (iv) the derivative is de-designated as a hedging instrument. When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the cash flows of a hedged item, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized in net derivative gains (losses). Provided the hedged forecasted transaction is still probable of occurrence, the changes in estimated fair value of derivatives recorded in OCI related to discontinued cash flow hedges are released into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item. In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value on the balance sheet, with changes in its estimated fair value recognized in the current period as net derivative gains (losses). Embedded Derivatives The Company sells variable and indexed-linked annuities and is a party to certain reinsurance agreements that have embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated and measured at fair value, separately from the host contract. The Company bifurcates embedded derivatives when a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument, the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract and the underlying contract is not already measured at estimated fair value with changes recorded in earnings. See “— Variable Annuity Guarantees”, “Index-Linked Annuities” and “— Reinsurance” for additional information on the accounting policies for embedded derivatives bifurcated from variable annuity and reinsurance host contracts. Fair Value Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In most cases, the exit price and the transaction (or entry) price will be the same at initial recognition. In determining the estimated fair value of the Company’s investments, fair values are based on unadjusted quoted prices for identical investments in active markets that are readily and regularly obtainable. When such quoted prices are not available, fair values are based on quoted prices in markets that are not active, quoted prices for similar but not identical investments, or other observable inputs. If these inputs are not available, or observable inputs are not determinable, unobservable inputs and/or adjustments to observable inputs requiring management judgment are used to determine the estimated fair value of investments. Separate Accounts Separate accounts underlying the Company’s variable life and annuity contracts are reported at fair value. Assets in separate accounts supporting the contract liabilities are legally insulated from the Company’s general account liabilities. Investments in these separate accounts are directed by the contract holder and all investment performance, net of contract fees and assessments, is passed through to the contract holder. Investment performance and the corresponding amounts credited to contract holders of such separate accounts are offset within the same line on the statements of operations. Separate accounts that do not pass all investment performance to the contract holder, including those underlying certain index-linked annuities, are combined on a line-by-line basis with the Company’s general account assets, liabilities, revenues and expenses. The accounting for investments in these separate accounts is consistent with the methodologies described herein for similar financial instruments held within the general account. The Company receives asset-based distribution and service fees from mutual funds available to the variable life and annuity contract holders as investment options in its separate accounts. These fees are recognized in the period in which the related services are performed and are included in other revenues in the statement of operations. Income Tax Income taxes as presented herein attribute current and deferred income taxes of MetLife, Inc., for periods up until the Separation, to Brighthouse Financial in a manner that is systematic, rational and consistent with the asset and liability method prescribed by the Financial Accounting Standards Board (“FASB”) guidance Accounting Standards Codification 740 - Income Taxes (“ASC 740”). The Company’s income tax provision was prepared following the modified separate return method. The modified separate return method applies ASC 740 to the stand-alone financial statements of each member of the consolidated group as if the group member were a separate taxpayer and a stand-alone enterprise, after providing benefits for losses. The Company’s accounting for income taxes represents management’s best estimate of various events and transactions. Deferred tax assets and liabilities resulting from temporary differences between the financial reporting and tax bases of assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse. The realization of deferred tax assets depends upon the existence of sufficient taxable income within the carryback or carryforward periods under the tax law in the applicable tax jurisdiction. Valuation allowances are established when management determines, based on available information, that it is more likely than not that deferred income tax assets will not be realized. Significant judgment is required in determining whether valuation allowances should be established, as well as the amount of such allowances. When making such determination, the Company considers many factors, including the jurisdiction in which the deferred tax asset was generated, the length of time that carryforward can be utilized in the various taxing jurisdictions, future taxable income exclusive of reversing temporary differences and carryforwards, future reversals of existing taxable temporary differences, taxable income in prior carryback years, tax planning strategies and the nature, frequency, and amount of cumulative financial reporting income and losses in recent years. The Company may be required to change its provision for income taxes when estimates used in determining valuation allowances on deferred tax assets significantly change or when receipt of new information indicates the need for adjustment in valuation allowances. Additionally, the effect of changes in tax laws, tax regulations, or interpretations of such laws or regulations, is recognized in net income tax expense (benefit) in the period of change. The Company determines whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded on the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. Unrecognized tax benefits due to tax uncertainties that do not meet the threshold are included within other liabilities and are charged to earnings in the period that such determination is made. The Company classifies interest recognized as interest expense and penalties recognized as a component of income tax expense. On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (“the Tax Act”) into law. The Tax Act reduced the corporate tax rate to 21%, limited deductibility of interest expense, increased capitalization amounts for deferred acquisition costs, eliminated the corporate alternative minimum tax, provided for determining reserve deductions as 92.81% of statutory reserves, and reduced the dividend received deduction. Most of the changes in the Tax Act were effective as of January 1, 2018. In December 2017, the U.S. Securities and Exchange Commission issued Staff Accounting Bulletin (“SAB”) 118, addressing the application of GAAP in situations when a registrant does not have necessary information available to complete the accounting for certain income tax effects of the Tax Act. SAB 118 provides guidance for registrants under three scenarios: (1) the measurement of certain income tax effects is complete, (2) the measurement of certain income tax effects can be reasonably estimated, and (3) the measurement of certain income tax effects cannot be reasonably estimated. SAB 118 provides that the measurement period is complete when a company’s accounting is complete. The measurement period cannot extend beyond one year from the enactment date. The Company completed its accounting for the tax effects of the Tax Act as of December 31, 2018. The corporate rate reduction also left certain tax effects, which were originally recorded using the previous corporate rate, stranded in accumulated other comprehensive income (“AOCI”). The Company adopted new accounting guidance as of December 31, 2017 that allowed the Company to reclassify the stranded tax effects from AOCI into retained earnings. The Company elected to reclassify amounts based on the difference between the previously enacted statutory tax rate and the newly enacted rate as applied on an aggregate basis. See Note 11 for more information. Litigation Contingencies The Company is a party to a number of legal actions and may be involved in a number of regulatory investigations. Given the inherent unpredictability of these matters, it is difficult to estimate the impact, on the Company’s financial position. Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Legal costs are recognized as incurred. On a quarterly and annual basis, the Company reviews relevant information with respect to liabilities for litigation, regulatory investigations and litigation-related contingencies to be reflected on the Company’s financial statements. Other Accounting Policies Cash and Cash Equivalents The Company considers all highly liquid securities and other investments purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. Cash equivalents are stated at amortized cost, which approximates estimated fair value. Employee Benefit Plans Through December 31, 2016, Metropolitan Life Insurance Company (“MLIC”), a former affiliate, provided and the Company contributed to defined benefit pension and postemployment plans for its employees and retirees. MLIC also provides and the Company contributes to a postretirement medical and life insurance benefit plan for certain retired employees. Within its statement of operations, the Company has included expense associated with its participants in these plans. Adoption of New Accounting Pronouncements Changes to GAAP are established by the FASB in the form of accounting standards updates (“ASU”) to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the Company’s financial statements. The following table provides a description of new ASUs issued by the FASB and the expected impact of the adoption on the Company’s financial statements. Except as noted below, the ASUs adopted by the Company during 2018 did not have a material impact on its financial statements. ASUs adopted as of December 31, 2018 are summarized in the table below.
ASUs issued but not yet adopted as of December 31, 2018 are summarized in the table below.
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | 2. Segment Information The Company is organized into two segments: Annuities and Life. In addition, the Company reports certain of its results of operations in Corporate & Other. Annuities The Annuities segment consists of a variety of variable, fixed, index-linked and income annuities designed to address contract holders’ needs for protected wealth accumulation on a tax-deferred basis, wealth transfer and income security. Life The Life segment consists of insurance products and services, including term, whole and universal life products designed to address policyholders’ needs for financial security and protected wealth transfer, which may be provided on a tax-advantaged basis. Corporate & Other Corporate & Other contains the excess capital not allocated to the segments and expenses associated with certain legal proceedings and income tax audit issues. Corporate & Other also includes the elimination of intersegment amounts and a portion of MetLife’s former U.S. insurance business sold direct to consumers, which is no longer being offered for new sales. Financial Measures and Segment Accounting Policies Adjusted earnings is a financial measure used by management to evaluate performance, allocate resources and facilitate comparisons to industry results. Consistent with GAAP guidance for segment reporting, adjusted earnings is also used to measure segment performance. The Company believes the presentation of adjusted earnings, as the Company measures it for management purposes, enhances the understanding of its performance by highlighting the results of operations and the underlying profitability drivers of the business. Adjusted earnings should not be viewed as a substitute for net income (loss). Adjusted earnings, which may be positive or negative, focuses on the Company’s primary businesses principally by excluding (i) the impact of market volatility, which could distort trends, and (ii) businesses that have been or will be sold or exited by the Company, referred to as divested businesses. The following are significant items excluded from total revenues, net of income tax, in calculating adjusted earnings:
The following are significant items excluded from total expenses, net of income tax, in calculating adjusted earnings:
The tax impact of the adjustments mentioned above is calculated net of the statutory tax rate, which could differ from the Company’s effective tax rate. Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate & Other, for the years ended December 31, 2018, 2017 and 2016 and at December 31, 2018 and 2017. The segment accounting policies are the same as those used to prepare the Company’s financial statements, except for the adjustments to calculate adjusted earnings described above. In addition, segment accounting policies include the methods of capital allocation described below. Beginning in the first quarter of 2018, the Company changed the methodology for how capital is allocated to segments and, in some cases, products (the “Portfolio Realignment”). Segment investment and capitalization targets are now based on statutory oriented risk principles and metrics. Segment invested assets backing liabilities are based on net statutory liabilities plus excess capital. For the variable annuity business, the excess capital held is based on the target statutory total asset requirement consistent with the Company’s variable annuity risk management strategy. For insurance businesses other than variable annuities, excess capital held is based on a percentage of required statutory risk-based capital (“RBC”). Assets in excess of those allocated to the segments, if any, are held in Corporate & Other. Segment net investment income reflects the performance of each segment’s respective invested assets. Previously, invested assets held in the segments were based on net GAAP liabilities. Excess capital was retained in Corporate & Other and allocated to segments based on an internally developed statistics based capital model intended to capture the material risks to which the Company was exposed (referred to as “allocated equity”). Surplus assets in excess of the combined allocations to the segments were held in Corporate & Other with net investment income being credited back to the segments at a predetermined rate. Any excess or shortfall in net investment income from surplus assets was recognized in Corporate & Other. The Portfolio Realignment had no effect on the Company’s net income (loss) or adjusted earnings, but it did impact segment results for the year ended December 31, 2018. It was not practicable to determine the impact of the Portfolio Realignment to adjusted earnings in prior periods; however, the Company estimates that pre-tax adjusted earnings in the Life segment for the year ended December 31, 2018 increased between $8 million and $20 million as a result of the change. Impacts to the Annuities segment and Corporate & Other would not have been significantly different under the previous allocation method. In addition, the total assets recognized in the segments changed as a result of the Portfolio Realignment. Total assets (on a book value basis) in the Annuities and Life segments increased approximately $640 million and approximately $875 million, respectively, under the new allocation method. Corporate & Other experienced decreases in total assets of approximately $1.5 billion as a result of the Portfolio Realignment.
The following table presents total revenues with respect to the Company’s segments, as well as Corporate & Other:
The following table presents total premiums, universal life and investment-type product policy fees and other revenues by major product groups of the Company’s segments, as well as Corporate & Other:
All of the Company’s premiums, universal life and investment-type product policy fees and other revenues originated in the U.S. Revenues derived from any individual customer did not exceed 10% of premiums, universal life and investment-type product policy fees and other revenues for the years ended December 31, 2018, 2017 and 2016. |
Insurance |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance | 3. Insurance Insurance Liabilities Insurance liabilities, including affiliated insurance liabilities on reinsurance ceded, are comprised of future policy benefits, policyholder account balances and other policy-related balances. Information regarding insurance liabilities by segment, as well as Corporate & Other, was as follows at:
See Note 5 for discussion of affiliated reinsurance liabilities included in the table above. For non-participating term and whole-life insurance, assumptions for mortality and persistency are based upon the Company’s experience. Interest rate assumptions for the aggregate future policy benefit liabilities range from 3% to 5%. The liability for single premium immediate annuities is based on the present value of expected future payments using the Company’s experience for mortality assumptions, with interest rate assumptions used in establishing such liabilities ranging from 3% to 6%. Policyholder account balances liabilities for deferred annuities and universal life insurance have interest credited rates ranging from 1% to 7%. Guarantees The Company issues variable annuity contracts with guaranteed minimum benefits. GMABs, the non-life-contingent portion of GMWBs and the portion of certain GMIBs that do not require annuitization are accounted for as embedded derivatives in policyholder account balances and are further discussed in Note 7. The assumptions for GMDBs and GMIBs included in future policyholder benefits include projected separate account rates of return, general account investment returns, interest crediting rates, mortality, in-force or persistency, benefit elections and withdrawals, and expenses to administer business. GMIBs also include an assumption for the percentage of the potential annuitizations that may be elected by the contract holder, while GMWBs include assumptions for withdrawals. See Note 1 for more information on GMDBs and GMIBs accounted for as insurance liabilities. Information regarding the liabilities for guarantees (excluding policyholder account balances and embedded derivatives) relating to variable annuity contracts was as follows:
Information regarding the Company’s guarantee exposure was as follows at:
______________
Account balances of contracts with guarantees were invested in separate account asset classes as follows at:
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Deferred Policy Acquisition Costs, Value of Business Acquired and Other Policy-Related Intangibles |
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Deferred Policy Acquisition Costs and Present Value of Future Insurance Profits, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Policy Acquisition Costs, Value of Business Acquired and Other Policy-Related Intangibles | 4. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles See Note 1 for a description of capitalized acquisition costs. Information regarding DAC and VOBA was as follows:
Information regarding total DAC and VOBA by segment, as well as Corporate & Other, was as follows at:
Information regarding other intangibles was as follows:
The estimated future amortization expense to be reported in other expenses for the next five years is as follows:
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Reinsurance |
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Reinsurance Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance [Text Block] | 5. Reinsurance The Company enters into reinsurance agreements primarily as a purchaser of reinsurance for its various insurance products. The Company participates in reinsurance activities in order to limit losses, minimize exposure to significant risks and provide additional capacity for future growth. Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risks. The Company periodically reviews actual and anticipated experience compared to the aforementioned assumptions used to establish assets and liabilities relating to ceded and assumed reinsurance and evaluates the financial strength of counterparties to its reinsurance agreements using criteria similar to that evaluated in the security impairment process discussed in Note 6. Annuities For annuities, the Company currently reinsures to its parent Brighthouse Life Insurance Company and formerly reinsured to MLIC, 100% of certain variable annuity risks or 100% of the living and death benefit guarantees issued in connection with variable annuities. Under the benefit guarantees reinsurance agreements, the Company pays a reinsurance premium generally based on fees associated with the guarantees collected from policyholders, and receives reimbursement for benefits paid or accrued in excess of account values, subject to certain limitations. Life For its individual life insurance products, the Company has historically reinsured the mortality risk primarily on an excess of retention basis or on a quota share basis. The Company currently retains up to $100,000 per life and reinsures 100% of amounts in excess of the amount the Company retains. In addition to reinsuring mortality risk as described above, the Company reinsures other risks, as well as specific coverages. Placement of reinsurance is done primarily on an automatic basis and also on a facultative basis for risks with specified characteristics. The Company evaluates its reinsurance programs routinely and may increase or decrease its retention at any time. Catastrophe Coverage The Company has exposure to catastrophes, which could contribute to significant fluctuations in the Company’s results of operations. The Company uses excess of retention and quota share reinsurance agreements to provide greater diversification of risk and minimize exposure to larger risks. Reinsurance Recoverables The Company reinsures its business through a diversified group of reinsurers. The Company analyzes recent trends in arbitration and litigation outcomes in disputes, if any, with its reinsurers. The Company monitors ratings and evaluates the financial strength of its reinsurers by analyzing their financial statements. In addition, the reinsurance recoverable balance due from each reinsurer is evaluated as part of the overall monitoring process. Recoverability of reinsurance recoverable balances is evaluated based on these analyses. The Company generally secures large reinsurance recoverable balances with various forms of collateral, including secured trusts and irrevocable letters of credit. These reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance, which at both December 31, 2018 and 2017, were not significant. The Company has secured certain reinsurance recoverable balances with irrevocable letters of credit. The Company had $26.4 million and $17.0 million of unsecured reinsurance recoverable balances with third-parties at December 31, 2018 and 2017, respectively. At December 31, 2018, the Company had $26.5 million of net ceded reinsurance recoverables with third-parties. Of this total, $23.5 million, or 89%, were with the Company’s five largest ceded reinsurers, all of which were unsecured. At December 31, 2017, the Company had $17.1 million of net ceded reinsurance recoverables with third-parties. Of this total, $15.0 million, or 88%, were with the Company’s five largest ceded reinsurers, all of which were unsecured. The amounts on the statements of operations include the impact of reinsurance. Information regarding the significant effects of reinsurance was as follows:
The amounts on the balance sheets include the impact of reinsurance. Information regarding the significant effects of reinsurance was as follows at:
Reinsurance agreements that do not expose the Company to a reasonable possibility of a significant loss from insurance risk are recorded using the deposit method of accounting. The deposit assets on reinsurance were $17.7 million and $19.6 million at December 31, 2018 and 2017. There were no deposit liabilities on reinsurance at both December 31, 2018 and 2017. Related Party Reinsurance Transactions The Company has reinsurance agreements with its parent, Brighthouse Life Insurance Company, and certain MetLife, Inc. subsidiaries, including MLIC and MetLife Reinsurance Company of Vermont (“MRV”), all of which were related parties until the completion of the MetLife Divestiture. Information regarding the significant effects of related party reinsurance included on the statements of operations was as follows:
Information regarding the significant effects of ceded related party reinsurance included on the balance sheets was as follows at:
The Company cedes risks to Brighthouse Life Insurance Company related to guaranteed minimum benefit guarantees written directly by the Company. These ceded reinsurance agreements contain embedded derivatives and changes in their estimated fair value are included within net derivative gains (losses). The embedded derivatives associated with the cessions are included within premiums, reinsurance and other receivables and were $298.1 million and $307.7 million at December 31, 2018 and 2017, respectively. Net derivative gains (losses) associated with the embedded derivatives were ($11.5) million, ($73.6) million and $24.2 million for the years ended December 31, 2018, 2017 and 2016, respectively. The Company previously ceded 100% of certain variable annuities including guaranteed minimum benefit on a modified coinsurance basis to MLIC. In January 2017, the Company executed a novation and reassigned this reinsurance agreement with Brighthouse Life Insurance Company, as reinsurer. These transactions were treated as a termination of the existing reinsurance agreement with recognition of a loss and a new reinsurance agreement with no recognition of a gain or loss. These transactions resulted in an increase in other liabilities of $129.8 million. The Company recognized a loss of $84.4 million, net of income tax, as a result of these transactions. Certain contractual features of this agreement qualify as embedded derivatives and changes in their estimated fair value are included within net derivative gains (losses). Net derivative gains (losses) associated with the embedded derivatives were $0, ($125.1) million and $46.2 million for the years ended December 31, 2018, 2017 and 2016, respectively. In May 2017, the Company recaptured from MLIC risks related to multiple life products under yearly renewable term and coinsurance agreements. This recapture resulted in an increase in cash and cash equivalents of $25.6 million and a decrease in premiums, reinsurance and other receivables of $22.4 million. The Company recognized a gain of $2.1 million, net of income tax, as a result of this reinsurance termination. Concurrent with the recapture from MLIC, the Company executed a reinsurance agreement with Brighthouse Life Insurance Company, as reinsurer to cede on a yearly renewable term basis risks related to multiple life products. The transaction resulted in an increase in premiums, reinsurance and other receivables of $24.7 million, an increase in other liabilities of $22.7 million, a decrease in premiums of $22.7 million and a reduction in policyholder benefits and claims of $24.7 million. The Company recognized a gain of $1.3 million, net of income tax, as a result of this transaction. In December 2016, the Company recaptured level premium term business previously reinsured to MRV. This recapture resulted in a decrease in cash and cash equivalents of $27.2 million, a decrease in premiums, reinsurance and other receivables of $93.7 million and a decrease in other liabilities of $158.1 million. The Company recognized a gain of $24.2 million, net of income tax, as a result of this recapture. In November 2016, the Company recaptured certain single premium deferred annuity contracts previously reinsured to MLIC. This recapture resulted in an increase in investments and cash and cash equivalents of $933.4 million and an increase in DAC of $22.9 million, offset by a decrease in premiums, reinsurance and other receivables of $922.6 million. The Company recognized a gain of $21.9 million, net of income tax, as a result of this recapture. The Company has secured certain reinsurance recoverable balances with various forms of collateral, including secured trusts and irrevocable letters of credit. The Company had $0 and $92.6 million of unsecured related party reinsurance recoverable balances at December 31, 2018 and 2017, respectively. Related party reinsurance agreements that do not expose the Company to a reasonable possibility of a significant loss from insurance risk are recorded using the deposit method of accounting. The deposit assets on related party reinsurance were $4.1 million and $19.6 million at December 31, 2018 and 2017, respectively. There were no deposit liabilities on related party reinsurance at both December 31, 2018 and 2017. |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | 6. Investments See Note 8 for information about the fair value hierarchy for investments and the related valuation methodologies. Fixed Maturity Securities AFS Fixed Maturity Securities AFS by Sector The following table presents the fixed maturity securities AFS by sector at:
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The Company did not hold non-income producing fixed maturity securities at both December 31, 2018 and 2017. Maturities of Fixed Maturity Securities The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at December 31, 2018:
Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been presented in the year of final contractual maturity. Structured Securities are shown separately, as they are not due at a single maturity. Continuous Gross Unrealized Losses for Fixed Maturity Securities AFS by Sector The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities AFS in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position at:
Evaluation of AFS Securities for OTTI and Evaluating Temporarily Impaired AFS Securities Evaluation and Measurement Methodologies Management considers a wide range of factors about the security issuer and uses its best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Inherent in management’s evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used in the impairment evaluation process include, but are not limited to: (i) the length of time and the extent to which the estimated fair value has been below amortized cost; (ii) the potential for impairments when the issuer is experiencing significant financial difficulties; (iii) the potential for impairments in an entire industry sector or sub-sector; (iv) the potential for impairments in certain economically depressed geographic locations; (v) the potential for impairments where the issuer, series of issuers or industry has suffered a catastrophic loss or has exhausted natural resources; (vi) whether the Company has the intent to sell or will more likely than not be required to sell a particular security before the decline in estimated fair value below amortized cost recovers; (vii) with respect to Structured Securities, changes in forecasted cash flows after considering the quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying assets backing a particular security, and the payment priority within the tranche structure of the security; (viii) the potential for impairments due to weakening of foreign currencies on non-functional currency denominated fixed maturity securities that are near maturity; and (ix) other subjective factors, including concentrations and information obtained from regulators and rating agencies. For securities in an unrealized loss position, an OTTI is recognized in earnings when it is anticipated that the amortized cost will not be recovered. When either: (i) the Company has the intent to sell the security; or (ii) it is more likely than not that the Company will be required to sell the security before recovery, the OTTI recognized in earnings is the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions exists, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected is recognized as an OTTI in earnings (“credit loss”). If the estimated fair value is less than the present value of projected future cash flows expected to be collected, this portion of OTTI related to other-than-credit factors (“noncredit loss”) is recorded in OCI. Current Period Evaluation Based on the Company’s current evaluation of its AFS securities in an unrealized loss position in accordance with its impairment policy, and the Company’s current intentions and assessments (as applicable to the type of security) about holding, selling and any requirements to sell these securities, the Company concluded that these securities were not other-than-temporarily impaired at December 31, 2018. Gross unrealized losses on fixed maturity securities increased $49.5 million during the year ended December 31, 2018 to $64.2 million. The increase in gross unrealized losses for the year ended December 31, 2018, was primarily attributable to increasing longer-term interest rates and widening credit spreads. At December 31, 2018, $1.0 million of the total $64.2 million of gross unrealized losses was from one fixed maturity security with an unrealized loss position of 20% or more of amortized cost for six months or greater. Mortgage Loans Mortgage Loans by Portfolio Segment Mortgage loans are summarized as follows at:
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Information on commercial and agricultural mortgage loans is presented in the tables below. Valuation Allowance Methodology Mortgage loans are considered to be impaired when it is probable that, based upon current information and events, the Company will be unable to collect all amounts due under the loan agreement. Specific valuation allowances are established using the same methodology for both portfolio segments as the excess carrying value of a loan over either (i) the present value of expected future cash flows discounted at the loan’s original effective interest rate, (ii) the estimated fair value of the loan’s underlying collateral if the loan is in the process of foreclosure or otherwise collateral dependent, or (iii) the loan’s observable market price. A common evaluation framework is used for establishing non-specific valuation allowances for both loan portfolio segments; however, a separate non-specific valuation allowance is calculated and maintained for each loan portfolio segment that is based on inputs unique to each loan portfolio segment. Non-specific valuation allowances are established for pools of loans with similar risk characteristics where a property-specific or market-specific risk has not been identified, but for which the Company expects to incur a credit loss. These evaluations are based upon several loan portfolio segment-specific factors, including the Company’s experience for loan losses, defaults and loss severity, and loss expectations for loans with similar risk characteristics. These evaluations are revised as conditions change and new information becomes available. Credit Quality of Commercial Mortgage Loans The credit quality of commercial mortgage loans was as follows at:
Credit Quality of Agricultural Mortgage Loans The credit quality of agricultural mortgage loans was as follows at:
Past Due, Nonaccrual and Modified Mortgage Loans The Company has a high quality, well performing mortgage loan portfolio, with all mortgage loans classified as performing at both December 31, 2018 and 2017. The Company defines delinquency consistent with industry practice, when mortgage loans are past due as follows: commercial mortgage loans – 60 days and agricultural mortgage loans – 90 days. The Company had no commercial or agricultural mortgage loans past due and no commercial or agricultural mortgage loans in nonaccrual status at both December 31, 2018 and 2017. During the years ended December 31, 2018 and 2017, the Company did not have any mortgage loans modified in a troubled debt restructuring. Cash Equivalents The carrying value of cash equivalents, which includes securities and other investments with an original or remaining maturity of three months or less at the time of purchase, was $89.9 million and $60.7 million at December 31, 2018 and 2017, respectively. Net Unrealized Investment Gains (Losses) Unrealized investment gains (losses) on fixed maturity securities AFS and the effect on DAC, DSI and future policy benefits, that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in AOCI. The components of net unrealized investment gains (losses), included in AOCI, were as follows:
The changes in net unrealized investment gains (losses) were as follows:
Concentrations of Credit Risk There were no investments in any counterparty that were greater than 10% of the Company’s equity, other than the U.S. government and its agencies, at both December 31, 2018 and 2017. Invested Assets on Deposit and Pledged as Collateral Invested assets on deposit and pledged as collateral are presented below at estimated fair value at:
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Variable Interest Entities The Company has invested in legal entities that are variable interest entities (“VIEs”). VIEs are consolidated when the investor is the primary beneficiary. A primary beneficiary is the variable interest holder in a VIE with both the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and the obligation to absorb losses, or the right to receive benefits that could potentially be significant to the VIE. There were no material VIEs for which the Company has concluded that it is the primary beneficiary at December 31, 2018 or 2017. The Company’s investments in unconsolidated VIEs are described below. Fixed Maturity Securities The Company invests in U.S. corporate bonds, foreign corporate bonds, and Structured Securities, which include RMBS, ABS and CMBS, issued by VIEs. The Company is not obligated to provide any financial or other support to these VIEs, other than the original investment. The Company’s involvement with these entities is limited to that of a passive investor. The Company has no unilateral right to appoint or remove the service, special servicer, or investment manager, which are generally viewed as having the power to direct the activities that most significantly impact the economic performance of the VIE, nor does the Company function in any of these roles. The Company does not have the obligation to absorb losses or the right to receive benefits from the entity that could potentially be significant to the entity; as a result, the Company has determined it is not the primary beneficiary, or consolidator, of the VIE. The Company’s maximum exposure to loss on these fixed maturity securities is limited to the amortized cost of these investments. See “— Fixed Maturity Securities AFS” for information on these securities.
Net Investment Income The components of net investment income were as follows:
See “— Related Party Investment Transactions” for discussion of related party investment expenses. Net Investment Gains (Losses) Components of Net Investment Gains (Losses) The components of net investment gains (losses) were as follows:
Gains (losses) from foreign currency transactions included within net investment gains (losses) were ($9) thousand, $467 thousand and ($54) thousand for the years ended December 31, 2018, 2017 and 2016, respectively. Sales or Disposals and Impairments of Fixed Maturity Securities Investment gains and losses on sales of securities are determined on a specific identification basis. Proceeds from sales or disposals of fixed maturity securities and the components of fixed maturity securities net investment gains (losses) were as shown in the table below.
Related Party Investment Transactions The Company previously transferred invested assets, primarily consisting of fixed maturity securities, to former affiliates. During the years ended December 31, 2018 and 2017, the Company did not transfer any invested assets to former affiliates or receive transfers of invested assets from former affiliates. During the year ended December 31, 2016, the Company transferred invested assets to affiliates with an estimate fair value of $1.5 million and amortized cost of $1.4 million. The net investment gains (losses) recognized on these transfers was $64 thousand. In November 2016, the Company received a transfer of investments and cash and cash equivalents totaling $933.4 million for the recapture of risks related to certain single premium deferred annuity contracts previously reinsured to MLIC, a former affiliate. See Note 5 for additional information related to this transfer. The Company receives investment administrative services from MetLife Investment Advisors, LLC, which was considered a related party investment manager until the completion of the MetLife Divestiture. The related investment administrative service charges were $2.3 million, $2.8 million and $1.9 million for the years ended December 31, 2018, 2017 and 2016, respectively. All of the charges reported as related party activity in 2018 occurred prior to the MetLife Divestiture. See Note 1 regarding the MetLife Divestiture. |
Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | 7. Derivatives Accounting for Derivatives See Note 1 for a description of the Company’s accounting policies for derivatives and Note 8 for information about the fair value hierarchy for derivatives. Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s OTC derivatives are bilateral contracts between two counterparties (“OTC-bilateral”). The types of derivatives the Company uses include swaps and option contracts. Interest Rate Derivatives The Company purchases interest rate caps to protect against rises in long-term interest rates. The Company utilizes interest rate caps in nonqualifying hedging relationships. Foreign Currency Exchange Rate Derivatives The Company uses foreign currency swaps to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets denominated in foreign currencies. In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon notional amount. The notional amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company utilizes foreign currency swaps in cash flow and nonqualifying hedging relationships. Equity Derivatives The Company uses equity index call options to reduce exposure to rising equity markets associated with select structured annuity products. The Company utilizes equity index options in nonqualifying hedging relationships. Primary Risks Managed by Derivatives The following table presents the primary underlying risk exposure, gross notional amount, and estimated fair value of the Company’s derivatives, excluding embedded derivatives, held at:
The Company recognized net investment income from settlement payments related to qualifying hedges of $896 thousand, $604 thousand and $581 thousand for the years ended December 31, 2018, 2017 and 2016, respectively. The Company recognized net derivative gains (losses) from settlement payments related to nonqualifying hedges of $374 thousand, $326 thousand and $279 thousand for the years ended December 31, 2018, 2017 and 2016, respectively. The following tables present the amount and location of gains (losses) recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses):
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In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions were no longer probable of occurring. Because certain of the forecasted transactions also were not probable of occurring within two months of the anticipated date, the Company reclassified amounts from AOCI into net derivative gains (losses). At both December 31, 2018 and 2017, there were no amounts reclassified into net derivative gains (losses) related to such discontinued cash flow hedges. For the year ended December 31, 2016, $49 thousand was reclassified into net derivative gains (losses) related to such discontinued cash flow hedges. There were no hedged forecasted transactions, other than the receipt of payment of variable interest payments, for both the years ended December 31, 2018 and 2017. At December 31, 2018 and 2017, the balance in AOCI associated with foreign currency swaps designated and qualifying as cash flow hedges was $5.8 million and $471 thousand, respectively. Credit Risk The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current credit exposure of the Company’s derivatives is limited to the net positive estimated fair value of derivatives at the reporting date after taking into consideration the existence of master netting or similar agreements and any collateral received pursuant to such agreements. The Company manages its credit risk related to derivatives by entering into transactions with creditworthy counterparties and establishing and monitoring exposure limits. The Company’s OTC-bilateral derivative transactions are generally governed by International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties in the event of early termination of a transaction, which includes, but is not limited to, events of default and bankruptcy. In the event of an early termination, the Company is permitted to set off receivables from the counterparty against payables to the same counterparty arising out of all included transactions. Substantially all of the Company’s ISDA Master Agreements also include Credit Support Annex provisions which require both the pledging and accepting of collateral in connection with its OTC-bilateral derivatives. See Note 8 for a description of the impact of credit risk on the valuation of derivatives. The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at:
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The Company’s collateral arrangements for its OTC-bilateral derivatives generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the collateral amount owed by that counterparty reaches a minimum transfer amount. In addition, the Company’s netting agreements for derivatives contain provisions that require both the Company and the counterparty to maintain a specific investment grade credit rating from each of Moody’s Investors Service and Standard & Poor’s Global Ratings 500 Index. If a party’s financial strength or credit ratings were to fall below that specific investment grade credit rating, that party would be in violation of these provisions, and the other party to the derivatives could terminate the transactions and demand immediate settlement and payment based on such party’s reasonable valuation of the derivatives. At December 31, 2018 and 2017, the Company held OTC-bilateral derivatives that were in a net liability position after considering the effect of netting agreements with an estimated fair value of $46 thousand and $0, respectively. At December 31, 2018 and 2017, the Company provided collateral with an estimated fair value of $158 thousand and $0, respectively. The Company’s collateral arrangements require both parties to be fully collateralized, as such, the Company would not be required to post additional collateral as a result of a downgrade in its financial strength rating. Embedded Derivatives The Company issues certain insurance products that contain embedded derivatives that are required to be separated from their host contracts and accounted for as freestanding derivatives. These host contracts principally include: variable annuities with guaranteed minimum benefits, including GMWBs, GMABs and certain GMIBs; related party ceded reinsurance of guaranteed minimum benefits related to GMWBs, GMABs and certain GMIBs; and fixed annuities with equity-indexed returns. The following table presents the estimated fair value and balance sheet location of the Company’s embedded derivatives that have been separated from their host contracts at:
The following table presents changes in estimated fair value related to embedded derivatives:
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | 8. Fair Value Recurring Fair Value Measurements The assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the fair value hierarchy are presented below at:
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Valuation Controls and Procedures The Company monitors and provides oversight of valuation controls and policies for securities, mortgage loans and derivatives, which are primarily executed by its valuation service providers. The valuation methodologies used to determine fair values prioritize the use of observable market prices and market-based parameters and determines that judgmental valuation adjustments, when applied, are based upon established policies and are applied consistently over time. The valuation methodologies for securities, mortgage loans and derivatives are reviewed on an ongoing basis and revised when necessary, based on changing market conditions. In addition, the Chief Accounting Officer periodically reports to the Audit Committee of Brighthouse Financial’s Board of Directors regarding compliance with fair value accounting standards. The fair value of financial assets and financial liabilities is based on quoted market prices, where available. The Company assesses whether prices received represent a reasonable estimate of fair value through controls designed to ensure valuations represent an exit price. Valuation service providers perform several controls, including certain monthly controls, which include, but are not limited to, analysis of portfolio returns to corresponding benchmark returns, comparing a sample of executed prices of securities sold to the fair value estimates, reviewing the bid/ask spreads to assess activity, comparing prices from multiple independent pricing services and ongoing due diligence to confirm that independent pricing services use market-based parameters. The process includes a determination of the observability of inputs used in estimated fair values received from independent pricing services or brokers by assessing whether these inputs can be corroborated by observable market data. Independent non-binding broker quotes, also referred to herein as “consensus pricing”, are used for non-significant portion of the portfolio. Prices received from independent brokers are assessed to determine if they represent a reasonable estimate of fair value by considering such pricing relative to the current market dynamics and current pricing for similar financial instruments. Valuation service providers also apply a formal process to challenge any prices received from independent pricing services that are not considered representative of estimated fair value. If prices received from independent pricing services are not considered reflective of market activity or representative of estimated fair value, independent non-binding broker quotations are obtained. If obtaining an independent non-binding broker quotation is unsuccessful, valuation service providers will use the last available price. The Company reviews outputs of the valuation service providers’ controls and performs additional controls, including certain monthly controls, which include but are not limited to, performing balance sheet analytics to assess reasonableness of period to period pricing changes, including any price adjustments. Price adjustments are applied if prices or quotes received from independent pricing services or brokers are not considered reflective of market activity or representative of estimated fair value. The Company did not have significant price adjustments during the year ended December 31, 2018. Determination of Fair Value Fixed maturity securities The fair values for actively traded marketable bonds, primarily U.S. government and agency securities, are determined using the quoted market prices and are classified as Level 1 assets. For fixed maturity securities classified as Level 2 assets, fair values are determined using either a market or income approach and are valued based on a variety of observable inputs as described below. U.S. corporate and foreign corporate securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, benchmark yields, spreads off benchmark yields, new issuances, issuer rating, trades of identical or comparable securities, or duration. Privately-placed securities are valued using the additional key inputs: market yield curve, call provisions, observable prices and spreads for similar public or private securities that incorporate the credit quality and industry sector of the issuer, and delta spread adjustments to reflect specific credit-related issues. U.S. government and agency, state and political subdivision and foreign government securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, benchmark U.S. Treasury yield or other yields, spread off the U.S. Treasury yield curve for the identical security, issuer ratings and issuer spreads, broker dealer quotes, and comparable securities that are actively traded. Structured Securities: Fair value is determined using third-party commercial pricing services, with the primary inputs being quoted prices in markets that are not active, spreads for actively traded securities, spreads off benchmark yields, expected prepayment speeds and volumes, current and forecasted loss severity, ratings, geographic region, weighted average coupon and weighted average maturity, average delinquency rates and debt-service coverage ratios. Other issuance-specific information is also used, including, but not limited to; collateral type, structure of the security, vintage of the loans, payment terms of the underlying asset, payment priority within tranche, and deal performance. Derivatives The fair values for OTC-bilateral derivatives and OTC-cleared derivatives classified as Level 2 assets or liabilities, fair values are determined using the income approach. Valuations of non-option-based derivatives utilize present value techniques, whereas valuations of option-based derivatives utilize option pricing models which are based on market standard valuation methodologies and a variety of observable inputs. The significant inputs to the pricing models for most OTC-bilateral derivatives are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. Certain OTC-bilateral derivatives may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and management believes they are consistent with what other market participants would use when pricing such instruments. Most inputs for OTC-bilateral derivatives are mid-market inputs but, in certain cases, liquidity adjustments are made when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company’s derivatives and could materially affect net income. The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all OTC-bilateral derivatives, and any potential credit adjustment is based on the net exposure by counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values its OTC-bilateral derivatives using standard swap curves which may include a spread to the risk-free rate, depending upon specific collateral arrangements. This credit spread is appropriate for those parties that execute trades at pricing levels consistent with similar collateral arrangements. As the Company and its significant derivative counterparties generally execute trades at such pricing levels and hold sufficient collateral, additional credit risk adjustments are not currently required in the valuation process. The Company’s ability to consistently execute at such pricing levels is in part due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. An evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period. Embedded Derivatives Embedded derivatives principally include certain direct variable annuity guarantees and certain affiliated ceded reinsurance agreements related to such variable annuity guarantees, and equity crediting rates within index-linked annuity contracts. Embedded derivatives are recorded at estimated fair value with changes in estimated fair value reported in net income. The Company issues certain variable annuity products with guaranteed minimum benefits. GMWBs, GMABs and certain GMIBs contain embedded derivatives, which are measured at estimated fair value separately from the host variable annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances on the balance sheets. The Company determines the fair value of these embedded derivatives, by estimating the present value of projected future benefits minus the present value of projected future fees using actuarial and capital market assumptions including expectations of policyholder behavior. The calculation is based on in-force business, and is performed using standard actuarial valuation software which projects future cash flows from the embedded derivative over multiple risk neutral stochastic scenarios using observable risk-free rates. The percentage of fees included in the initial fair value measurement is not updated in subsequent periods. Capital market assumptions, such as risk-free rates and implied volatilities, are based on market prices for publicly traded instruments to the extent that prices for such instruments are observable. Implied volatilities beyond the observable period are extrapolated based on observable implied volatilities and historical volatilities. Actuarial assumptions, including mortality, lapse, withdrawal and utilization, are unobservable and are reviewed at least annually based on actuarial studies of historical experience. The valuation of these guarantee liabilities includes nonperformance risk adjustments and adjustments for a risk margin related to non-capital market inputs. The nonperformance adjustment is determined by taking into consideration publicly available information relating to spreads in the secondary market for BHF’s debt. These observable spreads are then adjusted to reflect the priority of these liabilities and claims paying ability of the issuing insurance subsidiaries as compared to BHF’s overall financial strength. Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, premium persistency, partial withdrawal and surrenders. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees. These guarantees may be more costly than expected in volatile or declining equity markets. Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and foreign currency exchange rates; changes in nonperformance risk; and variations in actuarial assumptions regarding policyholder behavior, mortality and risk margins related to non-capital market inputs, may result in significant fluctuations in the estimated fair value of the guarantees that could materially affect net income. The Company issues index-linked annuities which allow the policyholder to participate in returns from equity indices. The crediting rates associated with these features are embedded derivatives which are measured at estimated fair value separately from the host fixed annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances on the consolidated balance sheets. Transfers between Levels Transfers into or out of Level 3: Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable. Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) The following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at:
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The Company does not develop unobservable inputs used in measuring fair value for all other assets and liabilities classified within Level 3; therefore, these are not included in the table above. The other Level 3 assets and liabilities primarily included fixed maturity securities and derivatives. For fixed maturity securities valued based on non-binding broker quotes, an increase (decrease) in credit spreads would result in a higher (lower) fair value. For derivatives valued based on third-party pricing models, an increase (decrease) in credit spreads would generally result in a higher (lower) fair value. The following tables summarize the change of all assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3):
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Fair Value of Financial Instruments Carried at Other Than Fair Value The following tables provide fair value information for financial instruments that are carried on the balance sheet at amounts other than fair value. These tables exclude the following financial instruments: cash and cash equivalents, accrued investment income and payables for collateral under derivative transactions. The estimated fair value of the excluded financial instruments, which are primarily classified in Level 2, approximates carrying value as they are short-term in nature such that the Company believes there is minimal risk of material changes in interest rates or credit quality. All remaining balance sheet amounts excluded from the tables below are not considered financial instruments subject to this disclosure. The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at:
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Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | 9. Equity Capital Transactions In December 2017, the Company received a cash capital contribution of $75 million from Brighthouse Life Insurance Company. Statutory Equity and Income The state of domicile of the Company imposes RBC requirements that were developed by the National Association of Insurance Commissioners (“NAIC”). Regulatory compliance is determined by a ratio of a company’s total adjusted capital (“TAC”), calculated in the manner prescribed by the NAIC to its authorized control level RBC (“ACL RBC”), calculated in the manner prescribed by the NAIC, based on the statutory-based filed financial statements. Companies below specific trigger levels or ratios are classified by their respective levels, each of which requires specified corrective action. The minimum level of TAC before corrective action commences is twice ACL RBC. The RBC ratio for the Company was in excess of 400% for all periods presented. The Company prepares statutory-basis financial statements in accordance with statutory accounting practices prescribed or permitted by the New York State Department of Financial Services (“NYDFS”). The NAIC has adopted the Codification of Statutory Accounting Principles (“Statutory Codification”). Statutory Codification is intended to standardize regulatory accounting and reporting to state insurance departments. However, statutory accounting principles continue to be established by individual state laws and permitted practices. Modifications by the state insurance department may impact the effect of Statutory Codification on the statutory capital and surplus of the Company. Statutory accounting principles differ from GAAP primarily by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions, reporting of reinsurance agreements with different presentation and valuing investments and deferred tax assets on different bases. New York has adopted certain prescribed accounting practices, primarily consisting of the continuous Commissioners’ Annuity Reserve Valuation Method, which impacts deferred annuities, NYDFS Circular Letter No 11, which impacts deferred premiums, and NYDFS Seventh Amendment to Regulation 172, which impacts admitted unearned reinsurance premiums. The collective impact of these prescribed accounting practices decreased the statutory capital and surplus of the Company for the years ended December 31, 2018 and 2017 by an amount of $46.7 million and $47.7 million, respectively, in excess of the amount of the decrease had capital and surplus been measured under NAIC guidance. The tables below present amounts from the Company, which are derived from the statutory-basis financial statements as filed with the NYDFS. Statutory net income (loss) was as follows:
Statutory capital and surplus were as follows at:
Dividend Restrictions The Company is able to pay $27.7 million of dividends in 2019 to its parent without insurance regulatory approval from the NYDFS. The Company did not pay any dividends in 2018 or 2017 to its parent. Effective for dividends paid during 2016 and going forward, the New York Insurance Law was amended permitting the Company, without prior insurance regulatory clearance, to pay stockholder dividends to its parent, in any calendar year based on either of two standards. Under one standard, the Company is permitted, without prior insurance regulatory clearance, to pay dividends out of earned surplus (defined as positive “unassigned funds (surplus)” excluding 85% of the change in net unrealized capital gains or losses (less capital gains tax), for the immediately preceding calendar year), in an amount up to the greater of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year, or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding realized capital gains), not to exceed 30% of surplus to policyholders as of the end of the immediately preceding calendar year. In addition, under this standard, the Company may not, without prior insurance regulatory clearance, pay any dividends in any calendar year immediately following a calendar year for which its net gain from operations, excluding realized capital gains, was negative. Under the second standard, if dividends are paid out of other than earned surplus, the Company may, without prior insurance regulatory clearance, pay an amount up to the lesser of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year, or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding realized capital gains). In addition, the Company will be permitted to pay a dividend to its parent, in excess of the amounts allowed under both standards only if it files notice of its intention to declare such a dividend and the amount thereof with the New York Superintendent of Financial Services (the “Superintendent”) and the Superintendent either approves the distribution of the dividend or does not disapprove the dividend within 30 days of its filing. Under the New York Insurance Law, the Superintendent has broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its stockholders. Accumulated Other Comprehensive Income (Loss) Information regarding changes in the balances of each component of AOCI was as follows:
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Information regarding amounts reclassified out of each component of AOCI was as follows:
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Other Revenues and Other Expenses |
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Other Expenses | 10. Other Revenues and Other Expenses Other Revenues The Company has entered into contracts with mutual funds, fund managers, and their affiliates (collectively, the “Funds”) whereby the Company is paid monthly or quarterly fees (“12b-1 fees”) for providing certain services to customers and distributors of the Funds. The 12b-1 fees are generally equal to a fixed percentage of the average daily balance of the customer’s investment in a fund are based on a specified in the contract between the Company and the Funds. Payments are generally collected when due and are neither refundable nor able to offset future fees. To earn these fees, the Company performs services such as responding to phone inquiries, maintaining records, providing information to distributors and shareholders about fund performance and providing training to account managers and sales agents. The passage of time reflects the satisfaction of the Company’s performance obligations to the Funds, and is used to recognize revenue associated with 12b-1 fees. Other revenues consisted primarily of 12b-1 fees were $13.5 million, $13.5 million and $12.5 million for the years ended December 31, 2018, 2017 and 2016 respectively, of which all were reported in the Annuities segment. Other Expenses Information on other expenses was as follows:
Capitalization of DAC See Note 4 for information on the capitalization of DAC. Related Party Expenses See Note 13 for a discussion of related party expenses included in the table above. |
Income Tax |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax | 11. Income Tax The provision for income tax was as follows:
The reconciliation of the income tax provision at the statutory tax rate to the provision for income tax as reported was as follows:
__________________
Deferred income tax represents the tax effect of the differences between the book and tax bases of assets and liabilities. Net deferred income tax assets and liabilities consisted of the following at:
At December 31, 2018, the Company had net operating loss carryforwards of approximately $12.2 million and the Company had recorded a related deferred tax asset of $2.6 million which expires in year 2032. The following table sets forth the foreign tax credits available for carryforward for tax purposes at December 31, 2018.
The Company’s liability for unrecognized tax benefits may increase or decrease in the next 12 months. A reasonable estimate of the increase or decrease cannot be made at this time. However, the Company continues to believe that the ultimate resolution of the pending issues will not result in a material change to its financial statements, although the resolution of income tax matters could impact the Company’s effective tax rate in the future. A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
The Company classifies interest accrued related to unrecognized tax benefits in interest expense, included within other expenses, while penalties are included in income tax expense. Interest related to unrecognized tax benefits was not significant. The Company had no penalties for each of the years ended December 31, 2018, 2017 and 2016. The dividend received deduction reduces the amount of dividend income subject to tax and is a significant component of the difference between the actual tax expense and expected amount determined using the statutory tax rate. The Tax Act has changed the dividend received deduction amount applicable to insurance companies to a 70% company share and a 50% dividend received deduction for eligible dividends. The Company is under continuous examination by the Internal Revenue Service and other tax authorities in jurisdictions in which the Company has significant business operations. The income tax years under examination vary by jurisdiction and subsidiary. The Company is no longer subject to federal, state or local income tax examinations for years prior to 2007. Management believes it has established adequate tax liabilities, and final resolution of the audit for the years 2007 and forward is not expected to have a material impact on the Company’s financial statements. Tax Sharing Agreements For the periods prior to the Separation, the Company was included in a consolidated federal life and non-life income tax return in accordance with the provisions of the Tax Code. Current taxes (and the benefits of tax attributes such as losses) are allocated to the Company under the consolidated tax return regulations and a tax sharing agreement with MetLife. This tax sharing agreement states that federal taxes will be computed on a modified separate return basis with benefits for losses. For periods after the Separation, Brighthouse Life Insurance Company and any directly owned life insurance and reinsurance subsidiaries (including the Company and BRCD) entered in a tax sharing agreement to join a life consolidated federal income tax return. The nonlife subsidiaries of Brighthouse Life Insurance Company will file their own federal income tax returns. The tax sharing agreements state that federal taxes are computed on a modified separate return basis with benefit for losses. Income Tax Transactions with Former Parent The Company entered into a tax separation agreement with MetLife (the “Tax Separation Agreement”). Among other things, the Tax Separation Agreement governs the allocation between MetLife and us of the responsibility for the taxes of the MetLife group. The Tax Separation Agreement also allocates rights, obligations and responsibilities in connection with certain administrative matters relating to the preparation of tax returns and control of tax audits and other proceedings relating to taxes. In October 2017, MetLife paid $55.6 million to the Company under the Tax Separation Agreement. At December 31, 2017, the current income tax recoverable included $958 thousand related to this agreement. In November 2018, MetLife paid $1.7 million to the Company under the Tax Separation Agreement. At December 31, 2018, the current income tax payable included a $3.2 million payable to MetLife related to this agreement. |
Contingencies, Commitments and Guarantees |
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Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies, Commitments and Guarantees | 12. Contingencies, Commitments and Guarantees Contingencies Litigation Sales Practices Claims Over the past several years, the Company has faced claims and regulatory inquiries and investigations, alleging improper marketing or sales of individual life insurance policies, annuities or other products. The Company continues to defend vigorously against the claims in these matters. The Company believes adequate provision has been made in its financial statements for all probable and reasonably estimable losses for sales practices matters. Summary Various litigation, claims and assessments against the Company, in addition to those discussed previously and those otherwise provided for in the Company’s financial statements, have arisen in the course of the Company's business, including, but not limited to, in connection with its activities as an insurer, investor, and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning the Company's compliance with applicable insurance and other laws and regulations. It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. In some of the matters referred to previously, large and/or indeterminate amounts, including punitive and treble damages, are sought. Although in light of these considerations it is possible that an adverse outcome in certain cases could have a material effect upon the Company's financial position, based on information currently known by the Company's management, in its opinion, the outcomes of such pending investigations and legal proceedings are not likely to have such an effect. However, given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company's net income or cash flows in particular quarterly or annual periods. Commitments Mortgage Loan Commitments The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $7.6 million and $355 thousand at December 31, 2018 and 2017, respectively. Commitments to Fund Private Corporate Bond Investments The Company commits to lend funds under private corporate bond investments. The amounts of these unfunded commitments were $11.4 million and $11.6 million at December 31, 2018 and 2017, respectively. Guarantees In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties such that it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third-party lawsuits. These obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future. Management believes that it is unlikely the Company will have to make any material payments under these indemnities, guarantees, or commitments. In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the Company indemnifies its agents for liabilities incurred as a result of their representation of the Company’s interests. Since these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these indemnities in the future. The Company had no liability for indemnities, guarantees and commitments at both December 31, 2018 and 2017. |
Related Party Transactions |
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Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 13. Related Party Transactions The Company has various existing arrangements with its Brighthouse affiliates and MetLife for services necessary to conduct its activities. Subsequent to the Separation, certain of the MetLife services continued, as provided for under a master service agreement and various transition services agreements entered into in connection with the Separation. MetLife was no longer considered a related party upon the completion of the MetLife Divestiture on June 14, 2018. All of the MetLife transactions reported as related party activity occurred prior to the MetLife Divestiture. See Note 1 for information regarding the MetLife Divestiture. The Company has related party reinsurance and investment transactions, see Notes 5 and 6 for information on these material related party transactions. Other material arrangements between the Company and its related parties not disclosed elsewhere are as follows: Shared Services and Overhead Allocations Brighthouse affiliates and MetLife provide the Company certain services, which include, but are not limited to, treasury, financial planning and analysis, legal, human resources, tax planning, internal audit, financial reporting, and information technology. The Company is charged for the MetLife services through a transition services agreement and allocated to the legal entities and products within the Company. When specific identification to a particular legal entity and/or product is not practicable, an allocation methodology based on various performance measures or activity-based costing, such as sales, new policies/contracts issued, reserves, and in-force policy counts is used. The bases for such charges are modified and adjusted by management when necessary or appropriate to reflect fairly and equitably the actual incidence of cost incurred by the Company and/or affiliate. Management believes that the methods used to allocate expenses under these arrangements are reasonable. Costs incurred under these arrangements with the Brighthouse affiliates, as well as with MetLife prior to the MetLife Divestiture that were considered related party expenses, were $43.9 million, $38.0 million and $19.9 million for the years ended December 31, 2018, 2017 and 2016, respectively, and were recorded in other expenses. Revenues received from affiliates related to these agreements, recorded in universal life and investment-type product policy fees, was $12.4 million, $12.7 million and $13.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. The Company had net receivables (payables) from/to affiliates, related to the items discussed above, of $622 thousand and $8.6 million at December 31, 2018 and 2017, respectively. Brighthouse affiliates incur costs related to the establishment of services and infrastructure to replace those previously provided by MetLife. The Company is charged a fee to reflect the value of the available infrastructure and services provided by these costs. While management believes that the method used to allocate expenses under this arrangement is reasonable, the allocated expenses may not be indicative of those of a stand-alone entity. If expenses were allocated to the Company under this arrangement as incurred by Brighthouse affiliates, the Company would have incurred additional expenses of $2.8 million for the year ended December 31, 2018. The Company would have incurred no additional expenses under this arrangement in 2017. Broker-Dealer Transactions Beginning in March 2017, Brighthouse Securities, LLC, a registered broker-dealer affiliate, began distributing the Company’s existing and future registered annuity and life products, and the MetLife broker-dealers discontinued such distributions. Prior to March 2017, the Company recognized related party revenues and expenses arising from transactions with MetLife broker-dealers that previously sold the Company’s registered annuity and life products. The related party expense for the Company was commissions collected on the sale of variable products by the Company and passed through to the broker-dealer. The related party revenue for the Company was fee income from trusts and mutual funds whose shares serve as investment options of policyholders of the Company. Fee income received from affiliates related to these transactions and recorded in other revenues was $12.3 million, $12.4 million and $10.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. Commission expenses incurred from affiliates related to these transactions and recorded in other expenses was $57.9 million, $39.3 million and $32.2 million for the years ended December 31, 2018, 2017 and 2016, respectively. The Company also had related party fee income receivables of $951 thousand and $1.1 million at December 31, 2018 and 2017, respectively. |
Summary of Investments - Other Than Investments in Related Parties |
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SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Summary of Investments - Other Than Investments in Related Parties | Brighthouse Life Insurance Company of NY (An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.) Schedule I Summary of Investments Other Than Investments in Related Parties December 31, 2018 (In thousands)
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Supplementary Insurance Information |
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SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplementary Insurance Information | Brighthouse Life Insurance Company of NY (An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.) Schedule III Supplementary Insurance Information December 31, 2018 and 2017 (In thousands)
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Brighthouse Life Insurance Company of NY (An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.) Schedule III Supplementary Insurance Information (continued) December 31, 2018, 2017 and 2016 (In thousands)
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Consolidated Reinsurance |
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SEC Schedule, 12-17, Insurance Companies, Reinsurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Text Block] | Brighthouse Life Insurance Company of NY (An Indirect Wholly-Owned Subsidiary of Brighthouse Financial, Inc.) Schedule IV Reinsurance December 31, 2018, 2017 and 2016 (Dollars in thousands)
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For the year ended December 31, 2018, reinsurance ceded included related party transactions for life insurance in-force of $29.8 billion, and life insurance premiums of $37.2 million. For the year ended December 31, 2017, reinsurance ceded included related party transactions for life insurance in-force of $30.6 billion, and life insurance premiums of $51.9 million. For the year ended December 31, 2016, reinsurance ceded included related party transactions for life insurance in-force of $32.5 billion, and life insurance premiums of $44.2 million. |
Business, Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the financial statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s business and operations. Actual results could differ from these estimates. |
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Consolidation of Subsidiaries | Reclassifications Certain amounts in the prior years’ financial statements and related footnotes thereto have been reclassified to conform with the current year presentation as discussed throughout the Notes to the Financial Statements. Since the Company is a member of a controlled group of affiliated companies, its results may not be indicative of those of a stand-alone entity. |
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Future Policy Benefit Liabilities and Policyholder Account Balances | Future Policy Benefit Liabilities and Policyholder Account Balances The Company establishes liabilities for future amounts payable under insurance policies. Insurance liabilities are generally equal to the present value of future expected benefits to be paid, reduced by the present value of future expected net premiums. Assumptions used to measure the liability are based on the Company’s experience, and include a margin for adverse deviation. The principal assumptions used in the establishment of liabilities for future policy benefits are mortality, policy lapse, policy renewal, investment returns, inflation, expenses and other contingent events as appropriate to the respective product type. For traditional long duration insurance contracts (term, whole-life insurance and income annuities), assumptions are determined at issuance of the policy and are not updated unless a premium deficiency exists. A premium deficiency exists when the liability for future policy benefits plus the present value of expected future gross premiums are less than expected future benefits and expenses (based on current assumptions). When a premium deficiency exists, the Company will reduce any deferred acquisition costs and may also establish an additional liability to eliminate the deficiency. To assess whether a premium deficiency exists, the Company groups insurance contracts based on the manner acquired, serviced and the measurement of profitability. In applying the profitability criteria, groupings are limited by segment. In certain cases, the liability for an insurance product may be sufficient in the aggregate, but the pattern of future earnings may result in profits followed by losses. In these situations, the Company may establish an additional liability to offset the losses that are expected to be recognized in later years. Policyholder account balances relate to customer deposits on universal life insurance and deferred annuity contracts and are equal to the sum of deposits, plus interest credited, less charges and withdrawals. |
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Variable Annuity Guaranteed Minimum Benefits | Index-linked annuities The Company issues index-linked annuities. The crediting rate associated with index-linked annuities is accounted for at fair value as an embedded derivative. The estimated fair value is determined using a combination of an option pricing model and an option-budget approach. Under this approach, the company estimates the cost of funding the crediting rate using option pricing and establishes that cost on the balance sheet as a reduction to the initial deposit amount. In subsequent periods, the embedded derivative is remeasured at fair value while the account value is accreted up to the initial deposit over the estimated life of the contract. The Company issues directly, certain variable annuity products with guaranteed minimum benefits that provide the policyholder a minimum return based on their initial deposit (i.e., the benefit base) less withdrawals. These guarantees are accounted for as insurance liabilities or as embedded derivatives depending on how and when the benefit is paid. Specifically, a guarantee is accounted for as an embedded derivative if a guarantee is paid without requiring (i) the occurrence of specific insurable event, or (ii) the policyholder to annuitize. Alternatively, a guarantee is accounted for as an insurance liability if the guarantee is paid only upon either (i) the occurrence of a specific insurable event, or (ii) annuitization. In certain cases, a guarantee may have elements of both an insurance liability and an embedded derivative and in such cases the guarantee is split and accounted for under both models. Guarantees accounted for as insurance liabilities in future policy benefits include guaranteed minimum death benefits (“GMDBs”), the portion of guaranteed minimum income benefits (“GMIBs”) that require annuitization, and the life-contingent portion of guaranteed minimum withdrawal benefits (“GMWBs”). Guarantees accounted for as embedded derivatives in policyholder account balances include the non life-contingent portion of GMWBs, guaranteed minimum accumulation benefits (“GMABs”) and the portion of GMIBs that do not require annuitization. At inception, the Company attributes to the embedded derivative a portion of the projected future guarantee fees to be collected from the policyholder equal to the present value of projected future guaranteed benefits. Any additional fees represent “excess” fees and are reported in universal life and investment-type product policy fees. The assumptions for GMDBs and GMIBs included in future policyholder benefits include projected separate account rates of return, general account investment returns, interest crediting rates, mortality, in-force or persistency, benefit elections and withdrawals, and expenses to administer business. GMIBs also include an assumption for the percentage of the potential annuitizations that may be elected by the contract holder, while GMWBs include assumptions for withdrawals. Embedded Derivatives Embedded derivatives principally include certain direct variable annuity guarantees and certain affiliated ceded reinsurance agreements related to such variable annuity guarantees, and equity crediting rates within index-linked annuity contracts. Embedded derivatives are recorded at estimated fair value with changes in estimated fair value reported in net income. The Company issues certain variable annuity products with guaranteed minimum benefits. GMWBs, GMABs and certain GMIBs contain embedded derivatives, which are measured at estimated fair value separately from the host variable annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances on the balance sheets. The Company determines the fair value of these embedded derivatives, by estimating the present value of projected future benefits minus the present value of projected future fees using actuarial and capital market assumptions including expectations of policyholder behavior. The calculation is based on in-force business, and is performed using standard actuarial valuation software which projects future cash flows from the embedded derivative over multiple risk neutral stochastic scenarios using observable risk-free rates. The percentage of fees included in the initial fair value measurement is not updated in subsequent periods. Capital market assumptions, such as risk-free rates and implied volatilities, are based on market prices for publicly traded instruments to the extent that prices for such instruments are observable. Implied volatilities beyond the observable period are extrapolated based on observable implied volatilities and historical volatilities. Actuarial assumptions, including mortality, lapse, withdrawal and utilization, are unobservable and are reviewed at least annually based on actuarial studies of historical experience. The valuation of these guarantee liabilities includes nonperformance risk adjustments and adjustments for a risk margin related to non-capital market inputs. The nonperformance adjustment is determined by taking into consideration publicly available information relating to spreads in the secondary market for BHF’s debt. These observable spreads are then adjusted to reflect the priority of these liabilities and claims paying ability of the issuing insurance subsidiaries as compared to BHF’s overall financial strength. Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, premium persistency, partial withdrawal and surrenders. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees. These guarantees may be more costly than expected in volatile or declining equity markets. Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and foreign currency exchange rates; changes in nonperformance risk; and variations in actuarial assumptions regarding policyholder behavior, mortality and risk margins related to non-capital market inputs, may result in significant fluctuations in the estimated fair value of the guarantees that could materially affect net income. The Company issues index-linked annuities which allow the policyholder to participate in returns from equity indices. The crediting rates associated with these features are embedded derivatives which are measured at estimated fair value separately from the host fixed annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances on the consolidated balance sheets. |
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Recognition of Insurance Revenues and Deposits | Recognition of Insurance Revenues and Deposits Premiums related to traditional life insurance and annuity contracts with life contingencies are recognized as revenues when due from policyholders. Policyholder benefits and expenses are provided to recognize profits over the estimated lives of the insurance policies. When premiums are due over a significantly shorter period than the period over which policyholder benefits are incurred, any excess profit is deferred and recognized into earnings in proportion to insurance in-force or, for annuities, the amount of expected future policy benefit payments. Deposits related to universal life insurance and investment-type products are credited to policyholder account balances. Revenues from such contracts consist of asset-based investment management fees, mortality charges, risk charges, policy administration fees, and surrender charges. These fees are recognized when assessed to the contract holder and are included in universal life and investment-type product policy fees on the statements of operations. Premiums, policy fees, policyholder benefits and expenses are presented net of reinsurance. |
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Deferred Policy Acquisition Costs and Value of Business Acquired | Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles The Company incurs significant costs in connection with acquiring new and renewal insurance business. Costs that are related directly to the successful acquisition or renewal of insurance contracts are capitalized as DAC. These costs mainly consist of commissions, and include the portion of employees’ compensation and benefits related to time spent selling, underwriting or processing the issuance of new insurance contracts. All other acquisition-related costs are expensed as incurred. Value of business acquired (“VOBA”) is an intangible asset resulting from a business combination that represents the excess of book value over the estimated fair value of acquired insurance, annuity, and investment-type contracts in-force as of the acquisition date. The estimated fair value of the acquired contracts is based on projections, by each block of business, of future policy and contract charges, premiums, mortality and morbidity, separate account performance, surrenders, operating expenses, investment returns, nonperformance risk adjustment and other factors. The Company amortizes DAC and VOBA related to term life insurance, non-participating whole-life and immediate annuities over the appropriate premium paying period in proportion to the actual and expected future gross premiums that were set at contract issue. The expected premiums are based upon the premium requirement of each policy and assumptions for mortality, persistency and investment returns at policy issuance, or policy acquisition (as it relates to VOBA), include provisions for adverse deviation, and are consistent with the assumptions used to calculate future policy benefit liabilities. These assumptions are not revised after policy issuance or acquisition unless the DAC or VOBA balance is deemed to be unrecoverable from future expected profits. The Company amortizes DAC and VOBA on deferred annuities, universal life and variable life insurance contracts over the estimated lives of the contracts in proportion to actual and expected future gross profits. The amortization includes interest based on rates in effect at inception or acquisition of the contracts. The amount of future gross profits is dependent principally upon investment returns in excess of the amounts credited to policyholders, mortality, persistency, benefit elections and withdrawals, interest crediting rates, and expenses to administer the business. When significant negative gross profits are expected in future periods, the Company substitutes the amount of insurance in-force for expected future gross profits as the amortization basis for DAC. Assumptions for DAC and VOBA are reviewed at least annually, and if they change significantly, the cumulative DAC and VOBA amortization is re-estimated and adjusted by a cumulative charge or credit to net income. When expected future gross profits are below those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to net income. The opposite result occurs when the expected future gross profits are above the previously estimated expected future gross profits. The Company updates expected future gross profits to reflect the actual gross profits for each period, including changes to its nonperformance risk related to embedded derivatives and the actual amount of business remaining in-force. When actual gross profits exceed those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to net income. The opposite result occurs when the actual gross profits are below the previously expected future gross profits. DAC and VOBA balances on deferred annuities, universal and variable life insurance contracts are also adjusted to reflect the effect of investment gains and losses and certain embedded derivatives (including changes in nonperformance risk). These adjustments can create fluctuations in net income from period to period. Changes in DAC and VOBA balances related to unrealized gains and losses are recorded to other comprehensive income (loss) (“OCI”). DAC and VOBA balances and amortization for variable contracts can be significantly impacted by changes in expected future gross profits related to projected separate account rates of return. The Company’s practice of determining changes in separate account returns assumes that long-term appreciation in equity markets is only changed when sustained interim deviations are expected. The Company monitors these events and only changes the assumption when its long-term expectation changes. Periodically, the Company modifies product benefits, features, rights or coverages that occur by the exchange of an existing contract for a new contract, or by amendment, endorsement, or rider to a contract, or by election or coverage within a contract. If a modification is considered to have substantially changed the contract, the associated DAC or VOBA is written off immediately as net income and any new acquisition costs associated with the replacement contract are deferred. If the modification does not substantially change the contract, the DAC or VOBA amortization on the original contract will continue and any acquisition costs associated with the related modification are expensed. See Note 4 for additional information on DAC and VOBA. |
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Intangible Assets Arising from Insurance Contracts Acquired in Business Combination, Policy [Policy Text Block] | Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles The Company incurs significant costs in connection with acquiring new and renewal insurance business. Costs that are related directly to the successful acquisition or renewal of insurance contracts are capitalized as DAC. These costs mainly consist of commissions, and include the portion of employees’ compensation and benefits related to time spent selling, underwriting or processing the issuance of new insurance contracts. All other acquisition-related costs are expensed as incurred. Value of business acquired (“VOBA”) is an intangible asset resulting from a business combination that represents the excess of book value over the estimated fair value of acquired insurance, annuity, and investment-type contracts in-force as of the acquisition date. The estimated fair value of the acquired contracts is based on projections, by each block of business, of future policy and contract charges, premiums, mortality and morbidity, separate account performance, surrenders, operating expenses, investment returns, nonperformance risk adjustment and other factors. The Company amortizes DAC and VOBA related to term life insurance, non-participating whole-life and immediate annuities over the appropriate premium paying period in proportion to the actual and expected future gross premiums that were set at contract issue. The expected premiums are based upon the premium requirement of each policy and assumptions for mortality, persistency and investment returns at policy issuance, or policy acquisition (as it relates to VOBA), include provisions for adverse deviation, and are consistent with the assumptions used to calculate future policy benefit liabilities. These assumptions are not revised after policy issuance or acquisition unless the DAC or VOBA balance is deemed to be unrecoverable from future expected profits. The Company amortizes DAC and VOBA on deferred annuities, universal life and variable life insurance contracts over the estimated lives of the contracts in proportion to actual and expected future gross profits. The amortization includes interest based on rates in effect at inception or acquisition of the contracts. The amount of future gross profits is dependent principally upon investment returns in excess of the amounts credited to policyholders, mortality, persistency, benefit elections and withdrawals, interest crediting rates, and expenses to administer the business. When significant negative gross profits are expected in future periods, the Company substitutes the amount of insurance in-force for expected future gross profits as the amortization basis for DAC. Assumptions for DAC and VOBA are reviewed at least annually, and if they change significantly, the cumulative DAC and VOBA amortization is re-estimated and adjusted by a cumulative charge or credit to net income. When expected future gross profits are below those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to net income. The opposite result occurs when the expected future gross profits are above the previously estimated expected future gross profits. The Company updates expected future gross profits to reflect the actual gross profits for each period, including changes to its nonperformance risk related to embedded derivatives and the actual amount of business remaining in-force. When actual gross profits exceed those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to net income. The opposite result occurs when the actual gross profits are below the previously expected future gross profits. DAC and VOBA balances on deferred annuities, universal and variable life insurance contracts are also adjusted to reflect the effect of investment gains and losses and certain embedded derivatives (including changes in nonperformance risk). These adjustments can create fluctuations in net income from period to period. Changes in DAC and VOBA balances related to unrealized gains and losses are recorded to other comprehensive income (loss) (“OCI”). DAC and VOBA balances and amortization for variable contracts can be significantly impacted by changes in expected future gross profits related to projected separate account rates of return. The Company’s practice of determining changes in separate account returns assumes that long-term appreciation in equity markets is only changed when sustained interim deviations are expected. The Company monitors these events and only changes the assumption when its long-term expectation changes. Periodically, the Company modifies product benefits, features, rights or coverages that occur by the exchange of an existing contract for a new contract, or by amendment, endorsement, or rider to a contract, or by election or coverage within a contract. If a modification is considered to have substantially changed the contract, the associated DAC or VOBA is written off immediately as net income and any new acquisition costs associated with the replacement contract are deferred. If the modification does not substantially change the contract, the DAC or VOBA amortization on the original contract will continue and any acquisition costs associated with the related modification are expensed. See Note 4 for additional information on DAC and VOBA. |
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Deferred Sales Inducements | The Company also has deferred sales inducements (“DSI”) and value of distribution agreements (“VODA”) which are included in other assets. The Company defers sales inducements and amortizes them over the life of the policy using the same methodology and assumptions used to amortize DAC. The amortization of DSI is included in policyholder benefits and claims. VODA represents the present value of expected future profits associated with the expected future business derived from the distribution agreements acquired as part of a business combination. The VODA associated with past business combinations is amortized over useful lives ranging from 10 to 40 years and such amortization is included in other expenses. Each year, or more frequently if circumstances indicate a possible impairment exists, the Company reviews DSI and VODA to determine whether the assets are impaired. |
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Reinsurance | Reinsurance The Company enters into reinsurance arrangements pursuant to which it cedes certain insurance risks to unaffiliated and related-party reinsurers. Cessions under reinsurance agreements do not discharge the Company’s obligations as the primary insurer. The accounting for reinsurance arrangements depends on whether the arrangement provides indemnification against loss or liability relating to insurance risk in accordance with GAAP. For ceded reinsurance of existing in-force blocks of insurance contracts that transfer significant insurance risk, the difference, if any, between the amounts paid, and the liabilities ceded related to the underlying contracts is considered the net cost of reinsurance at the inception of the reinsurance agreement. The net cost of reinsurance is recorded as an adjustment to DAC when there is a gain at inception on the ceding entity and to other liabilities when there is a loss at inception. The net cost of reinsurance is recognized as a component of other expenses when there is a gain at inception and as policyholder benefits and claims when there is a loss and is subsequently amortized on a basis consistent with the methodology used for amortizing DAC related to the underlying reinsured contracts. If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. Deposits received are included in other liabilities and deposits made are included within premiums, reinsurance and other receivables. As amounts are paid or received, consistent with the underlying contracts, the deposit assets or liabilities are adjusted. Interest on such deposits is recorded as other revenues or other expenses, as appropriate. Periodically, the Company evaluates the adequacy of the expected payments or recoveries and adjusts the deposit asset or liability through other revenues or other expenses, as appropriate. The funds withheld liability represents amounts withheld by the Company in accordance with the terms of the reinsurance agreements. Under certain reinsurance agreements, the Company withholds the funds rather than transferring the underlying investments and, as a result, records a funds withheld liability within other liabilities. The Company recognizes interest on funds withheld, included in other expenses, at rates defined by the terms of the agreement which may be contractually specified or directly related to the investment portfolio. Certain funds withheld arrangements may also contain embedded derivatives measured at fair value that are related to the investment return on the assets withheld. The Company cedes the risk associated with the variable annuities with guaranteed minimum benefits to Brighthouse Life Insurance Company. Certain features of the ceded guarantees are accounted for as an embedded derivative and measured at fair value. |
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Investments | Investments Net Investment Income and Net Investment Gains (Losses) Income from investments is reported within net investment income, unless otherwise stated herein. Gains and losses on sales of investments, impairment losses and changes in valuation allowances are reported within net investment gains (losses), unless otherwise stated herein. Fixed Maturity Securities Available-For-Sale The Company’s fixed maturity securities are classified as available-for-sale (“AFS”) and are reported at their estimated fair value. Unrealized investment gains and losses on these securities are recorded as a separate component of OCI, net of policy-related amounts and deferred income taxes. All security transactions are recorded on a trade date basis. Investment gains and losses on sales are determined on a specific identification basis. Interest income and prepayment fees are recognized when earned. Interest income is recognized using an effective yield method giving effect to amortization of premiums and accretion of discounts and is based on the estimated economic life of the securities, which for residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”) (collectively, “Structured Securities”) considers the estimated timing and amount of prepayments of the underlying loans. The amortization of premium and accretion of discount of fixed maturity securities also takes into consideration call and maturity dates. Amortization of premium and accretion of discount on Structured Securities considers the estimated timing and amount of prepayments of the underlying loans. Actual prepayment experience is periodically reviewed, and effective yields are recalculated when differences arise between the originally anticipated and the actual prepayments received and currently anticipated. Prepayment assumptions for Structured Securities are estimated using inputs obtained from third-party specialists and based on management’s knowledge of the current market. For credit-sensitive Structured Securities and certain prepayment-sensitive securities, the effective yield is recalculated on a prospective basis. For all other Structured Securities, the effective yield is recalculated on a retrospective basis The Company periodically evaluates fixed maturity securities for impairment. The assessment of whether impairments have occurred is based on management’s case-by-case evaluation of the underlying reasons for the decline in estimated fair value, as well as an analysis of the gross unrealized losses by severity and/or age. See Note 6 “— Evaluation of AFS Securities for OTTI and Evaluating Temporarily Impaired AFS Securities.” For fixed maturity securities in an unrealized loss position, an other-than-temporary impairment (“OTTI”) is recognized in earnings when it is anticipated that the amortized cost will not be recovered. When either: (i) the Company has the intent to sell the security; or (ii) it is more likely than not that the Company will be required to sell the security before recovery, the OTTI recognized in earnings is the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions exists, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected is recognized as an OTTI in earnings (“credit loss”). If the estimated fair value is less than the present value of projected future cash flows expected to be collected, this portion of OTTI related to other-than-credit factors (“noncredit loss”) is recorded in OCI. Mortgage Loans Mortgage loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount and any deferred fees or expenses, and are net of valuation allowances. Interest income and prepayment fees are recognized when earned. Interest income is recognized using an effective yield method giving effect to amortization of premiums and accretion of discounts. Other Invested Assets Other invested assets consist principally of freestanding derivatives with positive estimated fair values which are described in “— Derivatives” below. Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been presented in the year of final contractual maturity. Structured Securities are shown separately, as they are not due at a single maturity. Maturities of Fixed Maturity Securities Evaluation and Measurement Methodologies Management considers a wide range of factors about the security issuer and uses its best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Inherent in management’s evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used in the impairment evaluation process include, but are not limited to: (i) the length of time and the extent to which the estimated fair value has been below amortized cost; (ii) the potential for impairments when the issuer is experiencing significant financial difficulties; (iii) the potential for impairments in an entire industry sector or sub-sector; (iv) the potential for impairments in certain economically depressed geographic locations; (v) the potential for impairments where the issuer, series of issuers or industry has suffered a catastrophic loss or has exhausted natural resources; (vi) whether the Company has the intent to sell or will more likely than not be required to sell a particular security before the decline in estimated fair value below amortized cost recovers; (vii) with respect to Structured Securities, changes in forecasted cash flows after considering the quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying assets backing a particular security, and the payment priority within the tranche structure of the security; (viii) the potential for impairments due to weakening of foreign currencies on non-functional currency denominated fixed maturity securities that are near maturity; and (ix) other subjective factors, including concentrations and information obtained from regulators and rating agencies. For securities in an unrealized loss position, an OTTI is recognized in earnings when it is anticipated that the amortized cost will not be recovered. When either: (i) the Company has the intent to sell the security; or (ii) it is more likely than not that the Company will be required to sell the security before recovery, the OTTI recognized in earnings is the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions exists, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected is recognized as an OTTI in earnings (“credit loss”). If the estimated fair value is less than the present value of projected future cash flows expected to be collected, this portion of OTTI related to other-than-credit factors (“noncredit loss”) is recorded in OCI. Past Due, Nonaccrual and Modified Mortgage Loans The Company defines delinquency consistent with industry practice, when mortgage loans are past due as follows: commercial mortgage loans – 60 days and agricultural mortgage loans – 90 days. Valuation Allowance Methodology Mortgage loans are considered to be impaired when it is probable that, based upon current information and events, the Company will be unable to collect all amounts due under the loan agreement. Specific valuation allowances are established using the same methodology for both portfolio segments as the excess carrying value of a loan over either (i) the present value of expected future cash flows discounted at the loan’s original effective interest rate, (ii) the estimated fair value of the loan’s underlying collateral if the loan is in the process of foreclosure or otherwise collateral dependent, or (iii) the loan’s observable market price. A common evaluation framework is used for establishing non-specific valuation allowances for both loan portfolio segments; however, a separate non-specific valuation allowance is calculated and maintained for each loan portfolio segment that is based on inputs unique to each loan portfolio segment. Non-specific valuation allowances are established for pools of loans with similar risk characteristics where a property-specific or market-specific risk has not been identified, but for which the Company expects to incur a credit loss. These evaluations are based upon several loan portfolio segment-specific factors, including the Company’s experience for loan losses, defaults and loss severity, and loss expectations for loans with similar risk characteristics. These evaluations are revised as conditions change and new information becomes available. Variable Interest Entities The Company has invested in legal entities that are variable interest entities (“VIEs”). VIEs are consolidated when the investor is the primary beneficiary. A primary beneficiary is the variable interest holder in a VIE with both the power to direct the activities of the VIE that most significantly impact the economic performance of the VIE and the obligation to absorb losses, or the right to receive benefits that could potentially be significant to the VIE. |
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Derivatives | Derivatives Freestanding Derivatives Freestanding derivatives are carried on the Company’s balance sheet either as assets within other invested assets or as liabilities within other liabilities at estimated fair value. The Company does not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement. If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are reported in net derivative gains (losses). Hedge Accounting The Company primarily designates derivatives as a hedge of a forecasted transaction or a variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”). When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in fair value are recorded in OCI and subsequently reclassified into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item. To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. In its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness and the method that will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item; (ii) the derivative expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; or (iv) the derivative is de-designated as a hedging instrument. When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the cash flows of a hedged item, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized in net derivative gains (losses). Provided the hedged forecasted transaction is still probable of occurrence, the changes in estimated fair value of derivatives recorded in OCI related to discontinued cash flow hedges are released into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item. In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value on the balance sheet, with changes in its estimated fair value recognized in the current period as net derivative gains (losses). Embedded Derivatives The Company sells variable and indexed-linked annuities and is a party to certain reinsurance agreements that have embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated and measured at fair value, separately from the host contract. The Company bifurcates embedded derivatives when a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument, the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract and the underlying contract is not already measured at estimated fair value with changes recorded in earnings. See “— Variable Annuity Guarantees”, “Index-Linked Annuities” and “— Reinsurance” for additional information on the accounting policies for embedded derivatives bifurcated from variable annuity and reinsurance host contracts. |
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Fair Value | Fair Value Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In most cases, the exit price and the transaction (or entry) price will be the same at initial recognition. In determining the estimated fair value of the Company’s investments, fair values are based on unadjusted quoted prices for identical investments in active markets that are readily and regularly obtainable. When such quoted prices are not available, fair values are based on quoted prices in markets that are not active, quoted prices for similar but not identical investments, or other observable inputs. If these inputs are not available, or observable inputs are not determinable, unobservable inputs and/or adjustments to observable inputs requiring management judgment are used to determine the estimated fair value of investments. When developing estimated fair values, the Company considers three broad valuation techniques: (i) the market approach, (ii) the income approach, and (iii) the cost approach. The Company determines the most appropriate valuation technique to use, given what is being measured and the availability of sufficient inputs, giving priority to observable inputs. The Company categorizes its assets and liabilities measured at estimated fair value into a three-level hierarchy, based on the significant input with the lowest level in its valuation. The input levels are as follows:
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Policyholder Accounts, Policy [Policy Text Block] | Separate Accounts Separate accounts underlying the Company’s variable life and annuity contracts are reported at fair value. Assets in separate accounts supporting the contract liabilities are legally insulated from the Company’s general account liabilities. Investments in these separate accounts are directed by the contract holder and all investment performance, net of contract fees and assessments, is passed through to the contract holder. Investment performance and the corresponding amounts credited to contract holders of such separate accounts are offset within the same line on the statements of operations. Separate accounts that do not pass all investment performance to the contract holder, including those underlying certain index-linked annuities, are combined on a line-by-line basis with the Company’s general account assets, liabilities, revenues and expenses. The accounting for investments in these separate accounts is consistent with the methodologies described herein for similar financial instruments held within the general account. The Company receives asset-based distribution and service fees from mutual funds available to the variable life and annuity contract holders as investment options in its separate accounts. These fees are recognized in the period in which the related services are performed and are included in other revenues in the statement of operations. |
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Employee Benefit Plans | Employee Benefit Plans Through December 31, 2016, Metropolitan Life Insurance Company (“MLIC”), a former affiliate, provided and the Company contributed to defined benefit pension and postemployment plans for its employees and retirees. MLIC also provides and the Company contributes to a postretirement medical and life insurance benefit plan for certain retired employees. Within its statement of operations, the Company has included expense associated with its participants in these plans. |
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Income Tax | Income Tax Income taxes as presented herein attribute current and deferred income taxes of MetLife, Inc., for periods up until the Separation, to Brighthouse Financial in a manner that is systematic, rational and consistent with the asset and liability method prescribed by the Financial Accounting Standards Board (“FASB”) guidance Accounting Standards Codification 740 - Income Taxes (“ASC 740”). The Company’s income tax provision was prepared following the modified separate return method. The modified separate return method applies ASC 740 to the stand-alone financial statements of each member of the consolidated group as if the group member were a separate taxpayer and a stand-alone enterprise, after providing benefits for losses. The Company’s accounting for income taxes represents management’s best estimate of various events and transactions. Deferred tax assets and liabilities resulting from temporary differences between the financial reporting and tax bases of assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse. The realization of deferred tax assets depends upon the existence of sufficient taxable income within the carryback or carryforward periods under the tax law in the applicable tax jurisdiction. Valuation allowances are established when management determines, based on available information, that it is more likely than not that deferred income tax assets will not be realized. Significant judgment is required in determining whether valuation allowances should be established, as well as the amount of such allowances. When making such determination, the Company considers many factors, including the jurisdiction in which the deferred tax asset was generated, the length of time that carryforward can be utilized in the various taxing jurisdictions, future taxable income exclusive of reversing temporary differences and carryforwards, future reversals of existing taxable temporary differences, taxable income in prior carryback years, tax planning strategies and the nature, frequency, and amount of cumulative financial reporting income and losses in recent years. The Company may be required to change its provision for income taxes when estimates used in determining valuation allowances on deferred tax assets significantly change or when receipt of new information indicates the need for adjustment in valuation allowances. Additionally, the effect of changes in tax laws, tax regulations, or interpretations of such laws or regulations, is recognized in net income tax expense (benefit) in the period of change. The Company determines whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded on the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. Unrecognized tax benefits due to tax uncertainties that do not meet the threshold are included within other liabilities and are charged to earnings in the period that such determination is made. The Company classifies interest recognized as interest expense and penalties recognized as a component of income tax expense. On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (“the Tax Act”) into law. The Tax Act reduced the corporate tax rate to 21%, limited deductibility of interest expense, increased capitalization amounts for deferred acquisition costs, eliminated the corporate alternative minimum tax, provided for determining reserve deductions as 92.81% of statutory reserves, and reduced the dividend received deduction. Most of the changes in the Tax Act were effective as of January 1, 2018. In December 2017, the U.S. Securities and Exchange Commission issued Staff Accounting Bulletin (“SAB”) 118, addressing the application of GAAP in situations when a registrant does not have necessary information available to complete the accounting for certain income tax effects of the Tax Act. SAB 118 provides guidance for registrants under three scenarios: (1) the measurement of certain income tax effects is complete, (2) the measurement of certain income tax effects can be reasonably estimated, and (3) the measurement of certain income tax effects cannot be reasonably estimated. SAB 118 provides that the measurement period is complete when a company’s accounting is complete. The measurement period cannot extend beyond one year from the enactment date. The Company completed its accounting for the tax effects of the Tax Act as of December 31, 2018. The corporate rate reduction also left certain tax effects, which were originally recorded using the previous corporate rate, stranded in accumulated other comprehensive income (“AOCI”). The Company adopted new accounting guidance as of December 31, 2017 that allowed the Company to reclassify the stranded tax effects from AOCI into retained earnings. The Company elected to reclassify amounts based on the difference between the previously enacted statutory tax rate and the newly enacted rate as applied on an aggregate basis. See Note 11 for more information. |
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Litigation Contingencies | Litigation Contingencies The Company is a party to a number of legal actions and may be involved in a number of regulatory investigations. Given the inherent unpredictability of these matters, it is difficult to estimate the impact, on the Company’s financial position. Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Legal costs are recognized as incurred. On a quarterly and annual basis, the Company reviews relevant information with respect to liabilities for litigation, regulatory investigations and litigation-related contingencies to be reflected on the Company’s financial statements. |
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Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid securities and other investments purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. Cash equivalents are stated at amortized cost, which approximates estimated fair value. |
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New Accounting Pronouncements, Policy [Policy Text Block] | Adoption of New Accounting Pronouncements Changes to GAAP are established by the FASB in the form of accounting standards updates (“ASU”) to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. ASUs not listed below were assessed and determined to be either not applicable or are not expected to have a material impact on the Company’s financial statements. The following table provides a description of new ASUs issued by the FASB and the expected impact of the adoption on the Company’s financial statements. Except as noted below, the ASUs adopted by the Company during 2018 did not have a material impact on its financial statements. ASUs adopted as of December 31, 2018 are summarized in the table below.
ASUs issued but not yet adopted as of December 31, 2018 are summarized in the table below.
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Segment Information (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Information, by Segment |
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Premiums, Universal Life and Investment-Type Policy Fees and Other Revenue by Product Groups for Reportable Segment | The following table presents total premiums, universal life and investment-type product policy fees and other revenues by major product groups of the Company’s segments, as well as Corporate & Other:
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Reconciliation of Revenue from Segments to Consolidated [Table Text Block] | The following table presents total revenues with respect to the Company’s segments, as well as Corporate & Other:
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Insurance (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance Liabilities | Insurance liabilities, including affiliated insurance liabilities on reinsurance ceded, are comprised of future policy benefits, policyholder account balances and other policy-related balances. Information regarding insurance liabilities by segment, as well as Corporate & Other, was as follows at:
See Note 5 for discussion of affiliated reinsurance liabilities included in the table above. |
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Liabilities for Guarantees | Information regarding the liabilities for guarantees (excluding policyholder account balances and embedded derivatives) relating to variable annuity contracts was as follows:
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Guarantees Related to Annuity, Universal and Variable Life Contracts | Information regarding the Company’s guarantee exposure was as follows at:
______________
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Fund Groupings | Account balances of contracts with guarantees were invested in separate account asset classes as follows at:
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Schedule of Liability Recorded and Collateral Pledged for Funding Agreements | Invested assets on deposit and pledged as collateral are presented below at estimated fair value at:
__________________
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Deferred Policy Acquisition Costs, Value of Business Acquired and Other Policy-Related Intangibles (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Policy Acquisition Costs and Present Value of Future Insurance Profits, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Policy Acquisition Costs and Value of Business Acquired | Information regarding DAC and VOBA was as follows:
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Deferred Policy Acquisition Costs [Table Text Block] | Information regarding DAC and VOBA was as follows:
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Information Regarding Deferred Policy Acquisition Costs and Value of Business Acquired by Segment | Information regarding total DAC and VOBA by segment, as well as Corporate & Other, was as follows at:
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Deferred Sales Inducements | Information regarding other intangibles was as follows:
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Value of Distribution Agreements and Customer Relationships Acquired | Information regarding other intangibles was as follows:
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Estimated Future Amortization Expense | The estimated future amortization expense to be reported in other expenses for the next five years is as follows:
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Reinsurance (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effects of Reinsurance [Table Text Block] | The amounts on the balance sheets include the impact of reinsurance. Information regarding the significant effects of reinsurance was as follows at:
The amounts on the statements of operations include the impact of reinsurance. Information regarding the significant effects of reinsurance was as follows:
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Affiliated Entity [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reinsurance Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effects of Reinsurance [Table Text Block] | Information regarding the significant effects of related party reinsurance included on the statements of operations was as follows:
Information regarding the significant effects of ceded related party reinsurance included on the balance sheets was as follows at:
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Investments (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed Maturity and Equity Securities Available-for-Sale | The following table presents the fixed maturity securities AFS by sector at:
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Available-for-sale fixed maturity securities by contractual maturity date | The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at December 31, 2018:
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Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale | The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities AFS in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position at:
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Disclosure of Mortgage Loans Net of Valuation Allowance | Mortgage loans are summarized as follows at:
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Components of net unrealized investment gains (losses) included in accumulated other comprehensive income (loss) | The components of net unrealized investment gains (losses), included in AOCI, were as follows:
The changes in net unrealized investment gains (losses) were as follows:
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Invested Assets on Deposit, Held in Trust and Pledged as Collateral | Invested assets on deposit and pledged as collateral are presented below at estimated fair value at:
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Schedule of Variable Interest Entities [Table Text Block] | The Company’s maximum exposure to loss on these fixed maturity securities is limited to the amortized cost of these investments. See “— Fixed Maturity Securities AFS” for information on these securities.
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The Components of Net Investment Income | The components of net investment income were as follows:
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The components of net investment gains (losses) | The components of net investment gains (losses) were as follows:
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Proceeds from sales or disposals of fixed maturity and equity securities and the components of fixed maturity and equity securities net investment gains and losses | Proceeds from sales or disposals of fixed maturity securities and the components of fixed maturity securities net investment gains (losses) were as shown in the table below.
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Disclosure of the mortgage loans portfolio segment by the recorded investment, prior to valuation allowances, by credit quality indicator categories | The credit quality of agricultural mortgage loans was as follows at:
The credit quality of commercial mortgage loans was as follows at:
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Derivatives (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location | The following table presents the primary underlying risk exposure, gross notional amount, and estimated fair value of the Company’s derivatives, excluding embedded derivatives, held at:
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Offsetting Assets [Table Text Block] | The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at:
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Offsetting Liabilities [Table Text Block] | The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at:
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Derivative Instruments, Gain (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) [Table Text Block] | The following tables present the amount and location of gains (losses) recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses):
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Derivatives, Methods of Accounting, Derivatives Not Designated or Qualifying as Hedges [Policy Text Block] | The following tables present the amount and location of gains (losses) recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses):
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Components of Net Derivatives Gains (Losses) | The following tables present the amount and location of gains (losses) recognized for derivatives and gains (losses) pertaining to hedged items presented in net derivative gains (losses):
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Net Embedded Derivatives | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Derivatives Gains (Losses) | The following table presents changes in estimated fair value related to embedded derivatives:
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Schedule of Derivative Instruments | The following table presents the estimated fair value and balance sheet location of the Company’s embedded derivatives that have been separated from their host contracts at:
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Fair Value (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recurring Fair Value Measurements |
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Fair Value Measurement Inputs and Valuation Techniques [Table Text Block] | The following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at:
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The Company does not develop unobservable inputs used in measuring fair value for all other assets and liabilities classified within Level 3; therefore, these are not included in the table above. The other Level 3 assets and liabilities primarily included fixed maturity securities and derivatives. For fixed maturity securities valued based on non-binding broker quotes, an increase (decrease) in credit spreads would result in a higher (lower) fair value. For derivatives valued based on third-party pricing models, an increase (decrease) in credit spreads would generally result in a higher (lower) fair value. Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) The following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at:
______________
The Company does not develop unobservable inputs used in measuring fair value for all other assets and liabilities classified within Level 3; therefore, these are not included in the table above. The other Level 3 assets and liabilities primarily included fixed maturity securities and derivatives. For fixed maturity securities valued based on non-binding broker quotes, an increase (decrease) in credit spreads would result in a higher (lower) fair value. For derivatives valued based on third-party pricing models, an increase (decrease) in credit spreads would generally result in a higher (lower) fair value. |
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Fair Value, Measured on Recurring Basis, Unobservable Input Reconciliation | The following tables summarize the change of all assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3):
______________
|
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Fair Value of Financial Instruments Carried at Other Than Fair Value | The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at:
|
Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of statutory net income, capital and surplus and reserve strengthening by subsidiary | Statutory net income (loss) was as follows:
Statutory capital and surplus were as follows at:
|
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Components of Accumulated Other Comprehensive Income (Loss) | Information regarding changes in the balances of each component of AOCI was as follows:
______________
|
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Reclassification out of Accumulated Other Comprehensive Income (Loss) | Information regarding amounts reclassified out of each component of AOCI was as follows:
|
Other Expenses (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Expenses | Information on other expenses was as follows:
|
Income Tax (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Tax Credit Carryforwards [Table Text Block] | The following table sets forth the foreign tax credits available for carryforward for tax purposes at December 31, 2018.
|
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Provision for income tax from continuing operations | The provision for income tax was as follows:
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Income tax for continuing operations effective rate reconciliation | The reconciliation of the income tax provision at the statutory tax rate to the provision for income tax as reported was as follows:
__________________
|
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Components of deferred tax assets and liabilities | Net deferred income tax assets and liabilities consisted of the following at:
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Reconciliation of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
|
Business, Basis of Presentation and Summary of Significant Accounting Policies (Narrative) (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Aug. 04, 2017 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of segments | 2 | |
Distribution Rights [Member] | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization period | 10 years | |
Distribution Rights [Member] | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization period | 40 years | |
Parent shareholders' percentage [Member] | Spinoff [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Common Stock Distribution by Parent | 80.80% |
Segment Information (Reconciliation of Operating Revenues to Total Revenues) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Segment Reporting Information [Line Items] | |||
Revenues | $ 155,049 | $ 11,665 | $ 304,700 |
Annuities | |||
Segment Reporting Information [Line Items] | |||
Revenues | 102,835 | 106,762 | 125,308 |
Life | |||
Segment Reporting Information [Line Items] | |||
Revenues | 59,863 | 36,646 | 86,089 |
Corporate & Other | |||
Segment Reporting Information [Line Items] | |||
Revenues | 4,369 | 12,789 | 15,135 |
Segment Reconciling Items | |||
Segment Reporting Information [Line Items] | |||
Revenues | $ (12,018) | $ (144,532) | $ 78,168 |
Segment Information (Total Assets and Liabilities) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Total assets | $ 8,130,125 | $ 8,486,305 |
Separate account assets | 4,268,423 | 5,021,633 |
Separate account liabilities | 4,268,423 | 5,021,633 |
Annuities | ||
Segment Reporting Information [Line Items] | ||
Total assets | 7,034,394 | 7,219,139 |
Separate account assets | 4,268,423 | 5,021,633 |
Separate account liabilities | 4,268,423 | 5,021,633 |
Life | ||
Segment Reporting Information [Line Items] | ||
Total assets | 1,083,641 | 662,546 |
Separate account assets | 0 | 0 |
Separate account liabilities | 0 | 0 |
Corporate & Other | ||
Segment Reporting Information [Line Items] | ||
Total assets | 12,090 | 604,620 |
Separate account assets | 0 | 0 |
Separate account liabilities | $ 0 | $ 0 |
Segment Information (Premiums, Universal Life and Investment-Type Policy Fees and Other Revenues by Major Product Groups) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Segment Reporting Information [Line Items] | |||
Total premiums, universal life and investment-type product policy fees and other revenues | $ 80,738 | $ 83,738 | $ 182,931 |
Annuity products | |||
Segment Reporting Information [Line Items] | |||
Total premiums, universal life and investment-type product policy fees and other revenues | 53,025 | 63,813 | 112,018 |
Life insurance products | |||
Segment Reporting Information [Line Items] | |||
Total premiums, universal life and investment-type product policy fees and other revenues | $ 27,713 | $ 19,925 | $ 70,913 |
Insurance (Insurance Liabilities) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Insurance Liabilities [Line Items] | ||
Insurance liabilities comprised of future policy benefits, policyholder account balances and other policy-related balances | $ 2,420,385 | $ 2,030,109 |
Annuities | ||
Insurance Liabilities [Line Items] | ||
Insurance liabilities comprised of future policy benefits, policyholder account balances and other policy-related balances | 2,050,867 | 1,675,039 |
Life | ||
Insurance Liabilities [Line Items] | ||
Insurance liabilities comprised of future policy benefits, policyholder account balances and other policy-related balances | 359,798 | 346,084 |
Corporate & Other | ||
Insurance Liabilities [Line Items] | ||
Insurance liabilities comprised of future policy benefits, policyholder account balances and other policy-related balances | $ 9,720 | $ 8,986 |
Insurance (Guarantees Related to Annuity Contracts) (Details) - Variable Annuity - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Guaranteed Minimum Death Benefit | ||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ||
Net Amount at Risk by Product and Guarantee, General Account Value | $ 4,274,326 | $ 5,026,927 |
Net Amount at Risk by Product and Guarantee, Separate Account Value | 4,266,520 | 5,020,107 |
Net amount at risk | $ 193,102 | $ 5,262 |
Average attained age of contractholders | 67 years | 66 years |
Annuitization Benefit [Member] | ||
Liabilities for Guarantees on Long-Duration Contracts [Line Items] | ||
Net Amount at Risk by Product and Guarantee, General Account Value | $ 3,483,668 | $ 4,149,482 |
Net Amount at Risk by Product and Guarantee, Separate Account Value | 3,482,829 | 4,149,482 |
Net amount at risk | $ 274,632 | $ 166,788 |
Average attained age of contractholders | 67 years | 66 years |
Insurance (Fund Groupings) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items] | ||
Fund Groupings | $ 4,268,423 | $ 5,021,633 |
Equity | ||
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items] | ||
Fund Groupings | 1,013,778 | 1,513,408 |
Balanced | ||
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items] | ||
Fund Groupings | 2,768,739 | 3,099,888 |
Bond | ||
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items] | ||
Fund Groupings | 485,906 | 359,929 |
Money Market | ||
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items] | ||
Fund Groupings | $ 0 | $ 48,408 |
Deferred Policy Acquisition Costs, Value of Business Acquired and Other Policy-Related Intangibles (DAC and VOBA by Segment) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Segment Reporting Information [Line Items] | |||
DAC and VOBA | $ 185,586 | $ 131,059 | $ 85,173 |
Annuities | |||
Segment Reporting Information [Line Items] | |||
DAC and VOBA | 163,301 | 107,760 | |
Life | |||
Segment Reporting Information [Line Items] | |||
DAC and VOBA | 22,098 | 23,101 | |
Corporate & Other | |||
Segment Reporting Information [Line Items] | |||
DAC and VOBA | $ 187 | $ 198 |
Deferred Policy Acquisition Costs, Value of Business Acquired and Other Policy-Related Intangibles (Deferred Sales Inducements) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
DSI | |||
Balance at January 1, | $ 26,923 | $ 29,647 | $ 37,114 |
Capitalization | 128 | 155 | 350 |
Amortization | (2,844) | (479) | (7,017) |
Unrealized investment gains (losses) | 5,300 | (2,400) | (800) |
Balance at December 31, | $ 29,507 | $ 26,923 | $ 29,647 |
Deferred Policy Acquisition Costs, Value of Business Acquired and Other Policy-Related Intangibles (VODA ) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Insurance [Abstract] | |||
Balance at January 1, | $ 8,579 | $ 9,862 | $ 11,222 |
Amortization | (1,184) | (1,283) | (1,360) |
Balance at December 31, | 7,395 | 8,579 | 9,862 |
Accumulated amortization | $ 12,119 | $ 10,935 | $ 9,652 |
Deferred Policy Acquisition Costs, Value of Business Acquired and Other Policy-Related Intangibles (Estimated Future Amortization) (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Estimated future amortization expense allocated to other expenses for VOBA [Abstract] | |
VOBA 2019 | $ 62 |
VOBA 2020 | 0 |
VOBA 2021 | 0 |
VOBA 2022 | 0 |
VOBA 2023 | 0 |
Value of Distribution Agreements and Customer Relationships Acquired [Abstract] | |
VODA 2019 | 1,073 |
VODA 2020 | 956 |
VODA 2021 | 841 |
VODA 2022 | 730 |
VODA 2023 | $ 633 |
Reinsurance (Effects of Reinsurance on Earnings) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Premiums: | |||
Direct premiums | $ 90,979 | $ 93,196 | $ 109,733 |
Reinsurance ceded | (53,951) | (66,928) | (58,994) |
Net premiums | 37,028 | 26,268 | 50,739 |
Direct universal life and investment-type product policy fees | 105,848 | 107,605 | 106,830 |
Reinsurance ceded | (3,958) | (3,869) | (3,830) |
Net universal life and investment-type product policy fees | 101,890 | 103,736 | 103,000 |
Other revenues: | |||
Direct other revenues | 13,450 | 13,016 | 12,494 |
Reinsurance ceded | (71,630) | (59,282) | 16,698 |
Net other revenues | (58,180) | (46,266) | 29,192 |
Policyholder benefits and claims: | |||
Direct policyholder benefits and claims | 98,166 | 105,551 | 128,420 |
Reinsurance ceded | (90,678) | (110,325) | (76,440) |
Net policyholder benefits and claims | 7,488 | (4,774) | 51,980 |
Other expenses: | |||
Total other expenses | $ 66,050 | $ 65,953 | $ 57,027 |
Reinsurance (Effects of Reinsurance on Balance Sheet) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Assets: | |||
Premiums, reinsurance and other receivables | $ 580,480 | $ 572,609 | |
Deferred policy acquisition costs and value of business acquired | 185,586 | 131,059 | $ 85,173 |
Liabilities: | |||
Other policy-related balances | 9,288 | 12,733 | |
Other Liabilities | 471,490 | 471,130 | |
Direct | |||
Assets: | |||
Premiums, reinsurance and other receivables | 17,613 | 20,852 | |
Liabilities: | |||
Other policy-related balances | 9,288 | 12,733 | |
Other Liabilities | 39,997 | 21,643 | |
Ceded | |||
Assets: | |||
Premiums, reinsurance and other receivables | 562,867 | 551,757 | |
Liabilities: | |||
Other policy-related balances | 0 | 0 | |
Other Liabilities | $ 431,493 | $ 449,487 |
Reinsurance (Effects of Affiliated Reinsurance on Statements of Operations) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Premiums: | |||
Reinsurance ceded | $ (53,951) | $ (66,928) | $ (58,994) |
Reinsurance ceded | (3,958) | (3,869) | (3,830) |
Other revenues: | |||
Reinsurance ceded | (71,630) | (59,282) | 16,698 |
Policyholder benefits and claims: | |||
Reinsurance ceded | (90,678) | (110,325) | (76,440) |
Deferred Policy Acquisition Costs and Present Value of Future Insurance Profits, Amortization | (732) | 39,997 | (23,217) |
Affiliated Entity [Member] | Ceded | |||
Premiums: | |||
Reinsurance ceded | (37,227) | (51,944) | (44,259) |
Reinsurance ceded | (3,676) | (3,680) | (3,645) |
Other revenues: | |||
Reinsurance ceded | (71,706) | (59,272) | 16,701 |
Policyholder benefits and claims: | |||
Reinsurance ceded | $ (89,445) | $ (99,990) | $ (71,948) |
Reinsurance (Effects of Affiliated Reinsurance on Balance Sheets) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Assets: | |||
Premiums, reinsurance and other receivables | $ 580,480 | $ 572,609 | |
Deferred policy acquisition costs and value of business acquired | 185,586 | 131,059 | $ 85,173 |
Liabilities: | |||
Future policy benefits | 718,599 | 674,046 | |
Policyholder account balances | 1,692,498 | 1,343,330 | |
Other Liabilities | 471,490 | 471,130 | |
Ceded | |||
Assets: | |||
Premiums, reinsurance and other receivables | 562,867 | 551,757 | |
Liabilities: | |||
Other Liabilities | 431,493 | 449,487 | |
Ceded | Affiliated Entity [Member] | |||
Assets: | |||
Premiums, reinsurance and other receivables | 534,487 | 533,388 | |
Liabilities: | |||
Other Liabilities | $ 429,656 | $ 448,210 |
Investments (Maturities of Fixed Maturity Securities) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Available-for-sale Securities, Debt Maturities [Abstract] | ||
Amortized Cost, Due in one year or less | $ 58,861 | |
Amortized Cost, Due after one year through five years | 340,282 | |
Amortized Cost, Due after five years through ten years | 863,117 | |
Amortized Cost, Due after ten years | 601,417 | |
Amortized Cost, Structured Securities | 606,124 | |
Amortized Cost, Subtotal | 2,469,801 | $ 2,165,134 |
Estimated Fair Value, Due in one year or less | 59,323 | |
Estimated Fair Value, Due after one year through five years | 335,699 | |
Estimated Fair Value, Due after five years through ten years | 840,602 | |
Estimated Fair Value, Due after ten years | 593,739 | |
Estimated Fair Value, Structured Securities | 604,270 | |
Debt Securities, Available-for-sale | $ 2,433,633 | $ 2,221,563 |
Investments (Mortgage Loans by Portfolio Segment) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Notes, Loans and Financing Receivable, Net, Current [Abstract] | ||
Commercial mortgage loans | $ 310,681 | $ 276,626 |
Percentage of loans receivable on commercial mortgage loans | 69.30% | 70.00% |
Agricultural mortgage loans | $ 139,361 | $ 119,984 |
Percentage of loans receivable on agricultural mortgage loans | 31.10% | 30.40% |
Subtotal | $ 450,042 | $ 396,610 |
Percentage of loans receivable on subtotal | 100.40% | 100.40% |
Valuation allowances | $ (1,937) | $ (1,747) |
Percentage of loans receivable on valuation allowances | (0.40%) | (0.40%) |
Mortgage Loans on Real Estate, Commercial and Consumer, Net | $ 448,105 | $ 394,863 |
Percentage of total mortgage loans, net | 100.00% | 100.00% |
Investments (Net Unrealized Investment Gains Losses) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Components of net unrealized investment gains (losses) included in accumulated other comprehensive loss | |||
Fixed maturity securities | $ (36,166) | $ 56,432 | $ 7,862 |
Derivatives | 5,791 | 471 | 4,718 |
Subtotal | (30,375) | 56,903 | 12,580 |
DAC, VOBA and DSI | 11,299 | (19,400) | (5,800) |
Deferred income tax benefit (expense) | 4,005 | (7,875) | (2,373) |
Net unrealized investment gains (losses) | $ (15,071) | $ 29,628 | $ 4,407 |
Investments (Changes in Net Unrealized Investment Gains Losses) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Changes In Net Unrealized Investment Gains Losses Included In Accumulated Other Comprehensive Loss [Abstract] | |||
Balance at January 1, | $ 29,628 | $ 4,407 | $ 5,406 |
Unrealized investment gains (losses) during the year | (87,278) | 44,323 | 3,363 |
Unrealized investment gains (losses) relating to [Abstract] | |||
DAC, VOBA and DSI | 30,699 | (13,600) | (4,900) |
Deferred income tax benefit (expense) | 11,880 | (5,502) | 538 |
Balance at December 31, | (15,071) | 29,628 | 4,407 |
Change in net unrealized investment gains (losses) | $ (44,699) | $ 25,221 | $ (999) |
Investments (Invested Assets on Deposit, Held In Trust and Pledged as Collateral) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Invested assets on deposit | $ 1,482 | $ 1,549 |
Invested Assets Pledged As Collateral | 158 | 707 |
Total Invested Assets On Deposit And Pledged As Collateral | $ 1,640 | $ 2,256 |
Investments (Unconsolidated Variable Interest Entities) (Details) - Fixed maturity securities - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Variable Interest Entity [Line Items] | ||
Carrying Amount Asset | $ 409,699 | $ 437,800 |
Carrying Amount Liability | $ 409,699 | $ 437,800 |
Investments (Net Investment Income) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Net Investment Income [Line Items] | |||
Less: Investment expenses | $ 5,509 | $ 3,156 | $ 1,958 |
Net investment income | 99,791 | 86,327 | 57,780 |
Securities Investment | |||
Net Investment Income [Line Items] | |||
Gross Investment Income, Operating | 105,300 | 89,483 | 59,738 |
Fixed maturity securities | |||
Net Investment Income [Line Items] | |||
Gross Investment Income, Operating | 85,966 | 71,779 | 50,386 |
Mortgage loans | |||
Net Investment Income [Line Items] | |||
Gross Investment Income, Operating | 17,201 | 16,665 | 8,734 |
Cash, cash equivalents and short-term investments | |||
Net Investment Income [Line Items] | |||
Gross Investment Income, Operating | 1,309 | 261 | 102 |
Other | |||
Net Investment Income [Line Items] | |||
Gross Investment Income, Operating | $ 824 | $ 778 | $ 516 |
Investments (Components of Net Investment Gains Losses) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Marketable Securities, Gain (Loss) [Abstract] | |||
Fixed maturity securities — net gains (losses) on sales and disposals | $ (5,407) | $ (1,749) | $ (1,884) |
Equity securities — net gains (losses) on sales and disposals | 0 | 0 | 6 |
Other net investment gains (losses): | |||
Mortgage loans | (234) | (42) | (1,129) |
Other | (1,553) | 613 | 140 |
Total net investment gains (losses) | (7,194) | (1,178) | (3,737) |
Fixed maturity securities | |||
Gain (Loss) on Securities [Line Items] | |||
Total OTTI losses recognized in earnings | 0 | 0 | (870) |
Net investment gains (losses) | $ (5,407) | $ (1,749) | $ (2,754) |
Investments (Sales or Disposals and Impairments of Fixed Maturity and Equity Securities) (Details) - Fixed maturity securities - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Debt Securities, Available-for-sale Securities [Line Items] | |||
Proceeds | $ 274,002 | $ 462,993 | $ 74,657 |
Gross investment gains | 1,160 | 1,879 | 1,006 |
Gross investment losses | (6,567) | (3,628) | (2,890) |
Other than Temporary Impairment Losses, Investments [Abstract] | |||
Total OTTI losses recognized in earnings | 0 | 0 | (870) |
Debt Securities, Available-for-sale, Realized Gain (Loss) [Abstract] | |||
Net investment gains (losses) | $ (5,407) | $ (1,749) | $ (2,754) |
Investments (Fixed Maturity and Equity Securities Available-For-Sale - Narrative) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Summary of Certain Fixed Maturity Securities [Abstract] | ||
Debt Securities, Available-for-sale | $ 2,433,633 | $ 2,221,563 |
Non-Income Producing Debt Securities [Member] | ||
Summary of Certain Fixed Maturity Securities [Abstract] | ||
Debt Securities, Available-for-sale | 0 | 0 |
Available-for-sale Securities, Accumulated Gross Unrealized Gain (Loss), before Tax | $ 0 | $ 0 |
Investments (Cash Equivalents - Narrative) (Details) - USD ($) $ in Millions |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Cash equivalents | $ 89.9 | $ 60.7 |
Investments (Concentrations of Credit Risk - Narrative) (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Investments, Debt and Equity Securities [Abstract] | ||
Investments in any counterparty that were greater than 10% of equity | $ 0 | $ 0 |
Securities holdings exposure in single issuer greater than stated percentage of Company's equity | 10.00% |
Investments (Consolidated Variable Interest Entities - Narrative) (Details) |
Dec. 31, 2017
USD ($)
|
---|---|
Variable Interest Entity, Consolidated, Carrying Amount, Assets and Liabilities, Net [Abstract] | |
Variable interest, consoldidated carrying amount assets and liabilities net | $ 0 |
Investments (Net Investment Gains Losses - Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Investments, Debt and Equity Securities [Abstract] | |||
Foreign Currency Transaction Gain (Loss), Realized | $ (9) | $ 467 | $ (54) |
Investments (Related Party Investment Transactions - Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Nov. 30, 2016 |
|
Related Party Transaction [Line Items] | ||||
Assets Transferred To Affiliates, Estimated Fair Value | $ 1,500 | |||
Related party net investment income | 64 | |||
Related party investment administrative services | $ 43,900 | $ 38,000 | 19,900 | |
Affiliated Entity [Member] | ||||
Related Party Transaction [Line Items] | ||||
Transfers of Financial Assets Accounted for as Sale, Amortized Cost of Assets Obtained as Proceeds | 1,400 | |||
Metlife Investment Advisors, LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party investment administrative services | $ 2,300 | $ 2,800 | $ 1,900 | |
Affiliated Entity [Member] | Recapture MLUS [Member] | ||||
Related Party Transaction [Line Items] | ||||
Cash, Cash Equivalents, and Short-term Investments | $ 933,400 |
Derivatives Derivatives (Earned Income on Derivatives - Narrative) (Details) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Designated as Hedging Instrument [Member] | Investment Income [Member] | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Interest and Other Income | $ 896 | $ 604 | $ 581 |
Not Designated as Hedging Instrument [Member] | Net Derivative Gains (Losses) | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Interest Income (Expense), Nonoperating, Net | $ 374 | $ 326 | $ 279 |
Equity (Capital Transactions - Narrative) (Details) $ in Millions |
1 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
| |
Equity [Abstract] | |
Capital contribution | $ 75 |
Equity (Statutory Income - Narrative) (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Equity [Abstract] | ||
Total adjusted capital of Brighthouse New York | 400% | 400% |
Statutory Accounting Practices, Prescribed Practice, Amount | $ 46.7 | $ 47.7 |
Equity (Statutory Income) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Equity [Abstract] | |||
Statutory net income (loss) | $ 18,778 | $ 22,166 | $ (87,290) |
Statutory capital and surplus | $ 279,206 | $ 294,298 |
Equity (Dividend Restrictions - Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2019 |
|
Payments of Dividends | $ 0 | $ 0 | |
Scenario, Forecast [Member] | |||
Statutory Accounting Practices, Statutory Amount Available for Dividend Payments without Regulatory Approval | $ 27,700 |
Other Revenues and Other Expenses Other Revenues (Narrative) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Distribution Service [Member] | |||
Revenue from Contract with Customer, Including Assessed Tax | $ 13.5 | $ 13.5 | $ 12.5 |
Other Expenses (Other Expenses) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Other Income and Expenses [Abstract] | |||
Compensation | $ 13,449 | $ 13,508 | $ 8,535 |
Professional services | 8,999 | 5,210 | 2,011 |
Transition Services Agreements | 10,976 | 11,843 | 0 |
Establishment Costs | 5,094 | 0 | 0 |
Premium taxes, licenses and fees | 3,081 | 3,795 | 2,590 |
Custody Fees | 0 | 11 | (46) |
Volume-related costs | 18,723 | 22,677 | 23,484 |
Other | 5,728 | 8,909 | 20,453 |
Total other expenses | $ 66,050 | $ 65,953 | $ 57,027 |
Income Tax (Provision for Income Tax from Continuing Operations) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Current: | |||
Federal | $ (2,171) | $ 17,352 | $ (57,108) |
Foreign | 12 | 17 | 0 |
Current Income Tax Expense (Benefit) | (2,159) | 17,369 | (57,108) |
Deferred: | |||
Federal | 7,236 | (118,094) | 99,260 |
Income Tax Expense (Benefit) | $ 5,077 | $ (100,725) | $ 42,152 |
Income Tax (Reconciliation of Income Tax Provision between US Statutory Rate and As Reported for Continuing Operations) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income tax expense benefit continuing operations income tax reconciliation | |||
Tax provision at U.S. statutory rate | $ 9,010 | $ (17,129) | $ 46,397 |
Effective Income Tax Reconciliation, Tax Cuts and Jobs Act of 2017, Amount | 0 | (77,308) | 0 |
Effective Income Tax Rate Reconciliation, Deduction, Dividends, Amount | (1,689) | (5,159) | (4,732) |
Prior year tax | (1,062) | (493) | 1,282 |
Tax credits | (953) | (636) | (797) |
Other, net | (229) | 0 | 2 |
Provision for income tax expense (benefit) | $ 5,077 | $ (100,725) | $ 42,152 |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 12.00% | 206.00% | 32.00% |
Income Tax (Net Deferred Income Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred income tax assets: | ||
Tax Credit Carryforward, Amount | $ 2,068 | $ 3,463 |
Deferred Tax Assets, Operating Loss Carryforwards | 2,552 | 3,661 |
Deferred Tax Assets, Other Comprehensive Loss | 4,006 | 0 |
Deferred Tax Assets, Investments | 3,015 | 0 |
Other | 33 | 2,973 |
Total deferred income tax assets | 11,674 | 10,097 |
Deferred income tax liabilities: | ||
Investments, including derivatives | 0 | 958 |
Deferred Tax Liabilities, Deferred Expense, Reserves and Accruals | 93,702 | 94,717 |
Intangibles | 1,141 | 1,384 |
Net unrealized investment gains | 0 | 7,875 |
DAC | 24,684 | 17,661 |
Total deferred income tax liabilities | 119,527 | 122,595 |
Deferred tax assets and liabilities [Abstract] | ||
Net deferred income tax asset (liability) | $ (107,853) | $ (112,498) |
Income Tax (Reconciliation of Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Reconciliation of Unrecognized Tax Benefits | |||
Balance at January 1, | $ 976 | $ 1,204 | $ 983 |
Additions for tax positions of prior years | 0 | 49 | 300 |
Reductions for tax positions of prior years | (27) | (62) | (23) |
Additions for tax positions of current year | 0 | 169 | 300 |
Reductions for tax positions of current year | 0 | (318) | 0 |
Settlements with tax authorities | 0 | (66) | (356) |
Balance at December 31, | 949 | 976 | 1,204 |
Unrecognized tax benefits that, if recognized would impact the effective rate | $ 949 | $ 976 | $ 1,130 |
Income Tax Income Tax Penalties (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Penalties [Abstract] | |||
Income Tax Examination, Penalties Expense | $ 0 | $ 0 | $ 0 |
Income Tax (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
Nov. 30, 2018 |
Oct. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Effective Income Tax Reconciliation, Tax Cuts and Jobs Act of 2017, Amount | $ 0 | $ 77,308 | $ 0 | ||
Deferred Tax Assets, Operating Loss Carryforwards, Components [Abstract] | |||||
Deferred Tax Assets, Operating Loss Carryforwards | 2,552 | 3,661 | |||
Operating Loss Carryforwards | 12,200 | ||||
Related Party Transactions, By Related Party [Abstract] | |||||
Due from Related Parties | 958 | ||||
Current income tax payable | 1,755 | 2,064 | |||
Metlife Inc [Member] | |||||
Related Party Transactions, By Related Party [Abstract] | |||||
Related Party Transaction, Amounts of Transaction | $ 55,600 | ||||
Income Taxes Paid | $ 1,700 | ||||
Current income tax payable | $ 3,200 | ||||
Alternative Minimum Tax adjustment [Member] | |||||
Effective Income Tax Reconciliation, Tax Cuts and Jobs Act of 2017, Amount | $ (77,300) |
Contingencies, Commitments and Guarantees (Commitments - Narrative) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Mortgage Loan Commitments | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Off-balance sheet commitments | $ 7,600 | $ 355 |
Commitments to Fund Private Corporate Bond Investments | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Off-balance sheet commitments | $ 11,400 | $ 11,600 |
Contingencies, Commitments and Guarantees (Guarantees - Narrative) (Details) - USD ($) |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Guarantees [Abstract] | ||
Liabilities for indemnities, guarantees and commitments | $ 0 | $ 0 |
Related Party Transactions (Related Party Transactions) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Related Party Transaction [Line Items] | |||
Related Party Transaction, Selling, General and Administrative Expenses from Transactions with Related Party | $ 43,900 | $ 38,000 | $ 19,900 |
Insurance Commissions and Fees | 101,890 | 103,736 | 103,000 |
Related Party Transaction, Due from (to) Related Party | 622 | 8,600 | |
Costs and Expenses, Related Party | 2,800 | 0 | |
Due from Related Parties | 958 | ||
Affiliated Entity [Member] | |||
Related Party Transaction [Line Items] | |||
Insurance Commissions and Fees | 12,400 | 12,700 | 13,000 |
Broker Dealer Activities [Member] | |||
Related Party Transaction [Line Items] | |||
Revenue from Related Parties | 12,300 | 12,400 | 10,000 |
Related Party Transaction, Expenses from Transactions with Related Party | 57,900 | 39,300 | $ 32,200 |
Due from Related Parties | $ 951 | $ 1,100 |
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