þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 75-3108137 | |
State of Incorporation | IRS Employer Identification No. | |
11825 N. Pennsylvania Street | ||
Carmel, Indiana 46032 | (317) 817-6100 | |
Address of principal executive offices | Telephone |
PART I - FINANCIAL INFORMATION | Page | |
Item 1. | Financial Statements | |
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II - OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 5. | ||
Item 6. |
ITEM 1. | FINANCIAL STATEMENTS. |
June 30, 2012 | December 31, 2011 | ||||||
Investments: | |||||||
Fixed maturities, available for sale, at fair value (amortized cost: June 30, 2012 - $22,033.0; December 31, 2011 - $21,779.1) | $ | 24,276.6 | $ | 23,516.0 | |||
Equity securities at fair value (cost: June 30, 2012 - $188.0; December 31, 2011 - $177.0) | 187.3 | 175.1 | |||||
Mortgage loans | 1,550.9 | 1,602.8 | |||||
Policy loans | 274.7 | 279.7 | |||||
Trading securities | 114.8 | 91.6 | |||||
Investments held by variable interest entities | 789.3 | 496.3 | |||||
Other invested assets | 257.1 | 202.8 | |||||
Total investments | 27,450.7 | 26,364.3 | |||||
Cash and cash equivalents - unrestricted | 190.2 | 436.0 | |||||
Cash and cash equivalents held by variable interest entities | 88.6 | 74.4 | |||||
Accrued investment income | 296.4 | 288.7 | |||||
Present value of future profits | 658.1 | 697.7 | |||||
Deferred acquisition costs | 591.4 | 797.1 | |||||
Reinsurance receivables | 3,013.8 | 3,091.1 | |||||
Income tax assets, net | 679.7 | 865.4 | |||||
Assets held in separate accounts | 15.6 | 15.0 | |||||
Other assets | 395.8 | 292.2 | |||||
Total assets | $ | 33,380.3 | $ | 32,921.9 |
June 30, 2012 | December 31, 2011 | ||||||
Liabilities: | |||||||
Liabilities for insurance products: | |||||||
Interest-sensitive products | $ | 12,956.3 | $ | 13,165.5 | |||
Traditional products | 10,604.6 | 10,482.7 | |||||
Claims payable and other policyholder funds | 991.9 | 1,034.3 | |||||
Liabilities related to separate accounts | 15.6 | 15.0 | |||||
Other liabilities | 686.0 | 556.3 | |||||
Investment borrowings | 1,687.9 | 1,676.5 | |||||
Borrowings related to variable interest entities | 766.7 | 519.9 | |||||
Notes payable – direct corporate obligations | 778.2 | 857.9 | |||||
Total liabilities | 28,487.2 | 28,308.1 | |||||
Commitments and Contingencies | |||||||
Shareholders' equity: | |||||||
Common stock ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: June 30, 2012 - 234,026,409; December 31, 2011 – 241,304,503) | 2.3 | 2.4 | |||||
Additional paid-in capital | 4,312.0 | 4,361.9 | |||||
Accumulated other comprehensive income | 990.8 | 781.6 | |||||
Accumulated deficit | (412.0 | ) | (532.1 | ) | |||
Total shareholders' equity | 4,893.1 | 4,613.8 | |||||
Total liabilities and shareholders' equity | $ | 33,380.3 | $ | 32,921.9 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 694.8 | $ | 679.6 | $ | 1,381.1 | $ | 1,346.8 | |||||||
Net investment income (loss): | |||||||||||||||
General account assets | 351.1 | 342.2 | 696.3 | 678.3 | |||||||||||
Policyholder and reinsurer accounts and other special-purpose portfolios | (17.3 | ) | 3.1 | 48.3 | 40.5 | ||||||||||
Realized investment gains (losses): | |||||||||||||||
Net realized investment gains, excluding impairment losses | 35.4 | 13.0 | 66.2 | 31.4 | |||||||||||
Other-than-temporary impairment losses: | |||||||||||||||
Total other-than-temporary impairment losses | (3.5 | ) | (10.1 | ) | (11.4 | ) | (23.4 | ) | |||||||
Portion of other-than-temporary impairment losses recognized in accumulated other comprehensive income | — | — | — | — | |||||||||||
Net impairment losses recognized | (3.5 | ) | (10.1 | ) | (11.4 | ) | (23.4 | ) | |||||||
Total realized gains (losses) | 31.9 | 2.9 | 54.8 | 8.0 | |||||||||||
Fee revenue and other income | 4.5 | 4.2 | 8.4 | 7.6 | |||||||||||
Total revenues | 1,065.0 | 1,032.0 | 2,188.9 | 2,081.2 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 689.7 | 684.4 | 1,378.7 | 1,367.6 | |||||||||||
Interest expense | 28.7 | 28.9 | 57.5 | 58.1 | |||||||||||
Amortization | 68.3 | 70.6 | 154.9 | 165.5 | |||||||||||
Loss on extinguishment of debt | .5 | .6 | .7 | 2.0 | |||||||||||
Other operating costs and expenses | 173.3 | 175.7 | 400.3 | 345.8 | |||||||||||
Total benefits and expenses | 960.5 | 960.2 | 1,992.1 | 1,939.0 | |||||||||||
Income before income taxes | 104.5 | 71.8 | 196.8 | 142.2 | |||||||||||
Income tax expense on period income | 38.8 | 25.4 | 72.0 | 50.4 | |||||||||||
Net income | $ | 65.7 | $ | 46.4 | $ | 124.8 | $ | 91.8 | |||||||
Earnings per common share: | |||||||||||||||
Basic: | |||||||||||||||
Weighted average shares outstanding | 237,289,000 | 250,933,000 | 239,092,000 | 251,027,000 | |||||||||||
Net income | $ | .28 | $ | .18 | $ | .52 | $ | .37 | |||||||
Diluted: | |||||||||||||||
Weighted average shares outstanding | 293,475,000 | 308,048,000 | 295,409,000 | 307,773,000 | |||||||||||
Net income | $ | .24 | $ | .16 | $ | .45 | $ | .32 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net income | $ | 65.7 | $ | 46.4 | $ | 124.8 | $ | 91.8 | |||||||
Other comprehensive income, before tax: | |||||||||||||||
Unrealized gains for the period | 511.5 | 226.0 | 563.4 | 274.5 | |||||||||||
Amortization of present value of future profits and deferred acquisition costs for: | |||||||||||||||
Unrealized gains during the period | (56.2 | ) | (29.6 | ) | (76.2 | ) | (37.1 | ) | |||||||
Amount related to premium deficiencies assuming the net unrealized gains had been realized | (143.4 | ) | — | (113.1 | ) | — | |||||||||
Reclassification adjustments: | |||||||||||||||
For net realized investment gains included in net income | (31.0 | ) | (5.2 | ) | (52.6 | ) | (14.0 | ) | |||||||
For amortization of the present value of future profits and deferred acquisition costs related to net realized investment gains included in net income | 3.1 | (.6 | ) | 4.2 | (.2 | ) | |||||||||
Unrealized gains on investments | 284.0 | 190.6 | 325.7 | 223.2 | |||||||||||
Change related to deferred compensation plan | .8 | .1 | 1.6 | .4 | |||||||||||
Other comprehensive income before tax | 284.8 | 190.7 | 327.3 | 223.6 | |||||||||||
Income tax expense related to items of accumulated other comprehensive income | (102.0 | ) | (68.5 | ) | (118.1 | ) | (80.8 | ) | |||||||
Other comprehensive income, net of tax | 182.8 | 122.2 | 209.2 | 142.8 | |||||||||||
Comprehensive income | $ | 248.5 | $ | 168.6 | $ | 334.0 | $ | 234.6 |
Common stock and additional paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings (accumulated deficit) | Total | ||||||||||||
Balance, December 31, 2010 (as originally reported) | $ | 4,426.7 | $ | 238.3 | $ | (339.7 | ) | $ | 4,325.3 | ||||||
Cumulative effect of accounting change (adoption of ASU 2010-26) | — | 14.4 | (528.1 | ) | (513.7 | ) | |||||||||
Balance, December 31, 2010 (as adjusted) | 4,426.7 | 252.7 | (867.8 | ) | 3,811.6 | ||||||||||
Net income | — | — | 91.8 | 91.8 | |||||||||||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense of $79.2) | — | 139.9 | — | 139.9 | |||||||||||
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense of $1.6) | — | 2.9 | — | 2.9 | |||||||||||
Cost of shares acquired | (16.2 | ) | — | — | (16.2 | ) | |||||||||
Stock option and restricted stock plans | 6.3 | — | — | 6.3 | |||||||||||
Balance, June 30, 2011 | $ | 4,416.8 | $ | 395.5 | $ | (776.0 | ) | $ | 4,036.3 | ||||||
Balance, December 31, 2011 (as originally reported) | $ | 4,364.3 | $ | 625.5 | $ | 42.8 | $ | 5,032.6 | |||||||
Cumulative effect of accounting change (adoption of ASU 2010-26) | — | 156.1 | (574.9 | ) | (418.8 | ) | |||||||||
Balance, December 31, 2011 (as adjusted) | 4,364.3 | 781.6 | (532.1 | ) | 4,613.8 | ||||||||||
Net income | — | — | 124.8 | 124.8 | |||||||||||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense of $115.9) | — | 205.2 | — | 205.2 | |||||||||||
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense of $2.2) | — | 4.0 | — | 4.0 | |||||||||||
Cost of shares acquired | (58.2 | ) | — | — | (58.2 | ) | |||||||||
Dividends on common stock | — | — | (4.7 | ) | (4.7 | ) | |||||||||
Stock option and restricted stock plans | 8.2 | — | — | 8.2 | |||||||||||
Balance, June 30, 2012 | $ | 4,314.3 | $ | 990.8 | $ | (412.0 | ) | $ | 4,893.1 |
Six months ended | |||||||
June 30, | |||||||
2012 | 2011 | ||||||
Cash flows from operating activities: | |||||||
Insurance policy income | $ | 1,216.6 | $ | 1,194.3 | |||
Net investment income | 660.0 | 687.1 | |||||
Fee revenue and other income | 8.4 | 7.6 | |||||
Insurance policy benefits | (1,108.8 | ) | (1,022.6 | ) | |||
Interest expense | (52.6 | ) | (42.2 | ) | |||
Deferrable policy acquisition costs | (94.7 | ) | (106.6 | ) | |||
Other operating costs | (385.6 | ) | (354.3 | ) | |||
Taxes | (4.3 | ) | (2.5 | ) | |||
Net cash provided by operating activities | 239.0 | 360.8 | |||||
Cash flows from investing activities: | |||||||
Sales of investments | 1,332.2 | 2,931.9 | |||||
Maturities and redemptions of investments | 824.5 | 538.1 | |||||
Purchases of investments | (2,614.5 | ) | (4,050.8 | ) | |||
Net sales of trading securities | 29.2 | 304.4 | |||||
Change in cash and cash equivalents held by variable interest entities | (14.2 | ) | 1.5 | ||||
Other | (16.7 | ) | (15.1 | ) | |||
Net cash used by investing activities | (459.5 | ) | (290.0 | ) | |||
Cash flows from financing activities: | |||||||
Payments on notes payable | (81.4 | ) | (66.2 | ) | |||
Issuance of common stock | 1.0 | .3 | |||||
Payments to repurchase common stock | (58.2 | ) | (16.2 | ) | |||
Common stock dividends paid | (4.7 | ) | — | ||||
Amounts received for deposit products | 674.4 | 837.7 | |||||
Withdrawals from deposit products | (814.6 | ) | (854.9 | ) | |||
Issuance of investment borrowings: | |||||||
Federal Home Loan Bank | — | 342.0 | |||||
Related to variable interest entities | 246.8 | 35.0 | |||||
Payments on investment borrowings: | |||||||
Federal Home Loan Bank | — | (267.0 | ) | ||||
Related to variable interest entities and other | (.6 | ) | (100.1 | ) | |||
Investment borrowings - repurchase agreements, net | 12.0 | 26.9 | |||||
Net cash used by financing activities | (25.3 | ) | (62.5 | ) | |||
Net increase (decrease) in cash and cash equivalents | (245.8 | ) | 8.3 | ||||
Cash and cash equivalents, beginning of period | 436.0 | 571.9 | |||||
Cash and cash equivalents, end of period | $ | 190.2 | $ | 580.2 |
June 30, 2012 | December 31, 2011 | ||||||
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized | $ | 2.8 | $ | (4.4 | ) | ||
Net unrealized gains (losses) on all other investments | 2,236.8 | 1,733.2 | |||||
Adjustment to present value of future profits (a) | (201.4 | ) | (214.8 | ) | |||
Adjustment to deferred acquisition costs | (487.8 | ) | (289.3 | ) | |||
Unrecognized net loss related to deferred compensation plan | (6.7 | ) | (8.3 | ) | |||
Deferred income tax liabilities | (552.9 | ) | (434.8 | ) | |||
Accumulated other comprehensive income | $ | 990.8 | $ | 781.6 |
(a) | The present value of future profits is the value assigned to the right to receive future cash flows from contracts existing at September 10, 2003 (the date our Predecessor emerged from bankruptcy). |
Amortized cost | Gross unrealized gains | Gross unrealized losses | Estimated fair value | Other-than- temporary impairments included in accumulated other comprehensive income | |||||||||||||||
Corporate securities | $ | 14,499.5 | $ | 1,810.3 | $ | (75.5 | ) | $ | 16,234.3 | $ | — | ||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 216.3 | 7.4 | — | 223.7 | — | ||||||||||||||
States and political subdivisions | 1,790.4 | 250.0 | (5.9 | ) | 2,034.5 | — | |||||||||||||
Debt securities issued by foreign governments | .8 | — | — | .8 | — | ||||||||||||||
Asset-backed securities | 1,481.0 | 56.4 | (18.5 | ) | 1,518.9 | — | |||||||||||||
Collateralized debt obligations | 332.2 | 1.6 | (3.7 | ) | 330.1 | — | |||||||||||||
Commercial mortgage-backed securities | 1,478.2 | 110.9 | (3.0 | ) | 1,586.1 | — | |||||||||||||
Mortgage pass-through securities | 20.4 | 1.4 | — | 21.8 | — | ||||||||||||||
Collateralized mortgage obligations | 2,214.2 | 119.1 | (6.9 | ) | 2,326.4 | (8.2 | ) | ||||||||||||
Total fixed maturities, available for sale | $ | 22,033.0 | $ | 2,357.1 | $ | (113.5 | ) | $ | 24,276.6 | $ | (8.2 | ) |
Amortized cost | Estimated fair value | ||||||
(Dollars in millions) | |||||||
Due in one year or less | $ | 180.8 | $ | 183.2 | |||
Due after one year through five years | 1,563.1 | 1,676.9 | |||||
Due after five years through ten years | 4,511.6 | 4,939.1 | |||||
Due after ten years | 10,251.5 | 11,694.1 | |||||
Subtotal | 16,507.0 | 18,493.3 | |||||
Structured securities | 5,526.0 | 5,783.3 | |||||
Total fixed maturities, available for sale | $ | 22,033.0 | $ | 24,276.6 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Credit losses on fixed maturity securities, available for sale, beginning of period | $ | (1.9 | ) | $ | (1.8 | ) | $ | (2.0 | ) | $ | (6.1 | ) | |||
Add: credit losses on other-than-temporary impairments not previously recognized | — | — | — | — | |||||||||||
Less: credit losses on securities sold | .2 | .2 | .3 | 4.5 | |||||||||||
Less: credit losses on securities impaired due to intent to sell (a) | — | — | — | — | |||||||||||
Add: credit losses on previously impaired securities | — | — | — | — | |||||||||||
Less: increases in cash flows expected on previously impaired securities | — | — | — | — | |||||||||||
Credit losses on fixed maturity securities, available for sale, end of period | $ | (1.7 | ) | $ | (1.6 | ) | $ | (1.7 | ) | $ | (1.6 | ) |
(a) | Represents securities for which the amount previously recognized in accumulated other comprehensive income was recognized in earnings because we intend to sell the security or we more likely than not will be required to sell the security before recovery of its amortized cost basis. |
Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
Description of securities | Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | ||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | $ | 19.0 | $ | — | $ | — | $ | — | $ | 19.0 | $ | — | ||||||||||||
States and political subdivisions | 21.3 | (.9 | ) | 83.9 | (5.0 | ) | 105.2 | (5.9 | ) | |||||||||||||||
Corporate securities | 790.6 | (25.9 | ) | 463.6 | (49.6 | ) | 1,254.2 | (75.5 | ) | |||||||||||||||
Asset-backed securities | 230.0 | (3.2 | ) | 243.3 | (15.3 | ) | 473.3 | (18.5 | ) | |||||||||||||||
Collateralized debt obligations | 178.1 | (2.5 | ) | 41.5 | (1.2 | ) | 219.6 | (3.7 | ) | |||||||||||||||
Commercial mortgage-backed securities | 75.8 | (.6 | ) | 38.6 | (2.4 | ) | 114.4 | (3.0 | ) | |||||||||||||||
Mortgage pass-through securities | — | — | 2.1 | — | 2.1 | — | ||||||||||||||||||
Collateralized mortgage obligations | 234.5 | (3.2 | ) | 137.5 | (3.7 | ) | 372.0 | (6.9 | ) | |||||||||||||||
Total fixed maturities, available for sale | $ | 1,549.3 | $ | (36.3 | ) | $ | 1,010.5 | $ | (77.2 | ) | $ | 2,559.8 | $ | (113.5 | ) | |||||||||
Equity securities | $ | 28.5 | $ | (3.6 | ) | $ | — | $ | — | $ | 28.5 | $ | (3.6 | ) |
Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
Description of securities | Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | ||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | $ | 9.1 | $ | — | $ | .2 | $ | — | $ | 9.3 | $ | — | ||||||||||||
States and political subdivisions | 6.9 | (.2 | ) | 155.4 | (13.4 | ) | 162.3 | (13.6 | ) | |||||||||||||||
Debt securities issued by foreign governments | .5 | — | — | — | .5 | — | ||||||||||||||||||
Corporate securities | 1,394.7 | (57.0 | ) | 466.2 | (79.9 | ) | 1,860.9 | (136.9 | ) | |||||||||||||||
Asset-backed securities | 437.6 | (14.5 | ) | 147.5 | (22.2 | ) | 585.1 | (36.7 | ) | |||||||||||||||
Collateralized debt obligations | 268.8 | (6.3 | ) | 1.7 | — | 270.5 | (6.3 | ) | ||||||||||||||||
Commercial mortgage-backed securities | 168.8 | (5.2 | ) | 33.0 | (2.7 | ) | 201.8 | (7.9 | ) | |||||||||||||||
Mortgage pass-through securities | 1.2 | — | 2.2 | (.1 | ) | 3.4 | (.1 | ) | ||||||||||||||||
Collateralized mortgage obligations | 645.0 | (20.8 | ) | 29.7 | (.6 | ) | 674.7 | (21.4 | ) | |||||||||||||||
Total fixed maturities, available for sale | $ | 2,932.6 | $ | (104.0 | ) | $ | 835.9 | $ | (118.9 | ) | $ | 3,768.5 | $ | (222.9 | ) | |||||||||
Equity securities | $ | 41.6 | $ | (3.0 | ) | $ | .4 | $ | — | $ | 42.0 | $ | (3.0 | ) |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net income for basic earnings per share | $ | 65.7 | $ | 46.4 | $ | 124.8 | $ | 91.8 | |||||||
Add: interest expense on 7.0% Convertible Senior Debentures due 2016 (the “7.0% Debentures”), net of income taxes | 3.7 | 3.7 | 7.4 | 7.4 | |||||||||||
Net income for diluted earnings per share | $ | 69.4 | $ | 50.1 | $ | 132.2 | $ | 99.2 | |||||||
Shares: | |||||||||||||||
Weighted average shares outstanding for basic earnings per share | 237,289 | 250,933 | 239,092 | 251,027 | |||||||||||
Effect of dilutive securities on weighted average shares: | |||||||||||||||
7% Debentures | 53,377 | 53,367 | 53,372 | 53,367 | |||||||||||
Stock option and restricted stock plans | 2,367 | 3,036 | 2,475 | 2,892 | |||||||||||
Warrants | 442 | 712 | 470 | 487 | |||||||||||
Dilutive potential common shares | 56,186 | 57,115 | 56,317 | 56,746 | |||||||||||
Weighted average shares outstanding for diluted earnings per share | 293,475 | 308,048 | 295,409 | 307,773 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues: | |||||||||||||||
Bankers Life: | |||||||||||||||
Insurance policy income: | |||||||||||||||
Annuities | $ | 7.9 | $ | 8.7 | $ | 15.1 | $ | 17.1 | |||||||
Health | 341.4 | 343.3 | 675.5 | 683.1 | |||||||||||
Life | 69.7 | 57.6 | 134.9 | 109.4 | |||||||||||
Net investment income (a) | 185.6 | 196.9 | 420.5 | 406.5 | |||||||||||
Fee revenue and other income (a) | 3.3 | 3.3 | 6.2 | 5.6 | |||||||||||
Total Bankers Life revenues | 607.9 | 609.8 | 1,252.2 | 1,221.7 | |||||||||||
Washington National: | |||||||||||||||
Insurance policy income: | |||||||||||||||
Health | 143.2 | 141.7 | 285.6 | 281.9 | |||||||||||
Life | 3.7 | 3.8 | 8.0 | 7.9 | |||||||||||
Other | .7 | 1.1 | 1.4 | 2.2 | |||||||||||
Net investment income (a) | 51.0 | 46.7 | 101.0 | 93.0 | |||||||||||
Fee revenue and other income (a) | .3 | .2 | .5 | .5 | |||||||||||
Total Washington National revenues | 198.9 | 193.5 | 396.5 | 385.5 | |||||||||||
Colonial Penn: | |||||||||||||||
Insurance policy income: | |||||||||||||||
Health | 1.3 | 1.5 | 2.7 | 3.1 | |||||||||||
Life | 53.3 | 49.4 | 105.3 | 98.1 | |||||||||||
Net investment income (a) | 10.2 | 10.5 | 20.2 | 20.8 | |||||||||||
Fee revenue and other income (a) | .2 | .2 | .4 | .4 | |||||||||||
Total Colonial Penn revenues | 65.0 | 61.6 | 128.6 | 122.4 | |||||||||||
Other CNO Business: | |||||||||||||||
Insurance policy income: | |||||||||||||||
Annuities | 3.3 | 2.9 | 5.8 | 5.2 | |||||||||||
Health | 6.4 | 7.1 | 13.1 | 14.4 | |||||||||||
Life | 63.7 | 61.9 | 133.3 | 123.2 | |||||||||||
Other | .2 | .6 | .4 | 1.2 | |||||||||||
Net investment income (a) | 79.8 | 86.7 | 172.5 | 181.4 | |||||||||||
Total Other CNO Business revenues | 153.4 | 159.2 | 325.1 | 325.4 | |||||||||||
Corporate operations: | |||||||||||||||
Net investment income | 7.2 | 4.5 | 30.4 | 17.1 | |||||||||||
Fee and other income | .7 | .5 | 1.3 | 1.1 | |||||||||||
Total corporate revenues | 7.9 | 5.0 | 31.7 | 18.2 | |||||||||||
Total revenues | 1,033.1 | 1,029.1 | 2,134.1 | 2,073.2 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Expenses: | |||||||||||||||
Bankers Life: | |||||||||||||||
Insurance policy benefits | $ | 396.7 | $ | 408.9 | $ | 817.6 | $ | 813.7 | |||||||
Amortization | 50.5 | 46.9 | 107.4 | 115.4 | |||||||||||
Interest expense on investment borrowings | 1.4 | 1.1 | 2.8 | 2.3 | |||||||||||
Other operating costs and expenses | 83.2 | 80.8 | 177.8 | 156.0 | |||||||||||
Total Bankers Life expenses | 531.8 | 537.7 | 1,105.6 | 1,087.4 | |||||||||||
Washington National: | |||||||||||||||
Insurance policy benefits | 113.7 | 118.3 | 229.4 | 230.5 | |||||||||||
Amortization | 10.8 | 11.4 | 23.5 | 24.8 | |||||||||||
Interest expense on investment borrowings | .8 | — | 1.5 | — | |||||||||||
Other operating costs and expenses | 39.7 | 42.0 | 83.5 | 84.1 | |||||||||||
Total Washington National expenses | 165.0 | 171.7 | 337.9 | 339.4 | |||||||||||
Colonial Penn: | |||||||||||||||
Insurance policy benefits | 39.6 | 38.0 | 81.7 | 76.7 | |||||||||||
Amortization | 3.9 | 3.5 | 7.6 | 7.5 | |||||||||||
Other operating costs and expenses | 20.9 | 19.6 | 48.5 | 43.4 | |||||||||||
Total Colonial Penn expenses | 64.4 | 61.1 | 137.8 | 127.6 | |||||||||||
Other CNO Business: | |||||||||||||||
Insurance policy benefits | 122.0 | 119.2 | 243.9 | 246.7 | |||||||||||
Amortization | 7.1 | 9.4 | 14.6 | 18.0 | |||||||||||
Interest expense on investment borrowings | 5.0 | 5.0 | 10.1 | 9.9 | |||||||||||
Other operating costs and expenses | 17.4 | 20.5 | 56.9 | 38.3 | |||||||||||
Total Other CNO Business expenses | 151.5 | 154.1 | 325.5 | 312.9 | |||||||||||
Corporate operations: | |||||||||||||||
Interest expense on corporate debt | 16.6 | 19.3 | 34.1 | 39.9 | |||||||||||
Interest expense on borrowings of variable interest entities | 4.7 | 3.5 | 8.7 | 6.0 | |||||||||||
Interest expense on investment borrowings | .2 | — | .3 | — | |||||||||||
Loss on extinguishment of debt | .5 | .6 | .7 | 2.0 | |||||||||||
Other operating costs and expenses | 12.1 | 12.8 | 33.6 | 24.0 | |||||||||||
Total corporate expenses | 34.1 | 36.2 | 77.4 | 71.9 | |||||||||||
Total expenses | 946.8 | 960.8 | 1,984.2 | 1,939.2 | |||||||||||
Income (loss) before net realized investment losses and fair value changes in embedded derivative liabilities (net of related amortization) and income taxes: | |||||||||||||||
Bankers Life | 76.1 | 72.1 | 146.6 | 134.3 | |||||||||||
Washington National | 33.9 | 21.8 | 58.6 | 46.1 | |||||||||||
Colonial Penn | .6 | .5 | (9.2 | ) | (5.2 | ) | |||||||||
Other CNO Business | 1.9 | 5.1 | (.4 | ) | 12.5 | ||||||||||
Corporate operations | (26.2 | ) | (31.2 | ) | (45.7 | ) | (53.7 | ) | |||||||
Income before net realized investment losses and fair value changes in embedded derivative liabilities (net of related amortization) and income taxes | $ | 86.3 | $ | 68.3 | $ | 149.9 | $ | 134.0 |
(a) | It is not practicable to provide additional components of revenue by product or services. |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Total segment revenues | $ | 1,033.1 | $ | 1,029.1 | $ | 2,134.1 | $ | 2,073.2 | |||||||
Net realized investment gains | 31.9 | 2.9 | 54.8 | 8.0 | |||||||||||
Consolidated revenues | $ | 1,065.0 | $ | 1,032.0 | $ | 2,188.9 | $ | 2,081.2 | |||||||
Total segment expenses | $ | 946.8 | $ | 960.8 | $ | 1,984.2 | $ | 1,939.2 | |||||||
Insurance policy benefits - fair value changes in embedded derivative liabilities | 17.7 | — | 6.1 | — | |||||||||||
Amortization related to fair value changes in embedded derivative liabilities | (7.1 | ) | — | (2.4 | ) | — | |||||||||
Amortization related to net realized investment gains | 3.1 | (.6 | ) | 4.2 | (.2 | ) | |||||||||
Consolidated expenses | $ | 960.5 | $ | 960.2 | $ | 1,992.1 | $ | 1,939.0 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Current tax expense | $ | 3.4 | $ | 1.8 | $ | 6.7 | $ | 4.9 | |||||||
Deferred tax provision | 35.4 | 23.6 | 65.3 | 45.5 | |||||||||||
Total income tax expense | $ | 38.8 | $ | 25.4 | $ | 72.0 | $ | 50.4 |
Six months ended | |||||
June 30, | |||||
2012 | 2011 | ||||
U.S. statutory corporate rate | 35.0 | % | 35.0 | % | |
Other nondeductible benefits | 1.2 | (.4 | ) | ||
State taxes | .9 | .7 | |||
Provision for tax issues, tax credits and other | (.5 | ) | .1 | ||
Effective tax rate | 36.6 | % | 35.4 | % |
June 30, 2012 | December 31, 2011 | ||||||
Deferred tax assets: | |||||||
Net federal operating loss carryforwards | $ | 1,374.6 | $ | 1,445.2 | |||
Net state operating loss carryforwards | 16.4 | 16.8 | |||||
Tax credits | 36.7 | 32.6 | |||||
Capital loss carryforwards | 319.8 | 342.3 | |||||
Deductible temporary differences: | |||||||
Insurance liabilities | 763.3 | 744.4 | |||||
Other | 50.5 | 64.8 | |||||
Gross deferred tax assets | 2,561.3 | 2,646.1 | |||||
Deferred tax liabilities: | |||||||
Investments | (28.3 | ) | (24.2 | ) | |||
Present value of future profits and deferred acquisition costs | (339.7 | ) | (363.7 | ) | |||
Unrealized appreciation on investments | (552.9 | ) | (434.8 | ) | |||
Gross deferred tax liabilities | (920.9 | ) | (822.7 | ) | |||
Net deferred tax assets before valuation allowance | 1,640.4 | 1,823.4 | |||||
Valuation allowance | (938.4 | ) | (938.4 | ) | |||
Net deferred tax assets | 702.0 | 885.0 | |||||
Current income taxes accrued | (22.3 | ) | (19.6 | ) | |||
Income tax assets, net | $ | 679.7 | $ | 865.4 |
Year of expiration | Net operating loss carryforwards (a) | Capital loss | Total loss | |||||||||||||||||||
Life | Non-life | carryforwards | carryforwards | |||||||||||||||||||
2013 | $ | — | $ | — | $ | 876.2 | (b) | $ | 876.2 | |||||||||||||
2014 | — | — | 28.7 | 28.7 | ||||||||||||||||||
2015 | — | — | 8.9 | 8.9 | ||||||||||||||||||
2018 | 613.9 | (a) | — | — | 613.9 | |||||||||||||||||
2021 | 29.6 | — | — | 29.6 | ||||||||||||||||||
2022 | 204.1 | — | — | 204.1 | ||||||||||||||||||
2023 | — | (b) | 2,591.7 | (a) | — | 2,591.7 | ||||||||||||||||
2024 | — | 3.2 | — | 3.2 | ||||||||||||||||||
2025 | — | 118.8 | — | 118.8 | ||||||||||||||||||
2027 | — | 216.8 | — | 216.8 | ||||||||||||||||||
2028 | — | .5 | — | .5 | ||||||||||||||||||
2029 | — | 148.8 | — | 148.8 | ||||||||||||||||||
Total | $ | 847.6 | $ | 3,079.8 | $ | 913.8 | $ | 4,841.2 |
(a) | The life/non-life allocation summarized above assumes the IRS does not ultimately agree with the tax position we have taken in our tax returns with respect to the allocation of CODI. If the IRS ultimately agrees with our tax position, approximately $631 million of the non-life NOLs expiring in 2023 would be characterized as life NOLs expiring in 2018. |
(b) | The allocation of the capital loss carryforwards summarized above assumes the IRS does not ultimately agree with the tax position we have taken with respect to our investment in Senior Health, which was worthless when it was transferred to the Independent Trust in 2008. If the IRS ultimately agrees with our tax position of classifying this loss as ordinary, capital loss carryforwards expiring in 2013 would decrease and life NOLs expiring in 2023 would increase by $742 million. |
June 30, 2012 | December 31, 2011 | ||||||
7.0% Debentures | $ | 293.0 | $ | 293.0 | |||
Senior Secured Credit Agreement (as defined below) | 223.8 | 255.2 | |||||
9.0% Senior Secured Notes due January 2018 (the “9.0% Senior Secured Notes”) | 275.0 | 275.0 | |||||
Senior Health Note due November 12, 2013 (the “Senior Health Note”) | — | 50.0 | |||||
Unamortized discount on 7.0% Debentures | (11.9 | ) | (12.9 | ) | |||
Unamortized discount on Senior Secured Credit Agreement | (1.7 | ) | (2.4 | ) | |||
Direct corporate obligations | $ | 778.2 | $ | 857.9 |
(i) | a change in the definition of “Total Capitalization” (used to calculate compliance with the Debt to Total Capitalization Ratio covenant) to provide that any change to the Company's shareholders' equity resulting from the adoption by the Company of ASU 2010-26, related to the accounting for deferred acquisition costs, shall be disregarded for the purpose of such covenant to the extent the Company going forward quantifies the impact of ASU 2010-26 for each fiscal quarter or fiscal year and the cumulative impact since its adoption; and |
(ii) | an increase in the cap on investments in “Capital Stock” (as defined in the amended credit agreement) from 1 percent to 3 percent. |
Year ending June 30, | |||
2013 | $ | 47.5 | |
2014 | 65.0 | ||
2015 | 80.0 | ||
2016 | 31.3 | ||
2017 | 293.0 | ||
Thereafter | 275.0 | ||
$ | 791.8 |
• | incur or guarantee additional indebtedness or issue preferred stock; |
• | pay dividends or make other distributions to shareholders; |
• | purchase or redeem capital stock or subordinated indebtedness; |
• | make certain investments; |
• | create liens; |
• | incur restrictions on the Company's ability and the ability of the Restricted Subsidiaries to pay dividends or make |
• | sell assets, including capital stock of the Company's subsidiaries; |
• | consolidate or merge with or into other companies or transfer all or substantially all of the Company's assets; and |
• | engage in transactions with affiliates. |
Amount | Maturity | Interest rate at | ||||
borrowed | date | June 30, 2012 | ||||
$ | 100.0 | October 2013 | Variable rate – 0.575% | |||
100.0 | November 2013 | Variable rate – 0.547% | ||||
67.0 | February 2014 | Fixed rate – 1.830% | ||||
50.0 | August 2014 | Variable rate – 0.597% | ||||
100.0 | September 2015 | Variable rate – 0.766% | ||||
150.0 | October 2015 | Variable rate – 0.592% | ||||
100.0 | (a) | November 2015 | Fixed rate – 4.890% | |||
146.0 | November 2015 | Fixed rate – 5.300% | ||||
100.0 | December 2015 | Fixed rate – 4.710% | ||||
100.0 | June 2016 | Variable rate – 0.685% | ||||
75.0 | June 2016 | Variable rate – 0.630% | ||||
75.0 | August 2016 | Variable rate – 0.677% | ||||
100.0 | October 2016 | Variable rate – 0.648% | ||||
50.0 | November 2016 | Variable rate – 0.738% | ||||
50.0 | November 2016 | Variable rate – 0.715% | ||||
100.0 | June 2017 | Variable rate – 0.760% | ||||
50.0 | August 2017 | Variable rate – 0.667% | ||||
100.0 | October 2017 | Variable rate – 0.897% | ||||
37.0 | November 2017 | Fixed rate – 3.750% | ||||
$ | 1,650.0 |
Balance, December 31, 2011 | 241,305 | |||
Treasury stock purchased and retired | (8,090 | ) | ||
Stock options exercised | 415 | |||
Restricted stock vested | 396 | (a) | ||
Balance, June 30, 2012 | 234,026 |
(a) | Such amount was reduced by 142 thousand shares which were tendered to the Company for the payment of federal and state taxes owed on the vesting of restricted stock. |
June 30, 2012 | |||||||||||
Amounts prior to adoption of ASU 2010-26 | Effect of adoption of ASU 2010-26 | As reported | |||||||||
Deferred acquisition costs | $ | 1,330.2 | $ | (738.8 | ) | $ | 591.4 | ||||
Income tax assets, net | 403.5 | 276.2 | 679.7 | ||||||||
Other assets | 418.9 | (23.1 | ) | 395.8 | |||||||
Total assets | 33,866.0 | (485.7 | ) | 33,380.3 | |||||||
Other liabilities | 678.5 | 7.5 | 686.0 | ||||||||
Total liabilities | 28,479.7 | 7.5 | 28,487.2 | ||||||||
Accumulated other comprehensive income | 886.6 | 104.2 | 990.8 | ||||||||
Retained earnings (accumulated deficit) | 185.4 | (597.4 | ) | (412.0 | ) | ||||||
Total shareholders' equity | 5,386.3 | (493.2 | ) | 4,893.1 | |||||||
Total liabilities and shareholders' equity | 33,866.0 | (485.7 | ) | 33,380.3 |
Three months ended | Six months ended | ||||||||||||||||||||||
June 30, 2012 | June 30, 2012 | ||||||||||||||||||||||
Amounts prior to adoption of ASU 2010-26 | Effect of adoption of ASU 2010-26 | As reported | Amounts prior to adoption of ASU 2010-26 | Effect of adoption of ASU 2010-26 | As reported | ||||||||||||||||||
Amortization | $ | 103.9 | $ | (35.6 | ) | $ | 68.3 | $ | 235.7 | $ | (80.8 | ) | $ | 154.9 | |||||||||
Other operating costs and expenses | 118.8 | 54.5 | 173.3 | 284.3 | 116.0 | 400.3 | |||||||||||||||||
Total benefits and expenses | 941.6 | 18.9 | 960.5 | 1,956.9 | 35.2 | 1,992.1 | |||||||||||||||||
Income before income taxes | 123.4 | (18.9 | ) | 104.5 | 232.0 | (35.2 | ) | 196.8 | |||||||||||||||
Tax expense on period income | 45.6 | (6.8 | ) | 38.8 | 84.7 | (12.7 | ) | 72.0 | |||||||||||||||
Net income | 77.8 | (12.1 | ) | 65.7 | 147.3 | (22.5 | ) | 124.8 | |||||||||||||||
Earnings per common share: | |||||||||||||||||||||||
Basic: | |||||||||||||||||||||||
Net income | $ | .33 | $ | (.05 | ) | $ | .28 | $ | .62 | $ | (.10 | ) | $ | .52 | |||||||||
Diluted: | |||||||||||||||||||||||
Net income | .28 | (.04 | ) | .24 | .52 | (.07 | ) | .45 |
December 31, 2011 | |||||||||||
As originally reported | Effect of adoption of ASU 2010-26 | As adjusted | |||||||||
Deferred acquisition costs | $ | 1,418.1 | $ | (621.0 | ) | $ | 797.1 | ||||
Income tax assets, net | 630.5 | 234.9 | 865.4 | ||||||||
Other assets | 316.9 | (24.7 | ) | 292.2 | |||||||
Total assets | 33,332.7 | (410.8 | ) | 32,921.9 | |||||||
Other liabilities | 548.3 | 8.0 | 556.3 | ||||||||
Total liabilities | 28,300.1 | 8.0 | 28,308.1 | ||||||||
Accumulated other comprehensive income | 625.5 | 156.1 | 781.6 | ||||||||
Retained earnings (accumulated deficit) | 42.8 | (574.9 | ) | (532.1 | ) | ||||||
Total shareholders' equity | 5,032.6 | (418.8 | ) | 4,613.8 | |||||||
Total liabilities and shareholders' equity | 33,332.7 | (410.8 | ) | 32,921.9 |
Three months ended | Six months ended | ||||||||||||||||||||||
June 30, 2011 | June 30, 2011 | ||||||||||||||||||||||
As originally reported | Effect of adoption of ASU 2010-26 | As adjusted | As originally reported | Effect of adoption of ASU 2010-26 | As adjusted | ||||||||||||||||||
Amortization | $ | 101.5 | $ | (30.9 | ) | $ | 70.6 | $ | 238.2 | $ | (72.7 | ) | $ | 165.5 | |||||||||
Other operating costs and expenses | 124.4 | 51.3 | 175.7 | 239.5 | 106.3 | 345.8 | |||||||||||||||||
Total benefits and expenses | 939.8 | 20.4 | 960.2 | 1,905.4 | 33.6 | 1,939.0 | |||||||||||||||||
Income before income taxes | 92.2 | (20.4 | ) | 71.8 | 175.8 | (33.6 | ) | 142.2 | |||||||||||||||
Tax expense on period income | 32.7 | (7.3 | ) | 25.4 | 62.4 | (12.0 | ) | 50.4 | |||||||||||||||
Net income | 59.5 | (13.1 | ) | 46.4 | 113.4 | (21.6 | ) | 91.8 | |||||||||||||||
Earnings per common share: | |||||||||||||||||||||||
Basic: | |||||||||||||||||||||||
Net income | $ | .24 | $ | (.06 | ) | $ | .18 | $ | .45 | $ | (.08 | ) | $ | .37 | |||||||||
Diluted: | |||||||||||||||||||||||
Net income | .21 | (.05 | ) | .16 | .39 | (.07 | ) | .32 |
Six months ended | |||||||||||
June 30, 2011 | |||||||||||
As originally reported | Effect of adoption of ASU 2010-26 | As adjusted | |||||||||
Cash flows from operating activities: | |||||||||||
Deferrable policy acquisition costs | $ | (215.1 | ) | $ | 108.5 | $ | (106.6 | ) | |||
Other operating costs | (245.8 | ) | (108.5 | ) | (354.3 | ) | |||||
Net cash used by operating activities | 360.8 | — | 360.8 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Balance, beginning of period | $ | 790.4 | $ | 989.3 | $ | 797.1 | $ | 999.6 | |||||||
Additions | 48.5 | 53.4 | 94.7 | 106.6 | |||||||||||
Amortization | (45.1 | ) | (42.4 | ) | (101.9 | ) | (99.2 | ) | |||||||
Amounts related to fair value adjustment of fixed maturities, available for sale | (202.4 | ) | (24.8 | ) | (198.5 | ) | (31.5 | ) | |||||||
Balance, end of period | $ | 591.4 | $ | 975.5 | $ | 591.4 | $ | 975.5 |
Six months ended | |||||||
June 30, | |||||||
2012 | 2011 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 124.8 | $ | 91.8 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Amortization and depreciation | 167.7 | 178.6 | |||||
Income taxes | 67.7 | 47.9 | |||||
Insurance liabilities | 105.4 | 192.5 | |||||
Accrual and amortization of investment income | (84.6 | ) | (31.7 | ) | |||
Deferral of policy acquisition costs | (94.7 | ) | (106.6 | ) | |||
Net realized investment gains | (54.8 | ) | (8.0 | ) | |||
Loss on extinguishment of debt | .7 | 2.0 | |||||
Other | 6.8 | (5.7 | ) | ||||
Net cash provided by operating activities | $ | 239.0 | $ | 360.8 |
Six months ended | |||||||
June 30, | |||||||
2012 | 2011 | ||||||
Stock option and restricted stock plans | $ | 7.2 | $ | 6.0 |
June 30, 2012 | |||||||||||
VIEs | Eliminations | Net effect on consolidated balance sheet | |||||||||
Assets: | |||||||||||
Investments held by variable interest entities | $ | 789.3 | $ | — | $ | 789.3 | |||||
Notes receivable of VIEs held by insurance subsidiaries | — | (78.5 | ) | (78.5 | ) | ||||||
Cash and cash equivalents held by variable interest entities | 88.6 | — | 88.6 | ||||||||
Accrued investment income | 3.1 | — | 3.1 | ||||||||
Income tax assets, net | 5.1 | (1.5 | ) | 3.6 | |||||||
Other assets | 14.2 | — | 14.2 | ||||||||
Total assets | $ | 900.3 | $ | (80.0 | ) | $ | 820.3 | ||||
Liabilities: | |||||||||||
Other liabilities | $ | 60.6 | $ | (.3 | ) | $ | 60.3 | ||||
Borrowings related to variable interest entities | 766.7 | — | 766.7 | ||||||||
Notes payable of VIEs held by insurance subsidiaries | 82.5 | (82.5 | ) | — | |||||||
Total liabilities | $ | 909.8 | $ | (82.8 | ) | $ | 827.0 |
December 31, 2011 | |||||||||||
VIEs | Eliminations | Net effect on consolidated balance sheet | |||||||||
Assets: | |||||||||||
Investments held by variable interest entities | $ | 496.3 | $ | — | $ | 496.3 | |||||
Notes receivable of VIEs held by insurance subsidiaries | — | (45.3 | ) | (45.3 | ) | ||||||
Cash and cash equivalents held by variable interest entities | 74.4 | — | 74.4 | ||||||||
Accrued investment income | 1.7 | — | 1.7 | ||||||||
Income tax assets, net | 6.8 | (1.4 | ) | 5.4 | |||||||
Other assets | 7.7 | — | 7.7 | ||||||||
Total assets | $ | 586.9 | $ | (46.7 | ) | $ | 540.2 | ||||
Liabilities: | |||||||||||
Other liabilities | $ | 30.3 | $ | (.1 | ) | $ | 30.2 | ||||
Borrowings related to variable interest entities | 519.9 | — | 519.9 | ||||||||
Notes payable of VIEs held by insurance subsidiaries | 49.3 | (49.3 | ) | — | |||||||
Total liabilities | $ | 599.5 | $ | (49.4 | ) | $ | 550.1 |
Amortized cost | Estimated fair value | ||||||
(Dollars in millions) | |||||||
Due in one year or less | $ | 3.6 | $ | 3.6 | |||
Due after one year through five years | 376.8 | 375.1 | |||||
Due after five years through ten years | 412.1 | 410.6 | |||||
Total | $ | 792.5 | $ | 789.3 |
• | Level 1 – includes assets and liabilities valued using inputs that are unadjusted quoted prices in active markets for identical assets or liabilities. Our Level 1 assets primarily include cash and exchange traded securities. |
• | Level 2 – includes assets and liabilities valued using inputs that are quoted prices for similar assets in an active market, quoted prices for identical or similar assets in a market that is not active, observable inputs, or observable inputs that can be corroborated by market data. Level 2 assets and liabilities include those financial instruments that are valued by independent pricing services using models or other valuation methodologies. These models are primarily industry-standard models that consider various inputs such as interest rate, credit spread, reported trades, broker/dealer quotes, issuer spreads and other inputs that are observable or derived from observable information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace. Financial assets in this category primarily include: certain public and privately placed corporate fixed maturity securities; certain government or agency securities; certain mortgage and asset-backed securities; certain equity securities; most investments held by our consolidated VIEs; certain mutual fund and hedge fund investments; and most short-term investments; and non-exchange-traded derivatives such as call options to hedge liabilities related to our fixed index annuity products. Financial liabilities in this category include investment borrowings, notes payable and borrowings related to VIEs. |
• | Level 3 – includes assets and liabilities valued using unobservable inputs that are used in model-based valuations that contain management assumptions. Level 3 assets and liabilities include those financial instruments whose fair value is estimated based on non-binding broker prices or internally developed models or methodologies utilizing significant inputs not based on, or corroborated by, readily available market information. Financial assets in this category include certain corporate securities (primarily certain below-investment grade privately placed securities), certain structured securities, mortgage loans, and other less liquid securities. Financial liabilities in this category include our insurance liabilities for interest-sensitive products, which includes embedded derivatives (including embedded derivatives related to our fixed index annuity products and to a modified coinsurance arrangement) since their values include significant unobservable inputs including actuarial assumptions. |
Quoted prices in active markets for identical assets or liabilities (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total | ||||||||||||
Assets: | |||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||
Corporate securities | $ | — | $ | 15,913.3 | $ | 321.0 | $ | 16,234.3 | |||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 222.2 | 1.5 | 223.7 | |||||||||||
States and political subdivisions | — | 2,018.5 | 16.0 | 2,034.5 | |||||||||||
Debt securities issued by foreign governments | — | .8 | — | .8 | |||||||||||
Asset-backed securities | — | 1,495.9 | 23.0 | 1,518.9 | |||||||||||
Collateralized debt obligations | — | — | 330.1 | 330.1 | |||||||||||
Commercial mortgage-backed securities | — | 1,586.1 | — | 1,586.1 | |||||||||||
Mortgage pass-through securities | — | 19.7 | 2.1 | 21.8 | |||||||||||
Collateralized mortgage obligations | — | 2,321.9 | 4.5 | 2,326.4 | |||||||||||
Total fixed maturities, available for sale | — | 23,578.4 | 698.2 | 24,276.6 | |||||||||||
Equity securities: | |||||||||||||||
Corporate securities | 19.4 | 106.7 | 3.2 | 129.3 | |||||||||||
Venture capital investments | — | — | 58.0 | 58.0 | |||||||||||
Total equity securities | 19.4 | 106.7 | 61.2 | 187.3 | |||||||||||
Trading securities: | |||||||||||||||
Corporate securities | — | 47.9 | — | 47.9 | |||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 4.9 | — | 4.9 | |||||||||||
States and political subdivisions | — | 15.4 | .5 | 15.9 | |||||||||||
Asset-backed securities | — | 9.0 | — | 9.0 | |||||||||||
Collateralized debt obligations | — | — | 3.4 | 3.4 | |||||||||||
Commercial mortgage-backed securities | — | 14.5 | — | 14.5 | |||||||||||
Mortgage pass-through securities | — | .2 | — | .2 | |||||||||||
Collateralized mortgage obligations | — | 14.4 | — | 14.4 | |||||||||||
Equity securities | .8 | 3.8 | — | 4.6 | |||||||||||
Total trading securities | .8 | 110.1 | 3.9 | 114.8 | |||||||||||
Investments held by variable interest entities - corporate securities | — | 789.3 | — | 789.3 | |||||||||||
Other invested assets: | |||||||||||||||
Company-owned life insurance | — | 108.2 | — | 108.2 | |||||||||||
Hedge funds | — | 16.4 | — | 16.4 | |||||||||||
Derivatives | 1.1 | 75.7 | — | 76.8 | |||||||||||
Total other invested assets | 1.1 | 200.3 | — | 201.4 | |||||||||||
Cash and cash equivalents - unrestricted: | |||||||||||||||
Cash | 131.6 | — | — | 131.6 | |||||||||||
Cash equivalents and short-term investments | — | 58.6 | — | 58.6 | |||||||||||
Total cash and cash equivalents - unrestricted | 131.6 | 58.6 | — | 190.2 | |||||||||||
Cash and cash equivalents held by variable interest entities | 88.6 | — | — | 88.6 | |||||||||||
Assets held in separate accounts | — | 15.6 | — | 15.6 | |||||||||||
Total assets carried at fair value by category | $ | 241.5 | $ | 24,859 | $ | 763.3 | $ | 25,863.8 | |||||||
Liabilities: | |||||||||||||||
Liabilities for insurance products: | |||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | $ | — | $ | — | $ | 701.0 | $ | 701.0 | |||||||
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement | — | — | 4.9 | 4.9 | |||||||||||
Total liabilities for insurance products | — | — | 705.9 | 705.9 | |||||||||||
Total liabilities carried at fair value by category | $ | — | $ | — | $ | 705.9 | $ | 705.9 |
June 30, 2012 | December 31, 2011 | ||||||||||||||||||||||||||
Quoted prices in active markets for identical assets or liabilities (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total estimated fair value | Total carrying amount | Total estimated fair value | Total carrying amount | |||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||
Mortgage loans | $ | — | $ | — | $ | 1,683.4 | $ | 1,683.4 | $ | 1,550.9 | $ | 1,735.4 | $ | 1,602.8 | |||||||||||||
Policy loans | — | 274.7 | — | 274.7 | 274.7 | 279.7 | 279.7 | ||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||
Insurance liabilities for interest-sensitive products excluding embedded derivatives (a) | — | — | 12,250.4 | 12,250.4 | 12,250.4 | 13,165.5 | 13,165.5 | ||||||||||||||||||||
Investment borrowings | — | 1,739.6 | — | 1,739.6 | 1,687.9 | 1,735.7 | 1,676.5 | ||||||||||||||||||||
Borrowings related to variable interest entities | — | 745.8 | — | 745.8 | 766.7 | 485.1 | 519.9 | ||||||||||||||||||||
Notes payable – direct corporate obligations | — | 997.0 | — | 997.0 | 778.2 | 978.3 | 857.9 |
(a) | The estimated fair value of insurance liabilities for interest-sensitive products was approximately equal to its carrying value at June 30, 2012. This was because interest rates credited on the vast majority of account balances approximate current rates paid on similar products and because these rates are not generally guaranteed beyond one year. |
Quoted prices in active markets for identical assets or liabilities (Level 1) | Significant other observable inputs (Level 2) (a) | Significant unobservable inputs (Level 3) (a) | Total | ||||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | — | $ | 15,594.4 | $ | 278.1 | $ | 15,872.5 | |||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 303.8 | 1.6 | 305.4 | |||||||||||||||
States and political subdivisions | — | 1,952.3 | 2.1 | 1,954.4 | |||||||||||||||
Debt securities issued by foreign governments | — | 1.4 | — | 1.4 | |||||||||||||||
Asset-backed securities | — | 1,334.3 | 79.7 | 1,414.0 | |||||||||||||||
Collateralized debt obligations | — | — | 327.3 | 327.3 | |||||||||||||||
Commercial mortgage-backed securities | — | 1,415.7 | 17.3 | 1,433.0 | |||||||||||||||
Mortgage pass-through securities | — | 29.8 | 2.2 | 32.0 | |||||||||||||||
Collateralized mortgage obligations | — | 2,051.2 | 124.8 | 2,176.0 | |||||||||||||||
Total fixed maturities, available for sale | — | 22,682.9 | 833.1 | 23,516.0 | |||||||||||||||
Equity securities | 17.9 | 87.3 | 69.9 | 175.1 | |||||||||||||||
Trading securities: | |||||||||||||||||||
Corporate securities | — | 67.6 | — | 67.6 | |||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 4.9 | — | 4.9 | |||||||||||||||
States and political subdivisions | — | 15.6 | — | 15.6 | |||||||||||||||
Asset-backed securities | — | .1 | — | .1 | |||||||||||||||
Commercial mortgage-backed securities | — | — | .4 | .4 | |||||||||||||||
Mortgage pass-through securities | — | .2 | — | .2 | |||||||||||||||
Collateralized mortgage obligations | — | .7 | — | .7 | |||||||||||||||
Equity securities | .7 | 1.4 | — | 2.1 | |||||||||||||||
Total trading securities | .7 | 90.5 | .4 | 91.6 | |||||||||||||||
Investments held by variable interest entities | — | 496.3 | — | 496.3 | |||||||||||||||
Other invested assets | — | 159.9 | (b) | — | 159.9 | ||||||||||||||
Assets held in separate accounts | — | 15.0 | — | 15.0 | |||||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products | — | — | 669.8 | (c) | 669.8 |
(a) | We revised the hierarchy classification of certain fixed maturities, equity securities, trading securities and other invested assets as we believe the observability of the inputs more closely represent Level 2 valuations. |
(b) | Includes company-owned life insurance and derivatives. |
(c) | Includes $666.3 million of embedded derivatives associated with our fixed index annuity products and $3.5 million of embedded derivatives associated with a modified coinsurance agreement. |
June 30, 2012 | |||||||||||||||||||||||||||||||
Beginning balance as of March 31, 2012 (a) | Purchases, sales, issuances and settlements, net (c) | Total realized and unrealized gains (losses) included in net income | Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | Transfers into Level 3 | Transfers out of Level 3 (b) | Ending balance as of June 30, 2012 | Amount of total gains (losses) for the three months ended June 30, 2012 included in our net income relating to assets and liabilities still held as of the reporting date | ||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||||||||||||||
Corporate securities | $ | 268.0 | $ | 18.3 | $ | — | $ | 2.0 | $ | 63.5 | $ | (30.8 | ) | $ | 321.0 | $ | — | ||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 1.6 | (.1 | ) | — | — | — | — | 1.5 | — | ||||||||||||||||||||||
States and political subdivisions | 9.6 | — | — | .8 | 10.6 | (5.0 | ) | 16.0 | — | ||||||||||||||||||||||
Asset-backed securities | 22.7 | — | — | 1.6 | 1.3 | (2.6 | ) | 23.0 | — | ||||||||||||||||||||||
Collateralized debt obligations | 332.4 | (3.9 | ) | — | 1.6 | — | — | 330.1 | — | ||||||||||||||||||||||
Mortgage pass-through securities | 2.2 | (.1 | ) | — | — | — | — | 2.1 | — | ||||||||||||||||||||||
Collateralized mortgage obligations | 14.7 | — | — | .1 | — | (10.3 | ) | 4.5 | — | ||||||||||||||||||||||
Total fixed maturities, available for sale | 651.2 | 14.2 | — | 6.1 | 75.4 | (48.7 | ) | 698.2 | — | ||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||||
Corporate securities | 3.2 | — | — | — | — | — | 3.2 | — | |||||||||||||||||||||||
Venture capital investments | 65.2 | — | (3.0 | ) | (4.2 | ) | — | — | 58.0 | (3.0 | ) | ||||||||||||||||||||
Total equity securities | 68.4 | — | (3.0 | ) | (4.2 | ) | — | — | 61.2 | (3.0 | ) | ||||||||||||||||||||
Trading securities: | |||||||||||||||||||||||||||||||
States and political subdivisions | — | — | — | — | .5 | — | .5 | — | |||||||||||||||||||||||
Collateralized debt obligations | 3.6 | — | — | (.2 | ) | — | — | 3.4 | (.2 | ) | |||||||||||||||||||||
Total trading securities | 3.6 | — | — | (.2 | ) | .5 | — | 3.9 | (.2 | ) | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||||||||||||||
Interest-sensitive products | (707.7 | ) | 21.1 | (19.3 | ) | — | — | — | (705.9 | ) | (19.3 | ) |
(a) | We revised the hierarchy classification of certain fixed maturities, equity securities, trading securities and other invested assets as we believe the observability of the inputs more closely represent Level 2 valuations. |
(b) | For our fixed maturity securities, the majority of our transfers out of Level 3 are the result of obtaining a valuation from an independent pricing service at the end of the period, whereas a broker quote was used as of the beginning of the period. |
(c) | Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the three months ended June 30, 2012 (dollars in millions): |
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | 18.3 | $ | — | $ | — | $ | — | $ | 18.3 | |||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | (.1 | ) | — | — | (.1 | ) | ||||||||||||
Collateralized debt obligations | 7.2 | (11.1 | ) | — | — | (3.9 | ) | ||||||||||||
Mortgage pass-through securities | — | (.1 | ) | — | — | (.1 | ) | ||||||||||||
Total fixed maturities, available for sale | 25.5 | (11.3 | ) | — | — | 14.2 | |||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products | (24.5 | ) | 36.7 | (1.5 | ) | 10.4 | 21.1 |
June 30, 2012 | |||||||||||||||||||||||||||||||
Beginning balance as of December 31, 2011 (a) | Purchases, sales, issuances and settlements, net (c) | Total realized and unrealized gains (losses) included in net income | Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | Transfers into Level 3 | Transfers out of Level 3 (b) | Ending balance as of June 30, 2012 | Amount of total gains (losses) for the six months ended June 30, 2012 included in our net income relating to assets and liabilities still held as of the reporting date | ||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||||||||||||||
Corporate securities | $ | 278.1 | $ | 16.0 | $ | — | $ | 3.5 | $ | 94.3 | $ | (70.9 | ) | $ | 321.0 | $ | — | ||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 1.6 | (.1 | ) | — | — | — | — | 1.5 | — | ||||||||||||||||||||||
States and political subdivisions | 2.1 | — | — | 1.7 | 14.3 | (2.1 | ) | 16.0 | — | ||||||||||||||||||||||
Asset-backed securities | 79.7 | (27.3 | ) | (.3 | ) | (2.7 | ) | .6 | (27.0 | ) | 23.0 | — | |||||||||||||||||||
Collateralized debt obligations | 327.3 | (5.7 | ) | — | 8.5 | — | — | 330.1 | — | ||||||||||||||||||||||
Commercial mortgage-backed securities | 17.3 | — | — | — | — | (17.3 | ) | — | — | ||||||||||||||||||||||
Mortgage pass-through securities | 2.2 | (.1 | ) | — | — | — | — | 2.1 | — | ||||||||||||||||||||||
Collateralized mortgage obligations | 124.8 | (22.5 | ) | — | (1.0 | ) | — | (96.8 | ) | 4.5 | — | ||||||||||||||||||||
Total fixed maturities, available for sale | 833.1 | (39.7 | ) | (.3 | ) | 10.0 | 109.2 | (214.1 | ) | 698.2 | — | ||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||||
Corporate securities | 6.4 | — | (3.8 | ) | .6 | — | — | 3.2 | (3.8 | ) | |||||||||||||||||||||
Venture capital investments | 63.5 | — | (3.0 | ) | (2.5 | ) | — | — | 58.0 | (3.0 | ) | ||||||||||||||||||||
Total equity securities | 69.9 | — | (6.8 | ) | (1.9 | ) | — | — | 61.2 | (6.8 | ) | ||||||||||||||||||||
Trading securities: | |||||||||||||||||||||||||||||||
States and political subdivisions | — | — | — | .1 | .4 | — | .5 | .1 | |||||||||||||||||||||||
Collateralized debt obligations | — | 4.2 | — | (.8 | ) | — | — | 3.4 | (.8 | ) | |||||||||||||||||||||
Commercial mortgage-backed securities | .4 | — | — | — | — | (.4 | ) | — | — | ||||||||||||||||||||||
Total trading securities | .4 | 4.2 | — | (.7 | ) | .4 | (.4 | ) | 3.9 | (.7 | ) | ||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||||||||||||||
Interest-sensitive products | (669.8 | ) | (29.4 | ) | (6.7 | ) | — | — | — | (705.9 | ) | (6.7 | ) |
(a) | We revised the hierarchy classification of certain fixed maturities, equity securities, trading securities and other invested assets as we believe the observability of the inputs more closely represent Level 2 valuations. |
(b) | For our fixed maturity securities, the majority of our transfers out of Level 3 are the result of obtaining a valuation from an independent pricing service at the end of the period, whereas a broker quote was used as of the beginning of the period. |
(c) | Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the six months ended June 30, 2012 (dollars in millions): |
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | 43.3 | $ | (27.3 | ) | $ | — | $ | — | $ | 16.0 | ||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | (.1 | ) | — | — | (.1 | ) | ||||||||||||
Asset-backed securities | — | (27.3 | ) | — | — | (27.3 | ) | ||||||||||||
Collateralized debt obligations | 35.5 | (41.2 | ) | — | — | (5.7 | ) | ||||||||||||
Mortgage pass-through securities | — | (.1 | ) | — | — | (.1 | ) | ||||||||||||
Collateralized mortgage obligations | 4.1 | (26.6 | ) | — | — | (22.5 | ) | ||||||||||||
Total fixed maturities, available for sale | 82.9 | (122.6 | ) | — | — | (39.7 | ) | ||||||||||||
Trading securities - collateralized debt obligations | 4.2 | — | — | — | 4.2 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products | (51.8 | ) | 41.7 | (40.4 | ) | 21.1 | (29.4 | ) |
June 30, 2011 | ||||||||||||||||||||||||||||||||
Beginning balance as of March 31, 2011 | Purchases, sales, issuances and settlements, net (a) | Total realized and unrealized gains (losses) included in net income | Total realized and unrealized gains (losses) included in other comprehensive income (loss) | Transfers into Level 3 | Transfers out of Level 3 | Ending balance as of June 30, 2011 | Amount of total gains (losses) for the three months ended June 30, 2011 included in our net income relating to assets and liabilities still held as of the reporting date | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | ||||||||||||||||||||||||||||||||
Corporate securities | $ | 1,853.1 | $ | (59.0 | ) | $ | (10.0 | ) | $ | 5.0 | $ | 43.5 | $ | (1,470.8 | ) | $ | 361.8 | $ | (5.1 | ) | ||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 1.7 | — | — | — | — | — | 1.7 | — | ||||||||||||||||||||||||
Asset-backed securities | 207.4 | (1.6 | ) | — | 2.6 | 4.4 | (42.1 | ) | 170.7 | — | ||||||||||||||||||||||
Collateralized debt obligations | 186.2 | 7.2 | — | .1 | — | — | 193.5 | — | ||||||||||||||||||||||||
Mortgage pass-through securities | 3.3 | (.1 | ) | — | — | — | — | 3.2 | — | |||||||||||||||||||||||
Collateralized mortgage obligations | 247.5 | 45.8 | (.9 | ) | (.1 | ) | 25.1 | (113.3 | ) | 204.1 | — | |||||||||||||||||||||
Total fixed maturities, available for sale | 2,499.2 | (7.7 | ) | (10.9 | ) | 7.6 | 73.0 | (1,626.2 | ) | 935.0 | (5.1 | ) | ||||||||||||||||||||
Equity securities | 44.3 | — | — | .3 | — | — | 44.6 | — | ||||||||||||||||||||||||
Trading securities: | ||||||||||||||||||||||||||||||||
Collateralized mortgage obligations | .5 | — | — | — | — | (.5 | ) | — | — | |||||||||||||||||||||||
Total trading securities | .5 | — | — | — | — | (.5 | ) | — | — | |||||||||||||||||||||||
Investments held by variable interest entities: | ||||||||||||||||||||||||||||||||
Corporate securities | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Liabilities for insurance products: | ||||||||||||||||||||||||||||||||
Interest-sensitive products | (587.5 | ) | (15.2 | ) | (10.7 | ) | — | — | — | (613.4 | ) | (10.7 | ) |
(a) | Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the three months ended June 30, 2011 (dollars in millions): |
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | — | $ | (59.0 | ) | $ | — | $ | — | $ | (59.0 | ) | |||||||
Asset-backed securities | — | (1.6 | ) | — | — | (1.6 | ) | ||||||||||||
Collateralized debt obligations | 19.0 | (11.8 | ) | — | — | 7.2 | |||||||||||||
Mortgage pass-through securities | — | (.1 | ) | — | — | (.1 | ) | ||||||||||||
Collateralized mortgage obligations | 61.4 | (15.6 | ) | — | — | 45.8 | |||||||||||||
Total fixed maturities, available for sale | 80.4 | (88.1 | ) | — | — | (7.7 | ) | ||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products | (27.4 | ) | 7.5 | (6.8 | ) | 11.5 | (15.2 | ) |
June 30, 2011 | ||||||||||||||||||||||||||||||||
Beginning balance as of December 31, 2010 | Purchases, sales, issuances and settlements, net (a) | Total realized and unrealized gains (losses) included in net income | Total realized and unrealized gains (losses) included in other comprehensive income (loss) | Transfers into Level 3 | Transfers out of Level 3 | Ending balance as of June 30, 2011 | Amount of total gains (losses) for the six months ended June 30, 2011 included in our net income relating to assets and liabilities still held as of the reporting date | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | ||||||||||||||||||||||||||||||||
Corporate securities | $ | 1,907.8 | $ | (161.0 | ) | $ | (21.0 | ) | $ | 8.3 | $ | 56.5 | $ | (1,428.8 | ) | $ | 361.8 | $ | (11.5 | ) | ||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 2.0 | (.1 | ) | — | (.2 | ) | — | — | 1.7 | — | ||||||||||||||||||||||
States and political subdivisions | 2.5 | — | — | — | — | (2.5 | ) | — | — | |||||||||||||||||||||||
Asset-backed securities | 182.3 | (2.7 | ) | — | 1.9 | 10.9 | (21.7 | ) | 170.7 | — | ||||||||||||||||||||||
Collateralized debt obligations | 256.5 | (69.5 | ) | 2.2 | 4.3 | — | — | 193.5 | — | |||||||||||||||||||||||
Mortgage pass-through securities | 3.5 | (.3 | ) | — | — | — | — | 3.2 | — | |||||||||||||||||||||||
Collateralized mortgage obligations | 197.1 | 54.4 | (.9 | ) | .7 | 38.7 | (85.9 | ) | 204.1 | — | ||||||||||||||||||||||
Total fixed maturities, available for sale | 2,551.7 | (179.2 | ) | (19.7 | ) | 15.0 | 106.1 | (1,538.9 | ) | 935.0 | (11.5 | ) | ||||||||||||||||||||
Equity securities | 6.9 | 36.7 | — | 1.0 | — | — | 44.6 | — | ||||||||||||||||||||||||
Trading securities: | ||||||||||||||||||||||||||||||||
Collateralized mortgage obligations | .4 | — | — | — | — | (.4 | ) | — | — | |||||||||||||||||||||||
Total trading securities | .4 | — | — | — | — | (.4 | ) | — | — | |||||||||||||||||||||||
Investments held by variable interest entities: | ||||||||||||||||||||||||||||||||
Corporate securities | 6.7 | (7.9 | ) | 1.5 | (.3 | ) | — | — | — | — | ||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Liabilities for insurance products: | ||||||||||||||||||||||||||||||||
Interest-sensitive products | (553.2 | ) | (51.3 | ) | (8.9 | ) | — | — | — | (613.4 | ) | (8.9 | ) |
(a) | Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the six months ended June 30, 2011 (dollars in millions): |
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | — | $ | (161.0 | ) | $ | — | $ | — | $ | (161.0 | ) | |||||||
United States Treasury securities and obligations of United States governement corporations and agencies | — | (.1 | ) | — | — | (.1 | ) | ||||||||||||
Asset-backed securities | — | (2.7 | ) | — | — | (2.7 | ) | ||||||||||||
Collateralized debt obligations | 20.7 | (90.2 | ) | — | — | (69.5 | ) | ||||||||||||
Mortgage pass-through securities | — | (.3 | ) | — | — | (.3 | ) | ||||||||||||
Collateralized mortgage obligations | 73.9 | (19.5 | ) | — | — | 54.4 | |||||||||||||
Total fixed maturities, available for sale | 94.6 | (273.8 | ) | — | — | (179.2 | ) | ||||||||||||
Equity securities | 36.7 | — | — | — | 36.7 | ||||||||||||||
Investments held by variable interest entities: | |||||||||||||||||||
Corporate securities | — | (7.9 | ) | — | — | (7.9 | ) | ||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products | (52.4 | ) | 10.1 | (25.8 | ) | 16.8 | (51.3 | ) |
Fair Value at June 30, 2012 | Valuation Technique(s) | Unobservable Inputs | Range (Weighted Average) | ||||||
Assets: | |||||||||
Corporate securities (a) | $ | 182.0 | Discounted cash flow analysis | Discount margins | 2.05% - 3.65% (2.94%) | ||||
Asset-backed securities (b) | 12.4 | Discounted cash flow analysis | Discount margins | 1.90% - 2.05% (2.05%) | |||||
Collateralized debt obligations (c) | 333.5 | Discounted cash flow analysis | Recoveries | 54% - 66% (ramp over 6 months) | |||||
Constant prepayment rate | 20% | ||||||||
Discount margins | .93% - 20.39% (3.30%) | ||||||||
Annual default rate | 1.36% - 5.90% (3.24%) | ||||||||
Portfolio CCC % | .72% - 21.83% (12.21%) | ||||||||
Equity securities (d) | 3.2 | Discounted cash flow analysis | Recoveries | .308 -.308 (.308) | |||||
Venture capital investments (e) | 58.0 | Market multiples | EBITDA multiple | 4.6 - 28.8 (11.69) | |||||
Revenue multiple | 0.7 - 7.1 (4.16) | ||||||||
Book equity multiple | 1.0 - 4.9 (1) | ||||||||
Other assets categorized as Level 3 (f) | 174.2 | Unadjusted third-party price source | Not applicable | Not applicable | |||||
Total | 763.3 | ||||||||
Liabilities: | |||||||||
Interest sensitive products (g) | 705.9 | Discounted projected embedded derivatives | Projected portfolio yields | 5.35% - 5.61% (5.55%) | |||||
Discount rates | 0.0 - 3.3% (1.3%) | ||||||||
Surrender rates | 4% - 43% (19%) |
(a) | Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. |
(b) | Asset-backed securities - The significant unobservable input used in the fair value measurement of our asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. |
(c) | Collateralized debt obligations - The significant unobservable inputs used in the fair value measurement of our collateralized debt obligations relate to collateral performance, including default rate, recoveries and constant prepayment rate, as well as discount margins of the underlying collateral. Significant increases (decreases) in default rate in isolation would result in a significantly lower (higher) fair value measurement. Generally, a significant increase (decrease) in the constant prepayment rate and recoveries in isolation would result in a significantly higher (lower) fair value measurement. Generally a significant increase (decrease) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the annual default rate is accompanied by a directionally similar change in the assumption used for discount margins and portfolio CCC % and a directionally opposite change in the assumption used for constant prepayment rate and recoveries. A tranche's payment priority and investment cost basis could alter generalized fair value outcomes. |
(d) | Equity securities - The significant unobservable input used in the fair value measurement of our equity securities is the anticipated cash recovery. Significant increases (decreases) in the anticipated recovery would result in a significantly higher (lower) fair value measurement. |
(e) | Venture capital investments - The significant unobservable inputs used in the fair value measurement of our venture capital |
(f) | Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources. |
(g) | Interest sensitive products - The significant unobservable inputs used in the fair value measurement of our interest sensitive products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative. |
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
• | changes in or sustained low interest rates causing reductions in investment income, the margins of our fixed annuity and life insurance businesses, and sales of, and demand for, our products; |
• | expectations of lower future investment earnings may cause us to accelerate amortization, write down the balance of insurance acquisition costs or establish additional liabilities for insurance products; |
• | general economic, market and political conditions, including the performance and fluctuations of the financial markets which may affect the value of our investments as well as our ability to raise capital or refinance existing indebtedness and the cost of doing so; |
• | the ultimate outcome of lawsuits filed against us and other legal and regulatory proceedings to which we are subject; |
• | our ability to make anticipated changes to certain NGEs of our life insurance products; |
• | our ability to obtain adequate and timely rate increases on our health products, including our long-term care business; |
• | the receipt of any required regulatory approvals for dividend and surplus debenture interest payments from our insurance subsidiaries; |
• | mortality, morbidity, the increased cost and usage of health care services, persistency, the adequacy of our previous reserve estimates and other factors which may affect the profitability of our insurance products; |
• | changes in our assumptions related to deferred acquisition costs or the present value of future profits; |
• | the recoverability of our deferred tax assets and the effect of potential ownership changes and tax rate changes on their value; |
• | our assumption that the positions we take on our tax return filings, including our position that our 7.0% Debentures will not be treated as stock for purposes of Section 382 of the Code and will not trigger an ownership change, will not be successfully challenged by the IRS; |
• | changes in accounting principles and the interpretation thereof (including changes in principles related to accounting for deferred acquisition costs); |
• | our ability to continue to satisfy the financial ratio and balance requirements and other covenants of our debt agreements; |
• | our ability to achieve anticipated expense reductions and levels of operational efficiencies including improvements in claims adjudication and continued automation and rationalization of operating systems; |
• | performance and valuation of our investments, including the impact of realized losses (including other-than-temporary impairment charges); |
• | our ability to identify products and markets in which we can compete effectively against competitors with greater market share, higher ratings, greater financial resources and stronger brand recognition; |
• | our ability to generate sufficient liquidity to meet our debt service obligations and other cash needs; |
• | our ability to maintain effective controls over financial reporting; |
• | our ability to continue to recruit and retain productive agents and distribution partners and customer response to new products, distribution channels and marketing initiatives; |
• | our ability to achieve eventual upgrades of the financial strength ratings of CNO and our insurance company subsidiaries as well as the impact of our ratings on our business, our ability to access capital, and the cost of capital; |
• | the risk factors or uncertainties listed from time to time in our filings with the SEC; |
• | regulatory changes or actions, including those relating to regulation of the financial affairs of our insurance companies, such as the payment of dividends and surplus debenture interest to us, regulation of the sale, underwriting and pricing of products, and health care regulation affecting health insurance products; and |
• | changes in the Federal income tax laws and regulations which may affect or eliminate the relative tax advantages of some of our products or affect the value of our deferred tax assets. |
• | Bankers Life, which markets and distributes Medicare supplement insurance, interest-sensitive life insurance, traditional life insurance, fixed annuities and long-term care insurance products to the middle-income senior market through a dedicated field force of career agents and sales managers supported by a network of community-based |
• | Washington National, which markets and distributes supplemental health (including specified disease, accident and hospital indemnity insurance products) and life insurance to middle-income consumers at home and at the worksite. These products are marketed through Performance Matters Associates, Inc. ("PMA"), a wholly owned subsidiary, and through independent marketing organizations and insurance agencies including worksite marketing. The products being marketed are underwritten by Washington National Insurance Company. |
• | Colonial Penn, which markets primarily graded benefit and simplified issue life insurance directly to customers through television advertising, direct mail, the internet and telemarketing. The Colonial Penn segment includes primarily the business of Colonial Penn Life Insurance Company. |
• | Other CNO Business, which consists of blocks of interest-sensitive life insurance, traditional life insurance, annuities, long-term care insurance and other supplemental health products. These blocks of business are not being actively marketed and were primarily issued or acquired by Conseco Life and Washington National Insurance Company. |
Guaranteed | Fixed rate and fixed | Universal | ||||||||||
rate | index annuities | life | Total | |||||||||
> 5.0% to 6.0% | $ | .3 | $ | 36.5 | $ | 36.8 | ||||||
> 4.0% to 5.0% | 92.1 | 931.1 | 1,023.2 | |||||||||
> 3.0% to 4.0% | 1,763.0 | 1,226.3 | 2,989.3 | |||||||||
> 2.0% to 3.0% | 3,821.3 | 369.6 | 4,190.9 | |||||||||
> 1.0% to 2.0% | 1,339.7 | 4.9 | 1,344.6 | |||||||||
1.0% and under | 899.1 | 33.0 | 932.1 | |||||||||
$ | 7,915.5 | $ | 2,601.4 | $ | 10,516.9 | |||||||
Weighted average | 2.52 | % | 4.00 | % | 2.88 | % |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Earnings before net realized investment gains, fair value changes in embedded derivative liabilities, corporate interest expense, loss on extinguishment of debt and income taxes (“EBIT” a non-GAAP financial measure) (a): | |||||||||||||||
Bankers Life | $ | 76.1 | $ | 72.1 | $ | 146.6 | $ | 134.3 | |||||||
Washington National | 33.9 | 21.8 | 58.6 | 46.1 | |||||||||||
Colonial Penn | .6 | .5 | (9.2 | ) | (5.2 | ) | |||||||||
Other CNO Business | 1.9 | 5.1 | (.4 | ) | 12.5 | ||||||||||
EBIT from business segments | 112.5 | 99.5 | 195.6 | 187.7 | |||||||||||
Corporate Operations, excluding corporate interest expense | (9.1 | ) | (11.3 | ) | (10.9 | ) | (11.8 | ) | |||||||
EBIT | 103.4 | 88.2 | 184.7 | 175.9 | |||||||||||
Corporate interest expense | (16.6 | ) | (19.3 | ) | (34.1 | ) | (39.9 | ) | |||||||
Income before loss on extinguishment of debt, net realized investment gains, fair value changes in embedded derivative liabilities and taxes | 86.8 | 68.9 | 150.6 | 136.0 | |||||||||||
Tax expense on operating income | 32.6 | 24.4 | 55.8 | 48.3 | |||||||||||
Net operating income | 54.2 | 44.5 | 94.8 | 87.7 | |||||||||||
Net realized investment gains (net of related amortization and taxes) | 18.7 | 2.3 | 32.8 | 5.4 | |||||||||||
Fair value changes in embedded derivative liabilities (net of related amortization and taxes) | (6.9 | ) | — | (2.4 | ) | — | |||||||||
Loss on extinguishment of debt, net of income taxes | (.3 | ) | (.4 | ) | (.4 | ) | (1.3 | ) | |||||||
Net income | $ | 65.7 | $ | 46.4 | $ | 124.8 | $ | 91.8 | |||||||
Per diluted share: | |||||||||||||||
Net operating income | $ | .20 | $ | .15 | $ | .35 | $ | .31 | |||||||
Net realized investment gains, net of related amortization and taxes | .06 | .01 | .11 | .02 | |||||||||||
Fair value changes in embedded derivative liabilities, net of related amortization and taxes | (.02 | ) | — | (.01 | ) | — | |||||||||
Loss on extinguishment of debt, net of income taxes | — | — | — | (.01 | ) | ||||||||||
Net income | $ | .24 | $ | .16 | $ | .45 | $ | .32 |
(a) | Management believes that an analysis of EBIT provides a clearer comparison of the operating results of the Company from period to period because it excludes: (i) corporate interest expense; (ii) loss on extinguishment of debt; (iii) net realized investment gains; and (iv) fair value changes in embedded derivative liabilities that are unrelated to the Company’s underlying fundamentals. Net realized investment gains or losses include: (i) gains or losses on the sales of investments; (ii) other-than-temporary impairments recognized through net income; and (iii) changes in fair value of certain fixed maturity investments with embedded derivatives. The table above reconciles the non-GAAP measure to the corresponding GAAP measure. |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Income (loss) before net realized investment gains (losses), fair value changes in embedded derivative liabilities, net of related amortization, loss on extinguishment of debt and income taxes (a non-GAAP measure) (a): | |||||||||||||||
Bankers Life | $ | 76.1 | $ | 72.1 | $ | 146.6 | $ | 134.3 | |||||||
Washington National | 33.9 | 21.8 | 58.6 | 46.1 | |||||||||||
Colonial Penn | .6 | .5 | (9.2 | ) | (5.2 | ) | |||||||||
Other CNO Business | 1.9 | 5.1 | (.4 | ) | 12.5 | ||||||||||
Corporate operations | (25.7 | ) | (30.6 | ) | (45.0 | ) | (51.7 | ) | |||||||
86.8 | 68.9 | 150.6 | 136.0 | ||||||||||||
Net realized investment gains (losses), net of related amortization: | |||||||||||||||
Bankers Life | 16.2 | (1.5 | ) | 25.9 | 4.3 | ||||||||||
Washington National | 3.5 | (.5 | ) | 6.6 | (1.0 | ) | |||||||||
Colonial Penn | 1.9 | .2 | 4.5 | 1.3 | |||||||||||
Other CNO Business | 6.1 | 1.4 | 12.6 | .8 | |||||||||||
Corporate operations | 1.1 | 3.9 | 1.0 | 2.8 | |||||||||||
28.8 | 3.5 | 50.6 | 8.2 | ||||||||||||
Fair value changes in embedded derivative liabilities, net of related amortization: | |||||||||||||||
Bankers Life | (10.4 | ) | — | (3.6 | ) | — | |||||||||
Other CNO Business | (.2 | ) | — | (.1 | ) | — | |||||||||
(10.6 | ) | — | (3.7 | ) | — | ||||||||||
Loss on extinguishment of debt: | |||||||||||||||
Corporate operations | (.5 | ) | (.6 | ) | (.7 | ) | (2.0 | ) | |||||||
Income (loss) before income taxes: | |||||||||||||||
Bankers Life | 81.9 | 70.6 | 168.9 | 138.6 | |||||||||||
Washington National | 37.4 | 21.3 | 65.2 | 45.1 | |||||||||||
Colonial Penn | 2.5 | .7 | (4.7 | ) | (3.9 | ) | |||||||||
Other CNO Business | 7.8 | 6.5 | 12.1 | 13.3 | |||||||||||
Corporate operations | (25.1 | ) | (27.3 | ) | (44.7 | ) | (50.9 | ) | |||||||
Income before income taxes | $ | 104.5 | $ | 71.8 | $ | 196.8 | $ | 142.2 |
(a) | These non-GAAP measures as presented in the above table and in the following segment financial data and discussions of segment results exclude net realized investment gains (losses), fair value changes in embedded derivative liabilities, net of related amortization, loss on extinguishment of debt and before income taxes. These are considered non-GAAP financial measures. A non-GAAP measure is a numerical measure of a company’s performance, financial position, or cash flows that excludes or includes amounts that are normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Premium collections: | |||||||||||||||
Annuities | $ | 169.5 | $ | 259.1 | $ | 354.2 | $ | 481.3 | |||||||
Medicare supplement and other supplemental health | 331.3 | 329.1 | 660.8 | 666.7 | |||||||||||
Life | 75.4 | 62.0 | 145.5 | 118.4 | |||||||||||
Total collections | $ | 576.2 | $ | 650.2 | $ | 1,160.5 | $ | 1,266.4 | |||||||
Average liabilities for insurance products: | |||||||||||||||
Annuities: | |||||||||||||||
Mortality based | $ | 231.7 | $ | 243.1 | $ | 232.7 | $ | 244.5 | |||||||
Fixed index | 2,798.2 | 2,268.3 | 2,752.8 | 2,208.0 | |||||||||||
Deposit based | 4,577.8 | 4,793.2 | 4,611.4 | 4,812.8 | |||||||||||
Medicare supplement and other supplemental health | 4,653.2 | 4,529.9 | 4,643.9 | 4,509.8 | |||||||||||
Life: | |||||||||||||||
Interest sensitive | 444.7 | 425.2 | 443.0 | 422.8 | |||||||||||
Non-interest sensitive | 506.2 | 416.8 | 494.6 | 407.3 | |||||||||||
Total average liabilities for insurance products, net of reinsurance ceded | $ | 13,211.8 | $ | 12,676.5 | $ | 13,178.4 | $ | 12,605.2 | |||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 419.0 | $ | 409.6 | $ | 825.5 | $ | 809.6 | |||||||
Net investment income: | |||||||||||||||
General account invested assets | 204.9 | 196.5 | 405.2 | 387.8 | |||||||||||
Fixed index products | (19.3 | ) | .4 | 15.3 | 18.7 | ||||||||||
Fee revenue and other income | 3.3 | 3.3 | 6.2 | 5.6 | |||||||||||
Total revenues | 607.9 | 609.8 | 1,252.2 | 1,221.7 | |||||||||||
Expenses: | |||||||||||||||
Insurance policy benefits | 366.3 | 351.3 | 701.5 | 688.9 | |||||||||||
Amounts added to policyholder account balances: | |||||||||||||||
Annuity products and interest-sensitive life products other than fixed index products | 36.6 | 40.5 | 75.1 | 81.3 | |||||||||||
Fixed index products | (6.2 | ) | 17.1 | 41.0 | 43.5 | ||||||||||
Amortization related to operations | 50.5 | 46.9 | 107.4 | 115.4 | |||||||||||
Interest expense on investment borrowings | 1.4 | 1.1 | 2.8 | 2.3 | |||||||||||
Other operating costs and expenses | 83.2 | 80.8 | 177.8 | 156.0 | |||||||||||
Total benefits and expenses | 531.8 | 537.7 | 1,105.6 | 1,087.4 | |||||||||||
Income before net realized investment gains (losses) and fair value changes in embedded derivative liabilities, net of related amortization, and income taxes | 76.1 | 72.1 | 146.6 | 134.3 | |||||||||||
Net realized investment gains (losses) | 17.9 | (1.8 | ) | 28.5 | 4.8 | ||||||||||
Amortization related to net realized investment gains (losses) | (1.7 | ) | .3 | (2.6 | ) | (.5 | ) | ||||||||
Net realized investment gains (losses), net of related amortization | 16.2 | (1.5 | ) | 25.9 | 4.3 | ||||||||||
Insurance policy benefits - fair value changes in embedded derivative liabilities | (16.7 | ) | — | (5.7 | ) | — | |||||||||
Amortization related to fair value changes in embedded derivative liabilities | 6.3 | — | 2.1 | — | |||||||||||
Fair value changes in embedded derivative liabilities, net of related amortization | (10.4 | ) | — | (3.6 | ) | — | |||||||||
Income before income taxes | $ | 81.9 | $ | 70.6 | $ | 168.9 | $ | 138.6 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Health benefit ratios: | |||||||||||||||
All health lines: | |||||||||||||||
Insurance policy benefits | $ | 313.7 | $ | 305.0 | $ | 596.5 | $ | 602.6 | |||||||
Benefit ratio (a) | 91.9 | % | 88.8 | % | 88.3 | % | 88.2 | % | |||||||
Medicare supplement: | |||||||||||||||
Insurance policy benefits | $ | 132.9 | $ | 125.3 | $ | 250.7 | $ | 247.0 | |||||||
Benefit ratio (a) | 72.2 | % | 69.8 | % | 68.3 | % | 68.5 | % | |||||||
PDP: | |||||||||||||||
Insurance policy benefits | $ | 11.4 | $ | 14.8 | $ | 20.6 | $ | 27.7 | |||||||
Benefit ratio (a) | 64.2 | % | 88.6 | % | 72.4 | % | 89.0 | % | |||||||
PFFS: | |||||||||||||||
Insurance policy benefits | $ | (.1 | ) | $ | (.1 | ) | $ | (.2 | ) | $ | (.8 | ) | |||
Benefit ratio (a) | N/A | N/A | N/A | N/A | |||||||||||
Long-term care: | |||||||||||||||
Insurance policy benefits | $ | 169.5 | $ | 165.0 | $ | 325.4 | $ | 328.7 | |||||||
Benefit ratio (a) | 121.4 | % | 115.0 | % | 116.1 | % | 114.2 | % | |||||||
Interest-adjusted benefit ratio (b) | 75.4 | % | 71.6 | % | 70.4 | % | 71.2 | % |
(a) | We calculate benefit ratios by dividing the related product’s insurance policy benefits by insurance policy income. |
(b) | We calculate the interest-adjusted benefit ratio (a non-GAAP measure) for Bankers Life’s long-term care products by dividing such product’s insurance policy benefits less the imputed interest income on the accumulated assets backing the insurance liabilities by policy income. These are considered non-GAAP financial measures. A non-GAAP measure is a numerical measure of a company’s performance, financial position, or cash flows that excludes or includes amounts that are normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Expenses related to the marketing and quota-share agreements with Coventry | $ | 1.9 | $ | 2.6 | $ | 3.8 | $ | 4.6 | |||||||
Commission expense and agent manager benefits | 14.9 | 14.7 | 28.9 | 28.5 | |||||||||||
Other operating expenses | 66.4 | 63.5 | 145.1 | 122.9 | |||||||||||
Total | $ | 83.2 | $ | 80.8 | $ | 177.8 | $ | 156.0 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Premium collections: | |||||||||||||||
Medicare supplement and other supplemental health | $ | 145.1 | $ | 142.8 | $ | 286.8 | $ | 286.0 | |||||||
Life | 3.8 | 3.9 | 7.8 | 8.2 | |||||||||||
Total collections | $ | 148.9 | $ | 146.7 | $ | 294.6 | $ | 294.2 | |||||||
Average liabilities for insurance products: | |||||||||||||||
Medicare supplement and other supplemental health | $ | 2,418.9 | $ | 2,437.1 | $ | 2,424.3 | $ | 2,435.8 | |||||||
Non-interest sensitive life | 199.1 | 202.2 | 199.7 | 203.7 | |||||||||||
Total average liabilities for insurance products, net of reinsurance ceded | $ | 2,618.0 | $ | 2,639.3 | $ | 2,624.0 | $ | 2,639.5 | |||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 147.6 | $ | 146.6 | $ | 295.0 | $ | 292.0 | |||||||
Net investment income: | |||||||||||||||
General account invested assets | 51.0 | 46.7 | 101.0 | 93.0 | |||||||||||
Trading account income related to reinsurer accounts | 1.4 | .7 | 1.5 | 1.0 | |||||||||||
Change in value of embedded derivatives related to modified coinsurance agreements | (1.4 | ) | (.7 | ) | (1.5 | ) | (1.0 | ) | |||||||
Fee revenue and other income | .3 | .2 | .5 | .5 | |||||||||||
Total revenues | 198.9 | 193.5 | 396.5 | 385.5 | |||||||||||
Expenses: | |||||||||||||||
Insurance policy benefits | 113.7 | 118.3 | 229.4 | 230.5 | |||||||||||
Amortization related to operations | 10.8 | 11.4 | 23.5 | 24.8 | |||||||||||
Interest expense on investment borrowings | .8 | — | 1.5 | — | |||||||||||
Other operating costs and expenses | 39.7 | 42.0 | 83.5 | 84.1 | |||||||||||
Total benefits and expenses | 165.0 | 171.7 | 337.9 | 339.4 | |||||||||||
Income before net realized investment gains (losses) and income taxes | 33.9 | 21.8 | 58.6 | 46.1 | |||||||||||
Net realized investment gains (losses) | 3.5 | (.5 | ) | 6.6 | (1.0 | ) | |||||||||
Income before income taxes | $ | 37.4 | $ | 21.3 | $ | 65.2 | $ | 45.1 | |||||||
Health benefit ratios: | |||||||||||||||
Medicare supplement: | |||||||||||||||
Insurance policy benefits | $ | 20.5 | $ | 24.8 | $ | 40.6 | $ | 48.3 | |||||||
Benefit ratio (a) | 67.7 | % | 71.1 | % | 66.6 | % | 68.7 | % | |||||||
Supplemental health: | |||||||||||||||
Insurance policy benefits | $ | 87.1 | $ | 88.4 | $ | 179.1 | $ | 170.8 | |||||||
Benefit ratio (a) | 77.0 | % | 82.7 | % | 79.7 | % | 80.7 | % | |||||||
Interest-adjusted benefit ratio (b) | 50.1 | % | 54.1 | % | 52.6 | % | 51.6 | % |
(a) | We calculate benefit ratios by dividing the related product’s insurance policy benefits by insurance policy income. |
(b) | We calculate the interest-adjusted benefit ratio (a non-GAAP measure) for Washington National’s supplemental health products by dividing such product’s insurance policy benefits less the imputed interest income on the accumulated assets backing the insurance liabilities by policy income. These are considered non-GAAP financial measures. A non-GAAP measure is a numerical measure of a company’s performance, financial position, or cash flows that excludes or includes amounts that are normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Premium collections: | |||||||||||||||
Life | $ | 52.5 | $ | 48.5 | $ | 105.1 | $ | 97.9 | |||||||
Supplemental health | 1.2 | 1.5 | 2.5 | 3.0 | |||||||||||
Total collections | $ | 53.7 | $ | 50.0 | $ | 107.6 | $ | 100.9 | |||||||
Average liabilities for insurance products: | |||||||||||||||
Annuities-mortality based | $ | 76.8 | $ | 77.8 | $ | 76.9 | $ | 78.2 | |||||||
Supplemental health | 15.1 | 16.3 | 15.3 | 16.4 | |||||||||||
Life: | |||||||||||||||
Interest sensitive | 18.9 | 20.5 | 19.4 | 20.6 | |||||||||||
Non-interest sensitive | 601.8 | 588.7 | 600.1 | 587.7 | |||||||||||
Total average liabilities for insurance products, net of reinsurance ceded | $ | 712.6 | $ | 703.3 | $ | 711.7 | $ | 702.9 | |||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 54.6 | $ | 50.9 | $ | 108.0 | $ | 101.2 | |||||||
Net investment income: | |||||||||||||||
General account invested assets | 10.2 | 10.5 | 20.2 | 20.8 | |||||||||||
Fee revenue and other income | .2 | .2 | .4 | .4 | |||||||||||
Total revenues | 65.0 | 61.6 | 128.6 | 122.4 | |||||||||||
Expenses: | |||||||||||||||
Insurance policy benefits | 39.3 | 37.8 | 81.2 | 76.3 | |||||||||||
Amounts added to annuity and interest-sensitive life product account balances | .3 | .2 | .5 | .4 | |||||||||||
Amortization related to operations | 3.9 | 3.5 | 7.6 | 7.5 | |||||||||||
Other operating costs and expenses | 20.9 | 19.6 | 48.5 | 43.4 | |||||||||||
Total benefits and expenses | 64.4 | 61.1 | 137.8 | 127.6 | |||||||||||
Income (loss) before net realized investment gains and income taxes | .6 | .5 | (9.2 | ) | (5.2 | ) | |||||||||
Net realized investment gains | 1.9 | .2 | 4.5 | 1.3 | |||||||||||
Income (loss) before income taxes | $ | 2.5 | $ | .7 | $ | (4.7 | ) | $ | (3.9 | ) |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Premium collections: | |||||||||||||||
Annuities | $ | 1.2 | $ | 5.9 | $ | 2.1 | $ | 10.1 | |||||||
Other health | 6.5 | 7.2 | 13.4 | 14.8 | |||||||||||
Life | 40.9 | 48.9 | 86.2 | 95.3 | |||||||||||
Total collections | $ | 48.6 | $ | 62.0 | $ | 101.7 | $ | 120.2 | |||||||
Average liabilities for insurance products: | |||||||||||||||
Annuities: | |||||||||||||||
Mortality based | $ | 225.5 | $ | 237.2 | $ | 227.3 | $ | 238.7 | |||||||
Fixed index | 532.5 | 632.1 | 543.2 | 642.1 | |||||||||||
Deposit based | 633.1 | 656.1 | 635.7 | 657.9 | |||||||||||
Separate accounts | 15.8 | 17.7 | 15.6 | 17.8 | |||||||||||
Other health | 479.8 | 481.9 | 480.4 | 481.9 | |||||||||||
Life: | |||||||||||||||
Interest sensitive | 2,365.9 | 2,506.1 | 2,391.4 | 2,516.7 | |||||||||||
Non-interest sensitive | 763.3 | 790.9 | 764.9 | 798.2 | |||||||||||
Total average liabilities for insurance products, net of reinsurance ceded | $ | 5,015.9 | $ | 5,322.0 | $ | 5,058.5 | $ | 5,353.3 | |||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 73.6 | $ | 72.5 | $ | 152.6 | $ | 144.0 | |||||||
Net investment income: | |||||||||||||||
General account invested assets | 84.0 | 87.6 | 168.0 | 175.8 | |||||||||||
Fixed index products | (4.1 | ) | (.9 | ) | 2.7 | 4.1 | |||||||||
Trading account income related to policyholder accounts | (.1 | ) | — | 1.8 | 1.5 | ||||||||||
Total revenues | 153.4 | 159.2 | 325.1 | 325.4 | |||||||||||
Expenses: | |||||||||||||||
Insurance policy benefits | 93.8 | 85.9 | 176.8 | 174.7 | |||||||||||
Amounts added to policyholder account balances: | |||||||||||||||
Annuity products and interest-sensitive life products other than fixed index products | 27.5 | 30.3 | 57.2 | 61.9 | |||||||||||
Fixed index products | .7 | 3.0 | 9.9 | 10.1 | |||||||||||
Amortization related to operations | 7.1 | 9.4 | 14.6 | 18.0 | |||||||||||
Interest expense on investment borrowings | 5.0 | 5.0 | 10.1 | 9.9 | |||||||||||
Other operating costs and expenses | 17.4 | 20.5 | 56.9 | 38.3 | |||||||||||
Total benefits and expenses | 151.5 | 154.1 | 325.5 | 312.9 | |||||||||||
Income (loss) before net realized investment losses and fair value changes in embedded derivative liabilities, net of related amortization, and income taxes | 1.9 | 5.1 | (.4 | ) | 12.5 | ||||||||||
Net realized investment gains (losses) | 7.5 | 1.1 | 14.2 | .1 | |||||||||||
Amortization related to net realized investment gains (losses) | (1.4 | ) | .3 | (1.6 | ) | .7 | |||||||||
Net realized investment gains (losses), net of related amortization | 6.1 | 1.4 | 12.6 | .8 | |||||||||||
Insurance policy benefits - fair value changes in embedded derivative liabilities | (1.0 | ) | — | (.4 | ) | — | |||||||||
Amortization related to fair value changes in embedded derivative liabilities | .8 | — | .3 | — | |||||||||||
Fair value changes in embedded derivative liabilities, net of related amortization | (.2 | ) | — | (.1 | ) | — | |||||||||
Income (loss) before income taxes | $ | 7.8 | $ | 6.5 | $ | 12.1 | $ | 13.3 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Health benefit ratios: | |||||||||||||||
Long-term care: | |||||||||||||||
Insurance policy benefits | $ | 14.9 | $ | 14.5 | $ | 30.0 | $ | 31.7 | |||||||
Benefit ratio (a) | 230.2 | % | 205.8 | % | 228.8 | % | 221.0 | % | |||||||
Interest-adjusted benefit ratio (b) | 121.3 | % | 106.4 | % | 121.7 | % | 127.6 | % |
(a) | We calculate benefit ratios by dividing the related product’s insurance policy benefits by insurance policy income. |
(b) | We calculate the interest-adjusted benefit ratio (a non-GAAP measure) for Other CNO Business long-term care products by dividing such product’s insurance policy benefits less the imputed interest income on the accumulated assets backing the insurance liabilities by policy income. These are considered non-GAAP financial measures. A non-GAAP measure is a numerical measure of a company’s performance, financial position, or cash flows that excludes or includes amounts that are normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Corporate operations: | |||||||||||||||
Interest expense on corporate debt | $ | (16.6 | ) | $ | (19.3 | ) | $ | (34.1 | ) | $ | (39.9 | ) | |||
Net investment income (loss): | |||||||||||||||
General account invested assets | 1.0 | .9 | 1.9 | .9 | |||||||||||
Other special-purpose portfolios: | |||||||||||||||
COLI | (4.0 | ) | (1.1 | ) | 2.3 | .9 | |||||||||
Investments held in a rabbi trust | — | — | 4.1 | 2.0 | |||||||||||
Investments in certain hedge funds | (1.6 | ) | — | (1.8 | ) | — | |||||||||
Other trading account activities | 4.5 | 1.0 | 10.5 | 5.2 | |||||||||||
Fee revenue and other income | .2 | .2 | .6 | .6 | |||||||||||
Net operating results of variable interest entities | 2.9 | .2 | 5.1 | 2.2 | |||||||||||
Interest expense on investment borrowings | (.2 | ) | — | (.3 | ) | — | |||||||||
Other operating costs and expenses | (11.9 | ) | (12.5 | ) | (33.3 | ) | (23.6 | ) | |||||||
Loss before net realized investment gains, loss on extinguishment of debt and income taxes | (25.7 | ) | (30.6 | ) | (45.0 | ) | (51.7 | ) | |||||||
Net realized investment gains (losses) | 1.1 | 3.9 | 1.0 | 2.8 | |||||||||||
Loss on extinguishment of debt | (.5 | ) | (.6 | ) | (.7 | ) | (2.0 | ) | |||||||
Loss before income taxes | $ | (25.1 | ) | $ | (27.3 | ) | $ | (44.7 | ) | $ | (50.9 | ) |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
EBIT from In-Force Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 601.7 | $ | 594.3 | $ | 1,198.7 | $ | 1,178.3 | |||||||
Net investment income and other | 324.7 | 334.1 | 702.5 | 685.8 | |||||||||||
Total revenues | 926.4 | 928.4 | 1,901.2 | 1,864.1 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 611.7 | 626.3 | 1,247.0 | 1,251.1 | |||||||||||
Amortization | 64.6 | 61.9 | 137.7 | 147.2 | |||||||||||
Other expenses | 100.2 | 101.6 | 237.7 | 197.8 | |||||||||||
Total benefits and expenses | 776.5 | 789.8 | 1,622.4 | 1,596.1 | |||||||||||
EBIT from In-Force Business | $ | 149.9 | $ | 138.6 | $ | 278.8 | $ | 268.0 | |||||||
EBIT from New Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 93.1 | $ | 85.3 | $ | 182.4 | $ | 168.5 | |||||||
Net investment income and other | 5.7 | 10.4 | 18.8 | 22.4 | |||||||||||
Total revenues | 98.8 | 95.7 | 201.2 | 190.9 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 60.3 | 58.1 | 125.6 | 116.5 | |||||||||||
Amortization | 7.7 | 9.3 | 15.4 | 18.5 | |||||||||||
Other expenses | 68.2 | 67.4 | 143.4 | 136.2 | |||||||||||
Total benefits and expenses | 136.2 | 134.8 | 284.4 | 271.2 | |||||||||||
EBIT from New Business | $ | (37.4 | ) | $ | (39.1 | ) | $ | (83.2 | ) | $ | (80.3 | ) | |||
EBIT from In-Force and New Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 694.8 | $ | 679.6 | $ | 1,381.1 | $ | 1,346.8 | |||||||
Net investment income and other | 330.4 | 344.5 | 721.3 | 708.2 | |||||||||||
Total revenues | 1,025.2 | 1,024.1 | 2,102.4 | 2,055.0 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 672.0 | 684.4 | 1,372.6 | 1,367.6 | |||||||||||
Amortization | 72.3 | 71.2 | 153.1 | 165.7 | |||||||||||
Other expenses | 168.4 | 169.0 | 381.1 | 334.0 | |||||||||||
Total benefits and expenses | 912.7 | 924.6 | 1,906.8 | 1,867.3 | |||||||||||
EBIT from In-Force and New Business | $ | 112.5 | $ | 99.5 | $ | 195.6 | $ | 187.7 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
EBIT from In-Force Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 351.6 | $ | 346.3 | $ | 693.4 | $ | 685.1 | |||||||
Net investment income and other | 183.2 | 189.8 | 407.9 | 389.7 | |||||||||||
Total revenues | 534.8 | 536.1 | 1,101.3 | 1,074.8 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 348.7 | 361.3 | 716.1 | 718.2 | |||||||||||
Amortization | 43.7 | 38.5 | 93.7 | 98.6 | |||||||||||
Other expenses | 39.8 | 37.7 | 91.8 | 72.7 | |||||||||||
Total benefits and expenses | 432.2 | 437.5 | 901.6 | 889.5 | |||||||||||
EBIT from In-Force Business | $ | 102.6 | $ | 98.6 | $ | 199.7 | $ | 185.3 | |||||||
EBIT from New Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 67.4 | $ | 63.3 | $ | 132.1 | $ | 124.5 | |||||||
Net investment income and other | 5.7 | 10.4 | 18.8 | 22.4 | |||||||||||
Total revenues | 73.1 | 73.7 | 150.9 | 146.9 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 48.0 | 47.6 | 101.5 | 95.5 | |||||||||||
Amortization | 6.8 | 8.4 | 13.7 | 16.8 | |||||||||||
Other expenses | 44.8 | 44.2 | 88.8 | 85.6 | |||||||||||
Total benefits and expenses | 99.6 | 100.2 | 204.0 | 197.9 | |||||||||||
EBIT from New Business | $ | (26.5 | ) | $ | (26.5 | ) | $ | (53.1 | ) | $ | (51.0 | ) | |||
EBIT from In-Force and New Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 419.0 | $ | 409.6 | $ | 825.5 | $ | 809.6 | |||||||
Net investment income and other | 188.9 | 200.2 | 426.7 | 412.1 | |||||||||||
Total revenues | 607.9 | 609.8 | 1,252.2 | 1,221.7 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 396.7 | 408.9 | 817.6 | 813.7 | |||||||||||
Amortization | 50.5 | 46.9 | 107.4 | 115.4 | |||||||||||
Other expenses | 84.6 | 81.9 | 180.6 | 158.3 | |||||||||||
Total benefits and expenses | 531.8 | 537.7 | 1,105.6 | 1,087.4 | |||||||||||
EBIT from In-Force and New Business | $ | 76.1 | $ | 72.1 | $ | 146.6 | $ | 134.3 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
EBIT from In-Force Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 132.8 | $ | 133.5 | $ | 265.8 | $ | 265.4 | |||||||
Net investment income and other | 51.3 | 46.9 | 101.5 | 93.5 | |||||||||||
Total revenues | 184.1 | 180.4 | 367.3 | 358.9 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 107.6 | 112.9 | 217.4 | 219.5 | |||||||||||
Amortization | 10.0 | 10.6 | 22.0 | 23.3 | |||||||||||
Other expenses | 32.3 | 32.1 | 66.3 | 64.0 | |||||||||||
Total benefits and expenses | 149.9 | 155.6 | 305.7 | 306.8 | |||||||||||
EBIT from In-Force Business | $ | 34.2 | $ | 24.8 | $ | 61.6 | $ | 52.1 | |||||||
EBIT from New Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 14.8 | $ | 13.1 | $ | 29.2 | $ | 26.6 | |||||||
Net investment income and other | — | — | — | — | |||||||||||
Total revenues | 14.8 | 13.1 | 29.2 | 26.6 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 6.1 | 5.4 | 12.0 | 11.0 | |||||||||||
Amortization | .8 | .8 | 1.5 | 1.5 | |||||||||||
Other expenses | 8.2 | 9.9 | 18.7 | 20.1 | |||||||||||
Total benefits and expenses | 15.1 | 16.1 | 32.2 | 32.6 | |||||||||||
EBIT from New Business | $ | (.3 | ) | $ | (3.0 | ) | $ | (3.0 | ) | $ | (6.0 | ) | |||
EBIT from In-Force and New Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 147.6 | $ | 146.6 | $ | 295.0 | $ | 292.0 | |||||||
Net investment income and other | 51.3 | 46.9 | 101.5 | 93.5 | |||||||||||
Total revenues | 198.9 | 193.5 | 396.5 | 385.5 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 113.7 | 118.3 | 229.4 | 230.5 | |||||||||||
Amortization | 10.8 | 11.4 | 23.5 | 24.8 | |||||||||||
Other expenses | 40.5 | 42.0 | 85.0 | 84.1 | |||||||||||
Total benefits and expenses | 165.0 | 171.7 | 337.9 | 339.4 | |||||||||||
EBIT from In-Force and New Business | $ | 33.9 | $ | 21.8 | $ | 58.6 | $ | 46.1 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
EBIT from In-Force Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 43.7 | $ | 42.0 | $ | 86.9 | $ | 83.8 | |||||||
Net investment income and other | 10.4 | 10.7 | 20.6 | 21.2 | |||||||||||
Total revenues | 54.1 | 52.7 | 107.5 | 105.0 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 33.4 | 32.9 | 69.6 | 66.7 | |||||||||||
Amortization | 3.8 | 3.4 | 7.4 | 7.3 | |||||||||||
Other expenses | 5.7 | 6.3 | 12.6 | 12.9 | |||||||||||
Total benefits and expenses | 42.9 | 42.6 | 89.6 | 86.9 | |||||||||||
EBIT from In-Force Business | $ | 11.2 | $ | 10.1 | $ | 17.9 | $ | 18.1 | |||||||
EBIT from New Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 10.9 | $ | 8.9 | $ | 21.1 | $ | 17.4 | |||||||
Net investment income and other | — | — | — | — | |||||||||||
Total revenues | 10.9 | 8.9 | 21.1 | 17.4 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 6.2 | 5.1 | 12.1 | 10.0 | |||||||||||
Amortization | .1 | .1 | .2 | .2 | |||||||||||
Other expenses | 15.2 | 13.3 | 35.9 | 30.5 | |||||||||||
Total benefits and expenses | 21.5 | 18.5 | 48.2 | 40.7 | |||||||||||
EBIT from New Business | $ | (10.6 | ) | $ | (9.6 | ) | $ | (27.1 | ) | $ | (23.3 | ) | |||
EBIT from In-Force and New Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 54.6 | $ | 50.9 | $ | 108.0 | $ | 101.2 | |||||||
Net investment income and other | 10.4 | 10.7 | 20.6 | 21.2 | |||||||||||
Total revenues | 65.0 | 61.6 | 128.6 | 122.4 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 39.6 | 38.0 | 81.7 | 76.7 | |||||||||||
Amortization | 3.9 | 3.5 | 7.6 | 7.5 | |||||||||||
Other expenses | 20.9 | 19.6 | 48.5 | 43.4 | |||||||||||
Total benefits and expenses | 64.4 | 61.1 | 137.8 | 127.6 | |||||||||||
EBIT from In-Force and New Business | $ | .6 | $ | .5 | $ | (9.2 | ) | $ | (5.2 | ) |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
EBIT from In-Force Business (a) | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 73.6 | $ | 72.5 | $ | 152.6 | $ | 144.0 | |||||||
Net investment income and other | 79.8 | 86.7 | 172.5 | 181.4 | |||||||||||
Total revenues | 153.4 | 159.2 | 325.1 | 325.4 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 122.0 | 119.2 | 243.9 | 246.7 | |||||||||||
Amortization | 7.1 | 9.4 | 14.6 | 18.0 | |||||||||||
Other expenses | 22.4 | 25.5 | 67.0 | 48.2 | |||||||||||
Total benefits and expenses | 151.5 | 154.1 | 325.5 | 312.9 | |||||||||||
EBIT from In-Force Business | $ | 1.9 | $ | 5.1 | $ | (.4 | ) | $ | 12.5 |
(a) | All activity in the Other CNO Business segment relates to in-force business. |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Premiums collected by product: | |||||||||||||||
Annuities: | |||||||||||||||
Fixed index (first-year) | $ | 120.2 | $ | 163.9 | $ | 255.1 | $ | 312.1 | |||||||
Other fixed rate (first-year) | 47.9 | 94.1 | 95.7 | 167.2 | |||||||||||
Other fixed rate (renewal) | 1.4 | 1.1 | 3.4 | 2.0 | |||||||||||
Subtotal - other fixed rate annuities | 49.3 | 95.2 | 99.1 | 169.2 | |||||||||||
Total annuities | 169.5 | 259.1 | 354.2 | 481.3 | |||||||||||
Health: | |||||||||||||||
Medicare supplement (first-year) | 25.1 | 24.7 | 48.9 | 49.8 | |||||||||||
Medicare supplement (renewal) | 149.8 | 144.3 | 300.9 | 298.0 | |||||||||||
Subtotal - Medicare supplement | 174.9 | 169.0 | 349.8 | 347.8 | |||||||||||
Long-term care (first-year) | 5.9 | 6.0 | 11.4 | 12.1 | |||||||||||
Long-term care (renewal) | 132.9 | 136.9 | 264.1 | 275.7 | |||||||||||
Subtotal - long-term care | 138.8 | 142.9 | 275.5 | 287.8 | |||||||||||
PDP and PFFS (first year) | .1 | .2 | .4 | .6 | |||||||||||
PDP and PFFS (renewal) | 14.6 | 14.4 | 29.6 | 25.0 | |||||||||||
Subtotal – PDP and PFFS | 14.7 | 14.6 | 30.0 | 25.6 | |||||||||||
Other health (first-year) | .6 | .3 | 1.0 | .7 | |||||||||||
Other health (renewal) | 2.3 | 2.3 | 4.5 | 4.8 | |||||||||||
Subtotal - other health | 2.9 | 2.6 | 5.5 | 5.5 | |||||||||||
Total health | 331.3 | 329.1 | 660.8 | 666.7 | |||||||||||
Life insurance: | |||||||||||||||
First-year | 35.7 | 29.4 | 68.5 | 54.1 | |||||||||||
Renewal | 39.7 | 32.6 | 77.0 | 64.3 | |||||||||||
Total life insurance | 75.4 | 62.0 | 145.5 | 118.4 | |||||||||||
Collections on insurance products: | |||||||||||||||
Total first-year premium collections on insurance products | 235.5 | 318.6 | 481.0 | 596.6 | |||||||||||
Total renewal premium collections on insurance products | 340.7 | 331.6 | 679.5 | 669.8 | |||||||||||
Total collections on insurance products | $ | 576.2 | $ | 650.2 | $ | 1,160.5 | $ | 1,266.4 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Premiums collected by product: | |||||||||||||||
Health: | |||||||||||||||
Medicare supplement (first-year) | $ | .3 | $ | .5 | $ | .6 | $ | 1.1 | |||||||
Medicare supplement (renewal) | 28.8 | 32.6 | 56.6 | 67.3 | |||||||||||
Subtotal - Medicare supplement | 29.1 | 33.1 | 57.2 | 68.4 | |||||||||||
Supplemental health (first-year) | 15.1 | 13.7 | 29.2 | 26.9 | |||||||||||
Supplemental health (renewal) | 100.3 | 95.2 | 199.1 | 188.9 | |||||||||||
Subtotal – supplemental health | 115.4 | 108.9 | 228.3 | 215.8 | |||||||||||
Other health (all renewal) | .6 | .8 | 1.3 | 1.8 | |||||||||||
Total health | 145.1 | 142.8 | 286.8 | 286.0 | |||||||||||
Life insurance: | |||||||||||||||
First-year | .3 | .3 | .5 | .7 | |||||||||||
Renewal | 3.5 | 3.6 | 7.3 | 7.5 | |||||||||||
Total life insurance | 3.8 | 3.9 | 7.8 | 8.2 | |||||||||||
Collections on insurance products: | |||||||||||||||
Total first-year premium collections on insurance products | 15.7 | 14.5 | 30.3 | 28.7 | |||||||||||
Total renewal premium collections on insurance products | 133.2 | 132.2 | 264.3 | 265.5 | |||||||||||
Total collections on insurance products | $ | 148.9 | $ | 146.7 | $ | 294.6 | $ | 294.2 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Premiums collected by product: | |||||||||||||||
Life insurance: | |||||||||||||||
First-year | $ | 10.7 | $ | 8.6 | $ | 21.1 | $ | 17.3 | |||||||
Renewal | 41.8 | 39.9 | 84.0 | 80.6 | |||||||||||
Total life insurance | 52.5 | 48.5 | 105.1 | 97.9 | |||||||||||
Health (all renewal): | |||||||||||||||
Medicare supplement | 1.1 | 1.4 | 2.3 | 2.7 | |||||||||||
Other health | .1 | .1 | .2 | .3 | |||||||||||
Total health | 1.2 | 1.5 | 2.5 | 3.0 | |||||||||||
Collections on insurance products: | |||||||||||||||
Total first-year premium collections on insurance products | 10.7 | 8.6 | 21.1 | 17.3 | |||||||||||
Total renewal premium collections on insurance products | 43.0 | 41.4 | 86.5 | 83.6 | |||||||||||
Total collections on insurance products | $ | 53.7 | $ | 50.0 | $ | 107.6 | $ | 100.9 |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Premiums collected by product: | |||||||||||||||
Annuities: | |||||||||||||||
Fixed index (first-year) | $ | .2 | $ | 2.7 | $ | .2 | $ | 5.4 | |||||||
Fixed index (renewal) | .8 | 1.4 | 1.5 | 2.3 | |||||||||||
Subtotal - fixed index annuities | 1.0 | 4.1 | 1.7 | 7.7 | |||||||||||
Other fixed rate (first-year) | — | 1.6 | — | 2.0 | |||||||||||
Other fixed rate (renewal) | .2 | .2 | .4 | .4 | |||||||||||
Subtotal - other fixed rate annuities | .2 | 1.8 | .4 | 2.4 | |||||||||||
Total annuities | 1.2 | 5.9 | 2.1 | 10.1 | |||||||||||
Health: | |||||||||||||||
Long-term care (all renewal) | 6.3 | 7.0 | 13.0 | 14.4 | |||||||||||
Other health (all renewal) | .2 | .2 | .4 | .4 | |||||||||||
Total health | 6.5 | 7.2 | 13.4 | 14.8 | |||||||||||
Life insurance: | |||||||||||||||
First-year | .8 | .9 | 1.4 | 1.3 | |||||||||||
Renewal | 40.1 | 48.0 | 84.8 | 94.0 | |||||||||||
Total life insurance | 40.9 | 48.9 | 86.2 | 95.3 | |||||||||||
Collections on insurance products: | |||||||||||||||
Total first-year premium collections on insurance products | 1.0 | 5.2 | 1.6 | 8.7 | |||||||||||
Total renewal premium collections on insurance products | 47.6 | 56.8 | 100.1 | 111.5 | |||||||||||
Total collections on insurance products | $ | 48.6 | $ | 62.0 | $ | 101.7 | $ | 120.2 |
June 30, 2012 | December 31, 2011 | ||||||
Total capital: | |||||||
Corporate notes payable | $ | 778.2 | $ | 857.9 | |||
Shareholders’ equity: | |||||||
Common stock | 2.3 | 2.4 | |||||
Additional paid-in capital | 4,312.0 | 4,361.9 | |||||
Accumulated other comprehensive income | 990.8 | 781.6 | |||||
Accumulated deficit | (412.0 | ) | (532.1 | ) | |||
Total shareholders’ equity | 4,893.1 | 4,613.8 | |||||
Total capital | $ | 5,671.3 | $ | 5,471.7 |
June 30, 2012 | December 31, 2011 | ||||||
Book value per common share | $ | 20.91 | $ | 19.12 | |||
Book value per common share, excluding accumulated other comprehensive income (a) | 16.67 | 15.88 | |||||
Ratio of earnings to fixed charges | 2.00X | 1.75X | |||||
Debt to total capital ratios: | |||||||
Corporate debt to total capital | 13.7 | % | 15.7 | % | |||
Corporate debt to total capital, excluding accumulated other comprehensive income (a) | 16.6 | % | 18.3 | % |
(a) | This non-GAAP measure differs from the corresponding GAAP measure presented immediately above, because accumulated other comprehensive income has been excluded from the value of capital used to determine this measure. Management believes this non-GAAP measure is useful because it removes the volatility that arises from changes in accumulated other comprehensive income. Such volatility is often caused by changes in the estimated fair value of our investment portfolio resulting from changes in general market interest rates rather than the business decisions made by management. However, this measure does not replace the corresponding GAAP measure. |
Amount | Maturity | Interest rate at | ||||
borrowed | date | June 30, 2012 | ||||
$ | 100.0 | October 2013 | Variable rate – 0.575% | |||
100.0 | November 2013 | Variable rate – 0.547% | ||||
67.0 | February 2014 | Fixed rate – 1.830% | ||||
50.0 | August 2014 | Variable rate – 0.597% | ||||
100.0 | September 2015 | Variable rate – 0.766% | ||||
150.0 | October 2015 | Variable rate – 0.592% | ||||
100.0 | (a) | November 2015 | Fixed rate – 4.890% | |||
146.0 | November 2015 | Fixed rate – 5.300% | ||||
100.0 | December 2015 | Fixed rate – 4.710% | ||||
100.0 | June 2016 | Variable rate – 0.685% | ||||
75.0 | June 2016 | Variable rate – 0.630% | ||||
75.0 | August 2016 | Variable rate – 0.677% | ||||
100.0 | October 2016 | Variable rate – 0.648% | ||||
50.0 | November 2016 | Variable rate – 0.738% | ||||
50.0 | November 2016 | Variable rate – 0.715% | ||||
100.0 | June 2017 | Variable rate – 0.760% | ||||
50.0 | August 2017 | Variable rate – 0.667% | ||||
100.0 | October 2017 | Variable rate – 0.897% | ||||
37.0 | November 2017 | Fixed rate – 3.750% | ||||
$ | 1,650.0 |
Earned surplus | ||||||
Subsidiary of CDOC | (deficit) | Additional information | ||||
Subsidiaries of Conseco Life of Texas: | ||||||
Bankers Life | $ | 276.7 | (a) | |||
Colonial Penn Life Insurance Company | (235.7 | ) | (b) |
(a) | Bankers Life paid ordinary dividends of $20.0 million to Conseco Life of Texas in the first six months of 2012. |
(b) | The deficit is primarily due to transactions which occurred several years ago, including a tax planning transaction and the fee paid to recapture a block of business previously ceded to an unaffiliated insurer. |
(i) | a change in the definition of “Total Capitalization” (used to calculate compliance with the Debt to Total Capitalization Ratio covenant) to provide that any change to the Company's shareholders' equity resulting from the adoption by the Company of ASU 2010-26, related to the accounting for deferred acquisition costs, shall be disregarded for the purpose of such covenant to the extent the Company going forward quantifies the impact of ASU 2010-26 for each fiscal quarter or fiscal year and the cumulative impact since its adoption; and |
(ii) | an increase in the cap on investments in “Capital Stock” (as defined in the amended credit agreement) from 1 percent to 3 percent. |
Year ending June 30, | Principal | ||
2013 | $ | 47.5 | |
2014 | 65.0 | ||
2015 | 80.0 | ||
2016 | 31.3 | ||
2017 | 293.0 | ||
Thereafter | 275.0 | ||
$ | 791.8 |
• | incur or guarantee additional indebtedness or issue preferred stock; |
• | pay dividends or make other distributions to shareholders; |
• | purchase or redeem capital stock or subordinated indebtedness; |
• | make certain investments; |
• | create liens; |
• | incur restrictions on the Company's ability and the ability of the Restricted Subsidiaries to pay dividends or make other payments to the Company; |
• | sell assets, including capital stock of the Company's subsidiaries; |
• | consolidate or merge with or into other companies or transfer all or substantially all of the Company's assets; and |
• | engage in transactions with affiliates. |
Amortized cost | Gross unrealized gains | Gross unrealized losses | Estimated fair value | ||||||||||||
Investment grade (a): | |||||||||||||||
Corporate securities | $ | 13,291.6 | $ | 1,767.1 | $ | (47.6 | ) | $ | 15,011.1 | ||||||
United States Treasury securities and obligations of United States government corporations and agencies | 216.3 | 7.4 | — | 223.7 | |||||||||||
States and political subdivisions | 1,766.1 | 249.9 | (4.8 | ) | 2,011.2 | ||||||||||
Debt securities issued by foreign governments | .8 | — | — | .8 | |||||||||||
Asset-backed securities | 1,233.7 | 50.6 | (14.0 | ) | 1,270.3 | ||||||||||
Collateralized debt obligations | 326.8 | 1.6 | (2.8 | ) | 325.6 | ||||||||||
Commercial mortgage-backed securities | 1,478.2 | 110.9 | (3.0 | ) | 1,586.1 | ||||||||||
Mortgage pass-through securities | 20.4 | 1.4 | — | 21.8 | |||||||||||
Collateralized mortgage obligations | 1,270.9 | 97.2 | (2.5 | ) | 1,365.6 | ||||||||||
Total investment grade fixed maturities, available for sale | 19,604.8 | 2,286.1 | (74.7 | ) | 21,816.2 | ||||||||||
Below-investment grade (a): | |||||||||||||||
Corporate securities | 1,207.9 | 43.2 | (27.9 | ) | 1,223.2 | ||||||||||
States and political subdivisions | 24.3 | .1 | (1.1 | ) | 23.3 | ||||||||||
Asset-backed securities | 247.3 | 5.8 | (4.5 | ) | 248.6 | ||||||||||
Collateralized debt obligations | 5.4 | — | (.9 | ) | 4.5 | ||||||||||
Collateralized mortgage obligations | 943.3 | 21.9 | (4.4 | ) | 960.8 | ||||||||||
Total below-investment grade fixed maturities, available for sale | 2,428.2 | 71.0 | (38.8 | ) | 2,460.4 | ||||||||||
Total fixed maturities, available for sale | $ | 22,033.0 | $ | 2,357.1 | $ | (113.5 | ) | $ | 24,276.6 | ||||||
Equity securities | $ | 188.0 | $ | 2.9 | $ | (3.6 | ) | $ | 187.3 |
(a) | Investment ratings – Investment ratings are assigned the second lowest rating by Nationally Recognized Statistical Rating Organizations ("NRSROs") (Moody’s, S&P or Fitch), or if not rated by such firms, the rating assigned by the National Association of Insurance Commissioners (the "NAIC"). NAIC designations of “1” or “2” include fixed maturities generally rated investment grade (rated “Baa3” or higher by Moody’s or rated “BBB-” or higher by S&P and Fitch). NAIC designations of “3” through “6” are referred to as below-investment grade (which generally are rated “Ba1” or lower by Moody’s or rated “BB+” or lower by S&P and Fitch). References to investment grade or below-investment grade throughout our consolidated financial statements are determined as described above. |
NAIC Designation | NRSRO Equivalent Rating | |
1 | AAA/AA/A | |
2 | BBB | |
3 | BB | |
4 | B | |
5 | CCC and lower | |
6 | In or near default |
Percentage | |||||||||||
Estimated | of total | ||||||||||
NAIC | Amortized | fair | estimated | ||||||||
designation | cost | value | fair value | ||||||||
1 | $ | 10,656.0 | $ | 11,825.3 | 48.7 | % | |||||
2 | 10,017.4 | 11,074.6 | 45.6 | ||||||||
3 | 1,008.0 | 1,024.3 | 4.2 | ||||||||
4 | 309.8 | 315.9 | 1.3 | ||||||||
5 | 41.4 | 36.1 | .2 | ||||||||
6 | .4 | .4 | — | ||||||||
$ | 22,033.0 | $ | 24,276.6 | 100.0 | % |
Carrying value | Percent of fixed maturities | Gross unrealized losses | Percent of gross unrealized losses | ||||||||||
Energy/pipelines | $ | 2,431.3 | 10.0 | % | $ | 4.5 | 3.9 | % | |||||
Collateralized mortgage obligations | 2,326.4 | 9.6 | 6.9 | 6.1 | |||||||||
Utilities | 2,089.6 | 8.6 | 2.2 | 1.9 | |||||||||
States and political subdivisions | 2,034.5 | 8.4 | 5.9 | 5.2 | |||||||||
Commercial mortgage-backed securities | 1,586.1 | 6.5 | 3.0 | 2.6 | |||||||||
Asset-backed securities | 1,518.9 | 6.3 | 18.5 | 16.3 | |||||||||
Insurance | 1,447.5 | 6.0 | 6.0 | 5.3 | |||||||||
Food/beverage | 1,191.8 | 4.9 | 4.7 | 4.2 | |||||||||
Healthcare/pharmaceuticals | 1,174.6 | 4.8 | .7 | .6 | |||||||||
Cable/media | 928.3 | 3.8 | 7.3 | 6.5 | |||||||||
Real estate/REITs | 890.9 | 3.7 | .2 | .2 | |||||||||
Banks | 771.6 | 3.2 | 14.6 | 12.9 | |||||||||
Capital goods | 723.1 | 3.0 | 1.6 | 1.4 | |||||||||
Transportation | 533.5 | 2.2 | — | — | |||||||||
Telecom | 505.0 | 2.1 | 20.0 | 17.6 | |||||||||
Aerospace/defense | 457.7 | 1.9 | — | — | |||||||||
Chemicals | 392.7 | 1.6 | — | — | |||||||||
Building materials | 377.2 | 1.6 | 7.9 | 7.0 | |||||||||
Metals and mining | 352.2 | 1.4 | .8 | .7 | |||||||||
Paper | 344.1 | 1.4 | 1.7 | 1.5 | |||||||||
Collateralized debt obligations | 330.1 | 1.4 | 3.7 | 3.2 | |||||||||
Consumer products | 328.4 | 1.3 | .3 | .3 | |||||||||
Brokerage | 263.8 | 1.1 | 2.5 | 2.2 | |||||||||
Technology | 255.0 | 1.0 | .2 | .2 | |||||||||
Other | 1,022.3 | 4.2 | .3 | .2 | |||||||||
Total fixed maturities, available for sale | $ | 24,276.6 | 100.0 | % | $ | 113.5 | 100.0 | % |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||
Realized gains on sale | $ | 39.6 | $ | 25.7 | $ | 68.3 | $ | 66.9 | |||||||
Realized losses on sale | (5.5 | ) | (14.4 | ) | (7.8 | ) | (39.0 | ) | |||||||
Impairments: | |||||||||||||||
Total other-than-temporary impairment losses | (.5 | ) | (5.0 | ) | (.9 | ) | (11.5 | ) | |||||||
Other-than-temporary impairment losses recognized in accumulated other comprehensive income (loss) | — | — | — | — | |||||||||||
Net impairment losses recognized | (.5 | ) | (5.0 | ) | (.9 | ) | (11.5 | ) | |||||||
Net realized investment gains (losses) from fixed maturities | 33.6 | 6.3 | 59.6 | 16.4 | |||||||||||
Equity securities | .1 | .2 | .1 | .2 | |||||||||||
Commercial mortgage loans | (.6 | ) | (.3 | ) | (.1 | ) | (.7 | ) | |||||||
Impairments of mortgage loans and other investments | (3.0 | ) | (5.1 | ) | (10.5 | ) | (11.9 | ) | |||||||
Other | 1.8 | 1.8 | 5.7 | 4.0 | |||||||||||
Net realized investment gains | $ | 31.9 | $ | 2.9 | $ | 54.8 | $ | 8.0 |
Amortized cost | Estimated fair value | ||||||
(Dollars in millions) | |||||||
Due in one year or less | $ | 32.3 | $ | 32.2 | |||
Due after one year through five years | 143.7 | 141.3 | |||||
Due after five years through ten years | 451.3 | 434.3 | |||||
Due after ten years | 832.5 | 770.6 | |||||
Subtotal | 1,459.8 | 1,378.4 | |||||
Structured securities | 1,213.5 | 1,181.4 | |||||
Total | $ | 2,673.3 | $ | 2,559.8 |
Number of issuers | Cost basis | Unrealized loss | Estimated fair value | ||||||||||
Less than 6 months | 1 | $ | 4.0 | $ | (.8 | ) | $ | 3.2 | |||||
Greater than or equal to 6 months and less than 12 months | 2 | 4.9 | (1.4 | ) | 3.5 | ||||||||
Greater than 12 months | 1 | 9.3 | (2.3 | ) | 7.0 | ||||||||
4 | $ | 18.2 | $ | (4.5 | ) | $ | 13.7 |
Investment grade | Below investment grade | |||||||||||||||||||
AAA/AA/A | BBB | BB | B+ and below | Total gross unrealized losses | ||||||||||||||||
Telecom | $ | — | $ | 18.0 | $ | .8 | $ | 1.2 | $ | 20.0 | ||||||||||
Asset-backed securities | 5.1 | 8.9 | 3.0 | 1.5 | 18.5 | |||||||||||||||
Banks | 2.5 | 6.1 | 6.0 | — | 14.6 | |||||||||||||||
Building materials | — | .9 | 6.9 | .1 | 7.9 | |||||||||||||||
Cable/media | — | .1 | 4.6 | 2.7 | 7.4 | |||||||||||||||
Collateralized mortgage obligations | 2.3 | .2 | .2 | 4.2 | 6.9 | |||||||||||||||
Insurance | .1 | 4.8 | 1.1 | — | 6.0 | |||||||||||||||
States and political subdivisions | 1.6 | 3.2 | 1.1 | — | 5.9 | |||||||||||||||
Food/beverage | — | 4.7 | — | — | 4.7 | |||||||||||||||
Energy/pipelines | — | 3.1 | .9 | .5 | 4.5 | |||||||||||||||
Collateralized debt obligations | 2.8 | — | — | .9 | 3.7 | |||||||||||||||
Commercial mortgage-backed securities | 2.6 | .4 | — | — | 3.0 | |||||||||||||||
Brokerage | .7 | 1.8 | — | — | 2.5 | |||||||||||||||
Utilities | — | 2.2 | — | — | 2.2 | |||||||||||||||
Paper | — | — | 1.7 | — | 1.7 | |||||||||||||||
Capital goods | — | 1.4 | .1 | — | 1.5 | |||||||||||||||
Healthcare/pharmaceuticals | — | .2 | .2 | .4 | .8 | |||||||||||||||
Metals and mining | — | .6 | .1 | .1 | .8 | |||||||||||||||
Consumer products | — | .3 | — | — | .3 | |||||||||||||||
Gaming | — | — | — | .2 | .2 | |||||||||||||||
Real estate/REITs | — | .1 | .1 | — | .2 | |||||||||||||||
Technology | — | — | .1 | .1 | .2 | |||||||||||||||
Total fixed maturities, available for sale | $ | 17.7 | $ | 57.0 | $ | 26.9 | $ | 11.9 | $ | 113.5 |
Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
Description of securities | Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | ||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | $ | 19.0 | $ | — | $ | — | $ | — | $ | 19.0 | $ | — | ||||||||||||
States and political subdivisions | 21.3 | (.9 | ) | 83.9 | (5.0 | ) | 105.2 | (5.9 | ) | |||||||||||||||
Corporate securities | 790.6 | (25.9 | ) | 463.6 | (49.6 | ) | 1,254.2 | (75.5 | ) | |||||||||||||||
Asset-backed securities | 230.0 | (3.2 | ) | 243.3 | (15.3 | ) | 473.3 | (18.5 | ) | |||||||||||||||
Collateralized debt obligations | 178.1 | (2.5 | ) | 41.5 | (1.2 | ) | 219.6 | (3.7 | ) | |||||||||||||||
Commercial mortgage-backed securities | 75.8 | (.6 | ) | 38.6 | (2.4 | ) | 114.4 | (3.0 | ) | |||||||||||||||
Mortgage pass-through securities | — | — | 2.1 | — | 2.1 | — | ||||||||||||||||||
Collateralized mortgage obligations | 234.5 | (3.2 | ) | 137.5 | (3.7 | ) | 372.0 | (6.9 | ) | |||||||||||||||
Total fixed maturities, available for sale | $ | 1,549.3 | $ | (36.3 | ) | $ | 1,010.5 | $ | (77.2 | ) | $ | 2,559.8 | $ | (113.5 | ) | |||||||||
Equity securities | $ | 28.5 | $ | (3.6 | ) | $ | — | $ | — | $ | 28.5 | $ | (3.6 | ) |
Par value | Amortized cost | Estimated fair value | |||||||||
Below 4 percent | $ | 651.9 | $ | 598.9 | $ | 597.6 | |||||
4 percent – 5 percent | 694.8 | 681.0 | 744.6 | ||||||||
5 percent – 6 percent | 3,039.4 | 2,884.7 | 3,027.6 | ||||||||
6 percent – 7 percent | 1,044.0 | 993.2 | 1,033.1 | ||||||||
7 percent – 8 percent | 170.7 | 176.4 | 184.9 | ||||||||
8 percent and above | 187.0 | 191.8 | 195.5 | ||||||||
Total structured securities | $ | 5,787.8 | $ | 5,526.0 | $ | 5,783.3 |
Estimated fair value | ||||||||||
Type | Amortized cost | Amount | Percent of fixed maturities | |||||||
Pass-throughs, sequential and equivalent securities | $ | 1,485.9 | $ | 1,553.3 | 6.4 | % | ||||
Planned amortization classes, target amortization classes and accretion-directed bonds | 719.4 | 764.7 | 3.1 | |||||||
Commercial mortgage-backed securities | 1,478.2 | 1,586.1 | 6.5 | |||||||
Asset-backed securities | 1,481.0 | 1,518.9 | 6.3 | |||||||
Collateralized debt obligations | 332.2 | 330.1 | 1.4 | |||||||
Other | 29.3 | 30.2 | .1 | |||||||
Total structured securities | $ | 5,526.0 | $ | 5,783.3 | 23.8 | % |
Estimated fair value | |||||||||||
Loan-to-value ratio (a) | Carrying value | Mortgage loans | Collateral | ||||||||
Less than 60% | $ | 770.5 | $ | 865.3 | $ | 2,125.8 | |||||
60% to 70% | 329.0 | 352.9 | 506.4 | ||||||||
Greater than 70% to 80% | 184.8 | 196.3 | 245.3 | ||||||||
Greater than 80% to 90% | 166.6 | 180.3 | 195.4 | ||||||||
Greater than 90% | 100.0 | 88.6 | 105.9 | ||||||||
Total | $ | 1,550.9 | $ | 1,683.4 | $ | 3,178.8 |
(a) | Loan-to-value ratios are calculated as the ratio of: (i) the carrying value of the commercial mortgage loans; to (ii) the estimated fair value of the underlying collateral. |
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues: | |||||||||||||||
Net investment income – policyholder and reinsurer accounts and other special-purpose portfolios | $ | 7.3 | $ | 3.7 | $ | 13.4 | $ | 8.1 | |||||||
Fee revenue and other income | .5 | .3 | .7 | .5 | |||||||||||
Total revenues | 7.8 | 4.0 | 14.1 | 8.6 | |||||||||||
Expenses: | |||||||||||||||
Interest expense | 4.7 | 3.5 | 8.7 | 6.0 | |||||||||||
Other operating expenses | .2 | .3 | .3 | .4 | |||||||||||
Total expenses | 4.9 | 3.8 | 9.0 | 6.4 | |||||||||||
Income before net realized investment losses and income taxes | 2.9 | .2 | 5.1 | 2.2 | |||||||||||
Net realized investment gains (losses) | .3 | 1.8 | (.2 | ) | .4 | ||||||||||
Income (loss) before income taxes | $ | 3.2 | $ | 2.0 | $ | 4.9 | $ | 2.6 |
Carrying value | Percent of fixed maturities | Gross unrealized losses | Percent of gross unrealized losses | ||||||||||
Healthcare/pharmaceuticals | $ | 89.8 | 11.4 | % | $ | 1.1 | 19.5 | % | |||||
Cable/media | 84.0 | 10.6 | .6 | 10.4 | |||||||||
Technology | 78.9 | 10.0 | .4 | 7.7 | |||||||||
Autos | 63.2 | 8.0 | .2 | 4.5 | |||||||||
Food/beverage | 57.6 | 7.3 | .3 | 4.7 | |||||||||
Brokerage | 45.7 | 5.8 | .5 | 9.2 | |||||||||
Gaming | 37.9 | 4.8 | .2 | 2.8 | |||||||||
Consumer products | 28.5 | 3.6 | .5 | 9.7 | |||||||||
Telecom | 26.0 | 3.3 | .3 | 5.0 | |||||||||
Insurance | 25.2 | 3.2 | .1 | 1.4 | |||||||||
Entertainment/hotels | 24.9 | 3.2 | .3 | 6.2 | |||||||||
Chemicals | 20.9 | 2.6 | — | .9 | |||||||||
Utilities | 19.3 | 2.4 | .1 | 1.5 | |||||||||
Building materials | 18.6 | 2.4 | .1 | 2.2 | |||||||||
Retail | 18.1 | 2.3 | — | .5 | |||||||||
Aerospace/defense | 15.9 | 2.0 | — | .8 | |||||||||
Metals and mining | 15.9 | 2.0 | .1 | 2.1 | |||||||||
Capital goods | 13.1 | 1.7 | — | .7 | |||||||||
Energy/pipelines | 12.8 | 1.6 | .1 | 1.1 | |||||||||
Real estate/REITs | 12.7 | 1.6 | .1 | 2.0 | |||||||||
Transportation | 12.5 | 1.6 | .1 | 1.4 | |||||||||
Paper | 5.2 | .7 | .1 | 1.0 | |||||||||
Other | 62.6 | 7.9 | .3 | 4.7 | |||||||||
Total | $ | 789.3 | 100.0 | % | $ | 5.5 | 100.0 | % |
Amortized cost | Estimated fair value | ||||||
(Dollars in millions) | |||||||
Due in one year or less | $ | 1.6 | $ | 1.6 | |||
Due after one year through five years | 240.2 | 237.1 | |||||
Due after five years through ten years | 289.4 | 287.0 | |||||
Total | $ | 531.2 | $ | 525.7 |
Period | Total number of shares (or units) | Average price paid per share (or unit) | Total number of shares (or units) purchased as part of publicly announced plans or programs | Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs(a) | ||||||||||
(dollars in millions) | ||||||||||||||
April 1 through April 30 | 539 | $ | 7.63 | — | $ | 111.3 | ||||||||
May 1 through May 31 | 3,174,465 | 6.86 | 3,174,394 | 89.5 | ||||||||||
June 1 through June 30 | 2,478,224 | 7.05 | 2,478,224 | 172.1 | ||||||||||
Total | 5,653,228 | 6.95 | 5,652,618 | 172.1 |
(a) | In May 2011, the Company announced a common share repurchase program of up to $100.0 million. In both February 2012 and June 2012, the Company announced that its board of directors had approved an additional $100.0 million ($200.0 million in aggregate) to repurchase the Company's outstanding common stock. |
12.1 | Computation of Ratio of Earnings to Fixed Charges. |
31.1 | Certification Pursuant to the Securities Exchange Act Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 | Certification Pursuant to the Securities Exchange Act Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS | XBRL Instance Document. |
101.SCH | XBRL Taxonomy Extension Schema Document. |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
By: | /s/ Frederick J. Crawford | |
Frederick J. Crawford | ||
Executive Vice President and Chief Financial Officer | ||
(authorized officer and principal financial officer) |
Six months ended June 30, 2012 | Year ended December 31, 2011 | ||||||
Pretax income from operations: | |||||||
Net income | $ | 124.8 | $ | 335.7 | |||
Add income tax expense (benefit) | 72.0 | (29.5 | ) | ||||
Pretax income from operations | 196.8 | 306.2 | |||||
Add fixed charges: | |||||||
Interest expense on corporate debt | 34.1 | 76.3 | |||||
Interest expense on investment borrowings and borrowings related to variable interest entities | 23.4 | 37.8 | |||||
Interest added to policyholder account balances | 132.8 | 282.5 | |||||
Portion of rental (a) | 6.6 | 13.1 | |||||
Fixed charges | 196.9 | 409.7 | |||||
Adjusted earnings | $ | 393.7 | $ | 715.9 | |||
Ratio of earnings to fixed charges | 2.00X | 1.75X |
(a) | Interest portion of rental is estimated to be 33 percent. |
1. | I have reviewed this quarterly report on Form 10-Q of CNO Financial Group, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the period presented in this report; |
4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(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; 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 |
5. | I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(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. |
1. | I have reviewed this quarterly report on Form 10-Q of CNO Financial Group, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the period presented in this report; |
4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(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; 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 |
5. | I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(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. |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
FAIR VALUE MEASUREMENTS - NARRATIVE (DETAILS) (USD $)
|
6 Months Ended |
---|---|
Jun. 30, 2012
|
|
Fair Value Disclosures [Abstract] | |
Available for sale fixed maturities classified as level 3, investment grade, percent | 90.00% |
Available for Sale Maturities with Significant Unobservable Inputs, Collateralized Debt Obligations, Percent | 47.00% |
Fair value of level 3 fixed maturity securities valued using broker quotes, percentage | 25.00% |
Available for sale fixed maturities classified as level 3, corporate securities, percent | 46.00% |
Fair value, level 1 to level 2 transfers, amount | $ 0 |
Fair value, level 2 to level 1 transfers, amount | $ 0 |
SALES INDUCEMENTS (DETAILS) (USD $)
In Millions, unless otherwise specified |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2012
|
Jun. 30, 2011
|
Dec. 31, 2011
|
|
Deferred Sales Inducements [Abstract] | |||
Deferred Sales Inducements, Additions | $ 2.3 | $ 7.5 | |
Deferred Sales Inducements, Amortization Expense | 14.3 | 15.2 | |
Deferred Sales Inducements, Net | 137.2 | 149.2 | |
Persistency Bonus Benefits Included in Insurance Liabilities | $ 39.3 | $ 50.0 |
FAIR VALUE MEASUREMENTS (DETAILS) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2012
|
Dec. 31, 2011
|
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Mortgage loans | $ 1,550.9 | $ 1,602.8 | ||||||||||
Policy loans | 274.7 | 279.7 | ||||||||||
Fair Value, Assets and Liabilities Meaured on Recurring Basis with Carrying Amount [Abstract] | ||||||||||||
Mortgage loans | 1,550.9 | 1,602.8 | ||||||||||
Policy loans | 274.7 | 279.7 | ||||||||||
Insurance liabilities for interest-sensitive products excluding embedded derivatives | 12,250.4 | [1] | 13,165.5 | [1] | ||||||||
Investment borrowings | 1,687.9 | 1,676.5 | ||||||||||
Borrowings related to variable interest entities | 766.7 | 519.9 | ||||||||||
Borrowings Related To Variable Interest Entities, Fair Value Disclosure | 766.7 | 519.9 | ||||||||||
Notes payable - direct corporate obligations | 778.2 | 857.9 | ||||||||||
Notes Payable, Fair Value Disclosure | 778.2 | 857.9 | ||||||||||
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 24,276.6 | 23,516.0 | ||||||||||
Equity securities | 187.3 | 175.1 | ||||||||||
Trading securities | 114.8 | 91.6 | ||||||||||
Investments held by variable interest entities | 496.3 | |||||||||||
Other invested assets | 201.4 | 159.9 | ||||||||||
Cash and cash equivalents - unrestricted | 190.2 | |||||||||||
Cash and cash equivalents held by variable interest entities | 88.6 | |||||||||||
Assets held in separate accounts | 15.6 | 15.0 | ||||||||||
Total assets carried at fair value by category | 25,863.8 | |||||||||||
Liabilities, Fair Value Disclosure [Abstract] | ||||||||||||
Liabilities For Interest Sensitive Products, Fair Value Disclosure | 705.9 | 669.8 | ||||||||||
Total liabilities carried at fair value by category | 705.9 | |||||||||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 0 | 0 | ||||||||||
Equity securities | 19.4 | 17.9 | ||||||||||
Trading securities | 0.8 | 0.7 | ||||||||||
Investments held by variable interest entities | 0 | |||||||||||
Other invested assets | 1.1 | 0 | ||||||||||
Cash and cash equivalents - unrestricted | 131.6 | |||||||||||
Cash and cash equivalents held by variable interest entities | 88.6 | |||||||||||
Assets held in separate accounts | 0 | 0 | ||||||||||
Total assets carried at fair value by category | 241.5 | |||||||||||
Liabilities, Fair Value Disclosure [Abstract] | ||||||||||||
Liabilities For Interest Sensitive Products, Fair Value Disclosure | 0 | 0 | ||||||||||
Total liabilities carried at fair value by category | 0 | |||||||||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 23,578.4 | 22,682.9 | [2] | |||||||||
Equity securities | 106.7 | 87.3 | [2] | |||||||||
Trading securities | 110.1 | 90.5 | [2] | |||||||||
Investments held by variable interest entities | 496.3 | [2] | ||||||||||
Other invested assets | 200.3 | 159.9 | [2],[3] | |||||||||
Cash and cash equivalents - unrestricted | 58.6 | |||||||||||
Cash and cash equivalents held by variable interest entities | 0 | |||||||||||
Assets held in separate accounts | 15.6 | 15.0 | [2] | |||||||||
Total assets carried at fair value by category | 24,859.0 | |||||||||||
Liabilities, Fair Value Disclosure [Abstract] | ||||||||||||
Liabilities For Interest Sensitive Products, Fair Value Disclosure | 0 | 0 | [2] | |||||||||
Total liabilities carried at fair value by category | 0 | |||||||||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 698.2 | 833.1 | [2] | |||||||||
Equity securities | 61.2 | 69.9 | [2] | |||||||||
Trading securities | 3.9 | 0.4 | [2] | |||||||||
Investments held by variable interest entities | 0 | [2] | ||||||||||
Other invested assets | 0 | 0 | [2] | |||||||||
Cash and cash equivalents - unrestricted | 0 | |||||||||||
Cash and cash equivalents held by variable interest entities | 0 | |||||||||||
Assets held in separate accounts | 0 | 0 | [2] | |||||||||
Total assets carried at fair value by category | 763.3 | |||||||||||
Liabilities, Fair Value Disclosure [Abstract] | ||||||||||||
Liabilities For Interest Sensitive Products, Fair Value Disclosure | 705.9 | 669.8 | [2],[4] | |||||||||
Total liabilities carried at fair value by category | 705.9 | |||||||||||
Fair Value, Measurements, Disclosed on Recurring Basis [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Mortgage loans | 0 | |||||||||||
Policy loans | 0 | |||||||||||
Fair Value, Assets and Liabilities Meaured on Recurring Basis with Carrying Amount [Abstract] | ||||||||||||
Insurance liabilities for interest-sensitive products excluding embedded derivatives | 0 | [1] | ||||||||||
Investment borrowings | 0 | |||||||||||
Borrowings Related To Variable Interest Entities, Fair Value Disclosure | 0 | |||||||||||
Notes Payable, Fair Value Disclosure | 0 | |||||||||||
Fair Value, Measurements, Disclosed on Recurring Basis [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Mortgage loans | 0 | |||||||||||
Policy loans | 274.7 | |||||||||||
Fair Value, Assets and Liabilities Meaured on Recurring Basis with Carrying Amount [Abstract] | ||||||||||||
Insurance liabilities for interest-sensitive products excluding embedded derivatives | 0 | [1] | ||||||||||
Investment borrowings | 1,739.6 | |||||||||||
Borrowings Related To Variable Interest Entities, Fair Value Disclosure | 745.8 | |||||||||||
Notes Payable, Fair Value Disclosure | 997.0 | |||||||||||
Fair Value, Measurements, Disclosed on Recurring Basis [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Mortgage loans | 1,683.4 | |||||||||||
Policy loans | 0 | |||||||||||
Fair Value, Assets and Liabilities Meaured on Recurring Basis with Carrying Amount [Abstract] | ||||||||||||
Insurance liabilities for interest-sensitive products excluding embedded derivatives | 12,250.4 | [1] | ||||||||||
Investment borrowings | 0 | |||||||||||
Borrowings Related To Variable Interest Entities, Fair Value Disclosure | 0 | |||||||||||
Notes Payable, Fair Value Disclosure | 0 | |||||||||||
Venture Capital Funds [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Equity securities | 58.0 | |||||||||||
Venture Capital Funds [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Equity securities | 0 | |||||||||||
Venture Capital Funds [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Equity securities | 0 | |||||||||||
Venture Capital Funds [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Equity securities | 58.0 | |||||||||||
Foreign Government Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 0.8 | 1.4 | ||||||||||
Foreign Government Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 0 | 0 | ||||||||||
Foreign Government Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 0.8 | 1.4 | [2] | |||||||||
Foreign Government Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 0 | 0 | [2] | |||||||||
Corporate securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 16,234.3 | 15,872.5 | ||||||||||
Equity securities | 129.3 | |||||||||||
Trading securities | 47.9 | 67.6 | ||||||||||
Corporate securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 0 | 0 | ||||||||||
Equity securities | 19.4 | |||||||||||
Trading securities | 0 | 0 | ||||||||||
Corporate securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 15,913.3 | 15,594.4 | [2] | |||||||||
Equity securities | 106.7 | |||||||||||
Trading securities | 47.9 | 67.6 | [2] | |||||||||
Corporate securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 321.0 | 278.1 | [2] | |||||||||
Equity securities | 3.2 | |||||||||||
Trading securities | 0 | 0 | [2] | |||||||||
US Treasury and Government [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 223.7 | 305.4 | ||||||||||
Trading securities | 4.9 | 4.9 | ||||||||||
US Treasury and Government [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 0 | 0 | ||||||||||
Trading securities | 0 | 0 | ||||||||||
US Treasury and Government [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 222.2 | 303.8 | [2] | |||||||||
Trading securities | 4.9 | 4.9 | [2] | |||||||||
US Treasury and Government [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 1.5 | 1.6 | [2] | |||||||||
Trading securities | 0 | 0 | [2] | |||||||||
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 2,034.5 | 1,954.4 | ||||||||||
Trading securities | 15.9 | 15.6 | ||||||||||
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 0 | 0 | ||||||||||
Trading securities | 0 | 0 | ||||||||||
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 2,018.5 | 1,952.3 | [2] | |||||||||
Trading securities | 15.4 | 15.6 | [2] | |||||||||
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 16.0 | 2.1 | [2] | |||||||||
Trading securities | 0.5 | 0 | [2] | |||||||||
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 1,518.9 | 1,414.0 | ||||||||||
Trading securities | 9.0 | 0.1 | ||||||||||
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 0 | 0 | ||||||||||
Trading securities | 0 | 0 | ||||||||||
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 1,495.9 | 1,334.3 | [2] | |||||||||
Trading securities | 9.0 | 0.1 | [2] | |||||||||
Asset-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 23.0 | 79.7 | [2] | |||||||||
Trading securities | 0 | 0 | [2] | |||||||||
Collateralized Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 330.1 | 327.3 | ||||||||||
Trading securities | 3.4 | |||||||||||
Collateralized Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 0 | 0 | ||||||||||
Trading securities | 0 | |||||||||||
Collateralized Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 0 | 0 | [2] | |||||||||
Trading securities | 0 | |||||||||||
Collateralized Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 330.1 | 327.3 | [2] | |||||||||
Trading securities | 3.4 | |||||||||||
Commercial Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 1,586.1 | 1,433.0 | ||||||||||
Trading securities | 14.5 | 0.4 | ||||||||||
Commercial Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 0 | 0 | ||||||||||
Trading securities | 0 | 0 | ||||||||||
Commercial Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 1,586.1 | 1,415.7 | [2] | |||||||||
Trading securities | 14.5 | 0 | [2] | |||||||||
Commercial Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 0 | 17.3 | [2] | |||||||||
Trading securities | 0 | 0.4 | [2] | |||||||||
Mortgage Pass Through Securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 21.8 | 32.0 | ||||||||||
Trading securities | 0.2 | 0.2 | ||||||||||
Mortgage Pass Through Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 0 | 0 | ||||||||||
Trading securities | 0 | 0 | ||||||||||
Mortgage Pass Through Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 19.7 | 29.8 | [2] | |||||||||
Trading securities | 0.2 | 0.2 | [2] | |||||||||
Mortgage Pass Through Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 2.1 | 2.2 | [2] | |||||||||
Trading securities | 0 | 0 | [2] | |||||||||
Collateralized Mortgage Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 2,326.4 | 2,176.0 | ||||||||||
Trading securities | 14.4 | 0.7 | ||||||||||
Collateralized Mortgage Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 0 | 0 | ||||||||||
Trading securities | 0 | 0 | ||||||||||
Collateralized Mortgage Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 2,321.9 | 2,051.2 | [2] | |||||||||
Trading securities | 14.4 | 0.7 | [2] | |||||||||
Collateralized Mortgage Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 4.5 | 124.8 | [2] | |||||||||
Trading securities | 0 | 0 | [2] | |||||||||
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Trading securities | 4.6 | 2.1 | ||||||||||
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Trading securities | 0.8 | 0.7 | ||||||||||
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Trading securities | 3.8 | 1.4 | [2] | |||||||||
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Trading securities | 0 | 0 | [2] | |||||||||
Embedded Derivatives Associated with Fixed Index Annuity Products [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Liabilities, Fair Value Disclosure [Abstract] | ||||||||||||
Liabilities For Interest Sensitive Products, Fair Value Disclosure | 701.0 | |||||||||||
Embedded Derivatives Associated with Fixed Index Annuity Products [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Liabilities, Fair Value Disclosure [Abstract] | ||||||||||||
Liabilities For Interest Sensitive Products, Fair Value Disclosure | 0 | |||||||||||
Embedded Derivatives Associated with Fixed Index Annuity Products [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Liabilities, Fair Value Disclosure [Abstract] | ||||||||||||
Liabilities For Interest Sensitive Products, Fair Value Disclosure | 0 | |||||||||||
Embedded Derivatives Associated with Fixed Index Annuity Products [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Liabilities, Fair Value Disclosure [Abstract] | ||||||||||||
Liabilities For Interest Sensitive Products, Fair Value Disclosure | 701.0 | |||||||||||
Embedded Derivative Associated With Modified Coinsurance Agreement [Member]
|
||||||||||||
Fair Value, Assets and Liabilities Meaured on Recurring Basis with Carrying Amount [Abstract] | ||||||||||||
Embedded derivatives | 4.9 | 3.5 | ||||||||||
Embedded Derivative Associated With Modified Coinsurance Agreement [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Liabilities, Fair Value Disclosure [Abstract] | ||||||||||||
Liabilities For Interest Sensitive Products, Fair Value Disclosure | 4.9 | |||||||||||
Embedded Derivative Associated With Modified Coinsurance Agreement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Liabilities, Fair Value Disclosure [Abstract] | ||||||||||||
Liabilities For Interest Sensitive Products, Fair Value Disclosure | 0 | |||||||||||
Embedded Derivative Associated With Modified Coinsurance Agreement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Liabilities, Fair Value Disclosure [Abstract] | ||||||||||||
Liabilities For Interest Sensitive Products, Fair Value Disclosure | 0 | |||||||||||
Embedded Derivative Associated With Modified Coinsurance Agreement [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Liabilities, Fair Value Disclosure [Abstract] | ||||||||||||
Liabilities For Interest Sensitive Products, Fair Value Disclosure | 4.9 | |||||||||||
Embedded Derivative Financial Instruments [Member]
|
||||||||||||
Fair Value, Assets and Liabilities Meaured on Recurring Basis with Carrying Amount [Abstract] | ||||||||||||
Embedded derivatives | 701.0 | 666.3 | ||||||||||
Company-Owned Life Insurance [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Other invested assets | 108.2 | |||||||||||
Company-Owned Life Insurance [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Other invested assets | 0 | |||||||||||
Company-Owned Life Insurance [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Other invested assets | 108.2 | |||||||||||
Company-Owned Life Insurance [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Other invested assets | 0 | |||||||||||
Hedge Funds [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Other invested assets | 16.4 | |||||||||||
Hedge Funds [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Other invested assets | 0 | |||||||||||
Hedge Funds [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Other invested assets | 16.4 | |||||||||||
Hedge Funds [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Other invested assets | 0 | |||||||||||
Derivatives [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Other invested assets | 76.8 | |||||||||||
Derivatives [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Other invested assets | 1.1 | |||||||||||
Derivatives [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Other invested assets | 75.7 | |||||||||||
Derivatives [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Other invested assets | 0 | |||||||||||
Cash [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Cash and cash equivalents - unrestricted | 131.6 | |||||||||||
Cash [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Cash and cash equivalents - unrestricted | 131.6 | |||||||||||
Cash [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Cash and cash equivalents - unrestricted | 0 | |||||||||||
Cash [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Cash and cash equivalents - unrestricted | 0 | |||||||||||
Cash Equivalents and Short-Term Investments [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Cash and cash equivalents - unrestricted | 58.6 | |||||||||||
Cash Equivalents and Short-Term Investments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Cash and cash equivalents - unrestricted | 0 | |||||||||||
Cash Equivalents and Short-Term Investments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Cash and cash equivalents - unrestricted | 58.6 | |||||||||||
Cash Equivalents and Short-Term Investments [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Cash and cash equivalents - unrestricted | 0 | |||||||||||
Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Mortgage loans | 1,683.4 | 1,735.4 | ||||||||||
Policy loans | 274.7 | 279.7 | ||||||||||
Fair Value, Assets and Liabilities Meaured on Recurring Basis with Carrying Amount [Abstract] | ||||||||||||
Insurance liabilities for interest-sensitive products excluding embedded derivatives | 12,250.4 | [1] | 13,165.5 | [1] | ||||||||
Investment borrowings | 1,739.6 | 1,735.7 | ||||||||||
Borrowings Related To Variable Interest Entities, Fair Value Disclosure | 745.8 | 485.1 | ||||||||||
Notes Payable, Fair Value Disclosure | 997.0 | 978.3 | ||||||||||
Corporate Securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Investments held by variable interest entities | 789.3 | |||||||||||
Corporate Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Investments held by variable interest entities | 0 | |||||||||||
Corporate Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Investments held by variable interest entities | 789.3 | |||||||||||
Corporate Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Investments held by variable interest entities | $ 0 | |||||||||||
|
INVESTMENT BORROWINGS (DETAILS) (USD $)
|
6 Months Ended | 6 Months Ended | ||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2012
|
Dec. 31, 2011
|
Jun. 30, 2012
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2011
Federal Home Loan Bank Advances [Member]
|
Dec. 31, 2011
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Repurchase Agreements [Member]
|
Dec. 31, 2011
Repurchase Agreements [Member]
|
Jun. 30, 2012
Other Borrowings [Member]
|
Dec. 31, 2011
Other Borrowings [Member]
|
Jun. 30, 2012
Borrowings Due October 2013 [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due November 2013 [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due February 2014 [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due August 2014 [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due September 2015 [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due October 2015 [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due November 2015 [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due November 2015 Rate Two [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due December 2015 [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due June 2016 [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due June 2016 Rate Two [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due August 2016 [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due October 2016 [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due November 2016 [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due November 2016 Rate Two [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due June 2017 [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due August 2017 [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due October 2017 [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Borrowings Due November 2017 [Member]
Federal Home Loan Bank Advances [Member]
|
Jun. 30, 2012
Maturity up to 30 days [Member]
Other Borrowings [Member]
|
Jun. 30, 2012
Maturity 30 to 90 Days [Member]
Other Borrowings [Member]
|
Jul. 31, 2012
Refinance of Investment Borrowing [Member]
Borrowings Due November 2015 [Member]
Federal Home Loan Bank Advances [Member]
|
||||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | ||||||||||||||||||||||||||||||||||
Federal Home Loan Bank Stock | $ 82,500,000 | |||||||||||||||||||||||||||||||||
Investment borrowings | 1,687,900,000 | 1,676,500,000 | 1,650,000,000 | 1,650,000,000 | 1,100,000 | 1,700,000 | 100,000,000 | 100,000,000 | 67,000,000 | 50,000,000 | 100,000,000 | 150,000,000 | 100,000,000 | [1] | 146,000,000 | 100,000,000 | 100,000,000 | 75,000,000 | 75,000,000 | 100,000,000 | 50,000,000 | 50,000,000 | 100,000,000 | 50,000,000 | 100,000,000 | 37,000,000 | ||||||||
Debt Instrument, Maturity Date | Oct. 31, 2013 | Nov. 30, 2013 | Feb. 28, 2014 | Aug. 31, 2014 | Sep. 30, 2015 | Oct. 31, 2015 | Nov. 30, 2015 | Nov. 30, 2015 | Dec. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2016 | Aug. 31, 2016 | Oct. 31, 2016 | Nov. 30, 2016 | Nov. 30, 2016 | Jun. 30, 2017 | Aug. 31, 2017 | Oct. 31, 2017 | Nov. 30, 2017 | |||||||||||||||
Interest Rate for Borrowings | 7.00% | 0.575% | 0.547% | 1.83% | 0.597% | 0.766% | 0.592% | 4.89% | 5.30% | 4.71% | 0.685% | 0.63% | 0.677% | 0.648% | 0.738% | 0.715% | 0.76% | 0.667% | 0.897% | 3.75% | 3.90% | |||||||||||||
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged | 2,100,000,000 | |||||||||||||||||||||||||||||||||
Interest Expense on FHLB Borrowings | 14,400,000 | 12,200,000 | ||||||||||||||||||||||||||||||||
Aggregate Fee to Prepay All Fixed Rate FHLB Borrowings | 51,700,000 | |||||||||||||||||||||||||||||||||
Assets Sold under Agreements to Repurchase, Repurchase Liability | $ 36,800,000 | $ 24,800,000 | $ 32,800,000 | $ 4,000,000 | ||||||||||||||||||||||||||||||
|
CONSOLIDATED STATEMENT CASH FLOWS (TABLES)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation Of Net Income To Net Cash Provided By Operating Activities [Table Text Block] | The following reconciles net income to net cash provided by operating activities (dollars in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Significant Noncash Transactions [Table Text Block] | Non-cash items not reflected in the investing and financing activities sections of the consolidated statement of cash flows (dollars in millions):
|
FAIR VALUE MEASUREMENTS - ADDITIONAL INFORMATION (DETAILS) (USD $)
In Millions, unless otherwise specified |
6 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2012
|
Dec. 31, 2011
|
Jun. 30, 2012
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Fair Value, Inputs, Level 3 [Member]
Estimate of Fair Value, Fair Value Disclosure [Member]
|
Jun. 30, 2012
Corporate securities [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Corporate securities [Member]
Fair Value, Inputs, Level 3 [Member]
Estimate of Fair Value, Fair Value Disclosure [Member]
|
Jun. 30, 2012
Asset-backed securities [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Asset-backed securities [Member]
Fair Value, Inputs, Level 3 [Member]
Estimate of Fair Value, Fair Value Disclosure [Member]
|
Jun. 30, 2012
Collateralized debt obligations [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Collateralized debt obligations [Member]
Fair Value, Inputs, Level 3 [Member]
Estimate of Fair Value, Fair Value Disclosure [Member]
|
Jun. 30, 2012
Equity Securities [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Equity Securities [Member]
Fair Value, Inputs, Level 3 [Member]
Estimate of Fair Value, Fair Value Disclosure [Member]
|
Jun. 30, 2012
Venture capital investments [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Venture capital investments [Member]
Fair Value, Inputs, Level 3 [Member]
Estimate of Fair Value, Fair Value Disclosure [Member]
|
Jun. 30, 2012
Minimum [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Minimum [Member]
Corporate securities [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Minimum [Member]
Asset-backed securities [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Minimum [Member]
Collateralized debt obligations [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Minimum [Member]
Equity Securities [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Minimum [Member]
Venture capital investments [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Maximum [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Maximum [Member]
Corporate securities [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Maximum [Member]
Asset-backed securities [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Maximum [Member]
Collateralized debt obligations [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Maximum [Member]
Equity Securities [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Maximum [Member]
Venture capital investments [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Interest Sensitive Products [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Interest Sensitive Products [Member]
Minimum [Member]
Fair Value, Inputs, Level 3 [Member]
|
Jun. 30, 2012
Interest Sensitive Products [Member]
Maximum [Member]
Fair Value, Inputs, Level 3 [Member]
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Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||
Investments | $ 27,450.7 | $ 26,364.3 | $ 763.3 | $ 182.0 | [1] | $ 12.4 | [2] | $ 333.5 | [3] | $ 3.2 | [4] | $ 58.0 | [5] | ||||||||||||||||||||||||||||||||||||
Other Investments | 257.1 | 202.8 | 174.2 | [6] | |||||||||||||||||||||||||||||||||||||||||||||
Liabilities For Interest Sensitive Products | $ 12,956.3 | $ 13,165.5 | $ 705.9 | [7] | |||||||||||||||||||||||||||||||||||||||||||||
Investments, Fair Value Disclosure, Significant Assumptions, Discount Rate | 2.05% | 1.90% | 0.93% | 3.65% | 2.05% | 20.39% | |||||||||||||||||||||||||||||||||||||||||||
Investments, Fair Value Disclosure, Significant Assumptions, Weighted Average Discount Rate | 2.94% | 2.05% | 3.30% | ||||||||||||||||||||||||||||||||||||||||||||||
Investments, Fair Value Disclosure, Significant Assumptions, Recoveries | 54.00% | 30.80% | 66.00% | 30.80% | |||||||||||||||||||||||||||||||||||||||||||||
Investments, Fair Value Disclosure, Significant Assumptions, Weighted Average Constant Prepayment Rate | 20.00% | ||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Fair Value Disclosure, Significant Assumptions, Annual Default Rate | 1.36% | 5.90% | |||||||||||||||||||||||||||||||||||||||||||||||
Investments, Fair Value Disclosure, Significant Assumptions, Weighted Average Annual Default Rate | 3.24% | ||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Fair Value Disclosure, Significant Assumptions, Portfolio CCC Percent | 0.72% | 21.83% | |||||||||||||||||||||||||||||||||||||||||||||||
Investments, Fair Value Disclosure, Significant Assumptions, Weighted Average Portfolio CCC Percent | 12.21% | ||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Fair Value Disclosure, Significant Assumptions, Weighted Average Earnings Multiple of Capital and Surplus | 0.308 | ||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Fair Value Disclosure, Significant Assumptions, EBITDA Multiple | 4.6 | 28.8 | |||||||||||||||||||||||||||||||||||||||||||||||
Investments, Fair Value Disclosure, Significant Assumptions, Weighted Average EBITDA Multiple | 11.69 | ||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Fair Value Disclosure, Significant Assumptions, Revenue Multiple | 0.7 | 7.1 | |||||||||||||||||||||||||||||||||||||||||||||||
Investments, Fair Value Disclosure, Significant Assumptions, Weighted Average Revenue Multiple | 4.16 | ||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Fair Value Disclosure, Significant Assumptions, Book Equity Multiple | 1.0 | 4.9 | |||||||||||||||||||||||||||||||||||||||||||||||
Investments, Fair Value Disclosure, Significant Assumptions, Weighted Average Book Equity Multiple | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities, Fair Value Disclosure, Significant Assumptions, Projected Portfolio Yields | 5.35% | 5.61% | |||||||||||||||||||||||||||||||||||||||||||||||
Liabilities, Fair Value Disclosure, Significant Assumptions, Weighted Average Projected Portfolio Yields | 5.55% | ||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities, Fair Value Disclosure, Significant Assumptions, Discount Rates | 0.00% | 3.30% | |||||||||||||||||||||||||||||||||||||||||||||||
Liabilities, Fair Value Disclosure, Significant Assumptions, Weighted Average Discount Rates | 1.30% | ||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities, Fair Value Disclosure, Significant Assumptions, Surrender Rates | 4.00% | 43.00% | |||||||||||||||||||||||||||||||||||||||||||||||
Liabilities, Fair Value Disclosure, Significant Assumptions, Weighted Average Surrender Rates | 19.00% | ||||||||||||||||||||||||||||||||||||||||||||||||
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INVESTMENTS (TABLES)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2012
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | Accumulated other comprehensive income is primarily comprised of the net effect of unrealized appreciation (depreciation) on our investments. These amounts, included in shareholders’ equity as of June 30, 2012 and December 31, 2011, were as follows (dollars in millions):
_________
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Schedule of Available-for-sale Securities Reconciliation [Table Text Block] | At June 30, 2012, the amortized cost, gross unrealized gains and losses, estimated fair value, other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, were as follows (dollars in millions):
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Investments Classified by Contractual Maturity Date [Table Text Block] | The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at June 30, 2012, by contractual maturity. Actual maturities will differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties. In addition, structured securities (such as asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, mortgage pass-through securities and collateralized mortgage obligations, collectively referred to as “structured securities”) frequently include provisions for periodic principal payments and permit periodic unscheduled payments.
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Other than Temporary Impairment, Credit Losses Recognized in Earnings [Table Text Block] | The following table summarizes the amount of credit losses recognized in earnings on fixed maturity securities, available for sale, held at the beginning of the period, for which a portion of the other-than-temporary impairment was also recognized in accumulated other comprehensive income for the six months ended June 30, 2012 and 2011 (dollars in millions):
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Schedule of Unrealized Loss on Investments [Table Text Block] | The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at December 31, 2011 (dollars in millions):
The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at June 30, 2012 (dollars in millions):
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LITIGATION AND OTHER LEGAL PROCEEDINGS (DETAILS) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 0 Months Ended | ||||
---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2012
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Jun. 30, 2012
Conseco Life Insurance Company Litigation [Member]
|
Jun. 30, 2012
Multistate Examination, Senior Health and Bankers Life [Member]
|
Jun. 30, 2012
Regulatory Settlement For Certain Lifetrend Life Insurance Products [Member]
|
Oct. 31, 2008
Regulatory Settlement For Certain Lifetrend Life Insurance Products [Member]
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Dec. 31, 2008
CIUL Universal Life Member [Member]
|
Jun. 30, 2012
Settlement with State Securities Regulators [Member]
|
Jun. 30, 2012
Minimum [Member]
Multistate Examination, Senior Health and Bankers Life [Member]
|
Apr. 05, 2012
Pending Litigation [Member]
Settlement with State Securities Regulators [Member]
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Loss Contingencies [Line Items] | |||||||||
Pre-tax charge related to recorded loss contingency | $ 20 | $ 10 | |||||||
Number of States Involved In Multistate Examination | 40 | ||||||||
Loss Contingency, Maximum Senior Health | 2.3 | ||||||||
Potential Additional Amount Payable If Improvement Benchmarks Are Not Met | 10 | ||||||||
Lifetrend Policy Holders That Were Mailed a Notice | 12,000 | ||||||||
CIUL Universal Life Policy Holders Which Were Mailed a Notice | 16,000 | ||||||||
Fund Established For Certain Lifetrend Life Insurance Product Owners | 10 | ||||||||
Assesment To Be Paid To Participating Lifetrend Jurisdictions | 1 | ||||||||
Percentage of Lifetrend Policy Holders Represented by Jurisdictions That Have Signed Agreement | 98.00% | ||||||||
Number of States Participating in Examination of Compliance with Unclaimed Property Laws | 32 | ||||||||
Settlement payment by Bankers to state securities regulators | $ 9.9 |
REINSURANCE (DETAILS) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2012
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Jun. 30, 2011
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Jun. 30, 2012
|
Jun. 30, 2011
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Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | ||||
Ceded Premiums Written | $ 59.3 | $ 57.6 | $ 116.5 | $ 118.0 |
Reinsurance Effect on Claims and Benefits Incurred, Amount Ceded | 54.2 | 52.3 | 115.8 | 114.8 |
Assumed Premiums Written | 22.9 | 26.1 | 38.8 | 46.5 |
Coventry Health Care Marketing and Quota Share Agreements [Member]
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Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | ||||
Assumed Premiums Written | $ 17.7 | $ 20.4 | $ 28.5 | $ 34.8 |
INVESTMENTS IN VARIABLE INTEREST ENTITIES (DETAILS) (USD $)
In Millions, unless otherwise specified |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2012
|
Jun. 30, 2011
|
Dec. 31, 2011
|
|
Variable Interest Entity [Line Items] | |||
Investments held by variable interest entities | $ 789.3 | $ 496.3 | |
Cash and cash equivalents held by variable interest entities | 88.6 | 74.4 | |
Borrowings related to variable interest entities | 766.7 | 519.9 | |
Variable interest entity amortized cost securities held | 792.5 | ||
Variable interest entity, gross unrealized gains fixed maturity securities | 2.3 | ||
Variable interest entity gross unrealized losses fixed maturity securities | 5.5 | ||
Variable interest entities net realized gain (loss) on investments | (0.2) | 0.4 | |
Variable interest entities net gains from sale of fixed maturity investments | 0.2 | 3.6 | |
Total other-than-temporary impairment losses on investments held by variable interest entities | 0.4 | 3.2 | |
Variable Interest Entities, Investments Sold | 21.2 | ||
Variable Interest Entity, Available For Sale Securities, Gross Investment Losses From Sale, Before Tax | 0.2 | ||
Investments held in limited partnerships | 29.6 | ||
Unfunded committments to limited partnerships | 18.9 | ||
VIEs [Member]
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Variable Interest Entity [Line Items] | |||
Investments held by variable interest entities | 789.3 | 496.3 | |
Notes receivable of VIEs held by insurance subsidiaries | 0 | 0 | |
Cash and cash equivalents held by variable interest entities | 88.6 | 74.4 | |
Accrued investment income | 3.1 | 1.7 | |
Income tax assets, net | 5.1 | 6.8 | |
Other assets | 14.2 | 7.7 | |
Total assets | 900.3 | 586.9 | |
Other liabilities | 60.6 | 30.3 | |
Borrowings related to variable interest entities | 766.7 | 519.9 | |
Notes payable of VIEs held by insurance subsidiaries | 82.5 | 49.3 | |
Total liabilities | 909.8 | 599.5 | |
Eliminations [Member]
|
|||
Variable Interest Entity [Line Items] | |||
Investments held by variable interest entities | 0 | 0 | |
Notes receivable of VIEs held by insurance subsidiaries | (78.5) | (45.3) | |
Cash and cash equivalents held by variable interest entities | 0 | 0 | |
Accrued investment income | 0 | 0 | |
Income tax assets, net | (1.5) | (1.4) | |
Other assets | 0 | 0 | |
Total assets | (80.0) | (46.7) | |
Other liabilities | (0.3) | (0.1) | |
Borrowings related to variable interest entities | 0 | 0 | |
Notes payable of VIEs held by insurance subsidiaries | (82.5) | (49.3) | |
Total liabilities | (82.8) | (49.4) | |
Net Effect On Consolidated Balance Sheet [Member]
|
|||
Variable Interest Entity [Line Items] | |||
Investments held by variable interest entities | 789.3 | 496.3 | |
Notes receivable of VIEs held by insurance subsidiaries | (78.5) | (45.3) | |
Cash and cash equivalents held by variable interest entities | 88.6 | 74.4 | |
Accrued investment income | 3.1 | 1.7 | |
Income tax assets, net | 3.6 | 5.4 | |
Other assets | 14.2 | 7.7 | |
Total assets | 820.3 | 540.2 | |
Other liabilities | 60.3 | 30.2 | |
Borrowings related to variable interest entities | 766.7 | 519.9 | |
Notes payable of VIEs held by insurance subsidiaries | 0 | 0 | |
Total liabilities | 827.0 | 550.1 | |
Less Than Twelve Months [Member]
|
|||
Variable Interest Entity [Line Items] | |||
Fair value investments held by variable interest entity that had been in an unrealized loss position | 446.4 | ||
Gross unrealized losses on investments held by variable interest entity | 3.9 | ||
Greater Than Twelve Months [Member]
|
|||
Variable Interest Entity [Line Items] | |||
Fair value investments held by variable interest entity that had been in an unrealized loss position | 79.3 | ||
Gross unrealized losses on investments held by variable interest entity | $ 1.6 |
CHANGES IN COMMON STOCK (DETAILS) (USD $)
In Millions, except Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2012
|
Jun. 30, 2012
|
Jun. 30, 2011
|
||||
Class of Stock [Line Items] | ||||||
Stock Repurchase Program, Authorized Amount | $ 100.0 | |||||
Stock Repurchase Program, Increase in Authorized Amount | 200.0 | |||||
Stock Repurchased and Retired During Period, Shares | 8,089,548 | |||||
Stock Repurchased and Retired During Period, Value | 58.2 | 16.2 | ||||
Common Stock Disclosures [Abstract] | ||||||
Balance, December 31, 2011 | 241,304,503 | |||||
Balance, March 31, 2012 | 234,026,409 | 234,026,409 | ||||
Shares Paid for Tax Withholding for Share Based Compensation | 142,000 | |||||
Stock Repurchase Program, Remaining Repurchase Authorized Amount | 172.1 | 172.1 | ||||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.02 | |||||
Dividends, Common Stock | 4.7 | |||||
Stock Options [Member]
|
||||||
Common Stock Disclosures [Abstract] | ||||||
Shares issued under employee benefit compensation plans | 415,350 | |||||
Restricted Stock [Member]
|
||||||
Common Stock Disclosures [Abstract] | ||||||
Shares issued under employee benefit compensation plans | 396,104 | [1] | ||||
Common Stock Including Additional Paid in Capital [Member]
|
||||||
Class of Stock [Line Items] | ||||||
Stock Repurchased and Retired During Period, Value | 58.2 | 16.2 | ||||
Common Stock Disclosures [Abstract] | ||||||
Dividends, Common Stock | $ 0 | |||||
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BUSINESS AND BASIS OF PRESENTATION
|
6 Months Ended |
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Jun. 30, 2012
|
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS AND BASIS OF PRESENTATION | BUSINESS AND BASIS OF PRESENTATION The following notes should be read together with the notes to the consolidated financial statements included in our 2011 Annual Report on Form 10-K. CNO Financial Group, Inc., a Delaware corporation (“CNO”), is a holding company for a group of insurance companies operating throughout the United States that develop, market and administer health insurance, annuity, individual life insurance and other insurance products. CNO became the successor to Conseco, Inc., an Indiana corporation (our “Predecessor”), in connection with our bankruptcy reorganization which became effective on September 10, 2003. The terms “CNO Financial Group, Inc.”, the “Company”, “we”, “us”, and “our” as used in these financial statements refer to CNO and its subsidiaries or, when the context requires otherwise, our Predecessor and its subsidiaries. We focus on serving the senior and middle-income markets, which we believe are attractive, underserved, high growth markets. We sell our products through three distribution channels: career agents, independent producers (some of whom sell one or more of our product lines exclusively) and direct marketing. Our unaudited consolidated financial statements reflect normal recurring adjustments that, in the opinion of management, are necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. As permitted by rules and regulations of the Securities and Exchange Commission (the “SEC”) applicable to quarterly reports on Form 10-Q, we have condensed or omitted certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We have reclassified certain amounts from the prior periods to conform to the 2012 presentation. These reclassifications have no effect on net income or shareholders’ equity. Results for interim periods are not necessarily indicative of the results that may be expected for a full year. As discussed in the note to the consolidated financial statements entitled "Recently Issued Accounting Standards", we have adopted the provisions of Financial Accounting Standards Update No. 2010-26 (“ASU 2010-26”), effective January 1, 2012. Pursuant to the guidance, we elected to adopt the provisions on a retrospective basis. Accordingly, all prior periods presented have been retrospectively adjusted. The balance sheet at December 31, 2011, presented herein, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. When we prepare financial statements in conformity with GAAP, we are required to make estimates and assumptions that significantly affect reported amounts of various assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting periods. For example, we use significant estimates and assumptions to calculate values for deferred acquisition costs, the present value of future profits, fair value measurements of certain investments (including derivatives), other-than-temporary impairments of investments, assets and liabilities related to income taxes, liabilities for insurance products, liabilities related to litigation and guaranty fund assessment accruals. If our future experience differs from these estimates and assumptions, our financial statements would be materially affected. Our consolidated financial statements exclude the results of transactions between us and our consolidated affiliates, or among our consolidated affiliates. |