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. |
September 30, 2012 | December 31, 2011 | ||||||
(Restated) | |||||||
Investments: | (unaudited) | ||||||
Fixed maturities, available for sale, at fair value (amortized cost: September 30, 2012 - $21,825.7; December 31, 2011 - $21,779.1) | $ | 24,742.3 | $ | 23,516.0 | |||
Equity securities at fair value (cost: September 30, 2012 - $174.0; December 31, 2011 - $177.0) | 180.0 | 175.1 | |||||
Mortgage loans | 1,597.2 | 1,602.8 | |||||
Policy loans | 274.1 | 279.7 | |||||
Trading securities | 199.4 | 91.6 | |||||
Investments held by variable interest entities | 829.4 | 496.3 | |||||
Other invested assets | 265.0 | 202.8 | |||||
Total investments | 28,087.4 | 26,364.3 | |||||
Cash and cash equivalents - unrestricted | 415.3 | 436.0 | |||||
Cash and cash equivalents held by variable interest entities | 48.2 | 74.4 | |||||
Accrued investment income | 317.8 | 288.7 | |||||
Present value of future profits | 642.4 | 697.7 | |||||
Deferred acquisition costs | 623.4 | 797.1 | |||||
Reinsurance receivables | 2,967.7 | 3,091.1 | |||||
Income tax assets, net | 699.5 | 865.4 | |||||
Assets held in separate accounts | 15.7 | 15.0 | |||||
Other assets | 338.6 | 292.2 | |||||
Total assets | $ | 34,156.0 | $ | 32,921.9 |
September 30, 2012 | December 31, 2011 | ||||||
(Restated) | |||||||
Liabilities: | (unaudited) | ||||||
Liabilities for insurance products: | |||||||
Interest-sensitive products | $ | 12,930.3 | $ | 13,165.5 | |||
Traditional products | 11,004.3 | 10,482.7 | |||||
Claims payable and other policyholder funds | 977.6 | 1,034.3 | |||||
Liabilities related to separate accounts | 15.7 | 15.0 | |||||
Other liabilities | 709.0 | 556.3 | |||||
Investment borrowings | 1,650.9 | 1,676.5 | |||||
Borrowings related to variable interest entities | 766.9 | 519.9 | |||||
Notes payable – direct corporate obligations | 1,035.1 | 857.9 | |||||
Total liabilities | 29,089.8 | 28,308.1 | |||||
Commitments and Contingencies | |||||||
Shareholders' equity: | |||||||
Common stock ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: September 30, 2012 - 229,506,690; December 31, 2011 – 241,304,503) | 2.3 | 2.4 | |||||
Additional paid-in capital | 4,251.2 | 4,361.9 | |||||
Accumulated other comprehensive income | 1,234.4 | 781.6 | |||||
Accumulated deficit | (421.7 | ) | (532.1 | ) | |||
Total shareholders' equity | 5,066.2 | 4,613.8 | |||||
Total liabilities and shareholders' equity | $ | 34,156.0 | $ | 32,921.9 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 690.2 | $ | 673.5 | $ | 2,071.3 | $ | 2,020.3 | |||||||
Net investment income (loss): | |||||||||||||||
General account assets | 349.4 | 338.2 | 1,045.7 | 1,016.5 | |||||||||||
Policyholder and reinsurer accounts and other special-purpose portfolios | 39.1 | (54.9 | ) | 87.4 | (14.4 | ) | |||||||||
Realized investment gains (losses): | |||||||||||||||
Net realized investment gains, excluding impairment losses | 32.2 | 33.5 | 98.4 | 64.9 | |||||||||||
Other-than-temporary impairment losses: | |||||||||||||||
Total other-than-temporary impairment losses | (23.1 | ) | (2.9 | ) | (34.5 | ) | (26.3 | ) | |||||||
Portion of other-than-temporary impairment losses recognized in accumulated other comprehensive income | — | — | — | — | |||||||||||
Net impairment losses recognized | (23.1 | ) | (2.9 | ) | (34.5 | ) | (26.3 | ) | |||||||
Total realized gains | 9.1 | 30.6 | 63.9 | 38.6 | |||||||||||
Fee revenue and other income | 5.2 | 4.9 | 13.6 | 12.5 | |||||||||||
Total revenues | 1,093.0 | 992.3 | 3,281.9 | 3,073.5 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 745.7 | 661.0 | 2,124.4 | 2,028.6 | |||||||||||
Interest expense | 29.2 | 27.9 | 86.7 | 86.0 | |||||||||||
Amortization | 60.9 | 58.6 | 215.8 | 224.1 | |||||||||||
Loss on extinguishment of debt | 198.5 | 1.1 | 199.2 | 3.1 | |||||||||||
Other operating costs and expenses | 217.5 | 182.0 | 617.8 | 527.8 | |||||||||||
Total benefits and expenses | 1,251.8 | 930.6 | 3,243.9 | 2,869.6 | |||||||||||
Income (loss) before income taxes | (158.8 | ) | 61.7 | 38.0 | 203.9 | ||||||||||
Income tax expense (benefit): | |||||||||||||||
Income tax expense (benefit) on period income | (10.8 | ) | 25.2 | 61.2 | 75.6 | ||||||||||
Decrease in valuation allowance for deferred tax assets | (143.0 | ) | (143.0 | ) | (143.0 | ) | (143.0 | ) | |||||||
Net income (loss) | $ | (5.0 | ) | $ | 179.5 | $ | 119.8 | $ | 271.3 | ||||||
Earnings per common share: | |||||||||||||||
Basic: | |||||||||||||||
Weighted average shares outstanding | 231,481,000 | 246,965,000 | 236,555,000 | 249,673,000 | |||||||||||
Net income (loss) | $ | (.02 | ) | $ | .73 | $ | .51 | $ | 1.09 | ||||||
Diluted: | |||||||||||||||
Weighted average shares outstanding | 231,481,000 | 302,708,000 | 292,983,000 | 306,085,000 | |||||||||||
Net income (loss) | $ | (.02 | ) | $ | .61 | $ | .45 | $ | .92 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(Restated) | (Restated) | ||||||||||||||
Net income (loss) | $ | (5.0 | ) | $ | 179.5 | $ | 119.8 | $ | 271.3 | ||||||
Other comprehensive income, before tax: | |||||||||||||||
Unrealized gains for the period | 689.4 | 973.6 | 1,252.8 | 1,248.1 | |||||||||||
Amortization of present value of future profits and deferred acquisition costs | (38.0 | ) | (125.9 | ) | (114.2 | ) | (163.0 | ) | |||||||
Amount related to premium deficiencies assuming the net unrealized gains had been realized | (267.6 | ) | (241.0 | ) | (380.7 | ) | (241.0 | ) | |||||||
Reclassification adjustments: | |||||||||||||||
For net realized investment gains included in net income | (4.6 | ) | (55.1 | ) | (57.2 | ) | (69.1 | ) | |||||||
For amortization of the present value of future profits and deferred acquisition costs related to net realized investment gains included in net income | 1.7 | 3.9 | 5.9 | 3.7 | |||||||||||
Unrealized gains on investments | 380.9 | 555.5 | 706.6 | 778.7 | |||||||||||
Change related to deferred compensation plan | (2.1 | ) | (2.4 | ) | (.5 | ) | (2.0 | ) | |||||||
Other comprehensive income before tax | 378.8 | 553.1 | 706.1 | 776.7 | |||||||||||
Income tax expense related to items of accumulated other comprehensive income | (135.2 | ) | (197.7 | ) | (253.3 | ) | (278.5 | ) | |||||||
Other comprehensive income, net of tax | 243.6 | 355.4 | 452.8 | 498.2 | |||||||||||
Comprehensive income | $ | 238.6 | $ | 534.9 | $ | 572.6 | $ | 769.5 |
Common stock and additional paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings (accumulated deficit) | Total | ||||||||||||
Balance, December 31, 2010 | $ | 4,426.7 | $ | 252.7 | $ | (867.8 | ) | $ | 3,811.6 | ||||||
Net income | — | — | 271.3 | 271.3 | |||||||||||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense of $276.7) | — | 495.0 | — | 495.0 | |||||||||||
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense of $1.8) | — | 3.2 | — | 3.2 | |||||||||||
Cost of shares acquired | (55.7 | ) | — | — | (55.7 | ) | |||||||||
Stock option and restricted stock plans | 10.8 | — | — | 10.8 | |||||||||||
Balance, September 30, 2011 | $ | 4,381.8 | $ | 750.9 | $ | (596.5 | ) | $ | 4,536.2 | ||||||
Balance, December 31, 2011 | $ | 4,364.3 | $ | 781.6 | $ | (532.1 | ) | $ | 4,613.8 | ||||||
Net income | — | — | 119.8 | 119.8 | |||||||||||
Change in unrealized appreciation (depreciation) of investments (net of applicable income tax expense of $248.9) | — | 444.9 | — | 444.9 | |||||||||||
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense of $4.4) | — | 7.9 | — | 7.9 | |||||||||||
Extinguishment of beneficial conversion feature related to the repurchase of convertible debentures | (24.0 | ) | — | — | (24.0 | ) | |||||||||
Cost of shares acquired | (99.5 | ) | — | — | (99.5 | ) | |||||||||
Dividends on common stock | — | — | (9.4 | ) | (9.4 | ) | |||||||||
Stock option and restricted stock plans | 12.7 | — | — | 12.7 | |||||||||||
Balance, September 30, 2012 (Restated) | $ | 4,253.5 | $ | 1,234.4 | $ | (421.7 | ) | $ | 5,066.2 |
Nine months ended | |||||||
September 30, | |||||||
2012 | 2011 | ||||||
Cash flows from operating activities: | |||||||
Insurance policy income | $ | 1,802.3 | $ | 1,791.8 | |||
Net investment income | 1,010.0 | 1,065.0 | |||||
Fee revenue and other income | 13.6 | 12.5 | |||||
Insurance policy benefits | (1,611.5 | ) | (1,555.7 | ) | |||
Interest expense | (84.3 | ) | (70.5 | ) | |||
Deferrable policy acquisition costs | (141.4 | ) | (164.9 | ) | |||
Other operating costs | (558.6 | ) | (513.6 | ) | |||
Taxes | (5.5 | ) | (2.4 | ) | |||
Net cash provided by operating activities | 424.6 | 562.2 | |||||
Cash flows from investing activities: | |||||||
Sales of investments | 1,852.5 | 4,390.5 | |||||
Maturities and redemptions of investments | 1,365.4 | 853.3 | |||||
Purchases of investments | (3,570.2 | ) | (6,363.8 | ) | |||
Net sales of trading securities | 47.2 | 307.2 | |||||
Change in cash and cash equivalents held by variable interest entities | 26.2 | 7.1 | |||||
Other | (24.3 | ) | (23.4 | ) | |||
Net cash used by investing activities | (303.2 | ) | (829.1 | ) | |||
Cash flows from financing activities: | |||||||
Issuance of notes payable, net | 944.5 | — | |||||
Payments on notes payable | (779.0 | ) | (130.7 | ) | |||
Amounts related to extinguishment of debt | (206.4 | ) | — | ||||
Issuance of common stock | 2.0 | .6 | |||||
Payments to repurchase common stock | (99.5 | ) | (55.7 | ) | |||
Common stock dividends paid | (9.4 | ) | — | ||||
Amounts received for deposit products | 986.0 | 1,285.8 | |||||
Withdrawals from deposit products | (1,201.4 | ) | (1,272.0 | ) | |||
Issuance of investment borrowings: | |||||||
Federal Home Loan Bank | 200.0 | 517.0 | |||||
Related to variable interest entities | 246.7 | 122.2 | |||||
Payments on investment borrowings: | |||||||
Federal Home Loan Bank | (200.0 | ) | (267.0 | ) | |||
Related to variable interest entities and other | (.8 | ) | (100.4 | ) | |||
Investment borrowings - repurchase agreements, net | (24.8 | ) | 57.1 | ||||
Net cash provided (used) by financing activities | (142.1 | ) | 156.9 | ||||
Net decrease in cash and cash equivalents | (20.7 | ) | (110.0 | ) | |||
Cash and cash equivalents, beginning of period | 436.0 | 571.9 | |||||
Cash and cash equivalents, end of period | $ | 415.3 | $ | 461.9 |
As reported in Form 10-Q | Corrections to shadow adjustments | As reported in Form 10-Q/A | |||||||||
Deferred acquisition costs | $ | 580.7 | $ | 42.7 | $ | 623.4 | |||||
Income tax assets | 594.5 | 105.0 | 699.5 | ||||||||
Change in total assets | $ | 147.7 | |||||||||
Liabilities for insurance products | $ | 24,593.5 | $ | 334.4 | $ | 24,927.9 | |||||
Accumulated other comprehensive income | 1,421.1 | (186.7 | ) | 1,234.4 | |||||||
Change to total liabilities and shareholders' equity | $ | 147.7 | |||||||||
Comprehensive income: | |||||||||||
For the three months ended September 30, 2012 | $ | 425.3 | $ | (186.7 | ) | $ | 238.6 | ||||
For the nine months ended September 30, 2012 | $ | 759.3 | $ | (186.7 | ) | $ | 572.6 |
September 30, 2012 | December 31, 2011 | ||||||
(Restated) | |||||||
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized | $ | 9.6 | $ | (4.4 | ) | ||
Net unrealized gains on all other investments | 2,914.8 | 1,733.2 | |||||
Adjustment to present value of future profits (a) | (200.7 | ) | (214.8 | ) | |||
Adjustment to deferred acquisition costs | (458.0 | ) | (289.3 | ) | |||
Adjustment to insurance liabilities | (334.4 | ) | — | ||||
Unrecognized net loss related to deferred compensation plan | (8.8 | ) | (8.3 | ) | |||
Deferred income tax liabilities | (688.1 | ) | (434.8 | ) | |||
Accumulated other comprehensive income | $ | 1,234.4 | $ | 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 | $ | 14,586.6 | $ | 2,265.7 | $ | (28.8 | ) | $ | 16,823.5 | $ | — | ||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 164.2 | 6.9 | — | 171.1 | — | ||||||||||||||
States and political subdivisions | 1,785.6 | 267.9 | (5.4 | ) | 2,048.1 | — | |||||||||||||
Debt securities issued by foreign governments | .8 | — | — | .8 | — | ||||||||||||||
Asset-backed securities | 1,391.3 | 92.0 | (6.6 | ) | 1,476.7 | — | |||||||||||||
Collateralized debt obligations | 327.6 | 5.2 | (.8 | ) | 332.0 | — | |||||||||||||
Commercial mortgage-backed securities | 1,400.7 | 142.7 | (.8 | ) | 1,542.6 | — | |||||||||||||
Mortgage pass-through securities | 18.8 | 1.4 | — | 20.2 | — | ||||||||||||||
Collateralized mortgage obligations | 2,150.1 | 178.1 | (.9 | ) | 2,327.3 | (7.3 | ) | ||||||||||||
Total fixed maturities, available for sale | $ | 21,825.7 | $ | 2,959.9 | $ | (43.3 | ) | $ | 24,742.3 | $ | (7.3 | ) |
Amortized cost | Estimated fair value | ||||||
(Dollars in millions) | |||||||
Due in one year or less | $ | 178.3 | $ | 180.7 | |||
Due after one year through five years | 1,558.1 | 1,697.5 | |||||
Due after five years through ten years | 4,491.1 | 5,038.7 | |||||
Due after ten years | 10,309.7 | 12,126.6 | |||||
Subtotal | 16,537.2 | 19,043.5 | |||||
Structured securities | 5,288.5 | 5,698.8 | |||||
Total fixed maturities, available for sale | $ | 21,825.7 | $ | 24,742.3 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Credit losses on fixed maturity securities, available for sale, beginning of period | $ | (1.7 | ) | $ | (1.6 | ) | $ | (2.0 | ) | $ | (6.1 | ) | |||
Add: credit losses on other-than-temporary impairments not previously recognized | — | — | — | — | |||||||||||
Less: credit losses on securities sold | — | .7 | .3 | 5.2 | |||||||||||
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 | ) | $ | (.9 | ) | $ | (1.7 | ) | $ | (.9 | ) |
(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 | ||||||||||||||||||
States and political subdivisions | $ | 40.2 | $ | (2.0 | ) | $ | 68.7 | $ | (3.4 | ) | $ | 108.9 | $ | (5.4 | ) | |||||||||
Corporate securities | 300.5 | (9.2 | ) | 278.1 | (19.6 | ) | 578.6 | (28.8 | ) | |||||||||||||||
Asset-backed securities | 42.1 | (.3 | ) | 137.8 | (6.3 | ) | 179.9 | (6.6 | ) | |||||||||||||||
Collateralized debt obligations | 12.7 | (.1 | ) | 47.2 | (.7 | ) | 59.9 | (.8 | ) | |||||||||||||||
Commercial mortgage-backed securities | 16.0 | (.1 | ) | 14.3 | (.7 | ) | 30.3 | (.8 | ) | |||||||||||||||
Mortgage pass-through securities | — | — | 2.0 | — | 2.0 | — | ||||||||||||||||||
Collateralized mortgage obligations | 58.5 | (.5 | ) | 36.0 | (.4 | ) | 94.5 | (.9 | ) | |||||||||||||||
Total fixed maturities, available for sale | $ | 470.0 | $ | (12.2 | ) | $ | 584.1 | $ | (31.1 | ) | $ | 1,054.1 | $ | (43.3 | ) | |||||||||
Equity securities | $ | 2.1 | $ | (.1 | ) | $ | — | $ | — | $ | 2.1 | $ | (.1 | ) |
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 | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net income (loss) for basic earnings per share | $ | (5.0 | ) | $ | 179.5 | $ | 119.8 | $ | 271.3 | ||||||
Add: interest expense on 7.0% Convertible Senior Debentures due 2016 (the “7.0% Debentures”), net of income taxes | — | 3.7 | 11.1 | 11.1 | |||||||||||
Net income for diluted earnings per share | $ | (5.0 | ) | $ | 183.2 | $ | 130.9 | $ | 282.4 | ||||||
Shares: | |||||||||||||||
Weighted average shares outstanding for basic earnings per share | 231,481 | 246,965 | 236,555 | 249,673 | |||||||||||
Effect of dilutive securities on weighted average shares: | |||||||||||||||
7% Debentures | — | 53,367 | 53,037 | 53,367 | |||||||||||
Stock option and restricted stock plans | — | 2,353 | 2,639 | 2,712 | |||||||||||
Warrants | — | 23 | 752 | 333 | |||||||||||
Dilutive potential common shares | — | 55,743 | 56,428 | 56,412 | |||||||||||
Weighted average shares outstanding for diluted earnings per share | 231,481 | 302,708 | 292,983 | 306,085 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues: | |||||||||||||||
Bankers Life: | |||||||||||||||
Insurance policy income: | |||||||||||||||
Annuities | $ | 6.8 | $ | 9.6 | $ | 21.9 | $ | 26.7 | |||||||
Health | 335.1 | 334.0 | 1,010.6 | 1,017.1 | |||||||||||
Life | 74.2 | 61.0 | 209.1 | 170.4 | |||||||||||
Net investment income (a) | 221.6 | 158.0 | 642.1 | 564.5 | |||||||||||
Fee revenue and other income (a) | 4.0 | 3.6 | 10.2 | 9.2 | |||||||||||
Total Bankers Life revenues | 641.7 | 566.2 | 1,893.9 | 1,787.9 | |||||||||||
Washington National: | |||||||||||||||
Insurance policy income: | |||||||||||||||
Health | 143.4 | 141.2 | 429.0 | 423.1 | |||||||||||
Life | 3.6 | 3.9 | 11.6 | 11.8 | |||||||||||
Other | .8 | .8 | 2.2 | 3.0 | |||||||||||
Net investment income (a) | 50.9 | 47.3 | 151.9 | 140.3 | |||||||||||
Fee revenue and other income (a) | .3 | .4 | .8 | .9 | |||||||||||
Total Washington National revenues | 199.0 | 193.6 | 595.5 | 579.1 | |||||||||||
Colonial Penn: | |||||||||||||||
Insurance policy income: | |||||||||||||||
Health | 1.3 | 1.4 | 4.0 | 4.5 | |||||||||||
Life | 53.2 | 49.4 | 158.5 | 147.5 | |||||||||||
Net investment income (a) | 9.9 | 10.1 | 30.1 | 30.9 | |||||||||||
Fee revenue and other income (a) | .2 | .2 | .6 | .6 | |||||||||||
Total Colonial Penn revenues | 64.6 | 61.1 | 193.2 | 183.5 | |||||||||||
Other CNO Business: | |||||||||||||||
Insurance policy income: | |||||||||||||||
Annuities | 2.5 | 3.4 | 8.3 | 8.6 | |||||||||||
Health | 6.2 | 6.9 | 19.3 | 21.3 | |||||||||||
Life | 62.9 | 61.7 | 196.2 | 184.9 | |||||||||||
Other | .2 | .2 | .6 | 1.4 | |||||||||||
Net investment income (a) | 86.7 | 74.6 | 259.2 | 256.0 | |||||||||||
Total Other CNO Business revenues | 158.5 | 146.8 | 483.6 | 472.2 | |||||||||||
Corporate operations: | |||||||||||||||
Net investment income | 19.4 | (6.7 | ) | 49.8 | 10.4 | ||||||||||
Fee and other income | .7 | .7 | 2.0 | 1.8 | |||||||||||
Total corporate revenues | 20.1 | (6.0 | ) | 51.8 | 12.2 | ||||||||||
Total revenues | 1,083.9 | 961.7 | 3,218.0 | 3,034.9 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Expenses: | |||||||||||||||
Bankers Life: | |||||||||||||||
Insurance policy benefits | $ | 434.6 | $ | 360.6 | $ | 1,252.2 | $ | 1,174.3 | |||||||
Amortization | 35.6 | 44.1 | 143.0 | 159.5 | |||||||||||
Interest expense on investment borrowings | 1.3 | 1.2 | 4.1 | 3.5 | |||||||||||
Other operating costs and expenses | 89.6 | 80.9 | 267.4 | 236.9 | |||||||||||
Total Bankers Life expenses | 561.1 | 486.8 | 1,666.7 | 1,574.2 | |||||||||||
Washington National: | |||||||||||||||
Insurance policy benefits | 111.1 | 119.0 | 340.5 | 349.5 | |||||||||||
Amortization | 11.2 | 10.8 | 34.7 | 35.6 | |||||||||||
Interest expense on investment borrowings | .7 | .2 | 2.2 | .2 | |||||||||||
Other operating costs and expenses | 42.1 | 42.4 | 125.6 | 126.5 | |||||||||||
Total Washington National expenses | 165.1 | 172.4 | 503.0 | 511.8 | |||||||||||
Colonial Penn: | |||||||||||||||
Insurance policy benefits | 38.3 | 36.0 | 120.0 | 112.7 | |||||||||||
Amortization | 3.5 | 3.5 | 11.1 | 11.0 | |||||||||||
Other operating costs and expenses | 25.4 | 22.9 | 73.9 | 66.3 | |||||||||||
Total Colonial Penn expenses | 67.2 | 62.4 | 205.0 | 190.0 | |||||||||||
Other CNO Business: | |||||||||||||||
Insurance policy benefits | 157.1 | 111.5 | 401.0 | 358.2 | |||||||||||
Amortization | 10.5 | 10.4 | 25.1 | 28.4 | |||||||||||
Interest expense on investment borrowings | 5.0 | 5.3 | 15.1 | 15.2 | |||||||||||
Other operating costs and expenses | 39.5 | 16.8 | 96.4 | 55.1 | |||||||||||
Total Other CNO Business expenses | 212.1 | 144.0 | 537.6 | 456.9 | |||||||||||
Corporate operations: | |||||||||||||||
Interest expense on corporate debt | 16.3 | 18.7 | 50.4 | 58.6 | |||||||||||
Interest expense on borrowings of variable interest entities | 5.8 | 2.4 | 14.5 | 8.4 | |||||||||||
Interest expense on investment borrowings | .1 | .1 | .4 | .1 | |||||||||||
Loss on extinguishment of debt | 198.5 | 1.1 | 199.2 | 3.1 | |||||||||||
Other operating costs and expenses | 20.9 | 19.0 | 54.5 | 43.0 | |||||||||||
Total corporate expenses | 241.6 | 41.3 | 319.0 | 113.2 | |||||||||||
Total expenses | 1,247.1 | 906.9 | 3,231.3 | 2,846.1 | |||||||||||
Income (loss) before net realized investment losses and fair value changes in embedded derivative liabilities (net of related amortization) and income taxes: | |||||||||||||||
Bankers Life | 80.6 | 79.4 | 227.2 | 213.7 | |||||||||||
Washington National | 33.9 | 21.2 | 92.5 | 67.3 | |||||||||||
Colonial Penn | (2.6 | ) | (1.3 | ) | (11.8 | ) | (6.5 | ) | |||||||
Other CNO Business | (53.6 | ) | 2.8 | (54.0 | ) | 15.3 | |||||||||
Corporate operations | (221.5 | ) | (47.3 | ) | (267.2 | ) | (101.0 | ) | |||||||
Income (loss) before net realized investment losses and fair value changes in embedded derivative liabilities (net of related amortization) and income taxes | $ | (163.2 | ) | $ | 54.8 | $ | (13.3 | ) | $ | 188.8 |
(a) | It is not practicable to provide additional components of revenue by product or services. |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Total segment revenues | $ | 1,083.9 | $ | 961.7 | $ | 3,218.0 | $ | 3,034.9 | |||||||
Net realized investment gains | 9.1 | 30.6 | 63.9 | 38.6 | |||||||||||
Consolidated revenues | $ | 1,093.0 | $ | 992.3 | $ | 3,281.9 | $ | 3,073.5 | |||||||
Total segment expenses | $ | 1,247.1 | $ | 906.9 | $ | 3,231.3 | $ | 2,846.1 | |||||||
Insurance policy benefits - fair value changes in embedded derivative liabilities | 4.6 | 33.9 | 10.7 | 33.9 | |||||||||||
Amortization related to fair value changes in embedded derivative liabilities | (1.6 | ) | (14.1 | ) | (4.0 | ) | (14.1 | ) | |||||||
Amortization related to net realized investment gains | 1.7 | 3.9 | 5.9 | 3.7 | |||||||||||
Consolidated expenses | $ | 1,251.8 | $ | 930.6 | $ | 3,243.9 | $ | 2,869.6 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Current tax expense | $ | 2.4 | $ | 2.3 | $ | 9.1 | $ | 7.2 | |||||||
Deferred tax expense (benefit) | 11.1 | 22.9 | 76.4 | 68.4 | |||||||||||
Valuation allowance applicable to current year income | (31.8 | ) | — | (31.8 | ) | — | |||||||||
Income tax expense (benefit) calculated based on estimated annual effective tax rate | (18.3 | ) | 25.2 | 53.7 | 75.6 | ||||||||||
Income tax expense (benefit) on discrete items: | |||||||||||||||
Valuation allowance reduction applicable to income in future years | (111.2 | ) | (143.0 | ) | (111.2 | ) | (143.0 | ) | |||||||
Deferred tax benefit related to loss on extinguishment of debt and other items | (24.3 | ) | — | (24.3 | ) | — | |||||||||
Total income tax benefit | $ | (153.8 | ) | $ | (117.8 | ) | $ | (81.8 | ) | $ | (67.4 | ) |
Nine months ended | |||||
September 30, | |||||
2012 | 2011 | ||||
U.S. statutory corporate rate | 35.0 | % | 35.0 | % | |
Valuation allowance reduction applicable to current year income | (13.8 | ) | — | ||
Nondeductible amounts | .5 | 1.8 | |||
State taxes | 1.0 | 1.0 | |||
Provision for tax issues, tax credits and other | — | (.8 | ) | ||
Estimated annual effective tax rate | 22.7 | % | 37.0 | % |
September 30, 2012 | December 31, 2011 | ||||||
(Restated) | |||||||
Deferred tax assets: | |||||||
Net federal operating loss carryforwards | $ | 1,366.2 | $ | 1,445.2 | |||
Net state operating loss carryforwards | 16.3 | 16.8 | |||||
Tax credits | 37.7 | 32.6 | |||||
Capital loss carryforwards | 305.4 | 342.3 | |||||
Deductible temporary differences: | |||||||
Insurance liabilities | 754.8 | 744.4 | |||||
Other | 81.7 | 64.8 | |||||
Gross deferred tax assets | 2,562.1 | 2,646.1 | |||||
Deferred tax liabilities: | |||||||
Investments | (21.9 | ) | (24.2 | ) | |||
Present value of future profits and deferred acquisition costs | (333.7 | ) | (363.7 | ) | |||
Accumulated other comprehensive income | (688.1 | ) | (434.8 | ) | |||
Gross deferred tax liabilities | (1,043.7 | ) | (822.7 | ) | |||
Net deferred tax assets before valuation allowance | 1,518.4 | 1,823.4 | |||||
Valuation allowance | (795.4 | ) | (938.4 | ) | |||
Net deferred tax assets | 723.0 | 885.0 | |||||
Current income taxes accrued | (23.5 | ) | (19.6 | ) | |||
Income tax assets, net | $ | 699.5 | $ | 865.4 |
Year of expiration | Net operating loss carryforwards (a) | Capital loss | Total loss | |||||||||||||||||||
Life | Non-life | carryforwards | carryforwards | |||||||||||||||||||
2013 | $ | — | $ | — | $ | 836.7 | (b) | $ | 836.7 | |||||||||||||
2014 | — | — | 28.6 | 28.6 | ||||||||||||||||||
2015 | — | — | 7.2 | 7.2 | ||||||||||||||||||
2018 | 550.9 | (a) | — | — | 550.9 | |||||||||||||||||
2021 | 29.5 | — | — | 29.5 | ||||||||||||||||||
2022 | 204.1 | — | — | 204.1 | ||||||||||||||||||
2023 | — | (b) | 2,602.8 | (a) | — | 2,602.8 | ||||||||||||||||
2024 | — | 3.2 | — | 3.2 | ||||||||||||||||||
2025 | — | 118.8 | — | 118.8 | ||||||||||||||||||
2027 | — | 216.8 | — | 216.8 | ||||||||||||||||||
2028 | — | .5 | — | .5 | ||||||||||||||||||
2029 | — | 148.9 | — | 148.9 | ||||||||||||||||||
2031 | — | 28.0 | — | 28.0 | ||||||||||||||||||
Total | $ | 784.5 | $ | 3,119.0 | $ | 872.5 | $ | 4,776.0 |
(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. |
September 30, 2012 | December 31, 2011 | ||||||
New Senior Secured Credit Agreement (as defined below) | $ | 675.0 | $ | — | |||
7.0% Debentures | 93.0 | 293.0 | |||||
Previous Senior Secured Credit Agreement (as defined below) | — | 255.2 | |||||
6.375% Senior Secured Notes due October 2020 (the "6.375% Notes") | 275.0 | — | |||||
9.0% Senior Secured Notes due January 2018 (the “9.0% Notes”) | 1.2 | 275.0 | |||||
Senior Health Note due November 12, 2013 (the “Senior Health Note”) | — | 50.0 | |||||
Unamortized discount on New Senior Secured Credit Agreement | (5.5 | ) | — | ||||
Unamortized discount on 7.0% Debentures | (3.6 | ) | (12.9 | ) | |||
Unamortized discount on Previous Senior Secured Credit Agreement | — | (2.4 | ) | ||||
Direct corporate obligations | $ | 1,035.1 | $ | 857.9 |
• | 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 investments; |
• | create liens; |
• | incur restrictions on the Company's ability and the ability of its 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. |
• | limitations on debt (including, without limitation, guarantees and other contingent obligations); |
• | limitations on issuances of disqualified capital stock; |
• | limitations on liens and further negative pledges; |
• | limitations on sales, transfers and other dispositions of assets; |
• | limitations on transactions with affiliates; |
• | limitations on changes in the nature of the Company's business; |
• | limitations on mergers, consolidations and acquisitions; |
• | limitations on dividends and other distributions, stock repurchases and redemptions and other restricted payments; |
• | limitations on investments and acquisitions; |
• | limitations on prepayment of certain debt; |
• | limitations on modifications or waivers of certain debt documents and charter documents; |
• | investment portfolio requirements for insurance subsidiaries; |
• | limitations on restrictions affecting subsidiaries; |
• | limitations on holding company activities; and |
• | limitations on changes in accounting policies. |
(i) | $136.3 million (all of which was recognized in the third quarter of 2012) due to our repurchase of $200.0 million principal amount of 7.0% Debentures pursuant to the Debenture Repurchase Agreement described above and the write-off of unamortized discount and issuance costs associated with the 7.0% Debentures. Additional paid-in capital was also reduced by $24.0 million to extinguish the beneficial conversion feature associated with a portion of the 7.0% Debentures that were repurchased. As the Code limits the deduction to taxable income for losses on the redemption of convertible debt, a minimal tax benefit was recognized related to the repurchase of the 7.0% Debentures; |
(ii) | $57.8 million (all of which was recognized in the third quarter of 2012) related to the tender offer and consent solicitation for the 9.0% Notes; the write-off of unamortized issuance costs related to the 9.0% Notes; and other transaction costs; and |
(iii) | $5.1 million ($4.4 million of which was recognized in the third quarter of 2012) representing the write-off of unamortized discount and issuance costs associated with repayments of our Previous Senior Secured Credit Agreement. |
Year ending September 30, | |||
2013 | $ | 55.4 | |
2014 | 54.3 | ||
2015 | 79.3 | ||
2016 | 79.3 | ||
2017 | 97.2 | ||
Thereafter | 678.7 | ||
$ | 1,044.2 |
Amount | Maturity | Interest rate at | ||||
borrowed | date | September 30, 2012 | ||||
$ | 100.0 | November 2013 | Variable rate – 0.515% | |||
67.0 | February 2014 | Fixed rate – 1.830% | ||||
50.0 | August 2014 | Variable rate – 0.565% | ||||
100.0 | August 2014 | Variable rate – 0.476% | ||||
50.0 | September 2015 | Variable rate – 0.747% | ||||
150.0 | October 2015 | Variable rate – 0.571% | ||||
146.0 | November 2015 | Fixed rate – 5.300% | ||||
100.0 | December 2015 | Fixed rate – 4.710% | ||||
100.0 | June 2016 | Variable rate – 0.657% | ||||
75.0 | June 2016 | Variable rate – 0.621% | ||||
100.0 | October 2016 | Variable rate – 0.641% | ||||
50.0 | November 2016 | Variable rate – 0.684% | ||||
50.0 | November 2016 | Variable rate – 0.687% | ||||
100.0 | June 2017 | Variable rate – 0.751% | ||||
100.0 | July 2017 | Fixed rate – 3.900% | ||||
50.0 | August 2017 | Variable rate – 0.635% | ||||
75.0 | August 2017 | Variable rate – 0.577% | ||||
100.0 | October 2017 | Variable rate – 0.885% | ||||
37.0 | November 2017 | Fixed rate – 3.750% | ||||
50.0 | July 2018 | Variable rate – 0.917% | ||||
$ | 1,650.0 |
Balance, December 31, 2011 | 241,305 | |||
Treasury stock purchased and retired | (12,894 | ) | ||
Stock options exercised | 692 | |||
Restricted stock vested | 404 | (a) | ||
Balance, September 30, 2012 | 229,507 |
(a) | Such amount was reduced by 143 thousand shares which were tendered to the Company for the payment of federal and state taxes owed on the vesting of restricted stock. |
Three months ended | Nine months ended | ||||||||||||||||||||||
September 30, 2011 | September 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 | $ | 87.2 | $ | (28.6 | ) | $ | 58.6 | $ | 325.4 | $ | (101.3 | ) | $ | 224.1 | |||||||||
Other operating costs and expenses | 127.6 | 54.4 | 182.0 | 367.1 | 160.7 | 527.8 | |||||||||||||||||
Total benefits and expenses | 904.8 | 25.8 | 930.6 | 2,810.2 | 59.4 | 2,869.6 | |||||||||||||||||
Income before income taxes | 87.5 | (25.8 | ) | 61.7 | 263.3 | (59.4 | ) | 203.9 | |||||||||||||||
Tax expense on period income | 34.5 | (9.3 | ) | 25.2 | 96.9 | (21.3 | ) | 75.6 | |||||||||||||||
Net income | 196.0 | (16.5 | ) | 179.5 | 309.4 | (38.1 | ) | 271.3 | |||||||||||||||
Earnings per common share: | |||||||||||||||||||||||
Basic: | |||||||||||||||||||||||
Net income | $ | .79 | $ | (.06 | ) | $ | .73 | $ | 1.24 | $ | (.15 | ) | $ | 1.09 | |||||||||
Diluted: | |||||||||||||||||||||||
Net income | .66 | (.05 | ) | .61 | 1.05 | (.13 | ) | .92 |
Nine months ended | |||||||||||
September 30, 2011 | |||||||||||
As originally reported | Effect of adoption of ASU 2010-26 | As adjusted | |||||||||
Cash flows from operating activities: | |||||||||||
Deferrable policy acquisition costs | $ | (328.6 | ) | $ | 163.7 | $ | (164.9 | ) | |||
Other operating costs | (349.9 | ) | (163.7 | ) | (513.6 | ) | |||||
Net cash used by operating activities | 562.2 | — | 562.2 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(Restated) | (Restated) | ||||||||||||||
Balance, beginning of period | $ | 653.5 | $ | 975.5 | $ | 797.1 | $ | 999.6 | |||||||
Additions | 46.7 | 58.3 | 141.4 | 164.9 | |||||||||||
Amortization | (44.5 | ) | (35.5 | ) | (146.4 | ) | (134.7 | ) | |||||||
Amounts related to fair value adjustment of fixed maturities, available for sale | (32.3 | ) | (163.8 | ) | (168.7 | ) | (195.3 | ) | |||||||
Balance, end of period | $ | 623.4 | $ | 834.5 | $ | 623.4 | $ | 834.5 |
Nine months ended | |||||||
September 30, | |||||||
2012 | 2011 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 119.8 | $ | 271.3 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Amortization and depreciation | 235.2 | 243.6 | |||||
Income taxes | (87.3 | ) | (69.8 | ) | |||
Insurance liabilities | 242.8 | 244.4 | |||||
Accrual and amortization of investment income | (123.1 | ) | 62.9 | ||||
Deferral of policy acquisition costs | (141.4 | ) | (164.9 | ) | |||
Net realized investment gains | (63.9 | ) | (38.6 | ) | |||
Loss on extinguishment of debt | 199.2 | 3.1 | |||||
Other | 43.3 | 10.2 | |||||
Net cash provided by operating activities | $ | 424.6 | $ | 562.2 |
Nine months ended | |||||||
September 30, | |||||||
2012 | 2011 | ||||||
Stock option and restricted stock plans | $ | 10.7 | $ | 10.2 |
September 30, 2012 | |||||||||||
VIEs | Eliminations | Net effect on consolidated balance sheet | |||||||||
Assets: | |||||||||||
Investments held by variable interest entities | $ | 829.4 | $ | — | $ | 829.4 | |||||
Notes receivable of VIEs held by insurance subsidiaries | — | (78.5 | ) | (78.5 | ) | ||||||
Cash and cash equivalents held by variable interest entities | 48.2 | — | 48.2 | ||||||||
Accrued investment income | 3.9 | — | 3.9 | ||||||||
Income tax assets, net | 3.2 | (2.3 | ) | .9 | |||||||
Other assets | 10.9 | — | 10.9 | ||||||||
Total assets | $ | 895.6 | $ | (80.8 | ) | $ | 814.8 | ||||
Liabilities: | |||||||||||
Other liabilities | $ | 52.0 | $ | (2.3 | ) | $ | 49.7 | ||||
Borrowings related to variable interest entities | 766.9 | — | 766.9 | ||||||||
Notes payable of VIEs held by insurance subsidiaries | 82.5 | (82.5 | ) | — | |||||||
Total liabilities | $ | 901.4 | $ | (84.8 | ) | $ | 816.6 |
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 | $ | 3.0 | $ | 3.0 | |||
Due after one year through five years | 413.8 | 413.1 | |||||
Due after five years through ten years | 410.9 | 413.3 | |||||
Total | $ | 827.7 | $ | 829.4 |
• | 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 | $ | — | $ | 16,506.2 | $ | 317.3 | $ | 16,823.5 | |||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 171.1 | — | 171.1 | |||||||||||
States and political subdivisions | — | 2,048.1 | — | 2,048.1 | |||||||||||
Debt securities issued by foreign governments | — | .8 | — | .8 | |||||||||||
Asset-backed securities | — | 1,433.9 | 42.8 | 1,476.7 | |||||||||||
Collateralized debt obligations | — | — | 332.0 | 332.0 | |||||||||||
Commercial mortgage-backed securities | — | 1,540.3 | 2.3 | 1,542.6 | |||||||||||
Mortgage pass-through securities | — | 18.2 | 2.0 | 20.2 | |||||||||||
Collateralized mortgage obligations | — | 2,284.2 | 43.1 | 2,327.3 | |||||||||||
Total fixed maturities, available for sale | — | 24,002.8 | 739.5 | 24,742.3 | |||||||||||
Equity securities: | |||||||||||||||
Corporate securities | 20.5 | 119.2 | 2.2 | 141.9 | |||||||||||
Venture capital investments | — | — | 38.1 | 38.1 | |||||||||||
Total equity securities | 20.5 | 119.2 | 40.3 | 180.0 | |||||||||||
Trading securities: | |||||||||||||||
Corporate securities | — | 49.3 | .6 | 49.9 | |||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 4.9 | — | 4.9 | |||||||||||
States and political subdivisions | — | 17.1 | — | 17.1 | |||||||||||
Asset-backed securities | — | 50.3 | — | 50.3 | |||||||||||
Collateralized debt obligations | — | — | 7.0 | 7.0 | |||||||||||
Commercial mortgage-backed securities | — | 43.6 | — | 43.6 | |||||||||||
Mortgage pass-through securities | — | .2 | — | .2 | |||||||||||
Collateralized mortgage obligations | — | 24.1 | — | 24.1 | |||||||||||
Equity securities | .9 | 1.4 | — | 2.3 | |||||||||||
Total trading securities | .9 | 190.9 | 7.6 | 199.4 | |||||||||||
Investments held by variable interest entities - corporate securities | — | 829.4 | — | 829.4 | |||||||||||
Other invested assets: | |||||||||||||||
Company-owned life insurance | — | 112.3 | — | 112.3 | |||||||||||
Hedge funds | — | 16.3 | — | 16.3 | |||||||||||
Derivatives | — | 81.8 | — | 81.8 | |||||||||||
Total other invested assets | — | 210.4 | — | 210.4 | |||||||||||
Cash and cash equivalents - unrestricted: | |||||||||||||||
Cash | 202.0 | — | — | 202.0 | |||||||||||
Cash equivalents and short-term investments | — | 213.3 | — | 213.3 | |||||||||||
Total cash and cash equivalents - unrestricted | 202.0 | 213.3 | — | 415.3 | |||||||||||
Cash and cash equivalents held by variable interest entities | 48.2 | — | — | 48.2 | |||||||||||
Assets held in separate accounts | — | 15.7 | — | 15.7 | |||||||||||
Total assets carried at fair value by category | $ | 271.6 | $ | 25,581.7 | $ | 787.4 | $ | 26,640.7 | |||||||
Liabilities: | |||||||||||||||
Liabilities for insurance products: | |||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | $ | — | $ | — | $ | 737.9 | $ | 737.9 | |||||||
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement | — | — | 6.0 | 6.0 | |||||||||||
Total liabilities for insurance products | — | — | 743.9 | 743.9 | |||||||||||
Total liabilities carried at fair value by category | $ | — | $ | — | $ | 743.9 | $ | 743.9 |
September 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 | $ | — | $ | — | $ | 1,718.3 | $ | 1,718.3 | $ | 1,597.2 | $ | 1,735.4 | $ | 1,602.8 | |||||||||||||
Policy loans | — | 274.1 | — | 274.1 | 274.1 | 279.7 | 279.7 | ||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||
Insurance liabilities for interest-sensitive products excluding embedded derivatives (a) | — | — | 12,186.4 | 12,186.4 | 12,186.4 | 13,165.5 | 13,165.5 | ||||||||||||||||||||
Investment borrowings | — | 1,702.5 | — | 1,702.5 | 1,650.9 | 1,735.7 | 1,676.5 | ||||||||||||||||||||
Borrowings related to variable interest entities | — | 748.3 | — | 748.3 | 766.9 | 485.1 | 519.9 | ||||||||||||||||||||
Notes payable – direct corporate obligations | — | 1,114.4 | — | 1,114.4 | 1,035.1 | 978.3 | 857.9 |
(a) | The estimated fair value of insurance liabilities for interest-sensitive products was approximately equal to its carrying value at September 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. |
September 30, 2012 | |||||||||||||||||||||||||||||||
Beginning balance as of June 30, 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 September 30, 2012 | Amount of total gains (losses) for the three months ended September 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 | $ | 321.0 | $ | 14.0 | $ | — | $ | 7.3 | $ | 12.5 | $ | (37.5 | ) | $ | 317.3 | $ | — | ||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 1.5 | (1.5 | ) | — | — | — | — | — | — | ||||||||||||||||||||||
States and political subdivisions | 16.0 | — | — | — | — | (16.0 | ) | — | — | ||||||||||||||||||||||
Asset-backed securities | 23.0 | 15.0 | — | 5.5 | — | (.7 | ) | 42.8 | — | ||||||||||||||||||||||
Collateralized debt obligations | 330.1 | (6.3 | ) | — | 8.2 | — | — | 332.0 | — | ||||||||||||||||||||||
Commercial mortgage-backed securities | — | — | — | — | 2.3 | — | 2.3 | — | |||||||||||||||||||||||
Mortgage pass-through securities | 2.1 | (.1 | ) | — | — | — | — | 2.0 | — | ||||||||||||||||||||||
Collateralized mortgage obligations | 4.5 | (2.8 | ) | .1 | 1.0 | 44.6 | (4.3 | ) | 43.1 | — | |||||||||||||||||||||
Total fixed maturities, available for sale | 698.2 | 18.3 | .1 | 22.0 | 59.4 | (58.5 | ) | 739.5 | — | ||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||||
Corporate securities | 3.2 | (1.0 | ) | — | — | — | — | 2.2 | — | ||||||||||||||||||||||
Venture capital investments | 58.0 | — | (23.1 | ) | 3.2 | — | — | 38.1 | (23.1 | ) | |||||||||||||||||||||
Total equity securities | 61.2 | (1.0 | ) | (23.1 | ) | 3.2 | — | — | 40.3 | (23.1 | ) | ||||||||||||||||||||
Trading securities: | |||||||||||||||||||||||||||||||
Corporate securities | — | — | — | — | .6 | — | .6 | — | |||||||||||||||||||||||
States and political subdivisions | .5 | — | — | — | — | (.5 | ) | — | — | ||||||||||||||||||||||
Collateralized debt obligations | 3.4 | 2.8 | — | .8 | — | — | 7.0 | .8 | |||||||||||||||||||||||
Total trading securities | 3.9 | 2.8 | — | .8 | .6 | (.5 | ) | 7.6 | .8 | ||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||||||||||||||
Interest-sensitive products | (705.9 | ) | (22.7 | ) | (15.3 | ) | — | — | — | (743.9 | ) | (15.3 | ) |
(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 September 30, 2012 (dollars in millions): |
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | 27.0 | $ | (13.0 | ) | $ | — | $ | — | $ | 14.0 | ||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | (1.5 | ) | — | — | (1.5 | ) | ||||||||||||
Asset-backed securities | 15.0 | — | — | — | 15.0 | ||||||||||||||
Collateralized debt obligations | — | (6.3 | ) | — | — | (6.3 | ) | ||||||||||||
Mortgage pass-through securities | — | (.1 | ) | — | — | (.1 | ) | ||||||||||||
Collateralized mortgage obligations | 11.0 | (13.8 | ) | — | — | (2.8 | ) | ||||||||||||
Total fixed maturities, available for sale | 53.0 | (34.7 | ) | — | — | 18.3 | |||||||||||||
Equity securities - corporate securities | — | (1.0 | ) | — | — | (1.0 | ) | ||||||||||||
Trading securities - collateralized debt obligations | 2.8 | — | — | — | 2.8 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products | (23.5 | ) | .2 | (10.2 | ) | 10.8 | (22.7 | ) |
September 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 September 30, 2012 | Amount of total gains (losses) for the nine months ended September 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 | $ | 54.9 | $ | — | $ | 9.4 | $ | 67.5 | $ | (92.6 | ) | $ | 317.3 | $ | — | ||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 1.6 | (1.6 | ) | — | — | — | — | — | — | ||||||||||||||||||||||
States and political subdivisions | 2.1 | — | — | — | — | (2.1 | ) | — | — | ||||||||||||||||||||||
Asset-backed securities | 79.7 | 11.4 | (.2 | ) | 5.8 | .5 | (54.4 | ) | 42.8 | — | |||||||||||||||||||||
Collateralized debt obligations | 327.3 | (11.6 | ) | — | 16.3 | — | — | 332.0 | — | ||||||||||||||||||||||
Commercial mortgage-backed securities | 17.3 | — | — | .1 | — | (15.1 | ) | 2.3 | — | ||||||||||||||||||||||
Mortgage pass-through securities | 2.2 | (.2 | ) | — | — | — | — | 2.0 | — | ||||||||||||||||||||||
Collateralized mortgage obligations | 124.8 | 30.0 | (.1 | ) | 1.4 | — | (113.0 | ) | 43.1 | — | |||||||||||||||||||||
Total fixed maturities, available for sale | 833.1 | 82.9 | (.3 | ) | 33.0 | 68.0 | (277.2 | ) | 739.5 | — | |||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||||
Corporate securities | 6.4 | (1.0 | ) | (3.8 | ) | .6 | — | — | 2.2 | (3.8 | ) | ||||||||||||||||||||
Venture capital investments | 63.5 | — | (26.0 | ) | .6 | — | — | 38.1 | (26.0 | ) | |||||||||||||||||||||
Total equity securities | 69.9 | (1.0 | ) | (29.8 | ) | 1.2 | — | — | 40.3 | (29.8 | ) | ||||||||||||||||||||
Trading securities: | |||||||||||||||||||||||||||||||
Corporate securities | — | — | — | .1 | .5 | — | .6 | .1 | |||||||||||||||||||||||
States and political subdivisions | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Collateralized debt obligations | — | 7.0 | — | — | — | — | 7.0 | — | |||||||||||||||||||||||
Commercial mortgage-backed securities | .4 | — | — | — | — | (.4 | ) | — | — | ||||||||||||||||||||||
Total trading securities | .4 | 7.0 | — | .1 | .5 | (.4 | ) | 7.6 | .1 | ||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||||||||||||||
Interest-sensitive products | (669.8 | ) | (52.1 | ) | (22.0 | ) | — | — | — | (743.9 | ) | (22.0 | ) |
(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 nine months ended September 30, 2012 (dollars in millions): |
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | 70.3 | $ | (15.4 | ) | $ | — | $ | — | $ | 54.9 | ||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | (1.6 | ) | — | — | (1.6 | ) | ||||||||||||
Asset-backed securities | 15.0 | (3.6 | ) | — | — | 11.4 | |||||||||||||
Collateralized debt obligations | 30.1 | (41.7 | ) | — | — | (11.6 | ) | ||||||||||||
Mortgage pass-through securities | — | (.2 | ) | — | — | (.2 | ) | ||||||||||||
Collateralized mortgage obligations | 45.3 | (15.3 | ) | — | — | 30.0 | |||||||||||||
Total fixed maturities, available for sale | 160.7 | (77.8 | ) | — | — | 82.9 | |||||||||||||
Equity securities - corporate securities | — | (1.0 | ) | — | — | (1.0 | ) | ||||||||||||
Trading securities - collateralized debt obligations | 7.0 | — | — | — | 7.0 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products | (75.3 | ) | 41.9 | (50.6 | ) | 31.9 | (52.1 | ) |
September 30, 2011 | ||||||||||||||||||||||||||||||||
Beginning balance as of June 30, 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 September 30, 2011 | Amount of total gains (losses) for the three months ended September 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 | $ | 361.8 | $ | (111.2 | ) | $ | 4.9 | $ | 5.4 | $ | .5 | $ | (17.6 | ) | $ | 243.8 | $ | — | ||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 1.7 | — | — | — | — | — | 1.7 | — | ||||||||||||||||||||||||
States and political subdivisions | — | — | — | .1 | 2.0 | — | 2.1 | — | ||||||||||||||||||||||||
Asset-backed securities | 170.7 | 1.2 | — | — | 4.1 | (113.4 | ) | 62.6 | — | |||||||||||||||||||||||
Collateralized debt obligations | 193.5 | 72.7 | — | (6.1 | ) | — | — | 260.1 | — | |||||||||||||||||||||||
Mortgage pass-through securities | 3.2 | (.2 | ) | — | — | — | — | 3.0 | — | |||||||||||||||||||||||
Collateralized mortgage obligations | 204.1 | 3.6 | — | .7 | — | (30.2 | ) | 178.2 | — | |||||||||||||||||||||||
Total fixed maturities, available for sale | 935.0 | (33.9 | ) | 4.9 | 0.1 | 6.6 | (161.2 | ) | 751.5 | — | ||||||||||||||||||||||
Equity securities | 44.6 | 27.3 | — | (.3 | ) | — | — | 71.6 | — | |||||||||||||||||||||||
Trading securities: | ||||||||||||||||||||||||||||||||
Collateralized mortgage obligations | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Total trading securities | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Investments held by variable interest entities: | ||||||||||||||||||||||||||||||||
Corporate securities | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Liabilities for insurance products: | ||||||||||||||||||||||||||||||||
Interest-sensitive products | (613.4 | ) | 16.3 | (44.8 | ) | — | — | — | (641.9 | ) | (44.8 | ) |
(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 September 30, 2011 (dollars in millions): |
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | 1.8 | $ | (113.0 | ) | $ | — | $ | — | $ | (111.2 | ) | |||||||
Asset-backed securities | 4.2 | (3.0 | ) | — | — | 1.2 | |||||||||||||
Collateralized debt obligations | 84.2 | (11.5 | ) | — | — | 72.7 | |||||||||||||
Mortgage pass-through securities | — | (.2 | ) | — | — | (.2 | ) | ||||||||||||
Collateralized mortgage obligations | 20.5 | (16.9 | ) | — | — | 3.6 | |||||||||||||
Total fixed maturities, available for sale | 110.7 | (144.6 | ) | — | — | (33.9 | ) | ||||||||||||
Equity securities | 27.3 | — | — | — | 27.3 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products | (33.1 | ) | 41.7 | (2.6 | ) | 10.3 | 16.3 |
September 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 September 30, 2011 | Amount of total gains (losses) for the nine months ended September 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 | $ | (289.0 | ) | $ | (16.1 | ) | $ | 12.7 | $ | 39.0 | $ | (1,410.6 | ) | $ | 243.8 | $ | (11.5 | ) | ||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 2.0 | — | — | (.3 | ) | — | — | 1.7 | — | |||||||||||||||||||||||
States and political subdivisions | 2.5 | (2.8 | ) | (.1 | ) | .5 | 2.0 | — | 2.1 | — | ||||||||||||||||||||||
Asset-backed securities | 182.3 | (.6 | ) | — | 2.5 | 15.1 | (136.7 | ) | 62.6 | — | ||||||||||||||||||||||
Collateralized debt obligations | 256.5 | 3.5 | 1.8 | (1.7 | ) | — | — | 260.1 | — | |||||||||||||||||||||||
Mortgage pass-through securities | 3.5 | (.5 | ) | — | — | — | — | 3.0 | — | |||||||||||||||||||||||
Collateralized mortgage obligations | 197.1 | 48.5 | (2.1 | ) | 3.2 | 5.9 | (74.4 | ) | 178.2 | — | ||||||||||||||||||||||
Total fixed maturities, available for sale | 2,551.7 | (240.9 | ) | (16.5 | ) | 16.9 | 62.0 | (1,621.7 | ) | 751.5 | (11.5 | ) | ||||||||||||||||||||
Equity securities | 6.9 | 64.0 | — | .7 | — | — | 71.6 | — | ||||||||||||||||||||||||
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 | ) | (35.0 | ) | (53.7 | ) | — | — | — | (641.9 | ) | (53.7 | ) |
(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 nine months ended September 30, 2011 (dollars in millions): |
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | 1.8 | $ | (290.8 | ) | $ | — | $ | — | $ | (289.0 | ) | |||||||
States and political subdivisions | — | (2.8 | ) | — | — | (2.8 | ) | ||||||||||||
Asset-backed securities | 4.1 | (4.7 | ) | — | — | (.6 | ) | ||||||||||||
Collateralized debt obligations | 106.6 | (103.1 | ) | — | — | 3.5 | |||||||||||||
Mortgage pass-through securities | — | (.5 | ) | — | — | (.5 | ) | ||||||||||||
Collateralized mortgage obligations | 94.5 | (46.0 | ) | — | — | 48.5 | |||||||||||||
Total fixed maturities, available for sale | 207.0 | (447.9 | ) | — | — | (240.9 | ) | ||||||||||||
Equity securities | 64.0 | — | — | — | 64.0 | ||||||||||||||
Trading securities: | |||||||||||||||||||
Collateralized mortgage obligations | — | (.4 | ) | — | — | (.4 | ) | ||||||||||||
Investments held by variable interest entities: | |||||||||||||||||||
Corporate securities | — | (7.9 | ) | — | — | (7.9 | ) | ||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products | (85.5 | ) | 51.8 | (28.4 | ) | 27.1 | (35.0 | ) |
Fair value at September 30, 2012 | Valuation technique(s) | Unobservable inputs | Range (weighted average) | ||||||
Assets: | |||||||||
Corporate securities (a) | $ | 212.4 | Discounted cash flow analysis | Discount margins | 1.95% - 3.27% (2.78%) | ||||
Asset-backed securities (b) | 33.0 | Discounted cash flow analysis | Discount margins | 2.96% - 3.28% (3.15%) | |||||
Collateralized debt obligations (c) | 339.0 | Discounted cash flow analysis | Recoveries | 61% - 66% (ramp over 24 months) | |||||
Constant prepayment rate | 20% | ||||||||
Discount margins | 1.30% - 10.00% (2.39%) | ||||||||
Annual default rate | 1.32% - 5.81% (3.27%) | ||||||||
Portfolio CCC % | 1.90% - 22.17% (12.78%) | ||||||||
Equity securities (d) | 2.2 | Discounted cash flow analysis | Recoveries | 21% | |||||
Venture capital investments (e) | 38.1 | Market multiples | EBITDA multiple | 4.8 - 29.0 (11.46) | |||||
Revenue multiple | 0.9 - 7.0 (4.2) | ||||||||
Book equity multiple | 0.8 - 3.8 (2.3) | ||||||||
Other assets categorized as Level 3 (f) | 162.7 | Unadjusted third-party price source | Not applicable | Not applicable | |||||
Total | 787.4 | ||||||||
Liabilities: | |||||||||
Interest sensitive products (g) | 743.9 | Discounted projected embedded derivatives | Projected portfolio yields | 5.35% - 5.61% (5.55%) | |||||
Discount rates | 0.0 - 3.5% (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 investments are the EBITDA multiple and revenue multiple. Generally, a significant increase (decrease) in the EBITDA or revenue multiples in isolation would result in a significantly higher (lower) fair value measurement. |
(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 | |||||||||
> 6.0% to 8.0% | $ | .1 | $ | — | $ | .1 | ||||||
> 5.0% to 6.0% | .2 | 36.7 | 36.9 | |||||||||
> 4.0% to 5.0% | 81.3 | 913.2 | 994.5 | |||||||||
> 3.0% to 4.0% | 1,730.4 | 1,200.3 | 2,930.7 | |||||||||
> 2.0% to 3.0% | 3,739.4 | 370.0 | 4,109.4 | |||||||||
> 1.0% to 2.0% | 1,306.4 | 5.0 | 1,311.4 | |||||||||
1.0% and under | 1,047.5 | 38.7 | 1,086.2 | |||||||||
$ | 7,905.3 | $ | 2,563.9 | $ | 10,469.2 | |||||||
Weighted average | 2.49 | % | 3.98 | % | 2.85 | % |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 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 | $ | 80.6 | $ | 79.4 | $ | 227.2 | $ | 213.7 | |||||||
Washington National | 33.9 | 21.2 | 92.5 | 67.3 | |||||||||||
Colonial Penn | (2.6 | ) | (1.3 | ) | (11.8 | ) | (6.5 | ) | |||||||
Other CNO Business | (53.6 | ) | 2.8 | (54.0 | ) | 15.3 | |||||||||
EBIT from business segments | 58.3 | 102.1 | 253.9 | 289.8 | |||||||||||
Corporate Operations, excluding corporate interest expense | (6.7 | ) | (27.5 | ) | (17.6 | ) | (39.3 | ) | |||||||
EBIT | 51.6 | 74.6 | 236.3 | 250.5 | |||||||||||
Corporate interest expense | (16.3 | ) | (18.7 | ) | (50.4 | ) | (58.6 | ) | |||||||
Income before loss on extinguishment of debt, net realized investment gains, fair value changes in embedded derivative liabilities and taxes | 35.3 | 55.9 | 185.9 | 191.9 | |||||||||||
Tax expense on operating income | 9.7 | 23.1 | 65.5 | 71.4 | |||||||||||
Net operating income | 25.6 | 32.8 | 120.4 | 120.5 | |||||||||||
Net realized investment gains (net of related amortization and taxes) | 4.8 | 17.3 | 37.6 | 22.7 | |||||||||||
Fair value changes in embedded derivative liabilities (net of related amortization and taxes) | (2.0 | ) | (12.9 | ) | (4.4 | ) | (12.9 | ) | |||||||
Loss on extinguishment of debt, net of income taxes | (176.4 | ) | (.7 | ) | (176.8 | ) | (2.0 | ) | |||||||
Net income (loss) before valuation allowance for deferred tax assets | (148.0 | ) | 36.5 | (23.2 | ) | 128.3 | |||||||||
Decrease in valuation allowance for deferred tax assets | 143.0 | 143.0 | 143.0 | 143.0 | |||||||||||
Net income (loss) | $ | (5.0 | ) | $ | 179.5 | $ | 119.8 | $ | 271.3 | ||||||
Per diluted share: | |||||||||||||||
Net operating income | $ | .11 | $ | .12 | $ | .45 | $ | .43 | |||||||
Net realized investment gains, net of related amortization and taxes | .02 | .06 | .13 | .07 | |||||||||||
Fair value changes in embedded derivative liabilities, net of related amortization and taxes | (.01 | ) | (.04 | ) | (.02 | ) | (.04 | ) | |||||||
Loss on extinguishment of debt, net of income taxes | (.76 | ) | — | (.60 | ) | (.01 | ) | ||||||||
Decrease in valuation allowance for deferred tax assets | .62 | .47 | .49 | .47 | |||||||||||
Net income (loss) | $ | (.02 | ) | $ | .61 | $ | .45 | $ | .92 |
(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 | Nine months ended | ||||||||||||||
September 30, | September 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 | $ | 80.6 | $ | 79.4 | $ | 227.2 | $ | 213.7 | |||||||
Washington National | 33.9 | 21.2 | 92.5 | 67.3 | |||||||||||
Colonial Penn | (2.6 | ) | (1.3 | ) | (11.8 | ) | (6.5 | ) | |||||||
Other CNO Business | (53.6 | ) | 2.8 | (54.0 | ) | 15.3 | |||||||||
Corporate operations | (23.0 | ) | (46.2 | ) | (68.0 | ) | (97.9 | ) | |||||||
35.3 | 55.9 | 185.9 | 191.9 | ||||||||||||
Net realized investment gains (losses), net of related amortization: | |||||||||||||||
Bankers Life | 12.7 | 23.5 | 38.6 | 27.8 | |||||||||||
Washington National | (3.0 | ) | 1.6 | 3.6 | .6 | ||||||||||
Colonial Penn | 2.6 | 3.5 | 7.1 | 4.8 | |||||||||||
Other CNO Business | (5.7 | ) | 2.1 | 6.9 | 2.9 | ||||||||||
Corporate operations | .8 | (4.0 | ) | 1.8 | (1.2 | ) | |||||||||
7.4 | 26.7 | 58.0 | 34.9 | ||||||||||||
Fair value changes in embedded derivative liabilities, net of related amortization: | |||||||||||||||
Bankers Life | (3.0 | ) | (19.2 | ) | (6.6 | ) | (19.2 | ) | |||||||
Other CNO Business | — | (.6 | ) | (.1 | ) | (.6 | ) | ||||||||
(3.0 | ) | (19.8 | ) | (6.7 | ) | (19.8 | ) | ||||||||
Loss on extinguishment of debt: | |||||||||||||||
Corporate operations | (198.5 | ) | (1.1 | ) | (199.2 | ) | (3.1 | ) | |||||||
Income (loss) before income taxes: | |||||||||||||||
Bankers Life | 90.3 | 83.7 | 259.2 | 222.3 | |||||||||||
Washington National | 30.9 | 22.8 | 96.1 | 67.9 | |||||||||||
Colonial Penn | — | 2.2 | (4.7 | ) | (1.7 | ) | |||||||||
Other CNO Business | (59.3 | ) | 4.3 | (47.2 | ) | 17.6 | |||||||||
Corporate operations | (220.7 | ) | (51.3 | ) | (265.4 | ) | (102.2 | ) | |||||||
Income (loss) before income taxes | $ | (158.8 | ) | $ | 61.7 | $ | 38.0 | $ | 203.9 |
(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 | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Premium collections: | |||||||||||||||
Annuities | $ | 171.7 | $ | 264.1 | $ | 525.9 | $ | 745.4 | |||||||
Medicare supplement and other supplemental health | 327.3 | 328.0 | 988.1 | 994.7 | |||||||||||
Life | 81.3 | 65.5 | 226.8 | 183.9 | |||||||||||
Total collections | $ | 580.3 | $ | 657.6 | $ | 1,740.8 | $ | 1,924.0 | |||||||
Average liabilities for insurance products: | |||||||||||||||
Annuities: | |||||||||||||||
Mortality based | $ | 229.4 | $ | 240.0 | $ | 231.6 | $ | 243.0 | |||||||
Fixed index | 2,872.1 | 2,412.9 | 2,792.6 | 2,276.3 | |||||||||||
Deposit based | 4,515.4 | 4,750.5 | 4,579.4 | 4,792.0 | |||||||||||
Medicare supplement and other supplemental health | 4,710.0 | 4,564.0 | 4,665.9 | 4,527.8 | |||||||||||
Life: | |||||||||||||||
Interest sensitive | 450.8 | 431.8 | 445.6 | 425.8 | |||||||||||
Non-interest sensitive | 532.9 | 437.7 | 507.4 | 417.5 | |||||||||||
Total average liabilities for insurance products, net of reinsurance ceded | $ | 13,310.6 | $ | 12,836.9 | $ | 13,222.5 | $ | 12,682.4 | |||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 416.1 | $ | 404.6 | $ | 1,241.6 | $ | 1,214.2 | |||||||
Net investment income: | |||||||||||||||
General account invested assets | 205.4 | 194.3 | 610.6 | 582.1 | |||||||||||
Fixed index products | 16.2 | (36.3 | ) | 31.5 | (17.6 | ) | |||||||||
Fee revenue and other income | 4.0 | 3.6 | 10.2 | 9.2 | |||||||||||
Total revenues | 641.7 | 566.2 | 1,893.9 | 1,787.9 | |||||||||||
Expenses: | |||||||||||||||
Insurance policy benefits | 362.4 | 333.6 | 1,063.9 | 1,022.5 | |||||||||||
Amounts added to policyholder account balances: | |||||||||||||||
Annuity products and interest-sensitive life products other than fixed index products | 36.9 | 40.0 | 112.0 | 121.3 | |||||||||||
Fixed index products | 35.3 | (13.0 | ) | 76.3 | 30.5 | ||||||||||
Amortization related to operations | 35.6 | 44.1 | 143.0 | 159.5 | |||||||||||
Interest expense on investment borrowings | 1.3 | 1.2 | 4.1 | 3.5 | |||||||||||
Other operating costs and expenses | 89.6 | 80.9 | 267.4 | 236.9 | |||||||||||
Total benefits and expenses | 561.1 | 486.8 | 1,666.7 | 1,574.2 | |||||||||||
Income before net realized investment gains and fair value changes in embedded derivative liabilities, net of related amortization, and income taxes | 80.6 | 79.4 | 227.2 | 213.7 | |||||||||||
Net realized investment gains | 14.1 | 26.5 | 42.6 | 31.3 | |||||||||||
Amortization related to net realized investment gains | (1.4 | ) | (3.0 | ) | (4.0 | ) | (3.5 | ) | |||||||
Net realized investment gains, net of related amortization | 12.7 | 23.5 | 38.6 | 27.8 | |||||||||||
Insurance policy benefits - fair value changes in embedded derivative liabilities | (4.6 | ) | (30.7 | ) | (10.3 | ) | (30.7 | ) | |||||||
Amortization related to fair value changes in embedded derivative liabilities | 1.6 | 11.5 | 3.7 | 11.5 | |||||||||||
Fair value changes in embedded derivative liabilities, net of related amortization | (3.0 | ) | (19.2 | ) | (6.6 | ) | (19.2 | ) | |||||||
Income before income taxes | $ | 90.3 | $ | 83.7 | $ | 259.2 | $ | 222.3 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Health benefit ratios: | |||||||||||||||
All health lines: | |||||||||||||||
Insurance policy benefits | $ | 302.1 | $ | 287.5 | $ | 898.6 | $ | 890.1 | |||||||
Benefit ratio (a) | 90.2 | % | 86.1 | % | 88.9 | % | 87.5 | % | |||||||
Medicare supplement: | |||||||||||||||
Insurance policy benefits | $ | 125.5 | $ | 122.5 | $ | 376.2 | $ | 369.5 | |||||||
Benefit ratio (a) | 67.8 | % | 68.4 | % | 68.2 | % | 68.5 | % | |||||||
PDP: | |||||||||||||||
Insurance policy benefits | $ | 8.5 | $ | 9.8 | $ | 29.1 | $ | 37.5 | |||||||
Benefit ratio (a) | 74.8 | % | 76.1 | % | 73.1 | % | 85.2 | % | |||||||
PFFS: | |||||||||||||||
Insurance policy benefits | $ | (.1 | ) | $ | (.5 | ) | $ | (.3 | ) | $ | (1.3 | ) | |||
Benefit ratio (a) | N/A | N/A | N/A | N/A | |||||||||||
Long-term care: | |||||||||||||||
Insurance policy benefits | $ | 168.2 | $ | 155.7 | $ | 493.6 | $ | 484.4 | |||||||
Benefit ratio (a) | 121.4 | % | 109.7 | % | 117.9 | % | 112.7 | % | |||||||
Interest-adjusted benefit ratio (b) | 74.7 | % | 65.5 | % | 71.9 | % | 69.3 | % |
(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 | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Expenses related to the marketing and quota-share agreements with Coventry | $ | 2.5 | $ | 1.7 | $ | 6.3 | $ | 6.3 | |||||||
Commission expense and agent manager benefits | 15.7 | 11.3 | 44.6 | 39.8 | |||||||||||
Other operating expenses | 71.4 | 67.9 | 216.5 | 190.8 | |||||||||||
Total | $ | 89.6 | $ | 80.9 | $ | 267.4 | $ | 236.9 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Premium collections: | |||||||||||||||
Medicare supplement and other supplemental health | $ | 143.6 | $ | 141.2 | $ | 430.4 | $ | 427.2 | |||||||
Life | 3.0 | 4.1 | 10.8 | 12.3 | |||||||||||
Total collections | $ | 146.6 | $ | 145.3 | $ | 441.2 | $ | 439.5 | |||||||
Average liabilities for insurance products: | |||||||||||||||
Medicare supplement and other supplemental health | $ | 2,414.5 | $ | 2,436.9 | $ | 2,421.0 | $ | 2,436.2 | |||||||
Non-interest sensitive life | 200.3 | 198.7 | 199.9 | 202.0 | |||||||||||
Total average liabilities for insurance products, net of reinsurance ceded | $ | 2,614.8 | $ | 2,635.6 | $ | 2,620.9 | $ | 2,638.2 | |||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 147.8 | $ | 145.9 | $ | 442.8 | $ | 437.9 | |||||||
Net investment income: | |||||||||||||||
General account invested assets | 50.8 | 47.3 | 151.8 | 140.3 | |||||||||||
Trading account income related to reinsurer accounts | (.9 | ) | 2.6 | .6 | 3.6 | ||||||||||
Change in value of embedded derivatives related to modified coinsurance agreements | 1.0 | (2.6 | ) | (.5 | ) | (3.6 | ) | ||||||||
Fee revenue and other income | .3 | .4 | .8 | .9 | |||||||||||
Total revenues | 199.0 | 193.6 | 595.5 | 579.1 | |||||||||||
Expenses: | |||||||||||||||
Insurance policy benefits | 111.1 | 119.0 | 340.5 | 349.5 | |||||||||||
Amortization related to operations | 11.2 | 10.8 | 34.7 | 35.6 | |||||||||||
Interest expense on investment borrowings | .7 | .2 | 2.2 | .2 | |||||||||||
Other operating costs and expenses | 42.1 | 42.4 | 125.6 | 126.5 | |||||||||||
Total benefits and expenses | 165.1 | 172.4 | 503.0 | 511.8 | |||||||||||
Income before net realized investment gains (losses) and income taxes | 33.9 | 21.2 | 92.5 | 67.3 | |||||||||||
Net realized investment gains (losses) | (3.0 | ) | 1.6 | 3.6 | .6 | ||||||||||
Income before income taxes | $ | 30.9 | $ | 22.8 | $ | 96.1 | $ | 67.9 | |||||||
Health benefit ratios: | |||||||||||||||
Medicare supplement: | |||||||||||||||
Insurance policy benefits | $ | 18.6 | $ | 23.4 | $ | 59.2 | $ | 71.7 | |||||||
Benefit ratio (a) | 63.8 | % | 69.9 | % | 65.6 | % | 69.1 | % | |||||||
Supplemental health: | |||||||||||||||
Insurance policy benefits | $ | 84.5 | $ | 88.7 | $ | 263.6 | $ | 259.5 | |||||||
Benefit ratio (a) | 74.2 | % | 82.4 | % | 77.8 | % | 81.3 | % | |||||||
Interest-adjusted benefit ratio (b) | 47.5 | % | 53.9 | % | 50.9 | % | 52.4 | % |
(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 | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Premium collections: | |||||||||||||||
Life | $ | 53.0 | $ | 49.2 | $ | 158.1 | $ | 147.1 | |||||||
Supplemental health | 1.2 | 1.4 | 3.7 | 4.4 | |||||||||||
Total collections | $ | 54.2 | $ | 50.6 | $ | 161.8 | $ | 151.5 | |||||||
Average liabilities for insurance products: | |||||||||||||||
Annuities-mortality based | $ | 76.4 | $ | 77.3 | $ | 76.7 | $ | 77.9 | |||||||
Supplemental health | 15.0 | 16.1 | 15.2 | 16.3 | |||||||||||
Life: | |||||||||||||||
Interest sensitive | 18.1 | 20.2 | 19.0 | 20.4 | |||||||||||
Non-interest sensitive | 605.8 | 590.2 | 602.0 | 588.6 | |||||||||||
Total average liabilities for insurance products, net of reinsurance ceded | $ | 715.3 | $ | 703.8 | $ | 712.9 | $ | 703.2 | |||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 54.5 | $ | 50.8 | $ | 162.5 | $ | 152.0 | |||||||
Net investment income: | |||||||||||||||
General account invested assets | 9.9 | 10.1 | 30.1 | 30.9 | |||||||||||
Fee revenue and other income | .2 | .2 | .6 | .6 | |||||||||||
Total revenues | 64.6 | 61.1 | 193.2 | 183.5 | |||||||||||
Expenses: | |||||||||||||||
Insurance policy benefits | 38.2 | 35.7 | 119.4 | 112.0 | |||||||||||
Amounts added to annuity and interest-sensitive life product account balances | .1 | .3 | .6 | .7 | |||||||||||
Amortization related to operations | 3.5 | 3.5 | 11.1 | 11.0 | |||||||||||
Other operating costs and expenses | 25.4 | 22.9 | 73.9 | 66.3 | |||||||||||
Total benefits and expenses | 67.2 | 62.4 | 205.0 | 190.0 | |||||||||||
Loss before net realized investment gains and income taxes | (2.6 | ) | (1.3 | ) | (11.8 | ) | (6.5 | ) | |||||||
Net realized investment gains | 2.6 | 3.5 | 7.1 | 4.8 | |||||||||||
Income (loss) before income taxes | $ | — | $ | 2.2 | $ | (4.7 | ) | $ | (1.7 | ) |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Premium collections: | |||||||||||||||
Annuities | $ | .9 | $ | 3.3 | $ | 3.0 | $ | 13.4 | |||||||
Other health | 6.1 | 6.7 | 19.5 | 21.5 | |||||||||||
Life | 40.3 | 44.0 | 126.5 | 139.3 | |||||||||||
Total collections | $ | 47.3 | $ | 54.0 | $ | 149.0 | $ | 174.2 | |||||||
Average liabilities for insurance products: | |||||||||||||||
Annuities: | |||||||||||||||
Mortality based | $ | 221.5 | $ | 234.3 | $ | 225.4 | $ | 237.3 | |||||||
Fixed index | 510.5 | 607.6 | 532.3 | 630.6 | |||||||||||
Deposit based | 635.6 | 651.1 | 635.7 | 655.6 | |||||||||||
Separate accounts | 15.6 | 16.4 | 15.6 | 17.3 | |||||||||||
Other health | 479.6 | 481.3 | 480.1 | 481.7 | |||||||||||
Life: | |||||||||||||||
Interest sensitive | 2,329.1 | 2,484.6 | 2,370.6 | 2,506.0 | |||||||||||
Non-interest sensitive | 782.1 | 780.6 | 770.6 | 792.3 | |||||||||||
Total average liabilities for insurance products, net of reinsurance ceded | $ | 4,974.0 | $ | 5,255.9 | $ | 5,030.3 | $ | 5,320.8 | |||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 71.8 | $ | 72.2 | $ | 224.4 | $ | 216.2 | |||||||
Net investment income: | |||||||||||||||
General account invested assets | 82.3 | 85.4 | 250.3 | 261.2 | |||||||||||
Fixed index products | 3.3 | (8.4 | ) | 6.0 | (4.3 | ) | |||||||||
Trading account income related to policyholder accounts | 1.1 | (2.4 | ) | 2.9 | (.9 | ) | |||||||||
Total revenues | 158.5 | 146.8 | 483.6 | 472.2 | |||||||||||
Expenses: | |||||||||||||||
Insurance policy benefits | 122.7 | 86.7 | 299.5 | 261.4 | |||||||||||
Amounts added to policyholder account balances: | |||||||||||||||
Annuity products and interest-sensitive life products other than fixed index products | 29.4 | 28.9 | 86.6 | 90.8 | |||||||||||
Fixed index products | 5.0 | (4.1 | ) | 14.9 | 6.0 | ||||||||||
Amortization related to operations | 10.5 | 10.4 | 25.1 | 28.4 | |||||||||||
Interest expense on investment borrowings | 5.0 | 5.3 | 15.1 | 15.2 | |||||||||||
Other operating costs and expenses | 39.5 | 16.8 | 96.4 | 55.1 | |||||||||||
Total benefits and expenses | 212.1 | 144.0 | 537.6 | 456.9 | |||||||||||
Income (loss) before net realized investment losses and fair value changes in embedded derivative liabilities, net of related amortization, and income taxes | (53.6 | ) | 2.8 | (54.0 | ) | 15.3 | |||||||||
Net realized investment gains (losses) | (5.4 | ) | 3.0 | 8.8 | 3.1 | ||||||||||
Amortization related to net realized investment gains (losses) | (.3 | ) | (.9 | ) | (1.9 | ) | (.2 | ) | |||||||
Net realized investment gains (losses), net of related amortization | (5.7 | ) | 2.1 | 6.9 | 2.9 | ||||||||||
Insurance policy benefits - fair value changes in embedded derivative liabilities | — | (3.2 | ) | (.4 | ) | (3.2 | ) | ||||||||
Amortization related to fair value changes in embedded derivative liabilities | — | 2.6 | .3 | 2.6 | |||||||||||
Fair value changes in embedded derivative liabilities, net of related amortization | — | (.6 | ) | (.1 | ) | (.6 | ) | ||||||||
Income (loss) before income taxes | $ | (59.3 | ) | $ | 4.3 | $ | (47.2 | ) | $ | 17.6 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Health benefit ratios: | |||||||||||||||
Long-term care: | |||||||||||||||
Insurance policy benefits | $ | 17.5 | $ | 15.7 | $ | 47.5 | $ | 47.4 | |||||||
Benefit ratio (a) | 282.4 | % | 227.5 | % | 246.1 | % | 223.1 | % | |||||||
Interest-adjusted benefit ratio (b) | 169.9 | % | 126.1 | % | 137.3 | % | 127.1 | % |
(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 | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Corporate operations: | |||||||||||||||
Interest expense on corporate debt | $ | (16.3 | ) | $ | (18.7 | ) | $ | (50.4 | ) | $ | (58.6 | ) | |||
Net investment income (loss): | |||||||||||||||
General account invested assets | 1.0 | 1.1 | 2.9 | 2.0 | |||||||||||
Other special-purpose portfolios: | |||||||||||||||
COLI | 3.1 | (11.5 | ) | 5.4 | (10.6 | ) | |||||||||
Investments held in a rabbi trust | — | (.2 | ) | 4.1 | 1.8 | ||||||||||
Investments in certain hedge funds | (.1 | ) | (3.1 | ) | (1.9 | ) | (3.1 | ) | |||||||
Other trading account activities | 5.2 | 1.1 | 15.7 | 6.3 | |||||||||||
Fee revenue and other income | .3 | .3 | .9 | .9 | |||||||||||
Net operating results of variable interest entities | 4.7 | 3.8 | 9.8 | 6.0 | |||||||||||
Interest expense on investment borrowings | (.1 | ) | (.1 | ) | (.4 | ) | (.1 | ) | |||||||
Other operating costs and expenses | (20.8 | ) | (18.9 | ) | (54.1 | ) | (42.5 | ) | |||||||
Loss before net realized investment gains, loss on extinguishment of debt and income taxes | (23.0 | ) | (46.2 | ) | (68.0 | ) | (97.9 | ) | |||||||
Net realized investment gains (losses) | .8 | (4.0 | ) | 1.8 | (1.2 | ) | |||||||||
Loss on extinguishment of debt | (198.5 | ) | (1.1 | ) | (199.2 | ) | (3.1 | ) | |||||||
Loss before income taxes | $ | (220.7 | ) | $ | (51.3 | ) | $ | (265.4 | ) | $ | (102.2 | ) |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
EBIT from In-Force Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 594.4 | $ | 585.3 | $ | 1,793.1 | $ | 1,763.6 | |||||||
Net investment income and other | 360.7 | 286.5 | 1,063.2 | 972.3 | |||||||||||
Total revenues | 955.1 | 871.8 | 2,856.3 | 2,735.9 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 671.3 | 569.4 | 1,918.3 | 1,820.5 | |||||||||||
Amortization | 54.1 | 55.5 | 191.8 | 202.7 | |||||||||||
Other expenses | 125.3 | 98.5 | 363.0 | 296.3 | |||||||||||
Total benefits and expenses | 850.7 | 723.4 | 2,473.1 | 2,319.5 | |||||||||||
EBIT from In-Force Business | $ | 104.4 | $ | 148.4 | $ | 383.2 | $ | 416.4 | |||||||
EBIT from New Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 95.8 | $ | 88.2 | $ | 278.2 | $ | 256.7 | |||||||
Net investment income and other | 12.9 | 7.7 | 31.7 | 30.1 | |||||||||||
Total revenues | 108.7 | 95.9 | 309.9 | 286.8 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 69.8 | 57.7 | 195.4 | 174.2 | |||||||||||
Amortization | 6.7 | 13.3 | 22.1 | 31.8 | |||||||||||
Other expenses | 78.3 | 71.2 | 221.7 | 207.4 | |||||||||||
Total benefits and expenses | 154.8 | 142.2 | 439.2 | 413.4 | |||||||||||
EBIT from New Business | $ | (46.1 | ) | $ | (46.3 | ) | $ | (129.3 | ) | $ | (126.6 | ) | |||
EBIT from In-Force and New Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 690.2 | $ | 673.5 | $ | 2,071.3 | $ | 2,020.3 | |||||||
Net investment income and other | 373.6 | 294.2 | 1,094.9 | 1,002.4 | |||||||||||
Total revenues | 1,063.8 | 967.7 | 3,166.2 | 3,022.7 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 741.1 | 627.1 | 2,113.7 | 1,994.7 | |||||||||||
Amortization | 60.8 | 68.8 | 213.9 | 234.5 | |||||||||||
Other expenses | 203.6 | 169.7 | 584.7 | 503.7 | |||||||||||
Total benefits and expenses | 1,005.5 | 865.6 | 2,912.3 | 2,732.9 | |||||||||||
EBIT from In-Force and New Business | $ | 58.3 | $ | 102.1 | $ | 253.9 | $ | 289.8 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
EBIT from In-Force Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 345.7 | $ | 339.0 | $ | 1,039.1 | $ | 1,024.1 | |||||||
Net investment income and other | 212.7 | 153.9 | 620.6 | 543.6 | |||||||||||
Total revenues | 558.4 | 492.9 | 1,659.7 | 1,567.7 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 377.0 | 313.7 | 1,093.1 | 1,031.9 | |||||||||||
Amortization | 29.9 | 31.6 | 123.6 | 130.2 | |||||||||||
Other expenses | 41.4 | 36.0 | 133.2 | 108.7 | |||||||||||
Total benefits and expenses | 448.3 | 381.3 | 1,349.9 | 1,270.8 | |||||||||||
EBIT from In-Force Business | $ | 110.1 | $ | 111.6 | $ | 309.8 | $ | 296.9 | |||||||
EBIT from New Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 70.4 | $ | 65.6 | $ | 202.5 | $ | 190.1 | |||||||
Net investment income and other | 12.9 | 7.7 | 31.7 | 30.1 | |||||||||||
Total revenues | 83.3 | 73.3 | 234.2 | 220.2 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 57.6 | 46.9 | 159.1 | 142.4 | |||||||||||
Amortization | 5.7 | 12.5 | 19.4 | 29.3 | |||||||||||
Other expenses | 49.5 | 46.1 | 138.3 | 131.7 | |||||||||||
Total benefits and expenses | 112.8 | 105.5 | 316.8 | 303.4 | |||||||||||
EBIT from New Business | $ | (29.5 | ) | $ | (32.2 | ) | $ | (82.6 | ) | $ | (83.2 | ) | |||
EBIT from In-Force and New Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 416.1 | $ | 404.6 | $ | 1,241.6 | $ | 1,214.2 | |||||||
Net investment income and other | 225.6 | 161.6 | 652.3 | 573.7 | |||||||||||
Total revenues | 641.7 | 566.2 | 1,893.9 | 1,787.9 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 434.6 | 360.6 | 1,252.2 | 1,174.3 | |||||||||||
Amortization | 35.6 | 44.1 | 143.0 | 159.5 | |||||||||||
Other expenses | 90.9 | 82.1 | 271.5 | 240.4 | |||||||||||
Total benefits and expenses | 561.1 | 486.8 | 1,666.7 | 1,574.2 | |||||||||||
EBIT from In-Force and New Business | $ | 80.6 | $ | 79.4 | $ | 227.2 | $ | 213.7 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
EBIT from In-Force Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 133.4 | $ | 132.1 | $ | 399.2 | $ | 397.5 | |||||||
Net investment income and other | 51.2 | 47.7 | 152.7 | 141.2 | |||||||||||
Total revenues | 184.6 | 179.8 | 551.9 | 538.7 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 105.2 | 113.3 | 322.6 | 332.8 | |||||||||||
Amortization | 10.5 | 10.2 | 32.5 | 33.5 | |||||||||||
Other expenses | 32.6 | 33.9 | 98.9 | 97.9 | |||||||||||
Total benefits and expenses | 148.3 | 157.4 | 454.0 | 464.2 | |||||||||||
EBIT from In-Force Business | $ | 36.3 | $ | 22.4 | $ | 97.9 | $ | 74.5 | |||||||
EBIT from New Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 14.4 | $ | 13.8 | $ | 43.6 | $ | 40.4 | |||||||
Net investment income and other | — | — | — | — | |||||||||||
Total revenues | 14.4 | 13.8 | 43.6 | 40.4 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 5.9 | 5.7 | 17.9 | 16.7 | |||||||||||
Amortization | .7 | .6 | 2.2 | 2.1 | |||||||||||
Other expenses | 10.2 | 8.7 | 28.9 | 28.8 | |||||||||||
Total benefits and expenses | 16.8 | 15.0 | 49.0 | 47.6 | |||||||||||
EBIT from New Business | $ | (2.4 | ) | $ | (1.2 | ) | $ | (5.4 | ) | $ | (7.2 | ) | |||
EBIT from In-Force and New Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 147.8 | $ | 145.9 | $ | 442.8 | $ | 437.9 | |||||||
Net investment income and other | 51.2 | 47.7 | 152.7 | 141.2 | |||||||||||
Total revenues | 199.0 | 193.6 | 595.5 | 579.1 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 111.1 | 119.0 | 340.5 | 349.5 | |||||||||||
Amortization | 11.2 | 10.8 | 34.7 | 35.6 | |||||||||||
Other expenses | 42.8 | 42.6 | 127.8 | 126.7 | |||||||||||
Total benefits and expenses | 165.1 | 172.4 | 503.0 | 511.8 | |||||||||||
EBIT from In-Force and New Business | $ | 33.9 | $ | 21.2 | $ | 92.5 | $ | 67.3 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
EBIT from In-Force Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 43.5 | $ | 42.0 | $ | 130.4 | $ | 125.8 | |||||||
Net investment income and other | 10.1 | 10.3 | 30.7 | 31.5 | |||||||||||
Total revenues | 53.6 | 52.3 | 161.1 | 157.3 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 32.0 | 30.9 | 101.6 | 97.6 | |||||||||||
Amortization | 3.2 | 3.3 | 10.6 | 10.6 | |||||||||||
Other expenses | 6.8 | 6.5 | 19.4 | 19.4 | |||||||||||
Total benefits and expenses | 42.0 | 40.7 | 131.6 | 127.6 | |||||||||||
EBIT from In-Force Business | $ | 11.6 | $ | 11.6 | $ | 29.5 | $ | 29.7 | |||||||
EBIT from New Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 11.0 | $ | 8.8 | $ | 32.1 | $ | 26.2 | |||||||
Net investment income and other | — | — | — | — | |||||||||||
Total revenues | 11.0 | 8.8 | 32.1 | 26.2 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 6.3 | 5.1 | 18.4 | 15.1 | |||||||||||
Amortization | .3 | .2 | .5 | .4 | |||||||||||
Other expenses | 18.6 | 16.4 | 54.5 | 46.9 | |||||||||||
Total benefits and expenses | 25.2 | 21.7 | 73.4 | 62.4 | |||||||||||
EBIT from New Business | $ | (14.2 | ) | $ | (12.9 | ) | $ | (41.3 | ) | $ | (36.2 | ) | |||
EBIT from In-Force and New Business | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 54.5 | $ | 50.8 | $ | 162.5 | $ | 152.0 | |||||||
Net investment income and other | 10.1 | 10.3 | 30.7 | 31.5 | |||||||||||
Total revenues | 64.6 | 61.1 | 193.2 | 183.5 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 38.3 | 36.0 | 120.0 | 112.7 | |||||||||||
Amortization | 3.5 | 3.5 | 11.1 | 11.0 | |||||||||||
Other expenses | 25.4 | 22.9 | 73.9 | 66.3 | |||||||||||
Total benefits and expenses | 67.2 | 62.4 | 205.0 | 190.0 | |||||||||||
EBIT from In-Force and New Business | $ | (2.6 | ) | $ | (1.3 | ) | $ | (11.8 | ) | $ | (6.5 | ) |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
EBIT from In-Force Business (a) | |||||||||||||||
Revenues: | |||||||||||||||
Insurance policy income | $ | 71.8 | $ | 72.2 | $ | 224.4 | $ | 216.2 | |||||||
Net investment income and other | 86.7 | 74.6 | 259.2 | 256.0 | |||||||||||
Total revenues | 158.5 | 146.8 | 483.6 | 472.2 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits | 157.1 | 111.5 | 401.0 | 358.2 | |||||||||||
Amortization | 10.5 | 10.4 | 25.1 | 28.4 | |||||||||||
Other expenses | 44.5 | 22.1 | 111.5 | 70.3 | |||||||||||
Total benefits and expenses | 212.1 | 144.0 | 537.6 | 456.9 | |||||||||||
EBIT from In-Force Business | $ | (53.6 | ) | $ | 2.8 | $ | (54.0 | ) | $ | 15.3 |
(a) | All activity in the Other CNO Business segment relates to in-force business. |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Premiums collected by product: | |||||||||||||||
Annuities: | |||||||||||||||
Fixed index (first-year) | $ | 114.5 | $ | 208.0 | $ | 369.6 | $ | 520.1 | |||||||
Other fixed rate (first-year) | 56.0 | 55.1 | 151.7 | 222.3 | |||||||||||
Other fixed rate (renewal) | 1.2 | 1.0 | 4.6 | 3.0 | |||||||||||
Subtotal - other fixed rate annuities | 57.2 | 56.1 | 156.3 | 225.3 | |||||||||||
Total annuities | 171.7 | 264.1 | 525.9 | 745.4 | |||||||||||
Health: | |||||||||||||||
Medicare supplement (first-year) | 24.7 | 24.5 | 73.6 | 74.3 | |||||||||||
Medicare supplement (renewal) | 153.0 | 146.8 | 453.9 | 444.8 | |||||||||||
Subtotal - Medicare supplement | 177.7 | 171.3 | 527.5 | 519.1 | |||||||||||
Long-term care (first-year) | 6.0 | 5.9 | 17.4 | 18.0 | |||||||||||
Long-term care (renewal) | 130.1 | 131.9 | 394.2 | 407.6 | |||||||||||
Subtotal - long-term care | 136.1 | 137.8 | 411.6 | 425.6 | |||||||||||
PDP and PFFS (first year) | .1 | .6 | .5 | 1.2 | |||||||||||
PDP and PFFS (renewal) | 10.2 | 15.6 | 39.8 | 40.6 | |||||||||||
Subtotal – PDP and PFFS | 10.3 | 16.2 | 40.3 | 41.8 | |||||||||||
Other health (first-year) | .9 | .4 | 1.9 | 1.1 | |||||||||||
Other health (renewal) | 2.3 | 2.3 | 6.8 | 7.1 | |||||||||||
Subtotal - other health | 3.2 | 2.7 | 8.7 | 8.2 | |||||||||||
Total health | 327.3 | 328.0 | 988.1 | 994.7 | |||||||||||
Life insurance: | |||||||||||||||
First-year | 38.9 | 30.9 | 107.4 | 85.0 | |||||||||||
Renewal | 42.4 | 34.6 | 119.4 | 98.9 | |||||||||||
Total life insurance | 81.3 | 65.5 | 226.8 | 183.9 | |||||||||||
Collections on insurance products: | |||||||||||||||
Total first-year premium collections on insurance products | 241.1 | 325.4 | 722.1 | 922.0 | |||||||||||
Total renewal premium collections on insurance products | 339.2 | 332.2 | 1,018.7 | 1,002.0 | |||||||||||
Total collections on insurance products | $ | 580.3 | $ | 657.6 | $ | 1,740.8 | $ | 1,924.0 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Premiums collected by product: | |||||||||||||||
Health: | |||||||||||||||
Medicare supplement (first-year) | $ | .2 | $ | .4 | $ | .8 | $ | 1.5 | |||||||
Medicare supplement (renewal) | 28.2 | 31.5 | 84.8 | 98.8 | |||||||||||
Subtotal - Medicare supplement | 28.4 | 31.9 | 85.6 | 100.3 | |||||||||||
Supplemental health (first-year) | 14.7 | 13.2 | 43.9 | 40.1 | |||||||||||
Supplemental health (renewal) | 99.8 | 95.2 | 298.9 | 284.1 | |||||||||||
Subtotal – supplemental health | 114.5 | 108.4 | 342.8 | 324.2 | |||||||||||
Other health (all renewal) | .7 | .9 | 2.0 | 2.7 | |||||||||||
Total health | 143.6 | 141.2 | 430.4 | 427.2 | |||||||||||
Life insurance: | |||||||||||||||
First-year | .3 | .4 | .8 | 1.1 | |||||||||||
Renewal | 2.7 | 3.7 | 10.0 | 11.2 | |||||||||||
Total life insurance | 3.0 | 4.1 | 10.8 | 12.3 | |||||||||||
Collections on insurance products: | |||||||||||||||
Total first-year premium collections on insurance products | 15.2 | 14.0 | 45.5 | 42.7 | |||||||||||
Total renewal premium collections on insurance products | 131.4 | 131.3 | 395.7 | 396.8 | |||||||||||
Total collections on insurance products | $ | 146.6 | $ | 145.3 | $ | 441.2 | $ | 439.5 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Premiums collected by product: | |||||||||||||||
Life insurance: | |||||||||||||||
First-year | $ | 10.9 | $ | 8.9 | $ | 32.0 | $ | 26.2 | |||||||
Renewal | 42.1 | 40.3 | 126.1 | 120.9 | |||||||||||
Total life insurance | 53.0 | 49.2 | 158.1 | 147.1 | |||||||||||
Health (all renewal): | |||||||||||||||
Medicare supplement | 1.1 | 1.3 | 3.4 | 4.0 | |||||||||||
Other health | .1 | .1 | .3 | .4 | |||||||||||
Total health | 1.2 | 1.4 | 3.7 | 4.4 | |||||||||||
Collections on insurance products: | |||||||||||||||
Total first-year premium collections on insurance products | 10.9 | 8.9 | 32.0 | 26.2 | |||||||||||
Total renewal premium collections on insurance products | 43.3 | 41.7 | 129.8 | 125.3 | |||||||||||
Total collections on insurance products | $ | 54.2 | $ | 50.6 | $ | 161.8 | $ | 151.5 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Premiums collected by product: | |||||||||||||||
Annuities: | |||||||||||||||
Fixed index (first-year) | $ | .1 | $ | 2.2 | $ | .3 | $ | 7.6 | |||||||
Fixed index (renewal) | .4 | .8 | 1.9 | 3.1 | |||||||||||
Subtotal - fixed index annuities | .5 | 3.0 | 2.2 | 10.7 | |||||||||||
Other fixed rate (first-year) | — | .1 | — | 2.1 | |||||||||||
Other fixed rate (renewal) | .4 | .2 | .8 | .6 | |||||||||||
Subtotal - other fixed rate annuities | .4 | .3 | .8 | 2.7 | |||||||||||
Total annuities | .9 | 3.3 | 3.0 | 13.4 | |||||||||||
Health: | |||||||||||||||
Long-term care (all renewal) | 6.0 | 6.5 | 19.0 | 20.9 | |||||||||||
Other health (all renewal) | .1 | .2 | .5 | .6 | |||||||||||
Total health | 6.1 | 6.7 | 19.5 | 21.5 | |||||||||||
Life insurance: | |||||||||||||||
First-year | .9 | .3 | 2.3 | 1.6 | |||||||||||
Renewal | 39.4 | 43.7 | 124.2 | 137.7 | |||||||||||
Total life insurance | 40.3 | 44.0 | 126.5 | 139.3 | |||||||||||
Collections on insurance products: | |||||||||||||||
Total first-year premium collections on insurance products | 1.0 | 2.6 | 2.6 | 11.3 | |||||||||||
Total renewal premium collections on insurance products | 46.3 | 51.4 | 146.4 | 162.9 | |||||||||||
Total collections on insurance products | $ | 47.3 | $ | 54.0 | $ | 149.0 | $ | 174.2 |
September 30, 2012 | December 31, 2011 | ||||||
(Restated) | |||||||
Total capital: | |||||||
Corporate notes payable | $ | 1,035.1 | $ | 857.9 | |||
Shareholders’ equity: | |||||||
Common stock | 2.3 | 2.4 | |||||
Additional paid-in capital | 4,251.2 | 4,361.9 | |||||
Accumulated other comprehensive income | 1,234.4 | 781.6 | |||||
Accumulated deficit | (421.7 | ) | (532.1 | ) | |||
Total shareholders’ equity | 5,066.2 | 4,613.8 | |||||
Total capital | $ | 6,101.3 | $ | 5,471.7 |
September 30, 2012 | December 31, 2011 | ||||||
Book value per common share (Restated) | $ | 22.07 | $ | 19.12 | |||
Book value per common share, excluding accumulated other comprehensive income (a) | 16.70 | 15.88 | |||||
Ratio of earnings to fixed charges | 1.13X | 1.75X | |||||
Debt to total capital ratios: | |||||||
Corporate debt to total capital (Restated) | 17.0 | % | 15.7 | % | |||
Corporate debt to total capital, excluding accumulated other comprehensive income (a) | 21.3 | % | 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 | September 30, 2012 | ||||
$ | 100.0 | November 2013 | Variable rate – 0.515% | |||
67.0 | February 2014 | Fixed rate – 1.830% | ||||
50.0 | August 2014 | Variable rate – 0.565% | ||||
100.0 | August 2014 | Variable rate – 0.476% | ||||
50.0 | September 2015 | Variable rate – 0.747% | ||||
150.0 | October 2015 | Variable rate – 0.571% | ||||
146.0 | November 2015 | Fixed rate – 5.300% | ||||
100.0 | December 2015 | Fixed rate – 4.710% | ||||
100.0 | June 2016 | Variable rate – 0.657% | ||||
75.0 | June 2016 | Variable rate – 0.621% | ||||
100.0 | October 2016 | Variable rate – 0.641% | ||||
50.0 | November 2016 | Variable rate – 0.684% | ||||
50.0 | November 2016 | Variable rate – 0.687% | ||||
100.0 | June 2017 | Variable rate – 0.751% | ||||
100.0 | July 2017 | Fixed rate – 3.900% | ||||
50.0 | August 2017 | Variable rate – 0.635% | ||||
75.0 | August 2017 | Variable rate – 0.577% | ||||
100.0 | October 2017 | Variable rate – 0.885% | ||||
37.0 | November 2017 | Fixed rate – 3.750% | ||||
50.0 | July 2018 | Variable rate – 0.917% | ||||
$ | 1,650.0 |
Earned surplus | ||||||
Subsidiary of CDOC | (deficit) | Additional information | ||||
Subsidiaries of Conseco Life of Texas: | ||||||
Bankers Life | $ | 280.2 | (a) | |||
Colonial Penn Life Insurance Company | (246.5 | ) | (b) |
(a) | Bankers Life paid ordinary dividends of $65.0 million to Conseco Life of Texas in the first nine 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. |
Sources: | ||||
New Senior Secured Credit Agreement | $ | 669.5 | ||
Issuance of 6.375% Notes | 275.0 | |||
Total sources | $ | 944.5 | ||
Uses: | ||||
Cash on hand for general corporate purposes | $ | 19.9 | ||
Repurchase of $200 million principal amount of 7.0% Debentures pursuant to Debenture Repurchase Agreement | 355.1 | |||
Repayment of Previous Senior Secured Credit Agreement | 223.8 | |||
Repayment of $273.8 million principal amount of 9.0% Notes, including redemption premium, pursuant to tender offer | 322.7 | |||
Debt issuance costs | 16.9 | |||
Accrued interest | 6.1 | |||
Total uses | $ | 944.5 |
Year ending September 30, | Principal | ||
2013 | $ | 55.4 | |
2014 | 54.3 | ||
2015 | 79.3 | ||
2016 | 79.3 | ||
2017 | 97.2 | ||
Thereafter | 678.7 | ||
$ | 1,044.2 |
• | 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 investments; |
• | create liens; |
• | incur restrictions on the Company's ability and the ability of its 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 | $ | 13,446.3 | $ | 2,205.7 | $ | (16.1 | ) | $ | 15,635.9 | ||||||
United States Treasury securities and obligations of United States government corporations and agencies | 164.2 | 6.9 | — | 171.1 | |||||||||||
States and political subdivisions | 1,770.3 | 267.9 | (4.6 | ) | 2,033.6 | ||||||||||
Debt securities issued by foreign governments | .8 | — | — | .8 | |||||||||||
Asset-backed securities | 1,068.0 | 73.9 | (3.6 | ) | 1,138.3 | ||||||||||
Collateralized debt obligations | 322.2 | 5.0 | (.6 | ) | 326.6 | ||||||||||
Commercial mortgage-backed securities | 1,400.7 | 142.7 | (.8 | ) | 1,542.6 | ||||||||||
Mortgage pass-through securities | 18.8 | 1.4 | — | 20.2 | |||||||||||
Collateralized mortgage obligations | 1,223.9 | 109.1 | (.9 | ) | 1,332.1 | ||||||||||
Total investment grade fixed maturities, available for sale | 19,415.2 | 2,812.6 | (26.6 | ) | 22,201.2 | ||||||||||
Below-investment grade (a): | |||||||||||||||
Corporate securities | 1,140.3 | 60.0 | (12.7 | ) | 1,187.6 | ||||||||||
States and political subdivisions | 15.3 | — | (.8 | ) | 14.5 | ||||||||||
Asset-backed securities | 323.3 | 18.1 | (3.0 | ) | 338.4 | ||||||||||
Collateralized debt obligations | 5.4 | .2 | (.2 | ) | 5.4 | ||||||||||
Collateralized mortgage obligations | 926.2 | 69.0 | — | 995.2 | |||||||||||
Total below-investment grade fixed maturities, available for sale | 2,410.5 | 147.3 | (16.7 | ) | 2,541.1 | ||||||||||
Total fixed maturities, available for sale | $ | 21,825.7 | $ | 2,959.9 | $ | (43.3 | ) | $ | 24,742.3 | ||||||
Equity securities | $ | 174.0 | $ | 6.1 | $ | (.1 | ) | $ | 180.0 |
(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 | $ | 10,454.4 | $ | 11,893.9 | 48.1 | % | |||||
2 | 10,140.2 | 11,564.4 | 46.7 | ||||||||
3 | 890.8 | 937.0 | 3.8 | ||||||||
4 | 304.0 | 315.2 | 1.3 | ||||||||
5 | 35.9 | 31.4 | .1 | ||||||||
6 | .4 | .4 | — | ||||||||
$ | 21,825.7 | $ | 24,742.3 | 100.0 | % |
Carrying value | Percent of fixed maturities | Gross unrealized losses | Percent of gross unrealized losses | ||||||||||
Energy/pipelines | $ | 2,538.7 | 10.3 | % | $ | .3 | .8 | % | |||||
Collateralized mortgage obligations | 2,327.3 | 9.4 | .9 | 2.1 | |||||||||
Utilities | 2,100.6 | 8.5 | .7 | 1.6 | |||||||||
States and political subdivisions | 2,048.1 | 8.3 | 5.4 | 12.6 | |||||||||
Commercial mortgage-backed securities | 1,542.6 | 6.2 | .8 | 1.7 | |||||||||
Insurance | 1,538.1 | 6.2 | 2.5 | 5.9 | |||||||||
Asset-backed securities | 1,476.7 | 6.0 | 6.6 | 15.2 | |||||||||
Food/beverage | 1,254.8 | 5.1 | 3.5 | 8.1 | |||||||||
Healthcare/pharmaceuticals | 1,208.3 | 4.9 | .3 | .8 | |||||||||
Cable/media | 987.9 | 4.0 | 3.5 | 8.0 | |||||||||
Real estate/REITs | 912.9 | 3.7 | — | .1 | |||||||||
Banks | 805.6 | 3.2 | 2.4 | 5.6 | |||||||||
Capital goods | 690.1 | 2.8 | .1 | .3 | |||||||||
Transportation | 564.2 | 2.3 | — | — | |||||||||
Telecom | 532.9 | 2.1 | 9.1 | 20.9 | |||||||||
Aerospace/defense | 440.7 | 1.8 | — | — | |||||||||
Chemicals | 424.7 | 1.7 | — | — | |||||||||
Building materials | 382.3 | 1.5 | 4.8 | 11.1 | |||||||||
Metals and mining | 362.3 | 1.5 | 1.2 | 2.7 | |||||||||
Paper | 337.6 | 1.4 | — | — | |||||||||
Consumer products | 337.5 | 1.4 | .1 | .1 | |||||||||
Collateralized debt obligations | 332.0 | 1.3 | .8 | 1.8 | |||||||||
Brokerage | 294.1 | 1.2 | .1 | .2 | |||||||||
Other | 1,302.3 | 5.2 | .2 | .4 | |||||||||
Total fixed maturities, available for sale | $ | 24,742.3 | 100.0 | % | $ | 43.3 | 100.0 | % |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||
Realized gains on sale | $ | 35.1 | $ | 74.3 | $ | 103.4 | $ | 141.2 | |||||||
Realized losses on sale | (7.5 | ) | (18.1 | ) | (15.3 | ) | (57.1 | ) | |||||||
Impairments: | |||||||||||||||
Total other-than-temporary impairment losses | — | — | (.9 | ) | (11.5 | ) | |||||||||
Other-than-temporary impairment losses recognized in accumulated other comprehensive income (loss) | — | — | — | — | |||||||||||
Net impairment losses recognized | — | — | (.9 | ) | (11.5 | ) | |||||||||
Net realized investment gains from fixed maturities | 27.6 | 56.2 | 87.2 | 72.6 | |||||||||||
Equity securities | — | (.4 | ) | .1 | (.2 | ) | |||||||||
Commercial mortgage loans | (1.4 | ) | (21.5 | ) | (1.5 | ) | (22.2 | ) | |||||||
Impairments of mortgage loans and other investments | (23.1 | ) | (2.9 | ) | (33.6 | ) | (14.8 | ) | |||||||
Other | 6.0 | (.8 | ) | 11.7 | 3.2 | ||||||||||
Net realized investment gains | $ | 9.1 | $ | 30.6 | $ | 63.9 | $ | 38.6 |
Amortized cost | Estimated fair value | ||||||
(Dollars in millions) | |||||||
Due in one year or less | $ | 10.0 | $ | 10.0 | |||
Due after one year through five years | 55.0 | 54.1 | |||||
Due after five years through ten years | 177.8 | 172.9 | |||||
Due after ten years | 478.9 | 450.5 | |||||
Subtotal | 721.7 | 687.5 | |||||
Structured securities | 375.7 | 366.6 | |||||
Total | $ | 1,097.4 | $ | 1,054.1 |
Investment grade | Below investment grade | |||||||||||||||||||
AAA/AA/A | BBB | BB | B+ and below | Total gross unrealized losses | ||||||||||||||||
Telecom | $ | — | $ | 8.5 | $ | .1 | $ | .4 | $ | 9.0 | ||||||||||
Asset-backed securities | 1.0 | 2.6 | 2.3 | .7 | 6.6 | |||||||||||||||
States and political subdivisions | 1.5 | 3.1 | .8 | — | 5.4 | |||||||||||||||
Building materials | — | — | 3.6 | 1.2 | 4.8 | |||||||||||||||
Food/beverage | — | 3.5 | — | — | 3.5 | |||||||||||||||
Cable/media | — | — | 1.1 | 2.4 | 3.5 | |||||||||||||||
Insurance | — | 1.9 | .6 | — | 2.5 | |||||||||||||||
Banks | — | .7 | 1.7 | — | 2.4 | |||||||||||||||
Metals and mining | — | .4 | .8 | — | 1.2 | |||||||||||||||
Collateralized mortgage obligations | .8 | .1 | — | — | .9 | |||||||||||||||
Collateralized debt obligations | .6 | — | — | .2 | .8 | |||||||||||||||
Commercial mortgage-backed securities | .6 | .2 | — | — | .8 | |||||||||||||||
Utilities | — | .7 | — | — | .7 | |||||||||||||||
Energy/pipelines | — | — | .2 | .1 | .3 | |||||||||||||||
Healthcare/pharmaceuticals | — | .1 | .2 | — | .3 | |||||||||||||||
Capital goods | — | — | .1 | .1 | .2 | |||||||||||||||
Brokerage | — | .1 | — | — | .1 | |||||||||||||||
Consumer products | — | — | .1 | — | .1 | |||||||||||||||
Real estate/REITs | — | .1 | — | — | .1 | |||||||||||||||
Other | — | .1 | — | — | .1 | |||||||||||||||
Total fixed maturities, available for sale | $ | 4.5 | $ | 22.1 | $ | 11.6 | $ | 5.1 | $ | 43.3 |
Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
Description of securities | Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | ||||||||||||||||||
States and political subdivisions | $ | 40.2 | $ | (2.0 | ) | 68.7 | $ | (3.4 | ) | $ | 108.9 | $ | (5.4 | ) | ||||||||||
Corporate securities | 300.5 | (9.2 | ) | 278.1 | (19.6 | ) | 578.6 | (28.8 | ) | |||||||||||||||
Asset-backed securities | 42.1 | (.3 | ) | 137.8 | (6.3 | ) | 179.9 | (6.6 | ) | |||||||||||||||
Collateralized debt obligations | 12.7 | (.1 | ) | 47.2 | (.7 | ) | 59.9 | (.8 | ) | |||||||||||||||
Commercial mortgage-backed securities | 16.0 | (.1 | ) | 14.3 | (.7 | ) | 30.3 | (.8 | ) | |||||||||||||||
Mortgage pass-through securities | — | — | 2.0 | — | 2.0 | — | ||||||||||||||||||
Collateralized mortgage obligations | 58.5 | (.5 | ) | 36.0 | (.4 | ) | 94.5 | (.9 | ) | |||||||||||||||
Total fixed maturities, available for sale | $ | 470.0 | $ | (12.2 | ) | $ | 584.1 | $ | (31.1 | ) | $ | 1,054.1 | $ | (43.3 | ) | |||||||||
Equity securities | $ | 2.1 | $ | (.1 | ) | $ | — | $ | — | $ | 2.1 | $ | (.1 | ) |
Par value | Amortized cost | Estimated fair value | |||||||||
Below 4 percent | $ | 632.9 | $ | 582.2 | $ | 598.0 | |||||
4 percent – 5 percent | 771.2 | 752.1 | 827.9 | ||||||||
5 percent – 6 percent | 2,880.6 | 2,732.6 | 2,965.7 | ||||||||
6 percent – 7 percent | 977.9 | 915.8 | 987.9 | ||||||||
7 percent – 8 percent | 168.2 | 173.8 | 185.1 | ||||||||
8 percent and above | 131.2 | 132.0 | 134.2 | ||||||||
Total structured securities | $ | 5,562.0 | $ | 5,288.5 | $ | 5,698.8 |
Estimated fair value | ||||||||||
Type | Amortized cost | Amount | Percent of fixed maturities | |||||||
Pass-throughs, sequential and equivalent securities | $ | 1,443.4 | $ | 1,553.9 | 6.3 | % | ||||
Planned amortization classes, target amortization classes and accretion-directed securities | 697.0 | 763.0 | 3.1 | |||||||
Commercial mortgage-backed securities | 1,400.7 | 1,542.6 | 6.2 | |||||||
Asset-backed securities | 1,391.3 | 1,476.7 | 6.0 | |||||||
Collateralized debt obligations | 327.6 | 332.0 | 1.3 | |||||||
Other | 28.5 | 30.6 | .1 | |||||||
Total structured securities | $ | 5,288.5 | $ | 5,698.8 | 23.0 | % |
Estimated fair value | |||||||||||
Loan-to-value ratio (a) | Carrying value | Mortgage loans | Collateral | ||||||||
Less than 60% | $ | 778.1 | $ | 866.5 | $ | 2,214.6 | |||||
60% to 70% | 298.5 | 319.8 | 462.8 | ||||||||
Greater than 70% to 80% | 284.3 | 300.5 | 383.4 | ||||||||
Greater than 80% to 90% | 125.6 | 130.1 | 148.0 | ||||||||
Greater than 90% | 110.7 | 101.4 | 117.3 | ||||||||
Total | $ | 1,597.2 | $ | 1,718.3 | $ | 3,326.1 |
(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 | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues: | |||||||||||||||
Net investment income – policyholder and reinsurer accounts and other special-purpose portfolios | $ | 10.2 | $ | 5.9 | $ | 23.6 | $ | 14.0 | |||||||
Fee revenue and other income | .4 | .4 | 1.1 | .9 | |||||||||||
Total revenues | 10.6 | 6.3 | 24.7 | 14.9 | |||||||||||
Expenses: | |||||||||||||||
Interest expense | 5.8 | 2.4 | 14.5 | 8.4 | |||||||||||
Other operating expenses | .1 | .1 | .4 | .5 | |||||||||||
Total expenses | 5.9 | 2.5 | 14.9 | 8.9 | |||||||||||
Income before net realized investment gains (losses) and income taxes | 4.7 | 3.8 | 9.8 | 6.0 | |||||||||||
Net realized investment gains (losses) | .1 | (.6 | ) | (.1 | ) | (.2 | ) | ||||||||
Income before income taxes | $ | 4.8 | $ | 3.2 | $ | 9.7 | $ | 5.8 |
Carrying value | Percent of fixed maturities | Gross unrealized losses | Percent of gross unrealized losses | ||||||||||
Healthcare/pharmaceuticals | $ | 106.0 | 12.8 | % | $ | .9 | 27.0 | % | |||||
Cable/media | 95.9 | 11.6 | .3 | 9.6 | |||||||||
Technology | 75.4 | 9.1 | .2 | 6.7 | |||||||||
Autos | 65.4 | 7.9 | .1 | 1.5 | |||||||||
Food/beverage | 57.2 | 6.9 | .1 | 2.3 | |||||||||
Brokerage | 49.5 | 5.9 | .6 | 18.7 | |||||||||
Gaming | 40.4 | 4.9 | .1 | 2.0 | |||||||||
Consumer products | 28.5 | 3.4 | .4 | 12.4 | |||||||||
Insurance | 26.4 | 3.2 | — | .2 | |||||||||
Telecom | 26.1 | 3.2 | .1 | 1.7 | |||||||||
Entertainment/hotels | 25.9 | 3.1 | .2 | 6.5 | |||||||||
Aerospace/defense | 21.8 | 2.6 | — | — | |||||||||
Utilities | 20.8 | 2.5 | .1 | 1.6 | |||||||||
Chemicals | 19.3 | 2.3 | — | .8 | |||||||||
Retail | 18.9 | 2.3 | — | .4 | |||||||||
Building materials | 18.7 | 2.3 | — | .3 | |||||||||
Metals and mining | 16.0 | 1.9 | — | — | |||||||||
Energy/pipelines | 15.5 | 1.9 | — | .9 | |||||||||
Real estate/REITs | 12.6 | 1.5 | — | .4 | |||||||||
Transportation | 12.5 | 1.5 | — | 1.4 | |||||||||
Capital goods | 9.5 | 1.1 | — | .3 | |||||||||
Paper | 5.0 | .6 | .1 | 2.0 | |||||||||
Other | 62.1 | 7.5 | .1 | 3.3 | |||||||||
Total | $ | 829.4 | 100.0 | % | $ | 3.3 | 100.0 | % |
Amortized cost | Estimated fair value | ||||||
(Dollars in millions) | |||||||
Due in one year or less | $ | 1.2 | $ | 1.2 | |||
Due after one year through five years | 199.7 | 196.8 | |||||
Due after five years through ten years | 105.9 | 105.5 | |||||
Total | $ | 306.8 | $ | 303.5 |
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) | ||||||||||||||
July 1 through July 31 | 2,515,103 | $ | 7.95 | 2,515,103 | $ | 152.1 | ||||||||
August 1 through August 31 | 852,330 | 8.28 | 852,330 | 145.0 | ||||||||||
September 1 through September 30 | 1,437,726 | 9.98 | 1,437,197 | 130.7 | ||||||||||
Total | 4,805,159 | 8.62 | 4,804,630 | 130.7 |
(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. |
3.2 | Amended and Restated Bylaws of CNO Financial Group, Inc., incorporated by reference to Exhibit 3.2 of our Current Report on Form 8-K filed August 1, 2012. |
4.1 | Indenture, dated as of September 28, 2012, by and among CNO Financial Group, Inc., the subsidiary guarantors party thereto and Wilmington Trust, National Association, as trustee and as collateral agent, incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K filed October 1, 2012. |
4.2 | Form of 6.375% Senior Secured Note due 2020 (included in Exhibit 4.1), incorporated by reference to Exhibit 4.2 of our Current Report on Form 8-K filed October 1, 2012. |
10.1 | Security Agreement, dated as of September 28, 2012, by and among CNO Financial Group, Inc., the subsidiary guarantors party thereto and Wilmington Trust, National Association, as collateral agent, incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed October 1, 2012. |
10.2 | Credit Agreement, dated as of September 28, 2012, by and among CNO Financial Group, Inc., JPMorgan Chase Bank, N.A., as agent, and the lenders from time to time party thereto, incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed October 1, 2012. |
10.3 | Guarantee and Security Agreement, dated as of September 28, 2012, by and among CNO Financial Group, Inc., the subsidiary guarantors party thereto and JPMorgan Chase Bank, N.A., as agent, incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K filed October 1, 2012. |
10.4 | Pari Passu Intercreditor Agreement, dated as of September 28, 2012, among JPMorgan Chase Bank, N.A., as administrative agent for the credit agreement secured parties and Wilmington Trust, National Association, as collateral agent and authorized representative with respect to the 6.375% Senior Secured Notes due 2020, incorporated by reference to Exhibit 10.4 of our Current Report on Form 8-K filed October 1, 2012. |
10.5 | First Supplemental Indenture, dated as of September 28, 2012, among CNO Financial Group, Inc., the subsidiary guarantors party thereto and Wilmington Trust, National Association, as trustee and as collateral agent with respect to the 9.00% Senior Secured Notes due 2018, incorporated by reference to Exhibit 10.5 of our Current Report on Form 8-K filed October 1, 2012. |
10.6 | Employment Agreement dated as of July 23, 2012 between CNO Services, LLC and Bruce Baude. |
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) |
11. | Payments Following Termination. |
Nine months ended September 30, 2012 | Year ended December 31, 2011 | ||||||
Pretax income from operations: | |||||||
Net income | $ | 119.8 | $ | 335.7 | |||
Add income tax benefit | (81.8 | ) | (29.5 | ) | |||
Pretax income from operations | 38.0 | 306.2 | |||||
Add fixed charges: | |||||||
Interest expense on corporate debt | 50.4 | 76.3 | |||||
Interest expense on investment borrowings and borrowings related to variable interest entities | 36.3 | 37.8 | |||||
Interest added to policyholder account balances | 199.2 | 282.5 | |||||
Portion of rental (a) | 10.5 | 13.1 | |||||
Fixed charges | 296.4 | 409.7 | |||||
Adjusted earnings | $ | 334.4 | $ | 715.9 | |||
Ratio of earnings to fixed charges | 1.13X | 1.75X |
(a) | Interest portion of rental is estimated to be 33 percent. |
1. | I have reviewed this quarterly report on Form 10-Q/A 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/A 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. |
SALES INDUCEMENTS (DETAILS) (USD $)
In Millions, unless otherwise specified |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Dec. 31, 2011
|
|
Deferred Sales Inducements [Abstract] | |||
Deferred Sales Inducements, Additions | $ 3.1 | $ 9.7 | |
Deferred Sales Inducements, Amortization Expense | 20.5 | 21.2 | |
Deferred Sales Inducements, Net | 131.8 | 149.2 | |
Persistency Bonus Benefits Included in Insurance Liabilities | $ 36.6 | $ 50.0 |
INCOME TAXES - OPERATING LOSS CARRYFORWARDS (DETAILS) (USD $)
|
1 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2006
|
Sep. 30, 2012
|
Dec. 31, 2008
|
Dec. 31, 2011
|
||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Other Tax Carryforward, Gross Amount | $ 872,500,000 | ||||||||
Total loss carryforwards | 4,776,000,000 | ||||||||
Net operating loss carryforward to be reclassified as non life net operating loss carryforwards | 631,000,000 | ||||||||
Loss on Investment in Senior Health | 742,000,000 | ||||||||
Net state operating loss carryforwards | 16,300,000 | 16,800,000 | |||||||
Cancellation of Debt Income Realized | 2,500,000,000 | ||||||||
Valuation Allowance, Deferred Tax Asset, Change in Amount Due to Classifying Loss as Ordinary | 140,000,000 | ||||||||
Carryforward Expiration 2013 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Other Tax Carryforward, Expiration Dates | 2013 | ||||||||
Other Tax Carryforward, Gross Amount | 836,700,000 | ||||||||
Total loss carryforwards | 836,700,000 | ||||||||
Carryforward Expiration 2014 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Other Tax Carryforward, Expiration Dates | 2014 | ||||||||
Other Tax Carryforward, Gross Amount | 28,600,000 | ||||||||
Total loss carryforwards | 28,600,000 | ||||||||
Carryforward Expiration 2015 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Other Tax Carryforward, Expiration Dates | 2015 | ||||||||
Other Tax Carryforward, Gross Amount | 7,200,000 | ||||||||
Total loss carryforwards | 7,200,000 | ||||||||
Carryforward Expiration 2018 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards, expiration dates | 2018 | ||||||||
Other Tax Carryforward, Gross Amount | 0 | ||||||||
Total loss carryforwards | 550,900,000 | ||||||||
Carryforward Expiration 2021 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards, expiration dates | 2021 | ||||||||
Other Tax Carryforward, Gross Amount | 0 | ||||||||
Total loss carryforwards | 29,500,000 | ||||||||
Carryforward Expiration 2022 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards, expiration dates | 2022 | ||||||||
Other Tax Carryforward, Gross Amount | 0 | ||||||||
Total loss carryforwards | 204,100,000 | ||||||||
Carryforward Expiration 2023 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards, expiration dates | 2023 | ||||||||
Other Tax Carryforward, Gross Amount | 0 | ||||||||
Total loss carryforwards | 2,602,800,000 | ||||||||
Carryforward Expiration 2024 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards, expiration dates | 2024 | ||||||||
Other Tax Carryforward, Gross Amount | 0 | ||||||||
Total loss carryforwards | 3,200,000 | ||||||||
Carryforward Expiration 2025 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards, expiration dates | 2025 | ||||||||
Other Tax Carryforward, Gross Amount | 0 | ||||||||
Total loss carryforwards | 118,800,000 | ||||||||
Carryforward Expiration 2027 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards, expiration dates | 2027 | ||||||||
Other Tax Carryforward, Gross Amount | 0 | ||||||||
Total loss carryforwards | 216,800,000 | ||||||||
Carryforward Expiration 2028 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards, expiration dates | 2028 | ||||||||
Other Tax Carryforward, Gross Amount | 0 | ||||||||
Total loss carryforwards | 500,000 | ||||||||
Carryforward Expiration 2029 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards, expiration dates | 2029 | ||||||||
Other Tax Carryforward, Gross Amount | 0 | ||||||||
Total loss carryforwards | 148,900,000 | ||||||||
Carryforward Expiration 2031 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards, expiration dates | 2031 | ||||||||
Other Tax Carryforward, Gross Amount | 0 | ||||||||
Total loss carryforwards | 28,000,000 | ||||||||
Internal Revenue Service (IRS) [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 3,900,000,000 | ||||||||
Non Life Insurance Companies [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 3,119,000,000 | ||||||||
Valuation Allowance, Deferred Tax Asset, Change in Amount Due to Cancellation of Debt Income Issue | 140,000,000 | ||||||||
Amount of Tax Losses on Investment in Conseco Finance Corp | 3,800,000,000 | ||||||||
Non Life Insurance Companies [Member] | Carryforward Expiration 2013 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 0 | ||||||||
Non Life Insurance Companies [Member] | Carryforward Expiration 2014 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 0 | ||||||||
Non Life Insurance Companies [Member] | Carryforward Expiration 2015 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 0 | ||||||||
Non Life Insurance Companies [Member] | Carryforward Expiration 2018 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 0 | ||||||||
Non Life Insurance Companies [Member] | Carryforward Expiration 2021 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 0 | ||||||||
Non Life Insurance Companies [Member] | Carryforward Expiration 2022 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 0 | ||||||||
Non Life Insurance Companies [Member] | Carryforward Expiration 2023 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 2,602,800,000 | [1] | |||||||
Non Life Insurance Companies [Member] | Carryforward Expiration 2024 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 3,200,000 | ||||||||
Non Life Insurance Companies [Member] | Carryforward Expiration 2025 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 118,800,000 | ||||||||
Non Life Insurance Companies [Member] | Carryforward Expiration 2027 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 216,800,000 | ||||||||
Non Life Insurance Companies [Member] | Carryforward Expiration 2028 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 500,000 | ||||||||
Non Life Insurance Companies [Member] | Carryforward Expiration 2029 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 148,900,000 | ||||||||
Non Life Insurance Companies [Member] | Carryforward Expiration 2031 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 28,000,000 | ||||||||
Life Insurance Companies [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 784,500,000 | ||||||||
Amount of Tax Losses on Investment in Conseco Finance Corp | 2,100,000,000 | ||||||||
Life Insurance Companies [Member] | Carryforward Expiration 2013 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 0 | ||||||||
Life Insurance Companies [Member] | Carryforward Expiration 2014 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 0 | ||||||||
Life Insurance Companies [Member] | Carryforward Expiration 2015 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 0 | ||||||||
Life Insurance Companies [Member] | Carryforward Expiration 2018 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 550,900,000 | [1] | |||||||
Life Insurance Companies [Member] | Carryforward Expiration 2021 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 29,500,000 | ||||||||
Life Insurance Companies [Member] | Carryforward Expiration 2022 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 204,100,000 | ||||||||
Life Insurance Companies [Member] | Carryforward Expiration 2023 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 0 | [2] | |||||||
Life Insurance Companies [Member] | Carryforward Expiration 2024 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 0 | ||||||||
Life Insurance Companies [Member] | Carryforward Expiration 2025 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 0 | ||||||||
Life Insurance Companies [Member] | Carryforward Expiration 2027 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 0 | ||||||||
Life Insurance Companies [Member] | Carryforward Expiration 2028 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 0 | ||||||||
Life Insurance Companies [Member] | Carryforward Expiration 2029 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | 0 | ||||||||
Life Insurance Companies [Member] | Carryforward Expiration 2031 [Member]
|
|||||||||
Operating Loss Carryforwards [Line Items] | |||||||||
Operating loss carryforwards | $ 0 | ||||||||
|
RECENTLY ISSUED ACCOUNTING STANDARDS (DETAILS) (USD $)
In Millions, except Per Share data, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Changes from Adoption of New Accounting Standard, Statement of Operations [Abstract] | ||||
Amortization | $ 60.9 | $ 58.6 | $ 215.8 | $ 224.1 |
Other operating costs and expenses | 217.5 | 182.0 | 617.8 | 527.8 |
Total benefits and expenses | 1,251.8 | 930.6 | 3,243.9 | 2,869.6 |
Income before income taxes | (158.8) | 61.7 | 38.0 | 203.9 |
Tax expense on period income | (10.8) | 25.2 | 61.2 | 75.6 |
Net income (loss) | (5.0) | 179.5 | 119.8 | 271.3 |
Earnings Per Share, Basic | $ (0.02) | $ 0.73 | $ 0.51 | $ 1.09 |
Earnings Per Share, Diluted | $ (0.02) | $ 0.61 | $ 0.45 | $ 0.92 |
Changes from Adoption of New Accounting Standard, Statements of Cash Flows [Abstract] | ||||
Policy acquisition costs | (141.4) | (164.9) | ||
Other operating costs | (558.6) | (513.6) | ||
Net cash provided by operating activities | 424.6 | 562.2 | ||
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward] | ||||
Balance, beginning of period | 653.5 | 975.5 | 797.1 | 999.6 |
Deferred Policy Acquisition Costs, Additions | 46.7 | 58.3 | 141.4 | 164.9 |
Deferred Policy Acquisition Cost, Amortization Expense | (44.5) | (35.5) | (146.4) | (134.7) |
Deferred Policy Acquisition Cost, Related to Fair Value Adjustment of Fixed Maturities | (32.3) | (163.8) | (168.7) | (195.3) |
Balance, end of period | 623.4 | 834.5 | 623.4 | 834.5 |
As originally reported [Member]
|
||||
Changes from Adoption of New Accounting Standard, Statement of Operations [Abstract] | ||||
Amortization | 87.2 | 325.4 | ||
Other operating costs and expenses | 127.6 | 367.1 | ||
Total benefits and expenses | 904.8 | 2,810.2 | ||
Income before income taxes | 87.5 | 263.3 | ||
Tax expense on period income | 34.5 | 96.9 | ||
Net income (loss) | 196.0 | 309.4 | ||
Earnings Per Share, Basic | $ 0.79 | $ 1.24 | ||
Earnings Per Share, Diluted | $ 0.66 | $ 1.05 | ||
Changes from Adoption of New Accounting Standard, Statements of Cash Flows [Abstract] | ||||
Policy acquisition costs | 328.6 | |||
Other operating costs | 349.9 | |||
Net cash provided by operating activities | 562.2 | |||
Effect of adoption of ASU 2010-26 [Member]
|
||||
Changes from Adoption of New Accounting Standard, Statement of Operations [Abstract] | ||||
Amortization | (28.6) | (101.3) | ||
Other operating costs and expenses | 54.4 | 160.7 | ||
Total benefits and expenses | 25.8 | 59.4 | ||
Income before income taxes | (25.8) | (59.4) | ||
Tax expense on period income | (9.3) | (21.3) | ||
Net income (loss) | (16.5) | (38.1) | ||
Earnings Per Share, Basic | $ (0.06) | $ (0.15) | ||
Earnings Per Share, Diluted | $ (0.05) | $ (0.13) | ||
Changes from Adoption of New Accounting Standard, Statements of Cash Flows [Abstract] | ||||
Policy acquisition costs | (163.7) | |||
Other operating costs | 163.7 | |||
Net cash provided by operating activities | 0 | |||
As adjusted [Member]
|
||||
Changes from Adoption of New Accounting Standard, Statement of Operations [Abstract] | ||||
Amortization | 58.6 | 224.1 | ||
Other operating costs and expenses | 182.0 | 527.8 | ||
Total benefits and expenses | 930.6 | 2,869.6 | ||
Income before income taxes | 61.7 | 203.9 | ||
Tax expense on period income | 25.2 | 75.6 | ||
Net income (loss) | 179.5 | 271.3 | ||
Earnings Per Share, Basic | $ 0.73 | $ 1.09 | ||
Earnings Per Share, Diluted | $ 0.61 | $ 0.92 | ||
Changes from Adoption of New Accounting Standard, Statements of Cash Flows [Abstract] | ||||
Policy acquisition costs | 164.9 | |||
Other operating costs | 513.6 | |||
Net cash provided by operating activities | $ 562.2 |
REINSURANCE (DETAILS) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | ||||
Ceded Premiums Written | $ 48.0 | $ 58.3 | $ 164.5 | $ 176.3 |
Reinsurance Effect on Claims and Benefits Incurred, Amount Ceded | 56.4 | 45.4 | 172.2 | 160.2 |
Assumed Premiums Written | 15.9 | 18.1 | 54.7 | 64.6 |
Coventry Health Care Marketing and Quota Share Agreements [Member]
|
||||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | ||||
Assumed Premiums Written | $ 11.4 | $ 12.8 | $ 39.9 | $ 47.6 |
CHANGES IN COMMON STOCK (TABLES)
|
9 Months Ended | |||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||
Schedule of Stock by Class | Changes in the number of shares of common stock outstanding were as follows (shares in thousands):
________
|
CONSOLIDATED STATEMENT CASH FLOWS (DETAILS) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Cash flows from operating activities: | ||||
Net income (loss) | $ (5.0) | $ 179.5 | $ 119.8 | $ 271.3 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Amortization and depreciation | 235.2 | 243.6 | ||
Income taxes | (87.3) | (69.8) | ||
Insurance liabilities | 242.8 | 244.4 | ||
Accrual and amortization of investment income | (123.1) | 62.9 | ||
Deferral of policy acquisition costs | (141.4) | (164.9) | ||
Net realized investment (gains) losses | (9.1) | (30.6) | (63.9) | (38.6) |
Loss on extinguishment of debt | 198.5 | 1.1 | 199.2 | 3.1 |
Other | 43.3 | 10.2 | ||
Net cash provided by operating activities | 424.6 | 562.2 | ||
Other Noncash Investing and Financing Items [Abstract] | ||||
Stock option and restricted stock plans | $ 10.7 | $ 10.2 |
FAIR VALUE MEASUREMENTS
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and, therefore, represents an exit price, not an entry price. We carry certain assets and liabilities at fair value on a recurring basis, including fixed maturities, equity securities, trading securities, investments held by VIEs, derivatives, cash and cash equivalents, separate account assets and embedded derivatives. We carry our company-owned life insurance policy, which is backed by a series of mutual funds, at its cash surrender value and our hedge fund investments at their net asset values; in both cases, we believe these values approximate their fair values. In addition, we disclose fair value for certain financial instruments, including mortgage loans and policy loans, insurance liabilities for interest-sensitive products, investment borrowings, notes payable and borrowings related to VIEs. The degree of judgment utilized in measuring the fair value of financial instruments is largely dependent on the level to which pricing is based on observable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information. Financial instruments with readily available active quoted prices would be considered to have fair values based on the highest level of observable inputs, and little judgment would be utilized in measuring fair value. Financial instruments that rarely trade would often have fair value based on a lower level of observable inputs, and more judgment would be utilized in measuring fair value. Valuation Hierarchy There is a three-level hierarchy for valuing assets or liabilities at fair value based on whether inputs are observable or unobservable.
At each reporting date, we classify assets and liabilities into the three input levels based on the lowest level of input that is significant to the measurement of fair value for each asset and liability reported at fair value. This classification is impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction and overall market conditions. Our assessment of the significance of a particular input to the fair value measurement and the ultimate classification of each asset and liability requires judgment and is subject to change from period to period based on the observability of the valuation inputs. Any transfers between levels are reported as having occurred at the beginning of the period. There were no significant transfers between Level 1 and Level 2 in the first nine months of 2012. The vast majority of our fixed maturity and equity securities, including those held in trading portfolios and those held by consolidated VIEs, short-term and separate account assets use Level 2 inputs for the determination of fair value. These fair values are obtained primarily from independent pricing services, which use Level 2 inputs for the determination of fair value. Substantially all of our Level 2 fixed maturity securities and separate account assets were valued from independent pricing services. Third party pricing services normally derive the security prices through recently reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information. If there are no recently reported trades, the third party pricing services may use matrix or model processes to develop a security price where future cash flow expectations are developed and discounted at an estimated risk-adjusted market rate. The number of prices obtained for a given security is dependent on the Company’s analysis of such prices as further described below. For securities that are not priced by pricing services and may not be reliably priced using pricing models, we obtain broker quotes. These broker quotes are non-binding and represent an exit price, but assumptions used to establish the fair value may not be observable and therefore represent Level 3 inputs. Approximately 22 percent of our Level 3 fixed maturity securities were valued using unadjusted broker quotes or broker-provided valuation inputs. The remaining Level 3 fixed maturity investments do not have readily determinable market prices and/or observable inputs. For these securities, we use internally developed valuations. Key assumptions used to determine fair value for these securities may include risk-free rates, risk premiums, performance of underlying collateral and other factors involving significant assumptions which may not be reflective of an active market. For certain investments, we use a matrix or model process to develop a security price where future cash flow expectations are developed and discounted at an estimated market rate. The pricing matrix utilizes a spread level to determine the market price for a security. The credit spread generally incorporates the issuer’s credit rating and other factors relating to the issuer’s industry and the security’s maturity. In some instances issuer-specific spread adjustments, which can be positive or negative, are made based upon internal analysis of security specifics such as liquidity, deal size, and time to maturity. As the Company is responsible for the determination of fair value, we have control processes designed to ensure that the fair values received from third-party pricing sources are reasonable and the valuation techniques and assumptions used appear reasonable and consistent with prevailing market conditions. Additionally, when inputs are provided by third-party pricing sources, we have controls in place to review those inputs for reasonableness. As part of these controls, we perform monthly quantitative and qualitative analysis on the prices received from third parties to determine whether the prices are reasonable estimates of fair value. The Company’s analysis includes: (i) a review of the methodology used by third party pricing services; (ii) where available, a comparison of multiple pricing services’ valuations for the same security; (iii) a review of month to month price fluctuations; (iv) a review to ensure valuations are not unreasonably stale; and (v) back testing to compare actual purchase and sale transactions with valuations received from third parties. As a result of such procedures, the Company may conclude the prices received from third parties are not reflective of current market conditions. In those instances, we may request additional pricing quotes or apply internally developed valuations. However, the number of instances is insignificant and the aggregate change in value of such investments is not materially different from the original prices received. The categorization of the fair value measurements of our investments priced by independent pricing services was based upon the Company’s judgment of the inputs or methodologies used by the independent pricing services to value different asset classes. Such inputs include: benchmark yields, reported trades, broker dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data. The Company categorizes such fair value measurements based upon asset classes and the underlying observable or unobservable inputs used to value such investments. Except for exchange traded derivatives which are classified as Level 1, the fair value measurements for derivative instruments, including embedded derivatives requiring bifurcation, are determined based on the consideration of several inputs including closing exchange or over-the-counter market price quotations; time value and volatility factors underlying options; market interest rates; and non-performance risk. For certain embedded derivatives, we may use actuarial assumptions in the determination of fair value. The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at September 30, 2012 is as follows (dollars in millions):
For those financial instruments disclosed at fair value, we use the following methods and assumptions to determine the estimated fair values: Mortgage loans and policy loans. We discount future expected cash flows for loans included in our investment portfolio based on interest rates currently being offered for similar loans to borrowers with similar credit ratings. We aggregate loans with similar characteristics in our calculations. The fair value of policy loans approximates their carrying value. Insurance liabilities for interest-sensitive products. We discount future expected cash flows based on interest rates currently being offered for similar contracts with similar maturities. Investment borrowings, notes payable and borrowings related to variable interest entities. For publicly traded debt, we use current fair values. For other notes, we use discounted cash flow analyses based on our current incremental borrowing rates for similar types of borrowing arrangements. The fair value measurements for our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions):
____________________
The categorization of fair value measurements, by input level, for our fixed maturity securities, equity securities, trading securities, certain other invested assets, assets held in separate accounts and embedded derivative instruments included in liabilities for insurance products at December 31, 2011 is as follows (dollars in millions):
_____________
The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended September 30, 2012 (dollars in millions):
____________
The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the nine months ended September 30, 2012 (dollars in millions):
____________
The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended September 30, 2011 (dollars in millions):
____________
The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the nine months ended September 30, 2011 (dollars in millions):
____________
At September 30, 2012, 89 percent of our Level 3 fixed maturities, available for sale, were investment grade and 45 percent and 43 percent of our Level 3 fixed maturities, available for sale, consisted of collateralized debt obligations and corporate securities, respectively. Realized and unrealized investment gains and losses presented in the preceding tables represent gains and losses during the time the applicable financial instruments were classified as Level 3. Realized and unrealized gains (losses) on Level 3 assets are primarily reported in either net investment income for policyholder and reinsurer accounts and other special-purpose portfolios, net realized investment gains (losses) or insurance policy benefits within the consolidated statement of operations or accumulated other comprehensive income within shareholders’ equity based on the appropriate accounting treatment for the instrument. The amount presented for gains (losses) included in our net loss for assets and liabilities still held as of the reporting date primarily represents impairments for fixed maturities, available for sale, changes in fair value of trading securities and certain derivatives and changes in fair value of embedded derivative instruments included in liabilities for insurance products that exist as of the reporting date. The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at September 30, 2012 (dollars in millions):
________________________________
|
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (DETAILS) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | 0 Months Ended | 1 Months Ended | 9 Months Ended | 1 Months Ended | 0 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
Dec. 31, 2011
|
Sep. 30, 2012
New Senior Secured Credit Agreement [Member]
|
Dec. 31, 2011
New Senior Secured Credit Agreement [Member]
|
Sep. 30, 2012
Senior Secured Note 6.375% [Member]
|
Dec. 31, 2011
Senior Secured Note 6.375% [Member]
|
Sep. 30, 2012
Previous Senior Secured Credit Agreement [Member]
|
Sep. 30, 2012
Previous Senior Secured Credit Agreement [Member]
|
Dec. 31, 2011
Previous Senior Secured Credit Agreement [Member]
|
Sep. 30, 2012
Other Notes Payable [Member]
|
Dec. 31, 2011
Other Notes Payable [Member]
|
Sep. 30, 2012
Senior Secured Notes 9 Percent [Member]
|
Dec. 31, 2011
Senior Secured Notes 9 Percent [Member]
|
Sep. 30, 2012
Convertible Subordinated Debt [Member]
|
Dec. 31, 2011
Convertible Subordinated Debt [Member]
|
Sep. 28, 2012
Senior Notes [Member]
Pari Passu Intercreditor Agreement [Member]
|
Sep. 30, 2012
Senior Notes [Member]
Senior Secured Note 6.375% [Member]
|
Sep. 30, 2012
Senior Notes [Member]
Other Notes Payable [Member]
|
Sep. 28, 2012
Senior Notes [Member]
Senior Secured Notes 9 Percent [Member]
|
Sep. 30, 2012
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 28, 2012
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 30, 2012
Notes Payable to Banks [Member]
Previous Senior Secured Credit Agreement [Member]
|
Sep. 30, 2012
Notes Payable to Banks [Member]
Previous Senior Secured Credit Agreement [Member]
|
Sep. 30, 2012
Notes Payable, Other Payables [Member]
Convertible Subordinated Debt [Member]
|
Sep. 28, 2012
Maximum [Member]
Senior Notes [Member]
Pari Passu Intercreditor Agreement [Member]
|
Sep. 30, 2012
Maximum [Member]
Senior Notes [Member]
Senior Secured Note 6.375% [Member]
|
Sep. 28, 2012
Maximum [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 30, 2012
Minimum [Member]
Senior Notes [Member]
Senior Secured Note 6.375% [Member]
|
Sep. 28, 2012
Minimum [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 30, 2012
Term Loan Facility, Six-Year [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 28, 2012
Term Loan Facility, Six-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 30, 2012
Term Loan Facility, Four-Year [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 28, 2012
Term Loan Facility, Four-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 30, 2012
Revolving Credit Facility [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 28, 2012
Revolving Credit Facility [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 28, 2012
Uncommitted Subfacility [Member]
Maximum [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 28, 2012
Letter of Credit [Member]
Maximum [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 28, 2012
Eurodollar Rate [Member]
Term Loan Facility, Six-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 28, 2012
Eurodollar Rate [Member]
Term Loan Facility, Four-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 28, 2012
Base Rate [Member]
Term Loan Facility, Six-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 28, 2012
Base Rate [Member]
Term Loan Facility, Four-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 28, 2012
Base Rate [Member]
Revolving Credit Facility [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 28, 2012
Base Rate Subject to Eurodollar Floor [Member]
Term Loan Facility, Six-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 28, 2012
Base Rate Subject to Eurodollar Floor [Member]
Term Loan Facility, Four-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 30, 2012
Base Rate Floor [Member]
Term Loan Facility, Six-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 28, 2012
Base Rate Floor [Member]
Term Loan Facility, Six-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 30, 2012
Base Rate Floor [Member]
Term Loan Facility, Four-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 28, 2012
Base Rate Floor [Member]
Term Loan Facility, Four-Year [Member]
Notes Payable to Banks [Member]
New Senior Secured Credit Agreement [Member]
|
Sep. 30, 2012
Paulson & Co. Inc. [Member]
Notes Payable, Other Payables [Member]
Convertible Subordinated Debt [Member]
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|
Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable | $ 1,035.1 | $ 1,035.1 | $ 857.9 | $ 675.0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 255.2 | $ 0 | $ 50.0 | $ 1.2 | $ 275.0 | $ 93.0 | $ 293.0 | $ 275.0 | $ 1.2 | $ 425.0 | $ 250.0 | $ 200.0 | ||||||||||||||||||||||||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 7.00% | 7.00% | 6.375% | 9.00% | 7.00% | 6.375% | 9.00% | |||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Redemption Percentage of Aggregate Principal Amount | 100.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Redemption Percentage of Aggregate Principal Amount with Cash from Equity Offerings | 35.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Price Percentage of Aggregate Principal Amount | 106.375% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Terms, Mandatory Accelerated Repurchase, Percentage of Aggregate Principal Amount | 101.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Terms, Percentage of Trustees or Holders | 25.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Terms, Risk-Based Capital Ratio | 225.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Limit of Restricted Payments Permitted, Cash Dividends on Common Stock | 30 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Limit of Restricted Payments Permitted, Percent of Net Excess Cash Flow | 50.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Limit of Restricted Payments Permitted, Amount | 175.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Limit of Restricted Payments Permitted, Amount of Allowed Additional Payments | 244 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Limit of Restricted Payments Permitted, Debt to Total Capitalization Ratio Value | 17.50% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Term of Agreement | 6 years | 4 years | 3 years | |||||||||||||||||||||||||||||||||||||||||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 50.0 | 5.0 | 5.0 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Annual Amortization Percentage of Loan | 1.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Annual Amortization Percentage of Loan in First and Second Year | 20.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Annual Amortization Percentage of Loan in Third and Fourth Year | 30.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Increase, Additional Borrowings | 250.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Terms, Mandatory Prepayments, Percentage of Net Cash Proceeds from Asset Sales and Casualty Events | 100.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Terms, Mandatory Prepayments, Percentage of Net Cash Proceeds Received for Restricted Subsidiaries from Debt Issuances | 100.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Terms, Mandatory Prepayments, Percentage of Restricted Payments | 100.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt to Capitalization Ratio, Threshold Requiring Equal Debt Repayment | 22.50% | 17.50% | ||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Terms, Mandatory Prepayments, Reduced Percentage | 33.33% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt to Capitalization Ratio, Maximum Threshold for Repayment Requirement | 17.50% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Debt to Capitalization Ratio, Percentage Required No Mandatory Prepayment | 20.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Basis Spread on Variable Rate | 3.50% | 3.75% | 3.25% | 2.75% | 2.25% | 2.50% | 1.25% | 1.00% | 5.00% | 2.25% | 4.25% | 2.00% | ||||||||||||||||||||||||||||||||||||||||
Debt to Capitalization Ratio Required | 27.50% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt to Capitalization Ratio at Period End | 21.50% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Coverage Ratio Required | 2.50 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate Adjusted Capital to Company Action Level Risk-Based Capital Ratio, After Stated Date | 250.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Aggregate Adjusted Capital to Company Action Level Risk Based Capital Ratio at Period End | 361.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Minimum Combined Statutory Capital and Surplus | 1,300.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Combined Statutory Capital and Surplus at Period End | 1,766.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Mandatory Debt Repayment | 31.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Terms, Removal of Collateral Restrictions, Amount of Outstanding Borrowings | 25.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Terms, Removal of Collateral Restrictions, Period of Time After Default and Holders Make Certain Representations | 180 days | |||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Cash Tender Offer to Repay Long-term Debt | 273.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Repayments of Long-term Debt | 326.3 | 223.8 | 355.1 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument, Discount Rate | 2.80% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Repayments of Long-term Debt, Portion Related to Tender Offer | 313.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Repayments of Long-term Debt, Portion Related to Consent Payments | 8.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Repayments of Long-term Debt, Portion Related to Accrued and Unpaid Interest | 5.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Repayments of Notes Payable | 779.0 | 130.7 | 50.0 | |||||||||||||||||||||||||||||||||||||||||||||||||
Gains (Losses) on Extinguishment of Debt | (198.5) | (1.1) | (199.2) | (3.1) | (5.1) | (57.8) | (136.3) | |||||||||||||||||||||||||||||||||||||||||||||
Gains (Losses) on Extinguishment of Debt, Portion Related to Unamortized Discount | $ (4.4) |
EARNINGS PER SHARE (SCHEDULE OF BASIC AND DILUTED EPS CALCULATIONS) (DETAILS) (USD $)
In Millions, except Share data, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract] | ||||
Net income (loss) for basic earnings per share | $ (5.0) | $ 179.5 | $ 119.8 | $ 271.3 |
Add: interest expense on 7.0% Convertible Senior Debentures due 2016 (the “7.0% Debentures”), net of income taxes | 0 | 3.7 | 11.1 | 11.1 |
Net income for diluted earnings per share | $ (5.0) | $ 183.2 | $ 130.9 | $ 282.4 |
Shares: | ||||
Weighted average shares outstanding for basic earnings per share | 231,481,000 | 246,965,000 | 236,555,000 | 249,673,000 |
Effect of dilutive securities on weighted average shares: | ||||
7% Debentures | 0 | 53,367,000 | 53,037,000 | 53,367,000 |
Stock option and restricted stock plans | 0 | 2,353,000 | 2,639,000 | 2,712,000 |
Warrants | 0 | 23,000 | 752,000 | 333,000 |
Dilutive potential common shares | 0 | 55,743,000 | 56,428,000 | 56,412,000 |
Weighted average shares outstanding for diluted earnings per share | 231,481,000 | 302,708,000 | 292,983,000 | 306,085,000 |
FAIR VALUE MEASUREMENTS (TABLES)
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | The fair value measurements for our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions):
____________________
The categorization of fair value measurements, by input level, for our fixed maturity securities, equity securities, trading securities, certain other invested assets, assets held in separate accounts and embedded derivative instruments included in liabilities for insurance products at December 31, 2011 is as follows (dollars in millions):
_____________
The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at September 30, 2012 is as follows (dollars in millions):
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Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended September 30, 2012 (dollars in millions):
____________
The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the nine months ended September 30, 2012 (dollars in millions):
____________
The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended September 30, 2011 (dollars in millions):
____________
The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the nine months ended September 30, 2011 (dollars in millions):
____________
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Fair Value, Measurement Inputs, Disclosure [Table Text Block] | The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at September 30, 2012 (dollars in millions):
________________________________
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INVESTMENT BORROWINGS (DETAILS) (USD $)
|
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Dec. 31, 2011
|
|
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 1,650,900,000 | $ 1,676,500,000 | |
Interest rate | 7.00% | ||
Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Carrying value of FHLB common stock | 82,500,000 | ||
Investment borrowings | 1,650,000,000 | 1,650,000,000 | |
Estimated fair value of collateralized investments for FHLB borrowings | 2,000,000,000 | ||
Interest expense on FHLB borrowings | 21,300,000 | 18,900,000 | |
Aggregate fee to prepay all fixed rate FHLB borrowings | 51,600,000 | ||
Repurchase Agreements [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Assets sold under agreements to repurchase | 0 | 24,800,000 | |
Other Borrowings [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 900,000 | 1,700,000 | |
Borrowings Due November 2013 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 100,000,000 | ||
Maturity date | Nov. 30, 2013 | ||
Interest rate | 0.515% | ||
Borrowings Due February 2014 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 67,000,000 | ||
Maturity date | Feb. 28, 2014 | ||
Interest rate | 1.83% | ||
Borrowings Due August 2014 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | Aug. 31, 2014 | ||
Interest rate | 0.565% | ||
Borrowings Due August 2014 Rate 2 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 100,000,000 | ||
Maturity date | Aug. 31, 2014 | ||
Interest rate | 0.476% | ||
Borrowings Due September 2015 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | Sep. 30, 2015 | ||
Interest rate | 0.747% | ||
Borrowings Due October 2015 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 150,000,000 | ||
Maturity date | Oct. 31, 2015 | ||
Interest rate | 0.571% | ||
Borrowings Due November 2015 Rate Two [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 146,000,000 | ||
Maturity date | Nov. 30, 2015 | ||
Interest rate | 5.30% | ||
Borrowings Due December 2015 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 100,000,000 | ||
Maturity date | Dec. 31, 2015 | ||
Interest rate | 4.71% | ||
Borrowings Due June 2016 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 100,000,000 | ||
Maturity date | Jun. 30, 2016 | ||
Interest rate | 0.657% | ||
Borrowings Due June 2016 Rate Two [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 75,000,000 | ||
Maturity date | Jun. 30, 2016 | ||
Interest rate | 0.621% | ||
Borrowings Due October 2016 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 100,000,000 | ||
Maturity date | Oct. 31, 2016 | ||
Interest rate | 0.641% | ||
Borrowings Due November 2016 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | Nov. 30, 2016 | ||
Interest rate | 0.684% | ||
Borrowings Due November 2016 Rate Two [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | Nov. 30, 2016 | ||
Interest rate | 0.687% | ||
Borrowings Due June 2017 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 100,000,000 | ||
Maturity date | Jun. 30, 2017 | ||
Interest rate | 0.751% | ||
Borrowings Due July 2017 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 100,000,000 | ||
Maturity date | Jul. 31, 2017 | ||
Interest rate | 3.90% | ||
Borrowings Due August 2017 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 50,000,000 | ||
Maturity date | Aug. 31, 2017 | ||
Interest rate | 0.635% | ||
Borrowings Due August 2017 Rate 2 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 75,000,000 | ||
Maturity date | Aug. 31, 2017 | ||
Interest rate | 0.577% | ||
Borrowings Due October 2017 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 100,000,000 | ||
Maturity date | Oct. 31, 2017 | ||
Interest rate | 0.885% | ||
Borrowings Due November 2017 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | 37,000,000 | ||
Maturity date | Nov. 30, 2017 | ||
Interest rate | 3.75% | ||
Borrowings Due July 2018 [Member] | Federal Home Loan Bank Advances [Member]
|
|||
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items] | |||
Investment borrowings | $ 50,000,000 | ||
Maturity date | Jul. 31, 2018 | ||
Interest rate | 0.917% |
FAIR VALUE MEASUREMENTS - CATEGORIZATION OF FAIR VALUE MEASUREMENTS (DETAILS) (USD $)
In Millions, unless otherwise specified |
Sep. 30, 2012
|
Dec. 31, 2011
|
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Fair Value, Assets and Liabilities Meaured on Recurring Basis with Carrying Amount [Abstract] | ||||||||||||
Mortgage loans | $ 1,597.2 | $ 1,602.8 | ||||||||||
Policy loans | 274.1 | 279.7 | ||||||||||
Fair Value, Measurements, Recurring [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Mortgage loans | 1,597.2 | 1,602.8 | ||||||||||
Policy loans | 274.1 | 279.7 | ||||||||||
Fair Value, Assets and Liabilities Meaured on Recurring Basis with Carrying Amount [Abstract] | ||||||||||||
Insurance liabilities for interest-sensitive products excluding embedded derivatives | 12,186.4 | [1] | 13,165.5 | [1] | ||||||||
Investment borrowings | 1,650.9 | 1,676.5 | ||||||||||
Borrowings related to variable interest entities | 766.9 | 519.9 | ||||||||||
Notes Payable, Fair Value Disclosure | 1,035.1 | 857.9 | ||||||||||
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 | 20.5 | 17.9 | ||||||||||
Mortgage loans | 0 | |||||||||||
Policy loans | 0 | |||||||||||
Trading securities | 0.9 | 0.7 | ||||||||||
Investments held by variable interest entities | 0 | |||||||||||
Other invested assets | 0 | 0 | ||||||||||
Cash and cash equivalents - unrestricted | 202.0 | |||||||||||
Cash and cash equivalents held by variable interest entities | 48.2 | |||||||||||
Assets held in separate accounts | 0 | 0 | ||||||||||
Total assets carried at fair value by category | 271.6 | |||||||||||
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, 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 | 0 | |||||||||||
Notes Payable, Fair Value Disclosure | 0 | |||||||||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 24,002.8 | 22,682.9 | [2] | |||||||||
Equity securities | 119.2 | 87.3 | [2] | |||||||||
Mortgage loans | 0 | |||||||||||
Policy loans | 274.1 | |||||||||||
Trading securities | 190.9 | 90.5 | [2] | |||||||||
Investments held by variable interest entities | 496.3 | [2] | ||||||||||
Other invested assets | 210.4 | 159.9 | [2],[3] | |||||||||
Cash and cash equivalents - unrestricted | 213.3 | |||||||||||
Cash and cash equivalents held by variable interest entities | 0 | |||||||||||
Assets held in separate accounts | 15.7 | 15.0 | [2] | |||||||||
Total assets carried at fair value by category | 25,581.7 | |||||||||||
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, Assets and Liabilities Meaured on Recurring Basis with Carrying Amount [Abstract] | ||||||||||||
Insurance liabilities for interest-sensitive products excluding embedded derivatives | 0 | [1] | ||||||||||
Investment borrowings | 1,702.5 | |||||||||||
Borrowings related to variable interest entities | 748.3 | |||||||||||
Notes Payable, Fair Value Disclosure | 1,114.4 | |||||||||||
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 739.5 | 833.1 | [2] | |||||||||
Equity securities | 40.3 | 69.9 | [2] | |||||||||
Mortgage loans | 1,718.3 | |||||||||||
Policy loans | 0 | |||||||||||
Trading securities | 7.6 | 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 | 787.4 | |||||||||||
Liabilities, Fair Value Disclosure [Abstract] | ||||||||||||
Liabilities For Interest Sensitive Products, Fair Value Disclosure | 743.9 | 669.8 | [2],[4] | |||||||||
Total liabilities carried at fair value by category | 743.9 | |||||||||||
Fair Value, Assets and Liabilities Meaured on Recurring Basis with Carrying Amount [Abstract] | ||||||||||||
Insurance liabilities for interest-sensitive products excluding embedded derivatives | 12,186.4 | [1] | ||||||||||
Investment borrowings | 0 | |||||||||||
Borrowings related to variable interest entities | 0 | |||||||||||
Notes Payable, Fair Value Disclosure | 0 | |||||||||||
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Fixed maturities, available for sale | 24,742.3 | 23,516.0 | ||||||||||
Equity securities | 180.0 | 175.1 | ||||||||||
Mortgage loans | 1,718.3 | 1,735.4 | ||||||||||
Policy loans | 274.1 | 279.7 | ||||||||||
Trading securities | 199.4 | 91.6 | ||||||||||
Investments held by variable interest entities | 496.3 | |||||||||||
Other invested assets | 210.4 | 159.9 | ||||||||||
Cash and cash equivalents - unrestricted | 415.3 | |||||||||||
Cash and cash equivalents held by variable interest entities | 48.2 | |||||||||||
Assets held in separate accounts | 15.7 | 15.0 | ||||||||||
Total assets carried at fair value by category | 26,640.7 | |||||||||||
Liabilities, Fair Value Disclosure [Abstract] | ||||||||||||
Liabilities For Interest Sensitive Products, Fair Value Disclosure | 743.9 | 669.8 | ||||||||||
Total liabilities carried at fair value by category | 743.9 | |||||||||||
Fair Value, Assets and Liabilities Meaured on Recurring Basis with Carrying Amount [Abstract] | ||||||||||||
Insurance liabilities for interest-sensitive products excluding embedded derivatives | 12,186.4 | [1] | 13,165.5 | [1] | ||||||||
Investment borrowings | 1,702.5 | 1,735.7 | ||||||||||
Borrowings related to variable interest entities | 748.3 | 485.1 | ||||||||||
Notes Payable, Fair Value Disclosure | 1,114.4 | 978.3 | ||||||||||
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 | 38.1 | |||||||||||
Venture Capital Funds [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Equity securities | 38.1 | |||||||||||
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] | |||||||||
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 | ||||||||||
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 | 20.5 | |||||||||||
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 | 16,506.2 | 15,594.4 | [2] | |||||||||
Equity securities | 119.2 | |||||||||||
Trading securities | 49.3 | 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 | 317.3 | 278.1 | [2] | |||||||||
Equity securities | 2.2 | |||||||||||
Trading securities | 0.6 | 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 | 16,823.5 | 15,872.5 | ||||||||||
Equity securities | 141.9 | |||||||||||
Trading securities | 49.9 | 67.6 | ||||||||||
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 | 171.1 | 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 | 0 | 1.6 | [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 | 171.1 | 305.4 | ||||||||||
Trading securities | 4.9 | 4.9 | ||||||||||
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 | 2,048.1 | 1,952.3 | [2] | |||||||||
Trading securities | 17.1 | 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 | 0 | 2.1 | [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 | 2,048.1 | 1,954.4 | ||||||||||
Trading securities | 17.1 | 15.6 | ||||||||||
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 | 1,433.9 | 1,334.3 | [2] | |||||||||
Trading securities | 50.3 | 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 | 42.8 | 79.7 | [2] | |||||||||
Trading securities | 0 | 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 | 1,476.7 | 1,414.0 | ||||||||||
Trading securities | 50.3 | 0.1 | ||||||||||
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 | 332.0 | 327.3 | [2] | |||||||||
Trading securities | 7.0 | |||||||||||
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 | 332.0 | 327.3 | ||||||||||
Trading securities | 7.0 | |||||||||||
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 | 1,540.3 | 1,415.7 | [2] | |||||||||
Trading securities | 43.6 | 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 | 2.3 | 17.3 | [2] | |||||||||
Trading securities | 0 | 0.4 | [2] | |||||||||
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 | 1,542.6 | 1,433.0 | ||||||||||
Trading securities | 43.6 | 0.4 | ||||||||||
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 | 18.2 | 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 | 2.0 | 2.2 | [2] | |||||||||
Trading securities | 0 | 0 | [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 | 20.2 | 32.0 | ||||||||||
Trading securities | 0.2 | 0.2 | ||||||||||
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 | 2,284.2 | 2,051.2 | [2] | |||||||||
Trading securities | 24.1 | 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 | 43.1 | 124.8 | [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 | 2,327.3 | 2,176.0 | ||||||||||
Trading securities | 24.1 | 0.7 | ||||||||||
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Trading securities | 0.9 | 0.7 | ||||||||||
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Trading securities | 1.4 | 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] | |||||||||
Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Trading securities | 2.3 | 2.1 | ||||||||||
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 | 737.9 | |||||||||||
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 | 737.9 | |||||||||||
Embedded Derivative Associated With Modified Coinsurance Agreement [Member]
|
||||||||||||
Fair Value, Assets and Liabilities Meaured on Recurring Basis with Carrying Amount [Abstract] | ||||||||||||
Embedded derivatives | 6.0 | 3.5 | ||||||||||
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 | 6.0 | |||||||||||
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 | 6.0 | |||||||||||
Embedded Derivative Financial Instruments [Member]
|
||||||||||||
Fair Value, Assets and Liabilities Meaured on Recurring Basis with Carrying Amount [Abstract] | ||||||||||||
Embedded derivatives | 737.9 | 666.3 | ||||||||||
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 | 112.3 | |||||||||||
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 | |||||||||||
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 | 112.3 | |||||||||||
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 | 16.3 | |||||||||||
Hedge Funds [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 | 16.3 | |||||||||||
Derivatives [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Other invested assets | 0 | |||||||||||
Derivatives [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Other invested assets | 81.8 | |||||||||||
Derivatives [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 | 81.8 | |||||||||||
Cash [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Cash and cash equivalents - unrestricted | 202.0 | |||||||||||
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 [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
|
||||||||||||
Assets, Fair Value Disclosure [Abstract] | ||||||||||||
Cash and cash equivalents - unrestricted | 202.0 | |||||||||||
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 | 213.3 | |||||||||||
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 | |||||||||||
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 | 213.3 | |||||||||||
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 | 829.4 | |||||||||||
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 | |||||||||||
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 | $ 829.4 | |||||||||||
|
INCOME TAXES (DETAILS) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
Dec. 31, 2011
|
|
Income Tax Disclosure [Abstract] | |||||
Loss on extinguishment of debt | $ 198.5 | $ 1.1 | $ 199.2 | $ 3.1 | |
Income Tax Expense (Benefit) [Abstract] | |||||
Current tax expense | 2.4 | 2.3 | 9.1 | 7.2 | |
Deferred tax expense (benefit) | 11.1 | 22.9 | 76.4 | 68.4 | |
Valuation allowance applicable to current year income | (31.8) | 0 | (31.8) | 0 | |
Income tax expense (benefit) calculated based on estimated annual effective tax rate | (18.3) | 25.2 | 53.7 | 75.6 | |
Valuation allowance reduction impacting income in future years | (111.2) | (143.0) | (111.2) | (143.0) | |
Deferred tax benefit related to loss on extinguishment of debt and other items | (24.3) | 0 | (24.3) | 0 | |
Total income tax benefit | (153.8) | (117.8) | (81.8) | (67.4) | |
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract] | |||||
U.S. statutory corporate rate | 35.00% | 35.00% | |||
Valuation allowance reduction applicable to current year income | (13.80%) | 0.00% | |||
Nondeductible amounts | 0.50% | 1.80% | |||
State taxes | 1.00% | 1.00% | |||
Provision for tax issues, tax credits and other | 0.00% | (0.80%) | |||
Estimated annual effective tax rate | 22.70% | 37.00% | |||
Components of Deferred Tax Assets [Abstract] | |||||
Net federal operating loss carryforwards | 1,366.2 | 1,366.2 | 1,445.2 | ||
Net state operating loss carryforwards | 16.3 | 16.3 | 16.8 | ||
Tax credits | 37.7 | 37.7 | 32.6 | ||
Capital loss carryforwards | 305.4 | 305.4 | 342.3 | ||
Insurance liabilities | 754.8 | 754.8 | 744.4 | ||
Other | 81.7 | 81.7 | 64.8 | ||
Gross deferred tax assets | 2,562.1 | 2,562.1 | 2,646.1 | ||
Deferred tax liabilities: | |||||
Investments | (21.9) | (21.9) | (24.2) | ||
Present value of future profits and deferred acquisition costs | (333.7) | (333.7) | (363.7) | ||
Accumulated other comprehensive income | (688.1) | (688.1) | (434.8) | ||
Gross deferred tax liabilities | (1,043.7) | (1,043.7) | (822.7) | ||
Net deferred tax assets before valuation allowance | 1,518.4 | 1,518.4 | 1,823.4 | ||
Valuation allowance | (795.4) | (795.4) | (938.4) | ||
Net deferred tax assets | 723.0 | 723.0 | 885.0 | ||
Current income taxes accrued | (23.5) | (23.5) | (19.6) | ||
Income tax assets, net | 699.5 | 699.5 | 865.4 | ||
Estimated deferred tax assets realized through future taxable earnings | 893 | ||||
Identified reductions in deferred tax valuation allowance to be recognized in 2012 | 155.0 | ||||
Decrease in valuation allowance for deferred tax assets | (143.0) | (143.0) | (143.0) | (143.0) | |
Identified reductions in deferred tax allowance to be recognized in future period | 12.0 | ||||
Reduction valuation allowance due to increase in taxable income | 43.8 | ||||
Change in valuation allowance, amount to be recognized in current period | 31.8 | ||||
Reduction in valuation allowance for deferred tax assets | 111.2 | ||||
Deferred tax valuation assumption for annual taxable income growth (percent) | 5.00% | 5.00% | |||
Normalized average annual taxable income for last three years | 293 | ||||
Normalized average annual taxable income for last three years in prior projection | $ 260 | ||||
Loss limitation based on income of life insurance company (percent) | 35.00% | 35.00% | |||
Loss limitation based on loss of non-life entities (percent) | 35.00% | 35.00% | |||
Debenture interest rate | 7.00% | 7.00% | |||
Federal long term tax exempt rate (percent) | 3.02% | 3.02% | |||
Ownership change threshold restricting NOL usage (percent) | 50.00% | 50.00% |
BUSINESS AND BASIS OF PRESENTATION
|
9 Months Ended |
---|---|
Sep. 30, 2012
|
|
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 as retrospectively updated by the Current Report on Form 8-K filed on September 4, 2012 in connection with a change in accounting principle. 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, which modified the definition of the types of costs incurred by insurance entities that could be capitalized in the acquisition of new and renewal contracts. 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. |
FAIR VALUE MEASUREMENTS - UNOBSERVABLE INPUT RECONCILIATION (DETAILS) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|||||||||||||||
Fixed maturities, available for sale [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | $ 698.2 | [1] | $ 935.0 | $ 833.1 | $ 2,551.7 | |||||||||||||
Purchases, sales, issuances and settlements, net | 18.3 | [2] | (33.9) | [3] | 82.9 | [4] | (240.9) | [5] | ||||||||||
Total realized and unrealized gains (losses) included in net income | 0.1 | 4.9 | (0.3) | (16.5) | ||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 22.0 | 0.1 | 33.0 | 16.9 | ||||||||||||||
Transfers into level 3 | 59.4 | 6.6 | 68.0 | 62.0 | ||||||||||||||
Transfers out of level 3 | (58.5) | [4] | (161.2) | (277.2) | [1] | (1,621.7) | ||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 739.5 | 751.5 | 739.5 | 751.5 | ||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | 0 | 0 | 0 | (11.5) | ||||||||||||||
Equity Securities Classification [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Purchases, sales, issuances and settlements, net | (1.0) | |||||||||||||||||
Trading Securities [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 3.9 | [1] | 0 | 0.4 | 0.4 | |||||||||||||
Purchases, sales, issuances and settlements, net | 2.8 | [2] | 0 | [3] | 7.0 | [4] | (0.4) | [5] | ||||||||||
Total realized and unrealized gains (losses) included in net income | 0 | 0 | 0 | 0 | ||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0.8 | 0 | 0.1 | 0 | ||||||||||||||
Transfers into level 3 | 0.6 | 0 | 0.5 | 0 | ||||||||||||||
Transfers out of level 3 | (0.5) | [4] | 0 | (0.4) | [1] | 0 | ||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 7.6 | 0 | 7.6 | 0 | ||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | 0.8 | 0 | 0.1 | 0 | ||||||||||||||
Corporate securities [Member] | Fixed maturities, available for sale [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 321.0 | [1] | 361.8 | 278.1 | 1,907.8 | |||||||||||||
Purchases, sales, issuances and settlements, net | 14.0 | [2] | (111.2) | [3] | 54.9 | [4] | (289.0) | [5] | ||||||||||
Total realized and unrealized gains (losses) included in net income | 0 | 4.9 | 0 | (16.1) | ||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 7.3 | 5.4 | 9.4 | 12.7 | ||||||||||||||
Transfers into level 3 | 12.5 | 0.5 | 67.5 | 39.0 | ||||||||||||||
Transfers out of level 3 | (37.5) | [4] | (17.6) | (92.6) | [1] | (1,410.6) | ||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 317.3 | 243.8 | 317.3 | 243.8 | ||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | 0 | 0 | 0 | (11.5) | ||||||||||||||
Corporate securities [Member] | Equity Securities Classification [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 3.2 | [1] | 6.4 | |||||||||||||||
Purchases, sales, issuances and settlements, net | (1.0) | [2] | (1.0) | [4] | ||||||||||||||
Total realized and unrealized gains (losses) included in net income | 0 | (3.8) | ||||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0.6 | ||||||||||||||||
Transfers into level 3 | 0 | 0 | ||||||||||||||||
Transfers out of level 3 | 0 | [4] | 0 | [1] | ||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 2.2 | 2.2 | ||||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | 0 | (3.8) | ||||||||||||||||
US Treasury and Government [Member] | Fixed maturities, available for sale [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 1.5 | [1] | 1.7 | 1.6 | 2.0 | |||||||||||||
Purchases, sales, issuances and settlements, net | (1.5) | [2] | 0 | [3] | (1.6) | [4] | 0 | [5] | ||||||||||
Total realized and unrealized gains (losses) included in net income | 0 | 0 | 0 | 0 | ||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0 | 0 | (0.3) | ||||||||||||||
Transfers into level 3 | 0 | 0 | 0 | 0 | ||||||||||||||
Transfers out of level 3 | 0 | [4] | 0 | 0 | [1] | 0 | ||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0 | 1.7 | 0 | 1.7 | ||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | 0 | 0 | 0 | 0 | ||||||||||||||
US States and Political Subdivisions Debt Securities [Member] | Fixed maturities, available for sale [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 16.0 | [1] | 0 | 2.1 | 2.5 | |||||||||||||
Purchases, sales, issuances and settlements, net | 0 | [2] | 0 | [3] | 0 | [4] | (2.8) | [5] | ||||||||||
Total realized and unrealized gains (losses) included in net income | 0 | 0 | 0 | (0.1) | ||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0.1 | 0 | 0.5 | ||||||||||||||
Transfers into level 3 | 0 | 2.0 | 0 | 2.0 | ||||||||||||||
Transfers out of level 3 | (16.0) | [4] | 0 | (2.1) | [1] | 0 | ||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0 | 2.1 | 0 | 2.1 | ||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | 0 | 0 | 0 | 0 | ||||||||||||||
Asset-backed Securities [Member] | Fixed maturities, available for sale [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 23.0 | [1] | 170.7 | 79.7 | 182.3 | |||||||||||||
Purchases, sales, issuances and settlements, net | 15.0 | [2] | 1.2 | [3] | 11.4 | [4] | (0.6) | [5] | ||||||||||
Total realized and unrealized gains (losses) included in net income | 0 | 0 | (0.2) | 0 | ||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 5.5 | 0 | 5.8 | 2.5 | ||||||||||||||
Transfers into level 3 | 0 | 4.1 | 0.5 | 15.1 | ||||||||||||||
Transfers out of level 3 | (0.7) | [4] | (113.4) | (54.4) | [1] | (136.7) | ||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 42.8 | 62.6 | 42.8 | 62.6 | ||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | 0 | 0 | 0 | 0 | ||||||||||||||
Collateralized debt obligations [Member] | Fixed maturities, available for sale [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 330.1 | [1] | 193.5 | 327.3 | 256.5 | |||||||||||||
Purchases, sales, issuances and settlements, net | (6.3) | [2] | 72.7 | [3] | (11.6) | [4] | 3.5 | [5] | ||||||||||
Total realized and unrealized gains (losses) included in net income | 0 | 0 | 0 | 1.8 | ||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 8.2 | (6.1) | 16.3 | (1.7) | ||||||||||||||
Transfers into level 3 | 0 | 0 | 0 | 0 | ||||||||||||||
Transfers out of level 3 | 0 | [4] | 0 | 0 | [1] | 0 | ||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 332.0 | 260.1 | 332.0 | 260.1 | ||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | 0 | 0 | 0 | 0 | ||||||||||||||
Mortgage Pass Through Securities [Member] | Fixed maturities, available for sale [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 2.1 | [1] | 3.2 | 2.2 | 3.5 | |||||||||||||
Purchases, sales, issuances and settlements, net | (0.1) | [2] | (0.2) | [3] | (0.2) | [4] | (0.5) | [5] | ||||||||||
Total realized and unrealized gains (losses) included in net income | 0 | 0 | 0 | 0 | ||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0 | 0 | 0 | ||||||||||||||
Transfers into level 3 | 0 | 0 | 0 | 0 | ||||||||||||||
Transfers out of level 3 | 0 | [4] | 0 | 0 | [1] | 0 | ||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 2.0 | 3.0 | 2.0 | 3.0 | ||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | 0 | 0 | 0 | 0 | ||||||||||||||
Collateralized Mortgage Obligations [Member] | Fixed maturities, available for sale [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 4.5 | [1] | 204.1 | 124.8 | 197.1 | |||||||||||||
Purchases, sales, issuances and settlements, net | (2.8) | [2] | 3.6 | [3] | 30.0 | [4] | 48.5 | [5] | ||||||||||
Total realized and unrealized gains (losses) included in net income | 0.1 | 0 | (0.1) | (2.1) | ||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 1.0 | 0.7 | 1.4 | 3.2 | ||||||||||||||
Transfers into level 3 | 44.6 | 0 | 0 | 5.9 | ||||||||||||||
Transfers out of level 3 | (4.3) | [4] | (30.2) | (113.0) | [1] | (74.4) | ||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 43.1 | 178.2 | 43.1 | 178.2 | ||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | 0 | 0 | 0 | 0 | ||||||||||||||
Equity Securities [Member] | Equity Securities Classification [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 61.2 | [1] | 44.6 | 69.9 | 6.9 | |||||||||||||
Purchases, sales, issuances and settlements, net | (1.0) | [2] | 27.3 | [3] | (1.0) | [4] | 64.0 | [5] | ||||||||||
Total realized and unrealized gains (losses) included in net income | (23.1) | 0 | (29.8) | 0 | ||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 3.2 | (0.3) | 1.2 | 0.7 | ||||||||||||||
Transfers into level 3 | 0 | 0 | 0 | 0 | ||||||||||||||
Transfers out of level 3 | 0 | [4] | 0 | 0 | [1] | 0 | ||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 40.3 | 71.6 | 40.3 | 71.6 | ||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | (23.1) | 0 | (29.8) | 0 | ||||||||||||||
Venture Capital Funds [Member] | Equity Securities Classification [Member]
|
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 58.0 | [1] | 63.5 | |||||||||||||||
Purchases, sales, issuances and settlements, net | 0 | [2] | 0 | [4] | ||||||||||||||
Total realized and unrealized gains (losses) included in net income | (23.1) | (26.0) | ||||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 3.2 | 0.6 | ||||||||||||||||
Transfers into level 3 | 0 | 0 | ||||||||||||||||
Transfers out of level 3 | 0 | [4] | 0 | [1] | ||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 38.1 | 38.1 | ||||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | (23.1) | (26.0) | ||||||||||||||||
Commercial Mortgage Backed Securities [Member] | Fixed maturities, available for sale [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 0 | 17.3 | ||||||||||||||||
Purchases, sales, issuances and settlements, net | 0 | [4] | 0 | |||||||||||||||
Total realized and unrealized gains (losses) included in net income | 0 | 0 | ||||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0.1 | ||||||||||||||||
Transfers into level 3 | 2.3 | 0 | ||||||||||||||||
Transfers out of level 3 | 0 | [1] | (15.1) | |||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 2.3 | 2.3 | ||||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | 0 | 0 | ||||||||||||||||
Interest Sensitive Products [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | (15.3) | (44.8) | (22.0) | (53.7) | ||||||||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliations, liability value, beginning balance | (705.9) | [1] | (613.4) | (669.8) | (553.2) | |||||||||||||
Purchases, sales, issuances and settlements, net | (22.7) | [2] | 16.3 | [3] | (52.1) | [4] | (35.0) | [5] | ||||||||||
Total realized and unrealized gains (losses) included in net income | (15.3) | (44.8) | (22.0) | (53.7) | ||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0 | 0 | 0 | ||||||||||||||
Transfers into level 3 | 0 | 0 | 0 | 0 | ||||||||||||||
Transfers out of level 3 | 0 | [4] | 0 | 0 | [1] | 0 | ||||||||||||
Fair value, measurement with unobservable inputs reconciliations, liability value, ending balance | (743.9) | (641.9) | (743.9) | (641.9) | ||||||||||||||
US States and Political Subdivisions Debt Securities [Member] | Trading Securities [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 0.5 | [1] | 0 | |||||||||||||||
Purchases, sales, issuances and settlements, net | 0 | [2] | 0 | [4] | ||||||||||||||
Total realized and unrealized gains (losses) included in net income | 0 | 0 | ||||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0 | ||||||||||||||||
Transfers into level 3 | 0 | 0 | ||||||||||||||||
Transfers out of level 3 | (0.5) | [4] | 0 | [1] | ||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0 | 0 | ||||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | 0 | 0 | ||||||||||||||||
Collateralized Debt Obligations [Member] | Trading Securities [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 3.4 | [1] | 0 | |||||||||||||||
Purchases, sales, issuances and settlements, net | 2.8 | [2] | 7.0 | [4] | ||||||||||||||
Total realized and unrealized gains (losses) included in net income | 0 | 0 | ||||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0.8 | 0 | ||||||||||||||||
Transfers into level 3 | 0 | 0 | ||||||||||||||||
Transfers out of level 3 | 0 | [4] | 0 | [1] | ||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 7.0 | 7.0 | ||||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | 0.8 | 0 | ||||||||||||||||
Corporate securities [Member] | Equity Securities Classification [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Purchases, sales, issuances and settlements, net | (1.0) | |||||||||||||||||
Corporate securities [Member] | Trading Securities [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 0 | [1] | 0 | |||||||||||||||
Purchases, sales, issuances and settlements, net | 0 | [4] | 0 | |||||||||||||||
Total realized and unrealized gains (losses) included in net income | 0 | 0 | ||||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0.1 | ||||||||||||||||
Transfers into level 3 | 0.6 | 0.5 | ||||||||||||||||
Transfers out of level 3 | 0 | [1] | 0 | |||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0.6 | 0.6 | ||||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | 0 | 0.1 | ||||||||||||||||
Collateralized Mortgage Obligations [Member] | Trading Securities [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 0 | 0.4 | 0.4 | |||||||||||||||
Purchases, sales, issuances and settlements, net | 0 | [3] | 0 | [4] | (0.4) | [5] | ||||||||||||
Total realized and unrealized gains (losses) included in net income | 0 | 0 | 0 | |||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | 0 | 0 | |||||||||||||||
Transfers into level 3 | 0 | 0 | 0 | |||||||||||||||
Transfers out of level 3 | 0 | (0.4) | [1] | 0 | ||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0 | 0 | 0 | 0 | ||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | 0 | 0 | 0 | |||||||||||||||
Corporate Securities [Member] | Corporate Securities Held By Variable Interest Entities [Member] | Investments Held By Variable Interest Entities [Member]
|
||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, beginning balance | 0 | 6.7 | ||||||||||||||||
Purchases, sales, issuances and settlements, net | 0 | [3] | (7.9) | [5] | ||||||||||||||
Total realized and unrealized gains (losses) included in net income | 0 | 1.5 | ||||||||||||||||
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | 0 | (0.3) | ||||||||||||||||
Transfers into level 3 | 0 | 0 | ||||||||||||||||
Transfers out of level 3 | 0 | 0 | ||||||||||||||||
Fair value, measurement with unobservable inputs reconciliation, ending balance | 0 | 0 | ||||||||||||||||
Amount of total gains (losses) included in net income related to assets and liabilities still held at the reporting date | 0 | 0 | ||||||||||||||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||||||||||||||||
Purchases, sales, issuances and settlements, net | $ (7.9) | |||||||||||||||||
|