XML 43 R31.htm IDEA: XBRL DOCUMENT v3.5.0.2
INVESTMENT OPERATIONS (Tables)
 9 Months Ended
Sep. 30, 2016
Investments, Debt and Equity Securities [Abstract]  
Summary of Net Realized Investment Gains (Losses) for All Other Investments
Net realized gains (losses) for all other investments are summarized as follows:
 
 
Successor Company
 
Predecessor Company
 
For The Three Months Ended
September 30, 2016
 
For The Three Months Ended September 30, 2015
 
For The Nine Months Ended September 30, 2016
 
February 1, 2015
to
September 30, 2015
 
January 1, 2015
to
January 31, 2015
 
(Dollars In Thousands)
 
(Dollars In Thousands)
Fixed maturities
$
1,665

 
$
(1,304
)
 
$
24,097

 
$
2,398

 
$
6,891

Equity securities
—

 
51

 
36

 
72

 
—

Impairments on corporate securities
(3,308
)
 
(10,064
)
 
(6,892
)
 
(15,798
)
 
(481
)
Modco trading portfolio
23,995

 
8,377

 
178,353

 
(133,524
)
 
73,062

Other investments
(1,508
)
 
(1,815
)
 
(7,842
)
 
(1,040
)
 
1,200

Total realized gains (losses) - investments
$
20,844

 
$
(4,755
)
 
$
187,752

 
$
(147,892
)
 
$
80,672

 
Gross realized gains and gross realized losses on investments available-for-sale (fixed maturities, equity securities, and short-term investments) are as follows:
 
Successor Company
 
Predecessor Company
 
For The Three Months Ended
September 30, 2016
 
For The Three Months Ended September 30, 2015
 
For The Nine Months Ended September 30, 2016
 
February 1, 2015
to
September 30, 2015
 
January 1, 2015
to
January 31, 2015
 
(Dollars In Thousands)
 
(Dollars In Thousands)
Gross realized gains
$
3,223

 
$
714

 
$
31,004

 
$
7,646

 
$
6,920

Gross realized losses
$
(4,866
)
 
$
(12,031
)
 
$
(13,763
)
 
$
(20,974
)
 
$
(469
)
Impairments losses included in gross realized losses
$
(3,308
)
 
$
(10,064
)
 
$
(6,892
)
 
$
(15,798
)
 
$
(481
)
Schedule of Investments' Gross Unrealized Losses and Fair Value of the Company's Investments that are Not Deemed to be Other-than-Temporarily Impaired
The chart below summarizes the fair value (proceeds) and the gains/losses realized on securities the Company sold that were in an unrealized gain position and an unrealized loss position.
 
 
Successor Company
 
Predecessor Company
 
For The Three Months Ended
September 30, 2016
 
For The Three Months Ended September 30, 2015
 
For The Nine Months Ended September 30, 2016
 
February 1, 2015
to
September 30, 2015
 
January 1, 2015
to
January 31, 2015
 
(Dollars In Thousands)
 
(Dollars In Thousands)
Securities in an unrealized gain position:
 
 
 
 
 
 
 
 
 
Fair value (proceeds)
$
167,272

 
$
94,825

 
$
987,048

 
$
807,763

 
$
172,551

Gains realized
$
3,223

 
$
715

 
$
31,004

 
$
7,646

 
$
6,920

 
 
 
 
 
 
 
 
 
 
Securities in an unrealized loss position(1):
 
 
 
 
 
 
 
 
 
Fair value (proceeds)
$
7,105

 
$
34,591

 
$
67,688

 
$
83,917

 
$
435

Losses realized
$
(1,558
)
 
$
(1,967
)
 
$
(6,871
)
 
$
(5,175
)
 
$
(29
)
 
 
 
 
 
 
 
 
 
 
(1) The Company made the decision to exit these holdings in conjunction with its overall asset liability management process.
The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2016 (Successor Company):
 
 
Less Than 12 Months
 
12 Months or More
 
Total
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
(Dollars In Thousands)
Residential mortgage-backed securities
$
86,908

 
$
(433
)
 
$
180,768

 
$
(4,125
)
 
$
267,676

 
$
(4,558
)
Commercial mortgage-backed securities
175,209

 
(1,162
)
 
104,931

 
(1,470
)
 
280,140

 
(2,632
)
Other asset-backed securities
68,039

 
(268
)
 
465,787

 
(15,423
)
 
533,826

 
(15,691
)
U.S. government-related securities
128,224

 
(1,789
)
 
3

 
—

 
128,227

 
(1,789
)
Other government-related securities
1,927

 
(2
)
 
—

 
—

 
1,927

 
(2
)
States, municipalities, and political subdivisions
239,380

 
(2,842
)
 
561,253

 
(20,487
)
 
800,633

 
(23,329
)
Corporate securities
2,769,939

 
(46,629
)
 
10,876,293

 
(684,620
)
 
13,646,232

 
(731,249
)
Preferred stock
53,040

 
(128
)
 
19,251

 
(1,687
)
 
72,291

 
(1,815
)
Equities
84,188

 
(989
)
 
59,929

 
(5,766
)
 
144,117

 
(6,755
)
 
$
3,606,854

 
$
(54,242
)
 
$
12,268,215

 
$
(733,578
)
 
$
15,875,069

 
$
(787,820
)
Schedule of Amortized Cost and Fair Value of the Company's Investments Classified as Available-for-Sale
The amortized cost and fair value of the Company’s investments classified as available-for-sale as of September 30, 2016 (Successor Company) and December 31, 2015 (Successor Company), are as follows:
 
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
Total OTTI
Recognized
in OCI(1)
Successor Company
 
 
 
 
 
As of September 30, 2016
 
 
 
 
 
 
 
(Dollars In Thousands)
 
 
Fixed maturities:
 
 

 
 

 
 

 
 

 
 

Residential mortgage-backed securities
 
$
1,842,012

 
$
49,259

 
$
(4,558
)
 
$
1,886,713

 
$
—

Commercial mortgage-backed securities
 
1,654,152

 
31,706

 
(2,632
)
 
1,683,226

 
—

Other asset-backed securities
 
1,202,982

 
14,625

 
(15,691
)
 
1,201,916

 
—

U.S. government-related securities
 
1,299,876

 
13,092

 
(1,789
)
 
1,311,179

 
—

Other government-related securities
 
18,350

 
184

 
(2
)
 
18,532

 
—

States, municipals, and political subdivisions
 
1,725,351

 
25,239

 
(23,329
)
 
1,727,261

 
—

Corporate securities
 
28,966,811

 
488,460

 
(731,249
)
 
28,724,022

 
(909
)
Preferred stock
 
94,362

 
1,227

 
(1,815
)
 
93,774

 
—

 
 
36,803,896

 
623,792

 
(781,065
)
 
36,646,623

 
(909
)
Equity securities
 
673,709

 
25,454

 
(6,755
)
 
692,408

 
—

Short-term investments
 
142,870

 
—

 
—

 
142,870

 
—

 
 
$
37,620,475

 
$
649,246

 
$
(787,820
)
 
$
37,481,901

 
$
(909
)
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2015
 
 
 
 
 
 
 
 
 
 
Fixed maturities:
 
 

 
 

 
 

 
 

 
 

Residential mortgage-backed securities
 
$
1,773,099

 
$
9,286

 
$
(17,112
)
 
$
1,765,273

 
$
—

Commercial mortgage-backed securities
 
1,327,288

 
428

 
(41,852
)
 
1,285,864

 
—

Other asset-backed securities
 
813,056

 
2,758

 
(18,763
)
 
797,051

 
—

U.S. government-related securities
 
1,566,260

 
449

 
(34,532
)
 
1,532,177

 
—

Other government-related securities
 
18,483

 
—

 
(743
)
 
17,740

 
—

States, municipals, and political subdivisions
 
1,729,732

 
682

 
(126,814
)
 
1,603,600

 
—

Corporate securities
 
28,433,530

 
26,147

 
(2,681,020
)
 
25,778,657

 
(605
)
Preferred stock
 
64,362

 
192

 
(1,867
)
 
62,687

 
—

 
 
35,725,810

 
39,942

 
(2,922,703
)
 
32,843,049

 
(605
)
Equity securities
 
684,888

 
13,255

 
(6,477
)
 
691,666

 
—

Short-term investments
 
202,110

 
—

 
—

 
202,110

 
—

 
 
$
36,612,808

 
$
53,197

 
$
(2,929,180
)
 
$
33,736,825

 
$
(605
)
 
(1) These amounts are included in the gross unrealized gains and gross unrealized losses columns above.
Schedule of Amortized Cost and Fair Value of Available-for-Sale and Held-to-Maturity Fixed Maturities, by Expected Maturity
Expected maturities of securities without a single maturity date are allocated based on estimated rates of prepayment that may differ from actual rates of prepayment.
 
 
Successor Company
 
Available-for-sale
 
Held-to-maturity
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
(Dollars In Thousands)
 
(Dollars In Thousands)
Due in one year or less
$
786,505

 
$
787,980

 
$
—

 
$
—

Due after one year through five years
6,834,174

 
6,901,114

 
—

 
—

Due after five years through ten years
7,735,392

 
7,887,064

 
—

 
—

Due after ten years
21,447,825

 
21,070,465

 
2,775,230

 
2,894,615

 
$
36,803,896

 
$
36,646,623

 
$
2,775,230

 
$
2,894,615
Gain (Loss) on Investments
The chart below summarizes the Company's other-than-temporary impairments of investments. All of the impairments were related to fixed maturities.
 
 
Successor Company
 
Predecessor Company
 
For The Three Months Ended
September 30, 2016
 
For The Three Months Ended September 30, 2015
 
For The Nine Months Ended September 30, 2016
 
February 1, 2015
to
September 30, 2015
 
January 1, 2015
to
January 31, 2015
 
(Dollars In Thousands)
 
(Dollars In Thousands)
Other-than-temporary impairments
$
(1,898
)
 
$
(14,906
)
 
$
(10,194
)
 
$
(28,301
)
 
$
(636
)
Non-credit impairment losses recorded in other comprehensive income
(1,410
)
 
4,842

 
3,302

 
12,503

 
155

Net impairment losses recognized in earnings
$
(3,308
)
 
$
(10,064
)
 
$
(6,892
)
 
$
(15,798
)
 
$
(481
)
Schedule of Available-for-Sale Credit Losses on Fixed Maturities Held by the Company for Which a Portion of Other-than-Temporary Impairments were Recognized in Other Comprehensive Income (Loss)
The following chart is a rollforward of available-for-sale credit losses on fixed maturities held by the Company for which a portion of an other-than-temporary impairment was recognized in other comprehensive income (loss): 
 
Successor Company
 
Predecessor Company
 
For The Three Months Ended
September 30, 2016
 
For The Three Months Ended September 30, 2015
 
For The Nine Months Ended September 30, 2016
 
February 1, 2015
to
September 30, 2015
 
January 1, 2015
to
January 31, 2015
 
(Dollars In Thousands)
 
(Dollars In Thousands)
Beginning balance
$
964

 
$
4,472

 
$
22,761

 
$
—

 
$
15,463

Additions for newly impaired securities
1,721

 
—

 
4,777

 
4,472

 
—

Additions for previously impaired securities
1,521

 
9,479

 
2,046

 
9,479

 
221

Reductions for previously impaired securities due to a change in expected cash flows
(4
)
 
—

 
(22,763
)
 
—

 
—

Reductions for previously impaired securities that were sold in the current period
—

 
(687
)
 
(2,619
)
 
(687
)
 
—

Ending balance
$
4,202

 
$
13,264

 
$
4,202

 
$
13,264

 
$
15,684
Summary of Change in Unrealized Gains (Losses), Net of Income Tax, on Fixed Maturity and Equity Securities, Classified as Available-for-Sale
The change in unrealized gains (losses), net of income tax, on fixed maturity and equity securities, classified as available-for-sale is summarized as follows:
 
 
Successor Company
 
Predecessor Company
 
For The Three Months Ended
September 30, 2016
 
For The Three Months Ended September 30, 2015
 
For The Nine Months Ended September 30, 2016
 
February 1, 2015
to
September 30, 2015
 
January 1, 2015
to
January 31, 2015
 
(Dollars In Thousands)
 
(Dollars In Thousands)
Fixed maturities
$
294,917

 
$
(54,274
)
 
$
1,771,567

 
$
(1,437,340
)
 
$
669,160

Equity securities
(1,691
)
 
2,385

 
7,749

 
(5,152
)
 
12,172

The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2015 (Successor Company):
 
 
Less Than 12 Months
 
12 Months or More
 
Total
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
Fair
Value
 
Unrealized
Loss
 
(Dollars In Thousands)
Residential mortgage-backed securities
$
977,433

 
$
(17,112
)
 
$
—

 
$
—

 
$
977,433

 
$
(17,112
)
Commercial mortgage-backed securities
1,232,495

 
(41,852
)
 
—

 
—

 
1,232,495

 
(41,852
)
Other asset-backed securities
633,274

 
(18,763
)
 
—

 
—

 
633,274

 
(18,763
)
U.S. government-related securities
1,291,476

 
(34,532
)
 
—

 
—

 
1,291,476

 
(34,532
)
Other government-related securities
17,740

 
(743
)
 
—

 
—

 
17,740

 
(743
)
States, municipalities, and political subdivisions
1,566,752

 
(126,814
)
 
—

 
—

 
1,566,752

 
(126,814
)
Corporate securities
24,235,121

 
(2,681,020
)
 
—

 
—

 
24,235,121

 
(2,681,020
)
Preferred stock
34,685

 
(1,867
)
 
—

 
—

 
34,685

 
(1,867
)
Equities
248,493

 
(6,477
)
 
—

 
—

 
248,493

 
(6,477
)
 
$
30,237,469

 
$
(2,929,180
)
 
$
—

 
$
—

 
$
30,237,469

 
$
(2,929,180
)
Schedule of Amortized Cost and Fair Value of the Company's Investments Classified as Held-to-Maturity
The amortized cost and fair value of the Company’s investments classified as held-to-maturity as of September 30, 2016 (Successor Company) and December 31, 2015 (Successor Company), are as follows:
 
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
Total OTTI
Recognized
in OCI
Successor Company
 
 
 
 
 
As of September 30, 2016
 
 
 
 
 
 
 
(Dollars In Thousands)
Fixed maturities:
 
 

 
 

 
 

 
 

 
 

Securities issued by affiliates:
 
 
 
 
 
 
 
 
 
 
Red Mountain LLC
 
$
640,230

 
$
—

 
$
(1,751
)
 
$
638,479

 
$
—

Steel City LLC
 
2,135,000

 
121,136

 
—

 
2,256,136

 
—

 
 
$
2,775,230

 
$
121,136

 
$
(1,751
)
 
$
2,894,615

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
 
Total OTTI
Recognized
in OCI
Successor Company
 
 
 
 
 
As of December 31, 2015
 
 
 
 
 
 
 
(Dollars In Thousands)
Fixed maturities:
 
 

 
 

 
 

 
 

 
 

Securities issued by affiliates:
 
 
 
 
 
 
 
 
 
 
Red Mountain LLC
 
$
593,314

 
$
—

 
$
(78,314
)
 
$
515,000

 
$
—

 
 
$
593,314

 
$
—

 
$
(78,314
)
 
$
515,000

 
$
—