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DEBT AND OTHER OBLIGATIONS
 12 Months Ended
Dec. 31, 2020
Debt Disclosure [Abstract]  
DEBT AND OTHER OBLIGATIONS DEBT AND OTHER OBLIGATIONS
Under a revolving line of credit arrangement (the “Credit Facility”), the Company has the ability to borrow on an unsecured basis up to an aggregate principal amount of $1.0 billion. The Company has the right in certain circumstances to request that the commitment under the Credit Facility be increased up to a maximum principal amount of $1.5 billion. Balances outstanding under the Credit Facility accrue interest at a rate equal to, at the option of the Borrowers, (i) LIBOR plus a spread based on the ratings of PLC’s Senior Debt, or (ii) the sum of (A) a rate equal to the highest of (x) the Administrative Agent’s Prime rate, (y) 0.50% above the Funds rate, or (z) the one-month LIBOR plus 1.00% and (B) a spread based on the ratings of PLC’s Senior Debt. The Credit Facility also provided for a facility fee at a rate that varies with the ratings of PLC’s Senior Debt and that is calculated on the aggregate amount of commitments under the Credit Facility, whether used or unused. The annual facility fee rate is 0.125% of the aggregate principal amount. The Credit Facility provides that PLC is liable for the full amount of any obligations for borrowings or letters of credit, including those of the Company, under the Credit Facility. The maturity date of the Credit Facility is May 3, 2023. The Company is not aware of any non-compliance with the financial debt covenants of the Credit Facility as of December 31, 2020. PLC had a $190.0 million outstanding balance on the Credit Facility as of December 31, 2020.
During 2018, the Company issued $110.0 million of Subordinated Funding Obligations at a rate of 3.55% due 2038.
Non-Recourse Funding Obligations
On October 1, 2020, as part of a corporate initiative to consolidate and simplify the Company’s reserve financing structures and reduce related financial and operational costs, Golden Gate II, Golden Gate III, Golden Gate IV, and Golden Gate V, all of which are wholly owned captive insurance company subsidiaries of PLICO (collectively the “Captives”) merged with and into (the “Captive Merger”) Golden Gate.
For additional information, refer to Note 3, Significant Transactions.
Golden Gate Captive Insurance Company
On January 15, 2016, Golden Gate and Steel City entered into an 18-year transaction to finance $2.188 billion of “XXX” reserves related to the acquired GLAIC Block and the other term life insurance business reinsured to Golden Gate by the Company and WCL, a direct wholly owned subsidiary of the Company. Steel City issued notes (the “2016 Steel City Notes”) with an aggregate initial principal amount of $2.188 billion to Golden Gate in exchange for a surplus note issued by Golden Gate (the “2016 Surplus Notes”) with an initial principal amount of $2.188 billion. This structure was subsequently amended effective December 31, 2019, to accommodate financing of “XXX” reserves related to a specified portion of term life business the Company acquired from Liberty Life Assurance Company of Boston. Through the structure, Hannover Life Reassurance Company of America (Bermuda) Ltd., The Canada Life Assurance Company (Barbados Branch) and Nomura Americas Re Ltd. (collectively, the “Risk-Takers”) provide credit enhancement to the 2016 Steel City Notes in exchange for credit enhancement fees. The transaction is “non-recourse” to PLC, WCL, and the Company, meaning that none of these companies, other than Golden Gate, are liable to reimburse the Risk-Takers for any credit enhancement payments required to be made. As of September 30, 2020, the aggregate principal balance of the 2016 Steel City Notes was $1.858 billion. In connection with this transaction, PLC had entered into certain support agreements under which it guaranteed or otherwise supported certain obligations of Golden Gate or Steel City. During 2020 and 2019, no payments were made under these agreements. In connection with the Captive Merger, the Steel City Notes and the Golden Gate Note were redeemed and cancelled and the related support agreements were terminated effective October 1, 2020.
Golden Gate II Captive Insurance Company
Golden Gate II had $575 million of non-recourse funding obligations as of September 30, 2020. These outstanding non-recourse funding obligations were issued to special purpose trusts, which in turn issued securities to third parties. Certain of our affiliates own a portion of these securities. As of September 30, 2020, securities related to $20.6 million of the balance of the non-recourse funding obligations were held by external parties, securities related to $309.3 million of the non-recourse funding obligations were held by nonconsolidated affiliates, and $245.1 million were held by consolidated subsidiaries of the Company. PLC had entered into certain support agreements with Golden Gate II obligating it to make capital contributions or provide support related to certain of Golden Gate II’s expenses and in certain circumstances, to collateralize certain of PLC’s obligations to Golden Gate II. During 2020 and 2019, and in connection with certain support agreements, PLC made support agreement payments of $4.0 million and $1.7 million and had collateralized obligations of $5.5 million and $4.9 million, respectively. In connection with the Captive Merger discussed above, the $575 million of non-recourse funding obligations were redeemed and all support agreements between the Company and Golden Gate II were terminated effective October 1, 2020.
Golden Gate V Vermont Captive Insurance Company
On October 10, 2012, Golden Gate V and Red Mountain entered into a 20-year transaction to finance up to $945 million of “AXXX” reserves related to a block of universal life insurance policies with secondary guarantees issued by the Company and WCL. Golden Gate V issued non-recourse funding obligations to Red Mountain, and Red Mountain issued a note with an initial principal amount of $275 million, increasing to a maximum of $945 million in 2027, to Golden Gate V for deposit to a reinsurance trust supporting Golden Gate V’s obligations under a reinsurance agreement with WCL, pursuant to which WCL cedes liabilities relating to the policies of WCL and retrocedes liabilities relating to the policies of the Company. Through the structure, Hannover Life Reassurance Company of America (“Hannover Re”), the ultimate risk taker in the transaction, provides credit enhancement to the Red Mountain note for the 20-year term in exchange for a fee. The transaction is “non-recourse” to Golden Gate V, Red Mountain, WCL, PLC, and the Company, meaning that none of these companies are liable for the reimbursement of any credit enhancement payments required to be made. As of September 30, 2020, the principal balance of the Red Mountain note was $750 million. In connection with the transaction, PLC had entered into certain support agreements under which it guaranteed or otherwise supports certain obligations of Golden Gate V or Red Mountain. During 2020 and 2019, no payments were made under these agreements. In connection with the Captive Merger discussed above, the Red Mountain Note and the Golden Gate V Note were redeemed and cancelled, and the related support and guaranteed agreements were terminated effective October 1, 2020.
Non-recourse funding obligations outstanding, on a consolidated basis, are shown in the following tables:
IssuerOutstanding Principal
Carrying Value(1)
Maturity
Year		Year-to-Date
Interest Rate
 (Dollars In Thousands)  
As of December 31, 2020
MONY Life Insurance Company(3)
$1,885 $2,197 20246.19 %
Total$1,885 $2,197   

IssuerOutstanding Principal
Carrying Value(1)
Maturity
Year		Year-to-Date
Weighted-
Avg
Interest Rate
(Dollars In Thousands)
As of December 31, 2019
Golden Gate Captive Insurance Company(2)(3)
$2,028,000 $2,028,000 20394.70 %
Golden Gate II Captive Insurance Company329,949 274,955 20525.06 %
Golden Gate V Vermont Captive Insurance Company(3)
720,000 777,527 20375.12 %
MONY Life Insurance Company(3)
1,885 2,271 20246.19 %
Total$3,079,834 $3,082,753 
(1)Carrying values include premiums and discounts and do not represent unpaid principal balances.
(2)Obligations are issued to non-consolidated subsidiaries of PLC. These obligations collateralize certain held-to-maturity securities issued by wholly owned subsidiaries of the Company.
(3)Fixed rate obligations
Letters of Credit
Golden Gate III Vermont Captive Insurance Company
On April 23, 2010, Golden Gate III entered into a Reimbursement Agreement (the “GGIII Reimbursement Agreement”) with UBS AG, Stamford Branch (“UBS”), as issuing lender. Under the Reimbursement Agreement, UBS issued a letter of credit (the “LOC)”) to a trust for the benefit of WCL. The GGIII Reimbursement Agreement has undergone three separate amendments and restatements, most recently effective June 25, 2014, to finance up to of $935.0 million of “XXX reserves related to term life blocks issued or acquired by the Company and WCL and reinsured by Golden Gate III. As of September 30, 2020, the LOC balance was $750.0 million. The term of the LOC was expected to be approximately 15 years from the original issuance date. This transaction is “non-recourse” to WCL, PLC, and the Company, meaning that none of these companies other than Golden Gate III are liable for reimbursement on a draw of the LOC. In connection with the Captive Merger discussed above, Golden Gate III paid an early termination fee of $11 million to UBS, the LOC was cancelled effective October 1, 2020.
Golden Gate IV Vermont Captive Insurance Company
On December 10, 2010, Golden Gate IV entered into a Reimbursement Agreement (the “GGIV Reimbursement Agreement”) with UBS AG, Stamford Branch, as issuing lender. Under the GGIV Reimbursement Agreement, UBS issued a LOC to a trust for the benefit of WCL to finance up to $790 million of “XXX” reserves related to term life blocks issued by the Company and WCL. As of September 30, 2020, the LOC balance was $740 million. The term of the LOC was expected to be 12 years from the original issuance date (stated maturity of December 30, 2022). This transaction was a “non-recourse” to WCL, PLC, and the Company, meaning that none of these companies other than Golden Gate IV are liable for reimbursement on a draw of the LOC. In connection with the Captive Merger discussed above, Golden Gate IV paid an early termination fee of $3.7 million to UBS, the LOC was cancelled effective October 1, 2020.
Secured Financing Transactions
Repurchase Program Borrowings
While the Company anticipates that the cash flows of its operating subsidiaries will be sufficient to meet its investment commitments and operating cash needs in a normal credit market environment, the Company recognizes that investment commitments scheduled to be funded may, from time to time, exceed the funds then available. Therefore, the Company has established repurchase agreement programs for certain of its insurance subsidiaries to provide liquidity when needed. The Company expects that the rate received on its investments will equal or exceed its borrowing rate. Under this program, the Company may, from time to time, sell an investment security at a specific price and agree to repurchase that security at another specified price at a later date. These borrowings are typically for a term less than 90 days. The market value of securities to be repurchased is monitored and collateral levels are adjusted where appropriate to protect the counterparty against credit exposure. Cash received is invested in fixed maturity securities, and the agreements provided for net settlement in the event of default or on termination of the agreements. As of December 31, 2020, the fair value of securities pledged under the repurchase program was $452.1 million and the repurchase obligation of $437.0 million was included in the Company’s consolidated balance sheets (at an average borrowing rate of 15 basis points). During the year ended December 31, 2020, the maximum balance outstanding at any one point in time related to these programs was $824.7 million. The average daily balance was $143.2 million (at an average borrowing rate of 33 basis points) during the year ended December 31, 2020. As of December 31, 2019, the fair value of securities pledged under the repurchase program was $282.2 million and the repurchase obligation of $270.0 million was included in the Company’s consolidated balance sheets (at an average borrowing rate of 163 basis points). During the year ended December 31, 2019, the maximum balance outstanding at any one point in time related to these programs was $900.0 million. The average daily balance was $212.2 million (at an average borrowing rate of 214 basis points) during the year ended December 31, 2019.
Securities Lending
The Company participates in securities lending, primarily as an investment yield enhancement, whereby securities that are held as investments are loaned out to third parties for short periods of time. The Company requires collateral at least equal to 102% of the fair value of the loaned securities to be separately maintained. The loaned securities’ fair value is monitored on a daily basis and collateral is adjusted accordingly. The Company maintains ownership of the securities at all times and is entitled to receive from the borrower any payments for interest received on such securities during the loan term. Securities lending transactions are accounted for as secured borrowings. As of December 31, 2020, securities with a fair value of $56.6 million were loaned under this program. As collateral for the loaned securities, the Company receives cash, which is primarily reinvested in short term repurchase agreements, which are also collateralized by U.S. Government or U.S. Government Agency securities, and government money market funds. These investments recorded in “short-term investments” with a corresponding liability recorded in “secured financing liabilities” to account for its obligation to return the collateral. As of December 31, 2020 and 2019, the fair value of the collateral related to this program was $58.7 million and $65.5 million, and the Company has an obligation to return $58.7 million and $65.5 million of collateral to the securities borrowers, respectively.
The following table provides the fair value of collateral pledged for repurchase agreements, grouped by asset class, as of December 31, 2020 and 2019:
Repurchase Agreements, Securities Lending Transactions, and Repurchase-to-Maturity Transactions Accounted for as Secured Borrowings
Remaining Contractual Maturity of the Agreements
As of December 31, 2020
(Dollars In Thousands)
Overnight andGreater Than
ContinuousUp to 30 days30 - 90 days90 daysTotal
Repurchase agreements and repurchase-to-maturity transactions
U.S. Treasury and agency securities$366,012 $86,055 $— $— $452,067 
Commercial mortgage loans— — — — — 
Total repurchase agreements and repurchase-to-maturity transactions$366,012 $86,055 $— $— $452,067 
Securities lending transactions
 Fixed maturity securities48,952 — — — 48,952 
 Equity securities6,507 — — — 6,507 
 Redeemable preferred stocks1,157 — — — 1,157 
Total securities lending transactions56,616 — — — 56,616 
Total securities$422,628 $86,055 $— $— $508,683 

Remaining Contractual Maturity of the Agreements
As of December 31, 2019
(Dollars In Thousands)
Overnight andGreater Than
ContinuousUp to 30 days30 - 90 days90 daysTotal
Repurchase agreements and repurchase-to-maturity transactions
U.S. Treasury and agency securities$282,198 $— $— $— $282,198 
Commercial mortgage loans— — — — — 
Total repurchase agreements and repurchase-to-maturity transactions$282,198 $— $— $— $282,198 
Securities lending transactions
Corporate securities55,720 — — — 55,720 
 Equity securities7,120 — — — 7,120 
 Redeemable preferred stocks— — — — — 
Total securities lending transactions62,840 — — — 62,840 
Total securities$345,038 $— $— $— $345,038 
Other Obligations
The Company routinely receives from or pays to affiliates, under the control of PLC, reimbursements for expenses incurred on one another’s behalf. Receivables and payables among affiliates are generally settled monthly.
Interest Expense
Interest expense is summarized as follows:
For The Year Ended December 31,
202020192018
(Dollars In Millions)
Subordinated funding obligations$3.9 $3.9 $2.6 
Non-recourse funding obligations, other obligations, and repurchase agreements133.2 175.8 181.9 
Total interest expense$137.1 $179.7 $184.5