Investments (Tables)
|
3 Months Ended |
Mar. 31, 2019 |
|---|
| Investments, Debt and Equity Securities [Abstract] |
|
| Summary of Fixed Maturities and Equity Securities Available for Sale by Cost or Amortized Cost and Estimated Fair Value |
Summaries of fixed maturities available for sale by cost or amortized cost and estimated fair value at March 31, 2019 and December 31, 2018 are shown below. | | | | | | | | | | | | | | | | | | | | March 31, 2019 | | Cost or Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value(1) | | % of Total Fixed Maturities(2) | Fixed maturities available for sale: | | | | | | | | | | U.S. Government direct, guaranteed, and government-sponsored enterprises | $ | 390,947 |
| | $ | 16,443 |
| | $ | (1,034 | ) | | $ | 406,356 |
| | 2 | States, municipalities, and political subdivisions | 1,426,461 |
| | 113,371 |
| | (174 | ) | | 1,539,658 |
| | 9 | Foreign governments | 19,402 |
| | 2,222 |
| | — |
| | 21,624 |
| | — | Corporates, by sector: | | | | | | | | | | Financial | 3,864,828 |
| | 387,731 |
| | (44,465 | ) | | 4,208,094 |
| | 24 | Utilities | 1,984,792 |
| | 279,830 |
| | (9,690 | ) | | 2,254,932 |
| | 13 | Energy | 1,645,409 |
| | 172,802 |
| | (27,409 | ) | | 1,790,802 |
| | 10 | Other corporate sectors | 6,452,950 |
| | 438,527 |
| | (115,784 | ) | | 6,775,693 |
| | 40 | Total corporates | 13,947,979 |
| | 1,278,890 |
| | (197,348 | ) | | 15,029,521 |
| | 87 | Collateralized debt obligations | 57,473 |
| | 25,664 |
| | (5,888 | ) | | 77,249 |
| | 1 | Other asset-backed securities | 145,966 |
| | 3,577 |
| | (366 | ) | | 149,177 |
| | 1 | Total fixed maturities | $ | 15,988,228 |
| | $ | 1,440,167 |
| | $ | (204,810 | ) | | $ | 17,223,585 |
| | 100 |
| | (1) | Amounts reported on the balance sheet. |
| | | | | | | | | | | | | | | | | | | | December 31, 2018 | | Cost or Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value(1) | | % of Total Fixed Maturities(2) | Fixed maturities available for sale: | | | | | | | | | | U.S. Government direct, guaranteed, and government-sponsored enterprises | $ | 390,351 |
| | $ | 5,104 |
| | $ | (2,787 | ) | | $ | 392,668 |
| | 2 | States, municipalities, and political subdivisions | 1,354,810 |
| | 83,600 |
| | (1,750 | ) | | 1,436,660 |
| | 9 | Foreign governments | 19,006 |
| | 1,810 |
| | — |
| | 20,816 |
| | — | Corporates, by sector: | | | | | | | | | | Financial | 3,759,768 |
| | 262,875 |
| | (87,515 | ) | | 3,935,128 |
| | 24 | Utilities | 1,989,506 |
| | 217,846 |
| | (24,399 | ) | | 2,182,953 |
| | 13 | Energy | 1,652,700 |
| | 93,880 |
| | (62,371 | ) | | 1,684,209 |
| | 10 | Other corporate sectors | 6,382,707 |
| | 283,524 |
| | (242,509 | ) | | 6,423,722 |
| | 40 | Total corporates | 13,784,681 |
| | 858,125 |
| | (416,794 | ) | | 14,226,012 |
| | 87 | Collateralized debt obligations | 57,769 |
| | 22,014 |
| | (6,414 | ) | | 73,369 |
| | 1 | Other asset-backed securities | 146,854 |
| | 2,187 |
| | (634 | ) | | 148,407 |
| | 1 | Total fixed maturities | $ | 15,753,471 |
| | $ | 972,840 |
| | $ | (428,379 | ) | | $ | 16,297,932 |
| | 100 |
| | (1) | Amounts reported on the balance sheet. |
|
| Schedule of Fixed Maturities by Contractual Maturity Date |
A schedule of fixed maturities available for sale by contractual maturity date at March 31, 2019 is shown below on an amortized cost basis and on a fair value basis. Actual disposition dates could differ from contractual maturities due to call or prepayment provisions. | | | | | | | | | | March 31, 2019 | | Amortized
Cost | | Fair Value | Fixed maturities available for sale: | | | | Due in one year or less | $ | 204,444 |
| | $ | 206,980 |
| Due after one year through five years | 611,042 |
| | 643,173 |
| Due after five years through ten years | 1,643,633 |
| | 1,814,976 |
| Due after ten years through twenty years | 5,210,071 |
| | 5,843,176 |
| Due after twenty years | 8,114,988 |
| | 8,488,204 |
| Mortgage-backed and asset-backed securities | 204,050 |
| | 227,076 |
| | $ | 15,988,228 |
| | $ | 17,223,585 |
|
|
| Net Investment Income |
Net investment income for the three months ended March 31, 2019 and 2018 is summarized as follows: | | | | | | | | | | Three Months Ended
March 31, | | 2019 | | 2018 | Fixed maturities available for sale | $ | 215,763 |
| | $ | 208,542 |
| Policy loans | 10,636 |
| | 10,198 |
| Other long-term investments | 3,388 |
| | 2,854 |
| Short-term investments | 819 |
| | 391 |
| | 230,606 |
| | 221,985 |
| Less investment expense | (3,933 | ) | | (3,901 | ) | Net investment income | $ | 226,673 |
| | $ | 218,084 |
|
|
| Schedule Of Selected Information About Sales Of Fixed Maturities Available for Sale |
Selected information about sales of fixed maturities available for sale is as follows: | | | | | | | | | | Three Months Ended
March 31, | | 2019 | | 2018 | Fixed maturities available for sale: | | | | Proceeds from sales | $ | 34,997 |
| | $ | — |
| Gross realized gains | 46 |
| | — |
| Gross realized losses | (3,027 | ) | | — |
|
|
| Analysis of Realized Gains (Losses) on Investments |
An analysis of realized gains (losses) is as follows: | | | | | | | | | | Three Months Ended
March 31, | | 2019 | | 2018 | Realized investment gains (losses): | | | | Fixed maturities available for sale: | | | | Sales and other | $ | 3,670 |
| | $ | 1,386 |
| Fair value option—change in fair value | (2,185 | ) | | 560 |
| Other investments | (156 | ) | | 5 |
| Realized gains (losses) from investments | 1,329 |
| | 1,951 |
| Applicable tax | (279 | ) | | (410 | ) | Realized gains (losses), net of tax | $ | 1,050 |
| | $ | 1,541 |
|
|
| Schedule of Assets Measured at Fair Value on Recurring Basis |
The following tables represent the fair value of fixed maturities available for sale measured on a recurring basis at March 31, 2019 and December 31, 2018. | | | | | | | | | | | | | | | | | | Fair Value Measurements at March 31, 2019 using: | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Total Fair Value | Fixed maturities available for sale: | | | | | | | | U.S. Government direct, guaranteed, and government-sponsored enterprises | $ | — |
| | $ | 406,356 |
| | $ | — |
| | $ | 406,356 |
| States, municipalities, and political subdivisions | — |
| | 1,539,658 |
| | — |
| | 1,539,658 |
| Foreign governments | — |
| | 21,624 |
| | — |
| | 21,624 |
| Corporates, by sector: | | | | | | | | Financial | — |
| | 4,163,932 |
| | 44,162 |
| | 4,208,094 |
| Utilities | 5,100 |
| | 2,098,883 |
| | 150,949 |
| | 2,254,932 |
| Energy | — |
| | 1,750,336 |
| | 40,466 |
| | 1,790,802 |
| Other corporate sectors | — |
| | 6,448,950 |
| | 326,743 |
| | 6,775,693 |
| Total corporates | 5,100 |
| | 14,462,101 |
| | 562,320 |
| | 15,029,521 |
| Collateralized debt obligations | — |
| | — |
| | 77,249 |
| | 77,249 |
| Other asset-backed securities | — |
| | 136,023 |
| | 13,154 |
| | 149,177 |
| Total fixed maturities | $ | 5,100 |
| | $ | 16,565,762 |
| | $ | 652,723 |
| | $ | 17,223,585 |
| Percentage of total | — | % | | 96.2 | % | | 3.8 | % | | 100.0 | % |
| | | | | | | | | | | | | | | | | | Fair Value Measurements at December 31, 2018 using: | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Total Fair Value | Fixed maturities available for sale: | | | | | | | | U.S. Government direct, guaranteed, and government-sponsored enterprises | $ | — |
| | $ | 392,668 |
| | $ | — |
| | $ | 392,668 |
| States, municipalities, and political subdivisions | — |
| | 1,436,660 |
| | — |
| | 1,436,660 |
| Foreign governments | — |
| | 20,816 |
| | — |
| | 20,816 |
| Corporates, by sector: | | | | | | |
|
| Financial | — |
| | 3,891,728 |
| | 43,400 |
| | 3,935,128 |
| Utilities | — |
| | 2,032,127 |
| | 150,826 |
| | 2,182,953 |
| Energy | — |
| | 1,645,077 |
| | 39,132 |
| | 1,684,209 |
| Other corporate sectors | — |
| | 6,103,609 |
| | 320,113 |
| | 6,423,722 |
| Total corporates | — |
| | 13,672,541 |
| | 553,471 |
| | 14,226,012 |
| Collateralized debt obligations | — |
| | — |
| | 73,369 |
| | 73,369 |
| Other asset-backed securities | — |
| | 135,425 |
| | 12,982 |
| | 148,407 |
| Total fixed maturities | $ | — |
| | $ | 15,658,110 |
| | $ | 639,822 |
| | $ | 16,297,932 |
| Percentage of total | — | % | | 96.1 | % | | 3.9 | % | | 100.0 | % |
|
| Schedule of Analysis of Changes in Fair Value Measurements Using Significant Unobservable Inputs |
The following tables represent an analysis of changes in fair value measurements using significant unobservable inputs (Level 3) for the three months ended March 31, 2019 and 2018.
Analysis of Changes in Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | | | | | | | | | | | | | | | | | | Three Months Ended March 31, 2019 | | Asset-
Backed
Securities | | Collateralized
Debt
Obligations | | Corporates(1) | | Total | Balance at January 1, 2019 | $ | 12,982 |
| | $ | 73,369 |
| | $ | 553,471 |
| | $ | 639,822 |
| Total gains or losses: | | | | | | | | Included in realized gains/losses | — |
| | — |
| | — |
| | — |
| Included in other comprehensive income | 298 |
| | 4,176 |
| | 10,663 |
| | 15,137 |
| Acquisitions | — |
| | — |
| | — |
| | — |
| Sales | — |
| | — |
| | — |
| | — |
| Amortization | — |
| | 1,162 |
| | 3 |
| | 1,165 |
| Other(2) | (126 | ) | | (1,458 | ) | | (1,817 | ) | | (3,401 | ) | Transfers in and/or out of Level 3(3) | — |
| | — |
| | — |
| | — |
| Balance at March 31, 2019 | $ | 13,154 |
| | $ | 77,249 |
| | $ | 562,320 |
| | $ | 652,723 |
| Percent of total fixed maturities | 0.1 | % | | 0.4 | % | | 3.3 | % | | 3.8 | % |
| | (1) | Includes redeemable preferred stocks. |
| | (2) | Includes capitalized interest, foreign exchange adjustments, and principal repayments. |
| | (3) | Considered to be transferred at the end of the period. Transfers into Level 3 occur when observable inputs are no longer available. Transfers out of Level 3 occur when observable inputs become available. |
| | | | | | | | | | | | | | | | | | Three Months Ended March 31, 2018 | | Asset-
Backed
Securities | | Collateralized
Debt
Obligations | | Corporates(1) | | Total | Balance at January 1, 2018 | $ | 14,049 |
| | $ | 71,581 |
| | $ | 582,810 |
| | $ | 668,440 |
| Total gains or losses: | | | | | | | | Included in realized gains/losses | — |
| | — |
| | — |
| | — |
| Included in other comprehensive income | (749 | ) | | 4,621 |
| | (12,233 | ) | | (8,361 | ) | Acquisitions | — |
| | — |
| | — |
| | — |
| Sales | — |
| | — |
| | — |
| | — |
| Amortization | — |
| | 1,201 |
| | 4 |
| | 1,205 |
| Other(2) | (113 | ) | | (1,879 | ) | | (1,781 | ) | | (3,773 | ) | Transfers in and/or out of Level 3(3) | — |
| | — |
| | — |
| | — |
| Balance at March 31, 2018 | $ | 13,187 |
| | $ | 75,524 |
| | $ | 568,800 |
| | $ | 657,511 |
| Percent of total fixed maturities | 0.1 | % | | 0.5 | % | | 3.4 | % | | 4.0 | % |
| | (1) | Includes redeemable preferred stocks. |
| | (2) | Includes capitalized interest, foreign exchange adjustments, and principal repayments. |
| | (3) | Considered to be transferred at the end of the period. Transfers into Level 3 occur when observable inputs are no longer available. Transfers out of Level 3 occur when observable inputs become available. |
|
| Transfers In And Out Of Each Of Valuation Levels Of Fair Values |
The following table presents transfers in and out of each of the valuation levels of fair values. | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended March 31, | | 2019 | | 2018 | | In | | Out | | Net | | In | | Out | | Net | Level 1 | $ | 5,100 |
| | $ | — |
| | $ | 5,100 |
| | $ | — |
| | $ | — |
| | $ | — |
| Level 2 | — |
| | (5,100 | ) | | (5,100 | ) | | — |
| | — |
| | — |
| Level 3 | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
|
| Schedule Of Other Long Term Investments |
Other long-term investments consist of the following: | | | | | | | | | | March 31, 2019 | | December 31, 2018 | Investment in limited partnerships(1) | $ | 118,556 |
| | $ | 108,241 |
| Commercial mortgage loan participations(2) | 110,209 |
| | 96,266 |
| Other | 3,169 |
| | 2,751 |
| Total other long-term investments | $ | 231,934 |
| | $ | 207,258 |
|
| | (1) | See the following section for more information regarding the fair value option method used to account for these investments. |
| | (2) | Torchmark invests in a portfolio of commercial mortgage loan participations. As of March 31, 2019 and December 31, 2018, the Company evaluated the portfolio on a loan-by-loan basis to determine any allowance for loss. Factors considered include, but are not limited to, collateral value, loan-to-value ratio, debt service coverage ratio, local market conditions, credit quality of the borrower and tenants, and loan performance. There were no material changes to the property type, geographic location, or loan-to-value ratio for any of the loans during the quarter. As of March 31, 2019 and December 31, 2018, there was no allowance for loss. |
|
| Fair Value of Investments Elected for the Fair Value Option |
The following table represents the fair value of certain limited partnership investments elected for the fair value option method measured on a recurring basis at March 31, 2019, and the changes in fair value for the three months ended March 31, 2019. All changes in fair value are recognized in "Realized Investment Gains (Losses)" in the Condensed Consolidated Statements of Operations. Distributions received on a periodic basis are recorded in Net Investment Income. | | | | | | | | | | | | | | | | | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs
(Level 2) | | Significant Unobservable Inputs
(Level 3) | | Total Fair Value | Fair Value Measurements at: | | | | | | | | March 31, 2019 | $ | — |
| | $ | 118,556 |
| | $ | — |
| | $ | 118,556 |
| December 31, 2018 | — |
| | 108,241 |
| | — |
| | 108,241 |
|
| | | | | | | | | | | | | | Changes in Fair Values for the Period for Items Measured at Fair Value Pursuant to Election of the Fair Value Option | | Net Gains and Losses Recognized During the Period | | Less Net Gains and Losses Recognized due to Sales | | Total Changes in Fair Values Included in Current-Period Earnings | Three Months Ended March 31, | | | | | | 2019 | $ | (2,185 | ) | | $ | — |
| | $ | (2,185 | ) | 2018 | 560 |
| | — |
| | 560 |
|
|
| Schedule of Information About Investments in Unrealized Loss Position |
The following table discloses information about fixed maturities available for sale in an unrealized loss position. | | | | | | | | | | | Less than
Twelve
Months | | Twelve
Months
or Longer | | Total | Number of issues (CUSIP numbers) held: | | | | | | As of March 31, 2019 | 83 |
| | 311 |
| | 394 |
| As of December 31, 2018 | 495 |
| | 234 |
| | 729 |
|
|
| Schedule of Unrealized Investment Losses by Class of Investment |
The following tables disclose unrealized investment losses by class and major sector of fixed maturities available for sale at March 31, 2019 and December 31, 2018, respectively. Torchmark considers these investments to be only temporarily impaired.
Analysis of Gross Unrealized Investment Losses | | | | | | | | | | | | | | | | | | | | | | | | | | At March 31, 2019 | | Less than Twelve Months | | Twelve Months or Longer | | Total | | Fair Value | | Unrealized Loss | | Fair
Value | | Unrealized Loss | | Fair
Value | | Unrealized Loss | Fixed maturities available for sale: | | | | | | | | | | | | Investment grade securities: | | | | | | | | | | | | U.S. Government direct, guaranteed, and government-sponsored enterprises | $ | 6 |
| | $ | — |
| | $ | 61,709 |
| | $ | (1,034 | ) | | $ | 61,715 |
| | $ | (1,034 | ) | States, municipalities and political subdivisions | 14,974 |
| | (26 | ) | | 1,056 |
| | (5 | ) | | 16,030 |
| | (31 | ) | Corporates, by sector: | | | | | | | | | | | | Financial | 69,791 |
| | (1,004 | ) | | 388,946 |
| | (15,440 | ) | | 458,737 |
| | (16,444 | ) | Utilities | 2,023 |
| | (2 | ) | | 177,061 |
| | (5,553 | ) | | 179,084 |
| | (5,555 | ) | Energy | 48,948 |
| | (693 | ) | | 145,645 |
| | (7,662 | ) | | 194,593 |
| | (8,355 | ) | Other corporate sectors | 392,572 |
| | (12,612 | ) | | 1,560,588 |
| | (82,520 | ) | | 1,953,160 |
| | (95,132 | ) | Total corporates | 513,334 |
| | (14,311 | ) | | 2,272,240 |
| | (111,175 | ) | | 2,785,574 |
| | (125,486 | ) | Other asset-backed securities | 98 |
| | — |
| | 4,463 |
| | (23 | ) | | 4,561 |
| | (23 | ) | Total investment grade securities | 528,412 |
| | (14,337 | ) | | 2,339,468 |
| | (112,237 | ) | | 2,867,880 |
| | (126,574 | ) | | | | | | | | | | | | | Below investment grade securities: | | | | | | | | | | | | States, municipalities and political subdivisions | 85 |
| | (143 | ) | | — |
| | — |
| | 85 |
| | (143 | ) | Corporates, by sector: |
|
| |
|
| |
|
| |
|
| | | | | Financial | — |
| | — |
| | 104,759 |
| | (28,021 | ) | | 104,759 |
| | (28,021 | ) | Utilities | — |
| | — |
| | 12,648 |
| | (4,135 | ) | | 12,648 |
| | (4,135 | ) | Energy | 11,207 |
| | (589 | ) | | 47,260 |
| | (18,465 | ) | | 58,467 |
| | (19,054 | ) | Other corporate sectors | 35,189 |
| | (2,153 | ) | | 94,367 |
| | (18,499 | ) | | 129,556 |
| | (20,652 | ) | Total corporates | 46,396 |
| | (2,742 | ) | | 259,034 |
| | (69,120 | ) | | 305,430 |
| | (71,862 | ) | Collateralized debt obligations | — |
| | — |
| | 14,112 |
| | (5,888 | ) | | 14,112 |
| | (5,888 | ) | Other asset-backed securities | 14,132 |
| | (343 | ) | | — |
| | — |
| | 14,132 |
| | (343 | ) | Total below investment grade securities | 60,613 |
| | (3,228 | ) | | 273,146 |
| | (75,008 | ) | | 333,759 |
| | (78,236 | ) | Total fixed maturities | $ | 589,025 |
| | $ | (17,565 | ) | | $ | 2,612,614 |
| | $ | (187,245 | ) | | $ | 3,201,639 |
| | $ | (204,810 | ) |
Analysis of Gross Unrealized Investment Losses | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, 2018 | | Less than Twelve Months | | Twelve Months or Longer | | Total | | Fair Value | | Unrealized Loss | | Fair Value | | Unrealized Loss | | Fair Value | | Unrealized Loss | Fixed maturities available for sale: | | | | | | | | | | | | Investment grade securities: | | | | | | | | | | | | U.S. Government direct, guaranteed, and government-sponsored enterprises | $ | 37,182 |
| | $ | (212 | ) | | $ | 89,664 |
| | $ | (2,575 | ) | | $ | 126,846 |
| | $ | (2,787 | ) | States, municipalities and political subdivisions | 124,907 |
| | (1,648 | ) | | 7,981 |
| | (102 | ) | | 132,888 |
| | (1,750 | ) | Corporates, by sector: | | | | | | | | | | | | Financial | 931,161 |
| | (36,337 | ) | | 241,442 |
| | (21,572 | ) | | 1,172,603 |
| | (57,909 | ) | Utilities | 329,753 |
| | (11,680 | ) | | 121,308 |
| | (9,442 | ) | | 451,061 |
| | (21,122 | ) | Energy | 475,736 |
| | (29,426 | ) | | 54,937 |
| | (9,382 | ) | | 530,673 |
| | (38,808 | ) | Other corporate sectors | 2,515,541 |
| | (149,168 | ) | | 575,796 |
| | (62,994 | ) | | 3,091,337 |
| | (212,162 | ) | Total corporates | 4,252,191 |
| | (226,611 | ) | | 993,483 |
| | (103,390 | ) | | 5,245,674 |
| | (330,001 | ) | Other asset-backed securities | 44,603 |
| | (634 | ) | | — |
| | — |
| | 44,603 |
| | (634 | ) | Total investment grade securities | 4,458,883 |
| | (229,105 | ) | | 1,091,128 |
| | (106,067 | ) | | 5,550,011 |
| | (335,172 | ) | | | | | | | | | | | | | Below investment grade securities: | | | | | | | | | | | | States, municipalities and political subdivisions | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Corporates, by sector: | | | | | | | | | | | | Financial | 22,087 |
| | (8,674 | ) | | 81,101 |
| | (20,932 | ) | | 103,188 |
| | (29,606 | ) | Utilities | 28,613 |
| | (3,277 | ) | | — |
| | — |
| | 28,613 |
| | (3,277 | ) | Energy | 42,874 |
| | (3,901 | ) | | 36,122 |
| | (19,662 | ) | | 78,996 |
| | (23,563 | ) | Other corporate sectors | 146,373 |
| | (7,235 | ) | | 69,053 |
| | (23,112 | ) | | 215,426 |
| | (30,347 | ) | Total corporates | 239,947 |
| | (23,087 | ) | | 186,276 |
| | (63,706 | ) | | 426,223 |
| | (86,793 | ) | Collateralized debt obligations | — |
| | — |
| | 13,586 |
| | (6,414 | ) | | 13,586 |
| | (6,414 | ) | Other asset-backed securities | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Total below investment grade securities | 239,947 |
| | (23,087 | ) | | 199,862 |
| | (70,120 | ) | | 439,809 |
| | (93,207 | ) | Total fixed maturities | $ | 4,698,830 |
| | $ | (252,192 | ) | | $ | 1,290,990 |
| | $ | (176,187 | ) | | $ | 5,989,820 |
| | $ | (428,379 | ) |
|