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New Accounting Standards
 3 Months Ended
Mar. 31, 2023
Accounting Changes and Error Corrections [Abstract]  
New Accounting Standards Note 2—New Accounting Standards
Accounting Pronouncements Adopted in the Current Year: On January 1, 2023, the Company adopted ASU 2018-12 on a modified retrospective basis as of the transition date (Transition Date) of January 1, 2021. The amended guidance is a significant change to the accounting and disclosure of long-duration life and health insurance contracts. The modified retrospective transition method requires the updated standard be applied to all long-duration life and health contracts, which has resulted in the adjustment of the 2021 and 2022 consolidated financial statements.

The following tables summarize the balance of and changes to the liability for future policy benefits for traditional life and health long-duration contracts on the Transition Date due to the adoption of ASU 2018-12:
Net Liability for Future Policy Benefits - Long Duration Life
American IncomeDTCLiberty NationalOtherTotal
Balance, net of reinsurance, at original discount rates as of December 31, 2020
$3,541,317 $2,492,226 $2,140,071 $2,736,804 $10,910,418 
Effect of changes in discount rate assumptions3,334,600 2,195,430 1,229,610 2,297,835 9,057,475 
Effect of capping and flooring(1)
— 16,899 2,433 2 19,334 
Balance, net of reinsurance, at current discount rates as of January 1, 2021
$6,875,917 $4,704,555 $3,372,114 $5,034,641 $19,987,227 

Net liability for Future Policy Benefits - Long Duration Health
United AmericanFamily HeritageLiberty NationalAmerican IncomeDTCTotal
Balance, net of reinsurance, at original discount rates as of December 31, 2020
$131,505 $1,383,128 $501,312 $101,998 $(2,941)$2,115,002 
Effect of changes in discount rate assumptions75,652 497,250 219,992 60,366 346 853,606 
Effect of capping and flooring(1)
6,506 — 19,324 — 4,193 30,023 
Balance, net of reinsurance, at current discount rates as of January 1, 2021
$213,663 $1,880,378 $740,628 $162,364 $1,598 $2,998,631 
(1)When the present value of expected future net premiums exceeds the present value of expected future gross premiums for a given cohort (capping), or the present value of future policy benefits and related termination expenses exceeds the present value of expected future net premiums (flooring), an adjustment is made to the liability for future policy benefits.
The following table presents total policy liabilities, both before and after the Transition Date:
January 1,December 31,
20212020
Future policy benefits:
Net liability for future policy benefits—long duration life$19,987,227 $10,910,418 
Net liability for future policy benefits—long duration health2,998,631 2,115,002 
Additional insurance liabilities(1),(2)
2,008,399 2,218,116 
Total future policy benefits24,994,257 15,243,536 
Unearned and advance premium(1)
243,369 61,728 
Policy claims and other benefits payable(1)
473,524 399,507 
Other policyholders' funds(1)
98,459 97,968 
Total policy liabilities
$25,809,609 $15,802,739 
(1)In addition to the discount rate related adjustments to future policy benefits, the Company reclassified certain balances within total policy liabilities on the Consolidated Balance Sheets as a result of adopting ASU 2018-12. The reclassifications had an immaterial impact on Shareholders' Equity. See table summarizing the transition adjustments to Shareholders' Equity below.
(2)The Company's additional insurance liabilities consist primarily of: 1) deferred profit liability on limited-payment contracts; and 2) reserves on deferred annuity and interest sensitive life blocks of business. See Note 6—Policy Liabilities for additional information.
The following table presents the Company's deferred policy acquisition costs, both before and after the Transition Date:
January 1,December 31,
20212020
Life:
American Income$1,647,761 $1,647,761 
Direct to Consumer1,498,970 1,498,435 
Liberty National531,504 531,504 
Other304,786 304,459 
Total life3,983,021 3,982,159 
Health:
United American65,020 74,353 
Family Heritage364,751 364,751 
Liberty National124,754 124,888 
American Income39,477 39,477 
Direct to Consumer2,215 6,600 
Total health596,217 610,069 
Annuity8,309 3,216 
Total DAC
$4,587,547 $4,595,444 
In accordance with ASU 2018-12, the Company has adjusted its DAC balance to remove the impact of unrealized gains and losses that were previously recorded in Accumulated Other Comprehensive Income (AOCI) on the Consolidated Statements of Shareholders' Equity. Under prior guidance, the Company included these amounts within its calculation of amortization.
The following table presents the effect of transition adjustments due to the adoption of ASU 2018-12 on Shareholders' Equity:
Retained EarningsAccumulated Other Comprehensive Income (Loss)
Other(1)
Total
Shareholders’ Equity, as of December 31, 2020
$5,874,109 $3,029,244 $(132,261)$8,771,092 
Effect of changes in discount rate assumptions— (7,829,753)— (7,829,753)
Effect of capping and flooring(38,992)— — (38,992)
Effect of removal of unrealized gain (loss) on DAC— 4,704 — 4,704 
Other adjustments26,470 — — 26,470 
Shareholders’ Equity, as of January 1, 2021
$5,861,587 $(4,795,805)$(132,261)$933,521 
(1)Other represents common stock, additional paid-in capital, and treasury stock, combining balances that were unaffected by the new standard.

As of the Transition Date, the primary effects of the changes required by the standard were to AOCI and retained earnings. As seen in the table above, the transition adjustments impacting AOCI consist of the effect of changes in discount rate assumptions and the effect of the removal of unrealized gains (losses) on DAC. The effect of changes in discount rate assumptions is the impact, net of tax, of the Company re-measuring its liability for future policy benefits using current discount rates. As of the Transition Date, we experienced a lower level of current discount rates than the original discount rates used in valuing our future policy benefits under the prior guidance, thus reducing Shareholders' Equity. For the effect of removing unrealized gains (losses) on DAC, this adjustment relates to the requirement to remove unrealized gains (losses) that were included within the amortization calculation, as noted previously.
Regarding the impact on retained earnings, when the present value of net premiums exceeds the present value of gross premiums for a given cohort (capping), or the present value of future benefits and related termination expenses exceeds the present value of future gross premiums (flooring), an adjustment is recognized to the liability for future policy benefits. Any blocks of business that require increases in future policy benefits to minimum levels, or that have a net premium ratio greater than 100%, required an adjustment to the opening balance of retained earnings (decrease).
Accounting Pronouncements Yet to be Adopted: ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, adds disclosure requirements specific to equity securities subject to contractual sale restrictions. The disclosures clarify the nature of the contractual sale as well as the duration of the restriction and the circumstances that could cause a lapse in the restriction.

This standard is effective for the Company on January 1, 2024, and will be implemented on a prospective basis. The Company does not expect the standard will have a material impact on the Consolidated Financial Statements.
Effect of New Accounting Standards on Previously Reported Results: The impacts from the adoption of ASU 2018-12 on the Company's previously reported results included in these financial statements are as follows:

Condensed Consolidated Balance Sheets
December 31, 2022
As Previously ReportedAdoption ImpactAs Adjusted
Assets:
Other receivables$484,887 $104,192 $589,079 
Deferred acquisition costs5,249,907 285,790 5,535,697 
Liabilities:
Future policy benefits16,721,846 1,318,196 18,040,042 
Unearned and advance premium60,742 192,398 253,140 
Policy claims and other benefits payable430,027 77,192 507,219 
Current and deferred income taxes686,172 (251,523)434,649 
Shareholders' equity:
Accumulated other comprehensive income (loss)(1,415,714)(1,374,599)(2,790,313)
Retained earnings6,466,220 428,315 6,894,535 

Condensed Consolidated Statements of Operations
Three Months Ended
March 31, 2022
As Previously ReportedAdoption ImpactAs Adjusted
Revenue:
Life premium$754,602 $(5,474)$749,128 
Health premium317,000 (1,316)315,684 
Net investment income243,834 1,060 244,894 
Benefits and expenses:
Life policyholder benefits549,343 (53,914)495,429 
Health policyholder benefits196,855 (7,837)189,018 
Other policyholder benefits7,050 2,652 9,702 
Amortization of deferred acquisition costs158,384 (73,888)84,496 
Commissions, premium taxes, and non-deferred acquisition costs90,813 34,696 125,509 
Income before income taxes201,615 92,561 294,176 
Income tax benefit (expense)(37,254)(19,438)(56,692)
Net income
$164,361 $73,123 $237,484 
Basic net income per common share
$1.66 $0.73 $2.39 
Diluted net income per common share
$1.64 $0.73 $2.37 

See Note 1—Significant Accounting Policies, Note 6—Policy Liabilities, and Note 7—DAC for additional information on the adoption.