[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 37-0911756 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | X | Accelerated filer | |||
Non-accelerated filer | Smaller reporting company | ||||
Emerging growth company | |||||
PART I - FINANCIAL INFORMATION | Page | |
Item 1. | Financial Statements | |
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1A. | ||
Item 2. | ||
Item 5. | ||
Item 6. | ||
/s/ KPMG LLP | |
KPMG LLP | |
Chicago, Illinois | |
November 8, 2017 | |
September 30, 2017 | December 31, 2016 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Investments | ||||||||
Fixed maturity securities, available for sale, at fair value (amortized cost 2017, $7,194,397; 2016, $7,152,127) | $ | $ | ||||||
Equity securities, available for sale, at fair value (cost 2017, $140,200; 2016, $134,013) | ||||||||
Short-term and other investments | ||||||||
Total investments | ||||||||
Cash | ||||||||
Deferred policy acquisition costs | ||||||||
Goodwill | ||||||||
Other assets | ||||||||
Separate Account (variable annuity) assets | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Policy liabilities | ||||||||
Investment contract and life policy reserves | $ | $ | ||||||
Unpaid claims and claim expenses | ||||||||
Unearned premiums | ||||||||
Total policy liabilities | ||||||||
Other policyholder funds | ||||||||
Other liabilities | ||||||||
Long-term debt | ||||||||
Separate Account (variable annuity) liabilities | ||||||||
Total liabilities | ||||||||
Preferred stock, $0.001 par value, authorized 1,000,000 shares; none issued | ||||||||
Common stock, $0.001 par value, authorized 75,000,000 shares; issued, 2017, 65,382,877; 2016, 64,917,683 | ||||||||
Additional paid-in capital | ||||||||
Retained earnings | ||||||||
Accumulated other comprehensive income (loss), net of taxes: | ||||||||
Net unrealized investment gains on fixed maturity and equity securities | ||||||||
Net funded status of benefit plans | ( | ) | ( | ) | ||||
Treasury stock, at cost, 2017, 24,721,372 shares; 2016, 24,672,932 shares | ( | ) | ( | ) | ||||
Total shareholders’ equity | ||||||||
Total liabilities and shareholders’ equity | $ | $ | ||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues | ||||||||||||||||
Insurance premiums and contract charges earned | $ | $ | $ | $ | ||||||||||||
Net investment income | ||||||||||||||||
Net realized investment gains (losses) | ( | ) | ( | ) | ||||||||||||
Other income | ||||||||||||||||
Total revenues | ||||||||||||||||
Benefits, losses and expenses | ||||||||||||||||
Benefits, claims and settlement expenses | ||||||||||||||||
Interest credited | ||||||||||||||||
Policy acquisition expenses amortized | ||||||||||||||||
Operating expenses | ||||||||||||||||
Interest expense | ||||||||||||||||
Total benefits, losses and expenses | ||||||||||||||||
Income before income taxes | ||||||||||||||||
Income tax expense | ||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Net income per share | ||||||||||||||||
Basic | $ | $ | $ | $ | ||||||||||||
Diluted | $ | $ | $ | $ | ||||||||||||
Weighted average number of common and common equivalent shares (in thousands) | ||||||||||||||||
Basic | ||||||||||||||||
Diluted | ||||||||||||||||
Net realized investment gains (losses) | ||||||||||||||||
Total other-than-temporary impairment losses on securities | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Portion of losses recognized in other comprehensive income | ( | ) | ||||||||||||||
Net other-than-temporary impairment losses on securities recognized in earnings | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Realized investment gains, net | ||||||||||||||||
Total | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Comprehensive income | ||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Other comprehensive income, net of taxes: | ||||||||||||||||
Change in net unrealized investment gains on fixed maturity and equity securities | ||||||||||||||||
Change in net funded status of benefit plans | ||||||||||||||||
Other comprehensive income | ||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Common stock, $0.001 par value | ||||||||
Beginning balance | $ | $ | ||||||
Options exercised, 2017, 156,211 shares; 2016, 114,507 shares | ||||||||
Conversion of common stock units, 2017, 15,981 shares; 2016, 15,629 shares | ||||||||
Conversion of restricted stock units, 2017, 293,002 shares; 2016, 188,207 shares | ||||||||
Ending balance | ||||||||
Additional paid-in capital | ||||||||
Beginning balance | ||||||||
Options exercised and conversion of common stock units and restricted stock units | ||||||||
Share-based compensation expense | ||||||||
Ending balance | ||||||||
Retained earnings | ||||||||
Beginning balance | ||||||||
Net income | ||||||||
Cash dividends, 2017, $0.825 per share; 2016, $0.795 per share | ( | ) | ( | ) | ||||
Ending balance | ||||||||
Accumulated other comprehensive income, net of taxes | ||||||||
Beginning balance | ||||||||
Change in net unrealized investment gains on fixed maturity and equity securities | ||||||||
Change in net funded status of benefit plans | ||||||||
Ending balance | ||||||||
Treasury stock, at cost | ||||||||
Beginning balance, 2017, 24,672,932 shares; 2016, 23,971,522 shares | ( | ) | ( | ) | ||||
Acquisition of shares, 2017, 48,440 shares; 2016, 701,410 shares | ( | ) | ( | ) | ||||
Ending balance, 2017, 24,721,372 shares; 2016, 24,672,932 shares | ( | ) | ( | ) | ||||
Shareholders’ equity at end of period | $ | $ | ||||||
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Cash flows - operating activities | ||||||||
Premiums collected | $ | $ | ||||||
Policyholder benefits paid | ( | ) | ( | ) | ||||
Policy acquisition and other operating expenses paid | ( | ) | ( | ) | ||||
Federal income taxes paid | ( | ) | ( | ) | ||||
Investment income collected | ||||||||
Interest expense paid | ( | ) | ( | ) | ||||
Other | ||||||||
Net cash provided by operating activities | ||||||||
Cash flows - investing activities | ||||||||
Fixed maturity securities | ||||||||
Purchases | ( | ) | ( | ) | ||||
Sales | ||||||||
Maturities, paydowns, calls and redemptions | ||||||||
Purchase of other invested assets | ( | ) | ( | ) | ||||
Net cash used in equity securities, short-term and other investments | ( | ) | ( | ) | ||||
Net cash used in investing activities | ( | ) | ( | ) | ||||
Cash flows - financing activities | ||||||||
Dividends paid to shareholders | ( | ) | ( | ) | ||||
Acquisition of treasury stock | ( | ) | ( | ) | ||||
Proceeds from exercise of stock options | ||||||||
Withholding tax payments on RSUs tendered | ( | ) | ( | ) | ||||
Annuity contracts: variable, fixed and FHLB funding agreements | ||||||||
Deposits | ||||||||
Benefits, withdrawals and net transfers to Separate Account (variable annuity) assets | ( | ) | ( | ) | ||||
Transfer of Company 401(k) assets to a third-party provider | ( | ) | ||||||
Life policy accounts | ||||||||
Deposits | ||||||||
Withdrawals and surrenders | ( | ) | ( | ) | ||||
Change in bank overdrafts | ( | ) | ||||||
Net cash (used in) provided by financing activities | ( | ) | ||||||
Net (decrease) increase in cash | ( | ) | ||||||
Cash at beginning of period | ||||||||
Cash at end of period | $ | $ | ||||||
($ in thousands) | September 30, 2017 | December 31, 2016 | ||||||
Investment contract reserves | $ | $ | ||||||
Life policy reserves | ||||||||
Total | $ | $ | ||||||
($ in thousands) | Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities (1)(2) | Benefit Plans (1) | Total (1) | |||||||||
Beginning balance, July 1, 2017 | $ | $ | ( | ) | $ | |||||||
Other comprehensive income (loss) before reclassifications | ||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | ||||||||||||
Net current period other comprehensive income | ||||||||||||
Ending balance, September 30, 2017 | $ | $ | ( | ) | $ | |||||||
Beginning balance, January 1, 2017 | $ | $ | ( | ) | $ | |||||||
Other comprehensive income (loss) before reclassifications | ||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | ||||||||||||
Net current period other comprehensive income | ||||||||||||
Ending balance, September 30, 2017 | $ | $ | ( | ) | $ | |||||||
(1) | All amounts are net of tax. |
(2) | The pretax amounts reclassified from accumulated other comprehensive income (loss), $( |
($ in thousands) | Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities (1)(2) | Benefit Plans (1) | Total (1) | |||||||||
Beginning balance, July 1, 2016 | $ | $ | ( | ) | $ | |||||||
Other comprehensive income (loss) before reclassifications | ||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | ( | ) | ( | ) | ||||||||
Net current period other comprehensive income | ||||||||||||
Ending balance, September 30, 2016 | $ | $ | ( | ) | $ | |||||||
Beginning balance, January 1, 2016 | $ | $ | ( | ) | $ | |||||||
Other comprehensive income (loss) before reclassifications | ||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | ( | ) | ( | ) | ||||||||
Net current period other comprehensive income | ||||||||||||
Ending balance, September 30, 2016 | $ | $ | ( | ) | $ | |||||||
(1) | All amounts are net of tax. |
(2) |
($ in thousands) | Amortized Cost or Cost | Unrealized Investment Gains | Unrealized Investment Losses | Fair Value | OTTI in AOCI (1) | |||||||||||||||
September 30, 2017 | ||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||
U.S. Government and federally sponsored agency obligations (2): | ||||||||||||||||||||
Mortgage-backed securities | $ | $ | $ | $ | $ | |||||||||||||||
Other, including U.S. Treasury securities | ||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||
Foreign government bonds | ||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||
Other mortgage-backed securities | ||||||||||||||||||||
Totals | $ | $ | $ | $ | $ | |||||||||||||||
Equity securities (3) | $ | $ | $ | $ | $ | |||||||||||||||
December 31, 2016 | ||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||
U.S. Government and federally sponsored agency obligations (2): | ||||||||||||||||||||
Mortgage-backed securities | $ | $ | $ | $ | $ | |||||||||||||||
Other, including U.S. Treasury securities | ||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||
Foreign government bonds | ||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||
Other mortgage-backed securities | ||||||||||||||||||||
Totals | $ | $ | $ | $ | $ | |||||||||||||||
Equity securities (3) | $ | $ | $ | $ | $ | |||||||||||||||
(1) | Related to securities for which an unrealized loss was bifurcated to distinguish the credit-related portion and the portion driven by other market factors. Represents the amount of OTTI losses in AOCI which was not included in earnings; amounts also include net unrealized investment gains and losses on such impaired securities relating to changes in the fair value of those securities subsequent to the impairment measurement date. |
(2) | Fair value includes securities issued by Federal National Mortgage Association (“FNMA”) of $ |
(3) |
($ in thousands) | 12 Months or Less | More than 12 Months | Total | |||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||||||||
September 30, 2017 | ||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||
U.S. Government and federally sponsored agency obligations: | ||||||||||||||||||||||||
Mortgage-backed securities | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Other | ||||||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||||||
Foreign government bonds | ||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||
Other mortgage-backed securities | ||||||||||||||||||||||||
Total fixed maturity securities | ||||||||||||||||||||||||
Equity securities (1) | ||||||||||||||||||||||||
Combined totals | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Number of positions with a gross unrealized loss | ||||||||||||||||||||||||
Fair value as a percentage of total fixed maturity and equity securities fair value | % | % | % | |||||||||||||||||||||
December 31, 2016 | ||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||
U.S. Government and federally sponsored agency obligations: | ||||||||||||||||||||||||
Mortgage-backed securities | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Other | ||||||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||||||
Foreign government bonds | ||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||
Other mortgage-backed securities | ||||||||||||||||||||||||
Total fixed maturity securities | ||||||||||||||||||||||||
Equity securities (1) | ||||||||||||||||||||||||
Combined totals | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Number of positions with a gross unrealized loss | ||||||||||||||||||||||||
Fair value as a percentage of total fixed maturity and equity securities fair value | % | % | % | |||||||||||||||||||||
(1) | Includes nonredeemable perpetual preferred stocks, common stocks and closed-end funds. |
($ in thousands) | Nine Months Ended September 30, | |||||||
2017 | 2016 | |||||||
Cumulative credit loss (1) | ||||||||
Beginning of period | $ | $ | ||||||
New credit losses | ||||||||
Increases to previously recognized credit losses | ||||||||
Gains related to securities sold or paid down during the period | ( | ) | ||||||
End of period | $ | $ | ||||||
(1) |
($ in thousands) | Percent of Total Fair Value | September 30, 2017 | ||||||||||||
September 30, 2017 | December 31, 2016 | Fair Value | Amortized Cost | |||||||||||
Estimated expected maturity: | ||||||||||||||
Due in 1 year or less | % | % | $ | $ | ||||||||||
Due after 1 year through 5 years | ||||||||||||||
Due after 5 years through 10 years | ||||||||||||||
Due after 10 years through 20 years | ||||||||||||||
Due after 20 years | ||||||||||||||
Total | % | % | $ | $ | ||||||||||
Average option-adjusted duration, in years | 6.0 | 5.9 | ||||||||||||
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Fixed maturity securities | ||||||||||||||||
Proceeds received | $ | $ | $ | $ | ||||||||||||
Gross gains realized | ||||||||||||||||
Gross losses realized | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Equity securities | ||||||||||||||||
Proceeds received | $ | $ | $ | $ | ||||||||||||
Gross gains realized | ||||||||||||||||
Gross losses realized | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net unrealized investment gains and losses on fixed maturity securities, net of tax | ||||||||||||||||
Beginning of period | $ | $ | $ | $ | ||||||||||||
Change in net unrealized investment gains and losses | ||||||||||||||||
Reclassification of net realized investment (gains) losses to net income | ( | ) | ( | ) | ||||||||||||
End of period | $ | $ | $ | $ | ||||||||||||
Net unrealized investment gains and losses on equity securities, net of tax | ||||||||||||||||
Beginning of period | $ | $ | $ | $ | ||||||||||||
Change in net unrealized investment gains and losses | ( | ) | ||||||||||||||
Reclassification of net realized investment (gains) losses to net income | ( | ) | ( | ) | ||||||||||||
End of period | $ | $ | $ | $ | ||||||||||||
($ in thousands) | Gross Amounts Offset in the | Net Amounts of Assets/ Liabilities Presented in the | Gross Amounts Not Offset in the Consolidated Balance Sheets | |||||||||||||||||||||
Gross Amounts | Consolidated Balance Sheets | Consolidated Balance Sheets | Financial Instruments | Cash Collateral Received | Net Amount | |||||||||||||||||||
September 30, 2017 | ||||||||||||||||||||||||
Asset derivatives: | ||||||||||||||||||||||||
Free-standing derivatives | $ | $ | $ | $ | $ | $ | ( | ) | ||||||||||||||||
December 31, 2016 | ||||||||||||||||||||||||
Asset derivatives: | ||||||||||||||||||||||||
Free-standing derivatives | $ | $ | $ | $ | $ | $ | ( | ) | ||||||||||||||||
($ in thousands) | Fair Value Measurements at | |||||||||||||||||||
Carrying | Fair | Reporting Date Using | ||||||||||||||||||
Amount | Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
September 30, 2017 | ||||||||||||||||||||
Financial Assets | ||||||||||||||||||||
Investments | ||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||
U.S. Government and federally sponsored agency obligations: | ||||||||||||||||||||
Mortgage-backed securities | $ | $ | $ | $ | $ | |||||||||||||||
Other, including U.S. Treasury securities | ||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||
Foreign government bonds | ||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||
Other mortgage-backed securities | ||||||||||||||||||||
Total fixed maturity securities | ||||||||||||||||||||
Equity securities | ||||||||||||||||||||
Short-term investments | ||||||||||||||||||||
Other investments | ||||||||||||||||||||
Totals | $ | $ | $ | $ | $ | |||||||||||||||
Financial Liabilities | ||||||||||||||||||||
Investment contract and life policy reserves, embedded derivatives | $ | $ | $ | $ | $ | |||||||||||||||
Other policyholder funds, embedded derivatives | ||||||||||||||||||||
December 31, 2016 | ||||||||||||||||||||
Financial Assets | ||||||||||||||||||||
Investments | ||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||
U.S. Government and federally sponsored agency obligations: | ||||||||||||||||||||
Mortgage-backed securities | $ | $ | $ | $ | $ | |||||||||||||||
Other, including U.S. Treasury securities | ||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||
Foreign government bonds | ||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||
Other mortgage-backed securities | ||||||||||||||||||||
Total fixed maturity securities | ||||||||||||||||||||
Equity securities | ||||||||||||||||||||
Short-term investments | ||||||||||||||||||||
Other investments | ||||||||||||||||||||
Totals | $ | $ | $ | $ | $ | |||||||||||||||
Financial Liabilities | ||||||||||||||||||||
Investment contract and life policy reserves, embedded derivatives | $ | $ | $ | $ | $ | |||||||||||||||
Other policyholder funds, embedded derivatives | ||||||||||||||||||||
($ in thousands) | Financial Assets | Financial Liabilities(1) | ||||||||||||||||||||||||||||||
Municipal Bonds | Corporate Bonds | Mortgage- Backed Securities (2) | Total Fixed Maturity Securities | Equity Securities | Short-term Investments | Total | ||||||||||||||||||||||||||
Beginning balance, July 1, 2017 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Transfers into Level 3 (3) | ||||||||||||||||||||||||||||||||
Transfers out of Level 3 (3) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||||||
Net realized investment gains (losses) included in net income related to financial assets | ( | ) | ( | ) | ( | ) | ( | ) | — | |||||||||||||||||||||||
Net realized (gains) losses included in net income related to financial liabilities | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Net unrealized investment gains (losses) included in other comprehensive income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
Purchases | ||||||||||||||||||||||||||||||||
Issuances | ||||||||||||||||||||||||||||||||
Sales | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
Settlements | ||||||||||||||||||||||||||||||||
Paydowns, maturities and distributions | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Ending balance, September 30, 2017 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Beginning balance, January 1, 2017 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Transfers into Level 3 (3) | ||||||||||||||||||||||||||||||||
Transfers out of Level 3 (3) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||||||
Net realized investment gains (losses) included in net income related to financial assets | ( | ) | ( | ) | ( | ) | ( | ) | — | |||||||||||||||||||||||
Net realized (gains) losses included in net income related to financial liabilities | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Net unrealized investment gains (losses) included in other comprehensive income | ||||||||||||||||||||||||||||||||
Purchases | ||||||||||||||||||||||||||||||||
Issuances | ||||||||||||||||||||||||||||||||
Sales | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
Settlements | ||||||||||||||||||||||||||||||||
Paydowns, maturities and distributions | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Ending balance, September 30, 2017 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
(1) | Represents embedded derivatives, all related to the Company’s FIA products, reported in Other policyholder funds in the Company’s Consolidated Balance Sheets. |
(2) | Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities. |
(3) |
($ in thousands) | Financial Assets | Financial Liabilities(1) | ||||||||||||||||||||||||||||||
Municipal Bonds | Corporate Bonds | Mortgage- Backed Securities (2) | Total Fixed Maturity Securities | Equity Securities | Short-term Investments | Total | ||||||||||||||||||||||||||
Beginning balance, July 1, 2016 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Transfers into Level 3 (3) | ||||||||||||||||||||||||||||||||
Transfers out of Level 3 (3) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||||||
Net realized investment gains (losses) included in net income related to financial assets | ( | ) | ( | ) | ( | ) | — | |||||||||||||||||||||||||
Net realized (gains) losses included in net income related to financial liabilities | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Net unrealized investment gains (losses) included in other comprehensive income | ( | ) | ||||||||||||||||||||||||||||||
Purchases | ||||||||||||||||||||||||||||||||
Issuances | ||||||||||||||||||||||||||||||||
Sales | ||||||||||||||||||||||||||||||||
Settlements | ||||||||||||||||||||||||||||||||
Paydowns, maturities and distributions | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Ending balance, September 30, 2016 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Beginning balance, January 1, 2016 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Transfers into Level 3 (3) | ||||||||||||||||||||||||||||||||
Transfers out of Level 3 (3) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||||||
Net realized investment gains (losses) included in net income related to financial assets | ( | ) | ( | ) | ( | ) | ( | ) | — | |||||||||||||||||||||||
Net realized (gains) losses included in net income related to financial liabilities | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Net unrealized investment gains (losses) included in other comprehensive income | ||||||||||||||||||||||||||||||||
Purchases | ||||||||||||||||||||||||||||||||
Issuances | ||||||||||||||||||||||||||||||||
Sales | ||||||||||||||||||||||||||||||||
Settlements | ||||||||||||||||||||||||||||||||
Paydowns, maturities and distributions | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Ending balance, September 30, 2016 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
(1) | Represents embedded derivatives, all related to the Company’s FIA products, reported in Other policyholder funds in the Company’s Consolidated Balance Sheets. |
(2) | Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities. |
(3) |
($ in thousands) | Fair Value Measurements at | |||||||||||||||||||
Carrying | Fair | Reporting Date Using | ||||||||||||||||||
Amount | Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
September 30, 2017 | ||||||||||||||||||||
Financial Assets | ||||||||||||||||||||
Investments | ||||||||||||||||||||
Other investments | $ | $ | $ | $ | $ | |||||||||||||||
Financial Liabilities | ||||||||||||||||||||
Investment contract reserves | ||||||||||||||||||||
Life policy reserves, account values on life contracts | ||||||||||||||||||||
Other policyholder funds | ||||||||||||||||||||
Long-term debt | ||||||||||||||||||||
December 31, 2016 | ||||||||||||||||||||
Financial Assets | ||||||||||||||||||||
Investments | ||||||||||||||||||||
Other investments | $ | $ | $ | $ | $ | |||||||||||||||
Financial Liabilities | ||||||||||||||||||||
Investment contract reserves | ||||||||||||||||||||
Life policy reserves, account values on life contracts | ||||||||||||||||||||
Other policyholder funds | ||||||||||||||||||||
Long-term debt | ||||||||||||||||||||
($ in thousands) | September 30, 2017 | December 31, 2016 | ||||||
Assets | ||||||||
Derivative instruments, included in Short-term and other investments | $ | $ | ||||||
Liabilities | ||||||||
FIA - embedded derivatives, included in Other policyholder funds | $ | $ | ||||||
IUL - embedded derivatives, included in Investment contract and life policy reserves | ||||||||
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Change in fair value of derivatives (1): | ||||||||||||||||
Revenues | ||||||||||||||||
Net realized investment gains | $ | $ | $ | $ | ||||||||||||
Change in fair value of embedded derivatives: | ||||||||||||||||
Revenues | ||||||||||||||||
Net realized investment losses | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
(1) |
($ in thousands) | September 30, 2017 | December 31, 2016 | ||||||||||||||||
Credit Rating | Notional | Fair | Notional | Fair | ||||||||||||||
Counterparty | S&P | Amount | Value | Amount | Value | |||||||||||||
Bank of America, N.A. | $ | $ | $ | $ | ||||||||||||||
Barclays Bank PLC | ||||||||||||||||||
Citigroup Inc. | ||||||||||||||||||
Credit Suisse International | ||||||||||||||||||
Societe Generale | ||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Property and Casualty segment | ||||||||||||||||
Beginning Gross reserves (1) | $ | $ | $ | $ | ||||||||||||
Less: reinsurance recoverables | ||||||||||||||||
Net reserves, beginning of period (2) | ||||||||||||||||
Incurred claims and claim expenses: | ||||||||||||||||
Claims occurring in the current period | ||||||||||||||||
Decrease in estimated reserves for claims occurring in prior periods (3) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Total claims and claim expenses incurred (4) | ||||||||||||||||
Claims and claim expense payments for claims occurring during: | ||||||||||||||||
Current period | ||||||||||||||||
Prior periods | ||||||||||||||||
Total claims and claim expense payments | ||||||||||||||||
Net reserves, end of period (2) | ||||||||||||||||
Plus: reinsurance recoverables | ||||||||||||||||
Ending Gross reserves (1) | $ | $ | $ | $ | ||||||||||||
(1) | Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for the Life and Retirement segments of $ |
(2) | Reserves net of anticipated reinsurance recoverables. |
(3) | Shows the amounts by which the Company decreased its reserves in each of the periods indicated for claims occurring in previous periods to reflect subsequent information on such claims and changes in their projected final settlement costs. |
(4) | Benefits, claims and settlement expenses as reported in the Consolidated Statements of Operations also include amounts for the Life and Retirement segments of $ |
($ in thousands) | September 30, 2017 | December 31, 2016 | ||||||
Short-term debt: | ||||||||
Bank Credit Facility, expires July 30, 2019 | $ | $ | ||||||
Long-term debt: | ||||||||
4.50% Senior Notes, due December 1, 2025. Aggregate principal amount of $250,000 thousand less unaccrued discount of $561 thousand and $603 thousand (4.5% imputed rate) and unamortized debt issuance costs of $2,036 thousand and $2,188 thousand | ||||||||
($ in thousands) | Gross Amount | Ceded to Other Companies | Assumed from Other Companies | Net Amount | ||||||||||||
Three months ended September 30, 2017 | ||||||||||||||||
Premiums written and contract deposits | $ | $ | $ | $ | ||||||||||||
Premiums and contract charges earned | ||||||||||||||||
Benefits, claims and settlement expenses | ||||||||||||||||
Three months ended September 30, 2016 | ||||||||||||||||
Premiums written and contract deposits | $ | $ | $ | $ | ||||||||||||
Premiums and contract charges earned | ||||||||||||||||
Benefits, claims and settlement expenses | ||||||||||||||||
Nine months ended September 30, 2017 | ||||||||||||||||
Premiums written and contract deposits | $ | $ | $ | $ | ||||||||||||
Premiums and contract charges earned | ||||||||||||||||
Benefits, claims and settlement expenses | ||||||||||||||||
Nine months ended September 30, 2016 | ||||||||||||||||
Premiums written and contract deposits | $ | $ | $ | $ | ||||||||||||
Premiums and contract charges earned | ||||||||||||||||
Benefits, claims and settlement expenses | ||||||||||||||||
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Insurance premiums and contract charges earned | ||||||||||||||||
Property and Casualty | $ | $ | $ | $ | ||||||||||||
Retirement | ||||||||||||||||
Life | ||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||
Net investment income | ||||||||||||||||
Property and Casualty | $ | $ | $ | $ | ||||||||||||
Retirement | ||||||||||||||||
Life | ||||||||||||||||
Corporate and Other | ||||||||||||||||
Intersegment eliminations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Total | $ | $ | $ | $ | ||||||||||||
Net income (loss) | ||||||||||||||||
Property and Casualty | $ | $ | $ | $ | ||||||||||||
Retirement | ||||||||||||||||
Life | ||||||||||||||||
Corporate and Other | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Total | $ | $ | $ | $ | ||||||||||||
($ in thousands) | September 30, 2017 | December 31, 2016 | ||||||
Assets | ||||||||
Property and Casualty | $ | $ | ||||||
Retirement | ||||||||
Life | ||||||||
Corporate and Other | ||||||||
Intersegment eliminations | ( | ) | ( | ) | ||||
Total | $ | $ | ||||||
• | The impact that a prolonged economic recession may have on the Company’s investment portfolio; volume of new business for automobile, homeowners, retirement and life products; policy renewal rates; and additional annuity contract deposit receipts. |
• | Fluctuations in the fair value of securities in the Company’s investment portfolio and the related after tax effect on the Company’s shareholders’ equity and total capital through either realized or unrealized investment losses. |
• | Prevailing low interest rate levels, including the impact of interest rates on (1) the Company’s ability to maintain appropriate interest rate spreads over minimum fixed rates guaranteed in the Company’s annuity and life products, (2) the book yield of the Company’s investment portfolio, (3) unrealized gains and losses in the Company’s investment portfolio and the related after tax effect on the Company’s shareholders’ equity and total capital, (4) amortization of deferred policy acquisition costs and (5) capital levels of the Company’s life insurance subsidiaries. |
• | The frequency and severity of events such as hurricanes, storms, earthquakes and wildfires, and the ability of the Company to provide accurate estimates of ultimate claim costs in its consolidated financial statements. |
• | The Company’s risk exposure to catastrophe-prone areas. Based on full year 2016 Property and Casualty direct earned premiums, the Company’s ten largest states represented 57% of the segment total. Included in this top ten group are certain states which are considered more prone to catastrophe occurrences: California, North Carolina, Texas, South Carolina, Florida and Louisiana. |
• | The ability of the Company to maintain a favorable catastrophe reinsurance program considering both availability and cost; and the collectibility of reinsurance receivables. |
• | Adverse changes in market appreciation, interest spreads, business persistency and policyholder mortality and morbidity rates and the resulting impact on both estimated reserves and the amortization of deferred policy acquisition costs. |
• | The Company’s ability to refinance outstanding indebtedness or repurchase shares of the Company’s common stock. |
• | The Company’s ability to (1) develop and expand its marketing operations, including agents and other points of distribution, (2) maintain and secure access to educators, school administrators, principals and school business officials; and (3) profitably expand its Property and Casualty business in highly competitive environments. |
• | The effects of economic forces and other issues affecting the educator market including, but not limited to, federal, state and local budget deficits and cut-backs and adverse changes in state and local tax revenues. The effects of these forces can include, among others, teacher layoffs and early retirements, as well as individual concerns regarding employment and economic uncertainty. |
• | Changes in federal and state laws and regulations, which affect the relative tax and other advantages of the Company’s life and annuity products to customers, including, but not limited to, changes in IRS regulations governing Section 403(b) plans. |
• | Changes in public employee retirement programs as a result of federal and/or state level pension reform initiatives. |
• | Changes in federal and state laws and regulations, which affect the relative tax advantage of certain investments or which affect the ability of debt issuers to declare bankruptcy or restructure debt. |
• | The Company’s ability to effectively implement new or enhanced information technology systems and applications. |
• | Changes in Cybersecurity regulations as a result of state level requirements. |
($ in millions) | Three Months Ended September 30, | Change From Prior Year | Nine Months Ended September 30, | Change From Prior Year | ||||||||||||||||||||||||||
2017 | 2016 | Percent | Amount | 2017 | 2016 | Percent | Amount | |||||||||||||||||||||||
Insurance premiums written and contract deposits (includes annuity and life contract deposits) | ||||||||||||||||||||||||||||||
Property and Casualty | $ | 177.2 | $ | 169.8 | 4.4 | % | $ | 7.4 | $ | 498.0 | $ | 476.3 | 4.6 | % | $ | 21.7 | ||||||||||||||
Retirement (annuity) | 114.8 | 154.6 | -25.7 | % | (39.8 | ) | 348.9 | 391.9 | -11.0 | % | (43.0 | ) | ||||||||||||||||||
Life | 26.4 | 27.2 | -2.9 | % | (0.8 | ) | 79.8 | 78.4 | 1.8 | % | 1.4 | |||||||||||||||||||
Total | $ | 318.4 | $ | 351.6 | -9.4 | % | $ | (33.2 | ) | $ | 926.7 | $ | 946.6 | (2.1 | )% | $ | (19.9 | ) | ||||||||||||
Insurance premiums and contract charges earned (excludes annuity and life contract deposits) | ||||||||||||||||||||||||||||||
Property and Casualty | $ | 163.2 | $ | 155.7 | 4.8 | % | $ | 7.5 | $ | 482.0 | $ | 461.5 | 4.4 | % | $ | 20.5 | ||||||||||||||
Retirement (annuity) | 7.5 | 6.4 | 17.2 | % | 1.1 | 20.8 | 18.6 | 11.8 | % | 2.2 | ||||||||||||||||||||
Life | 28.3 | 29.0 | -2.4 | % | (0.7 | ) | 87.6 | 84.8 | 3.3 | % | 2.8 | |||||||||||||||||||
Total | $ | 199.0 | $ | 191.1 | 4.1 | % | $ | 7.9 | $ | 590.4 | $ | 564.9 | 4.5 | % | $ | 25.5 | ||||||||||||||
September 30, 2017 | December 31, 2016 | September 30, 2016 | ||||
Property and Casualty | ||||||
Automobile | 482,035 | 484,915 | 486,229 | |||
Property | 217,377 | 220,137 | 221,094 | |||
Total | 699,412 | 705,052 | 707,323 | |||
Retirement | 221,309 | 219,105 | 215,445 | |||
Life | 196,978 | 197,937 | 197,792 | |||
($ in millions) | September 30, 2017 | ||||||||||||||
Number of Issuers | Fair Value | Amortized Cost or Cost | Pretax Net Unrealized Investment Gain (Loss) | ||||||||||||
Fixed maturity securities | |||||||||||||||
Corporate bonds | |||||||||||||||
Banking & Finance | 119 | $ | 704.4 | $ | 661.9 | $ | 42.5 | ||||||||
Insurance | 56 | 284.5 | 255.4 | 29.1 | |||||||||||
Energy (1) | 58 | 232.7 | 217.8 | 14.9 | |||||||||||
Real Estate | 42 | 184.6 | 175.8 | 8.8 | |||||||||||
Technology | 34 | 180.6 | 172.0 | 8.6 | |||||||||||
HealthCare, Pharmacy | 51 | 163.1 | 152.3 | 10.8 | |||||||||||
Utilities | 42 | 153.8 | 134.5 | 19.3 | |||||||||||
Transportation | 37 | 150.2 | 142.8 | 7.4 | |||||||||||
Telecommunications | 26 | 110.9 | 102.6 | 8.3 | |||||||||||
Food and Beverage | 23 | 91.1 | 87.2 | 3.9 | |||||||||||
All other corporates (2) | 215 | 565.8 | 533.0 | 32.8 | |||||||||||
Total corporate bonds | 703 | 2,821.7 | 2,635.3 | 186.4 | |||||||||||
Mortgage-backed securities | |||||||||||||||
U.S. Government and federally sponsored agencies | 229 | 420.4 | 391.4 | 29.0 | |||||||||||
Commercial (3) | 125 | 535.1 | 531.4 | 3.7 | |||||||||||
Other | 28 | 70.1 | 69.0 | 1.1 | |||||||||||
Municipal bonds (4) | 378 | 1,842.2 | 1,669.3 | 172.9 | |||||||||||
Government bonds | |||||||||||||||
U.S. | 38 | 671.0 | 653.2 | 17.8 | |||||||||||
Foreign | 15 | 100.2 | 93.8 | 6.4 | |||||||||||
Collateralized debt obligations (5) | 87 | 522.4 | 517.4 | 5.0 | |||||||||||
Asset-backed securities | 101 | 647.5 | 633.6 | 13.9 | |||||||||||
Total fixed maturity securities | 1,704 | $ | 7,630.6 | $ | 7,194.4 | $ | 436.2 | ||||||||
Equity securities | |||||||||||||||
Non-redeemable preferred stocks | 14 | $ | 64.0 | $ | 61.5 | $ | 2.5 | ||||||||
Common stocks | 198 | 74.7 | 58.7 | 16.0 | |||||||||||
Closed-end fund | 1 | 20.6 | 20.0 | 0.6 | |||||||||||
Total equity securities | 213 | $ | 159.3 | $ | 140.2 | $ | 19.1 | ||||||||
Total | 1,917 | $ | 7,789.9 | $ | 7,334.6 | $ | 455.3 | ||||||||
(1) | At September 30, 2017, the fair value amount included $14.0 million of securities which were non-investment grade. |
(2) | The All other corporates category contains 18 additional industry sectors. Natural gas, broadcasting and media, consumer products, gaming, lodging and dining, retail and metal and mining represented $408.7 million of fair value at September 30, 2017, with the remaining 12 sectors each representing less than $32.7 million. |
(3) | At September 30, 2017, 100% were investment grade, with an overall credit rating of AA, and the positions were well diversified by property type, geography and sponsor. |
(4) | Holdings are geographically diversified, approximately 39% are tax-exempt and 78% are revenue bonds tied to essential services, such as mass transit, water and sewer. The overall credit quality of the municipal bond portfolio was AA- at September 30, 2017. |
(5) | Based on fair value, 96% of the collateralized debt obligation securities were rated investment grade by Standard and Poor’s Corporation (“S&P”) and/or Moody’s Investors Service, Inc. (“Moody’s”) at September 30, 2017. |
($ in millions) | Percent of Portfolio | |||||||||||||
Fair Value | September 30, 2017 | |||||||||||||
December 31, 2016 | September 30, 2017 | Fair Value | Amortized Cost or Cost | |||||||||||
Fixed maturity securities | ||||||||||||||
AAA | 8.3 | % | 7.4 | % | $ | 563.1 | $ | 544.6 | ||||||
AA (2) | 35.5 | 37.3 | 2,843.3 | 2,690.2 | ||||||||||
A | 23.6 | 24.2 | 1,845.0 | 1,714.8 | ||||||||||
BBB | 28.4 | 27.1 | 2,071.9 | 1,951.0 | ||||||||||
BB | 2.4 | 2.4 | 187.0 | 181.5 | ||||||||||
B | 1.0 | 0.8 | 64.3 | 63.1 | ||||||||||
CCC or lower | 0.2 | 0.1 | 4.9 | 4.9 | ||||||||||
Not rated (3) | 0.6 | 0.7 | 51.1 | 44.3 | ||||||||||
Total fixed maturity securities | 100.0 | % | 100.0 | % | $ | 7,630.6 | $ | 7,194.4 | ||||||
Equity securities | ||||||||||||||
AAA | — | — | — | — | ||||||||||
AA | — | — | — | — | ||||||||||
A | — | — | — | — | ||||||||||
BBB | 35.3 | % | 40.2 | % | $ | 64.0 | $ | 61.5 | ||||||
BB | — | — | — | — | ||||||||||
B | — | — | — | — | ||||||||||
CCC or lower | — | — | — | — | ||||||||||
Not rated | 64.7 | 59.8 | 95.3 | 78.7 | ||||||||||
Total equity securities | 100.0 | % | 100.0 | % | $ | 159.3 | $ | 140.2 | ||||||
Total | $ | 7,789.9 | $ | 7,334.6 | ||||||||||
(1) | Ratings are as assigned primarily by S&P when available, with remaining ratings as assigned on an equivalent basis by Moody’s. Ratings for publicly traded securities are determined when the securities are acquired and are updated monthly to reflect any changes in ratings. |
(2) | At September 30, 2017, the AA rated fair value amount included $671.0 million of U.S. Government and federally sponsored agency securities and $551.4 million of mortgage- and asset-backed securities issued by U.S. Government and federally sponsored agencies. |
(3) | This category primarily represents private placement and municipal securities not rated by either S&P or Moody’s. |
($ in millions) | Three Months Ended September 30, | Change From Prior Year | Nine Months Ended September 30, | Change From Prior Year | ||||||||||||||||||||||||||
2017 | 2016 | Percent | Amount | 2017 | 2016 | Percent | Amount | |||||||||||||||||||||||
Property and Casualty | $ | 114.9 | $ | 116.0 | -0.9 | % | $ | (1.1 | ) | $ | 384.9 | $ | 347.0 | 10.9 | % | $ | 37.9 | |||||||||||||
Retirement | 1.6 | 1.4 | 14.3 | % | 0.2 | 4.0 | 3.1 | 29.0 | % | 0.9 | ||||||||||||||||||||
Life | 18.4 | 18.3 | 0.5 | % | 0.1 | 56.0 | 53.5 | 4.7 | % | 2.5 | ||||||||||||||||||||
Total | $ | 134.9 | $ | 135.7 | -0.6 | % | $ | (0.8 | ) | $ | 444.9 | $ | 403.6 | 10.2 | % | $ | 41.3 | |||||||||||||
Property and Casualty catastrophe losses, included above | $ | 8.6 | $ | 8.4 | 2.4 | % | $ | 0.2 | $ | 58.2 | $ | 48.4 | 20.2 | % | $ | 9.8 | ||||||||||||||
($ in millions) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Incurred claims and claim expenses: | ||||||||||||||||
Claims occurring in the current year | $ | 115.4 | $ | 116.7 | $ | 387.0 | $ | 351.3 | ||||||||
Decrease in estimated reserves for claims occurring in prior years (2) | (0.5 | ) | (0.7 | ) | (2.1 | ) | (4.3 | ) | ||||||||
Total claims and claim expenses incurred | $ | 114.9 | $ | 116.0 | $ | 384.9 | $ | 347.0 | ||||||||
Property and Casualty loss ratio: | ||||||||||||||||
Total | 70.4 | % | 74.5 | % | 79.8 | % | 75.2 | % | ||||||||
Effect of catastrophe costs, included above (1) | 5.3 | % | 5.3 | % | 12.0 | % | 10.5 | % | ||||||||
Effect of prior years’ reserve development, included above (2) | -0.3 | % | -0.4 | % | -0.4 | % | -0.9 | % | ||||||||
(1) Property and Casualty catastrophe losses were incurred as follows: | ||||||||
2017 | 2016 | |||||||
Three months ended | ||||||||
March 31 | $ | 17.2 | $ | 12.7 | ||||
June 30 | 32.4 | 27.3 | ||||||
September 30 | 8.6 | 8.4 | ||||||
Total year-to-date | $ | 58.2 | $ | 48.4 | ||||
(2) Shows the amounts by which the Company decreased its reserves in each of the periods indicated for claims occurring in previous years to reflect subsequent information on such claims and changes in their projected final settlement costs. | ||||||||
2017 | 2016 | |||||||
Three months ended | ||||||||
March 31 | $ | (1.0 | ) | $ | (2.0 | ) | ||
June 30 | (0.6 | ) | (1.6 | ) | ||||
September 30 | (0.5 | ) | (0.7 | ) | ||||
Total year-to-date | $ | (2.1 | ) | $ | (4.3 | ) | ||
($ in millions) | Three Months Ended September 30, | Change From Prior Year | Nine Months Ended September 30, | Change From Prior Year | ||||||||||||||||||||||||||
2017 | 2016 | Percent | Amount | 2017 | 2016 | Percent | Amount | |||||||||||||||||||||||
Retirement (annuity) | $ | 38.8 | $ | 37.4 | 3.7 | % | $ | 1.4 | $ | 114.4 | $ | 109.4 | 4.6 | % | $ | 5.0 | ||||||||||||||
Life | 11.3 | 11.2 | 0.9 | % | 0.1 | 33.8 | 33.5 | 0.9 | % | 0.3 | ||||||||||||||||||||
Total | $ | 50.1 | $ | 48.6 | 3.1 | % | $ | 1.5 | $ | 148.2 | $ | 142.9 | 3.7 | % | $ | 5.3 | ||||||||||||||
($ in millions) | September 30, 2017 | ||||||||||||||||
Deferred Annuities at | |||||||||||||||||
Total Deferred Annuities | Minimum Guaranteed Rate | ||||||||||||||||
Percent of Total | Accumulated Value (“AV”) | Percent of Total Deferred Annuities AV | Percent of Total | Accumulated Value | |||||||||||||
Minimum guaranteed interest rates: | |||||||||||||||||
Less than 2% | 24.9 | % | $ | 1,083.8 | 51.3 | % | 14.7 | % | $ | 556.5 | |||||||
Equal to 2% but less than 3% | 7.1 | 307.4 | 83.0 | % | 6.8 | 255.1 | |||||||||||
Equal to 3% but less than 4% | 14.1 | 614.0 | 99.9 | % | 16.3 | 613.4 | |||||||||||
Equal to 4% but less than 5% | 52.6 | 2,288.7 | 100.0 | % | 60.7 | 2,288.7 | |||||||||||
5% or higher | 1.3 | 55.4 | 100.0 | % | 1.5 | 55.4 | |||||||||||
Total | 100.0 | % | $ | 4,349.3 | 86.7 | % | 100.0 | % | $ | 3,769.1 | |||||||
($ in millions) | Three Months Ended September 30, | Change From Prior Year | Nine Months Ended September 30, | Change From Prior Year | ||||||||||||||||||||||||||
2017 | 2016 | Percent | Amount | 2017 | 2016 | Percent | Amount | |||||||||||||||||||||||
Analysis of net income (loss) by segment: | ||||||||||||||||||||||||||||||
Property and Casualty | $ | 13.4 | $ | 6.7 | 100.0 | % | $ | 6.7 | $ | 2.2 | $ | 16.0 | -86.3 | % | $ | (13.8 | ) | |||||||||||||
Retirement | 13.6 | 15.7 | -13.4 | % | (2.1 | ) | 36.9 | 39.3 | -6.1 | % | (2.4 | ) | ||||||||||||||||||
Life | 4.8 | 4.6 | 4.3 | % | 0.2 | 14.3 | 13.1 | 9.2 | % | 1.2 | ||||||||||||||||||||
Corporate and Other (1) | (5.3 | ) | (0.1 | ) | N.M. | (5.2 | ) | (9.3 | ) | (4.5 | ) | 106.7 | % | (4.8 | ) | |||||||||||||||
Net income | $ | 26.5 | $ | 26.9 | -1.5 | % | $ | (0.4 | ) | $ | 44.1 | $ | 63.9 | -31.0 | % | $ | (19.8 | ) | ||||||||||||
Effect of catastrophe costs, after tax, included above | $ | (5.6 | ) | $ | (5.5 | ) | 1.8 | % | $ | (0.1 | ) | $ | (37.8 | ) | $ | (31.5 | ) | 20.0 | % | $ | (6.3 | ) | ||||||||
Effect of net realized investment gains (losses), after tax, included above | $ | (2.2 | ) | $ | 2.7 | N.M. | $ | (4.9 | ) | $ | (0.8 | ) | $ | 3.8 | -121.1 | % | $ | (4.6 | ) | |||||||||||
Diluted: | ||||||||||||||||||||||||||||||
Net income per share | $ | 0.64 | $ | 0.65 | -1.5 | % | $ | (0.01 | ) | $ | 1.06 | $ | 1.55 | -31.6 | % | $ | (0.49 | ) | ||||||||||||
Weighted average number of common and common equivalent shares (in millions) | 41.6 | 41.3 | 0.7 | % | 0.3 | 41.5 | 41.4 | 0.2 | % | 0.1 | ||||||||||||||||||||
Property and casualty combined ratio: | ||||||||||||||||||||||||||||||
Total | 95.8 | % | 101.5 | % | - | -5.7 pts | 106.5 | % | 102.4 | % | - | 4.1 pts | ||||||||||||||||||
Effect of catastrophe costs, included above | 5.3 | % | 5.3 | % | - | 0 pts | 12.0 | % | 10.5 | % | - | 1.5 pts | ||||||||||||||||||
Effect of prior years’ reserve development, included above | -0.3 | % | -0.4 | % | - | 0.1 pts | -0.4 | % | -0.9 | % | - | 0.5 pts | ||||||||||||||||||
(1) | The Corporate and Other segment includes interest expense on debt, net realized investment gains and losses, corporate debt retirement costs (when applicable), certain public company expenses and other corporate-level items. The Company does not allocate the impact of corporate-level transactions to the operating segments, consistent with the basis for management’s evaluation of the results of those segments. |
Insurance Financial | ||||||
Strength Ratings | Debt Ratings | |||||
(Outlook) | (Outlook) | |||||
As of October 31, 2017 | ||||||
S&P | A | (stable) | BBB | (stable) | ||
Moody’s | ||||||
Horace Mann Life Insurance Company | A3 | (positive) | N.A. | |||
HMEC’s Property and Casualty subsidiaries | A3 | (positive) | N.A. | |||
HMEC | N.A. | Baa3 | (positive) | |||
A.M. Best | A | (stable) | bbb | (stable) | ||
Fitch | A | (stable) | BBB | (stable) | ||
• | It could inhibit our ability to sell and service IRAs, resulting in a change and/or a reduction of the types of products we offer for IRAs, and impact our relationship with current clients. |
• | It could require changes in the way that we compensate our agents, thereby impacting our agents’ business model. |
• | It could require changes in our distribution model for financial services products and could result in a decrease in the number of our agents. |
• | It could increase our costs of doing IRA business and increase our litigation and regulatory risks. |
• | It could increase the cost and complexity of regulatory compliance for our Retirement segment’s products, including our recently introduced fixed indexed annuity product. |
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under The Plans or Programs | ||||||||
July 1 - 31 | — | — | — | $29.5 million | ||||||||
August 1 - 31 | — | — | — | $29.5 million | ||||||||
September 1 - 30 | 48,440 | $ | 34.26 | 48,440 | $27.8 million | |||||||
Total | 48,440 | $ | 34.26 | 48,440 | $27.8 million | |||||||
Exhibit | ||
No. | Description | |
(3) Articles of incorporation and bylaws: | ||
3.1 | ||
3.2 | Form of Certificate for shares of Common Stock, $0.001 par value per share, of HMEC, incorporated by reference to Exhibit 4.5 to HMEC’s Registration Statement on Form S-3 (Registration No. 33-53118) filed with the SEC on October 9, 1992. | |
3.3 | ||
(4) Instruments defining the rights of security holders, including indentures: | ||
4.1 | ||
4.1(a) | ||
4.2 | ||
(10) Material contracts: | ||
10.1 | ||
10.1(a) | ||
10.2* | ||
10.2(a)* | ||
10.2(b)* | ||
10.2(c)* | ||
10.2(d)* | ||
10.2(e)* | ||
10.3* | ||
10.3(a)* | ||
10.3(b)* | ||
10.3(c)* | ||
10.3(d)* | ||
10.3(e)* | ||
10.3(f)* | ||
10.3(g)* | ||
10.4* | ||
10.5* | ||
10.6* | ||
10.7* | ||
10.8* | ||
10.9* | ||
10.9(a)* | ||
10.10* | ||
10.10(a)* | ||
10.11* | ||
10.11(a)* | ||
10.11(b)* | ||
(31) Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002: | ||
31.1 | ||
31.2 | ||
(32) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002: | ||
32.1 | ||
32.2 | ||
(99) Additional exhibits: | ||
99.1 | ||
(101) Interactive Data File: | ||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | |
HORACE MANN EDUCATORS CORPORATION | |||
(Registrant) | |||
Date | November 8, 2017 | /s/ Marita Zuraitis | |
Marita Zuraitis | |||
President and Chief Executive Officer | |||
Date | November 8, 2017 | /s/ Bret A. Conklin | |
Bret A. Conklin | |||
Executive Vice President and | |||
Chief Financial Officer | |||
Date | November 8, 2017 | /s/ Kimberly A. Johnson | |
Kimberly A. Johnson | |||
Vice President, Controller and | |||
Principal Accounting Officer | |||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Basic: | ||||||||||||||||
Net income | $ | 26,551 | $ | 26,923 | $ | 44,130 | $ | 63,942 | ||||||||
Weighted average number of common shares during the period (in thousands) | 41,433 | 41,092 | 41,337 | 41,155 | ||||||||||||
Net income per share – basic | $ | 0.64 | $ | 0.66 | $ | 1.07 | $ | 1.55 | ||||||||
Diluted: | ||||||||||||||||
Net income | $ | 26,551 | $ | 26,923 | $ | 44,130 | $ | 63,942 | ||||||||
Weighted average number of common shares during the period | 41,433 | 41,092 | 41,337 | 41,155 | ||||||||||||
Weighted average number of common equivalent shares to reflect the dilutive effect of common stock equivalent securities: | ||||||||||||||||
Stock options | 84 | 117 | 119 | 98 | ||||||||||||
Common stock units related to deferred compensation for employees | 27 | 55 | 27 | 55 | ||||||||||||
Restricted common stock units related to incentive compensation | 31 | 83 | (16 | ) | 78 | |||||||||||
Total common and common equivalent shares adjusted to calculate diluted earnings per share | 41,575 | 41,347 | 41,467 | 41,386 | ||||||||||||
Net income per share – diluted | $ | 0.64 | $ | 0.65 | $ | 1.06 | $ | 1.55 | ||||||||
/s/ KPMG LLP | |
KPMG LLP | |
Chicago, Illinois | |
November 8, 2017 | |
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 based on such evaluation; 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 that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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. |
/s/ Marita Zuraitis | ||
Marita Zuraitis, Chief Executive Officer | ||
Horace Mann Educators Corporation | ||
Date: | November 8, 2017 | |
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 based on such evaluation; 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 that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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. |
/s/ Bret A. Conklin | ||
Bret A. Conklin, Chief Financial Officer | ||
Horace Mann Educators Corporation | ||
Date: | November 8, 2017 | |
(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. |
/s/ Marita Zuraitis | ||
Marita Zuraitis | ||
Chief Executive Officer | ||
Date: | November 8, 2017 | |
(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. |
/s/ Bret A. Conklin | ||
Bret A. Conklin | ||
Chief Financial Officer | ||
Date: | November 8, 2017 | |
• | Loss Ratio or Loss and Loss Adjustment Expense Ratio - The ratio of (1) the sum of net incurred losses and loss adjustment expenses to (2) net earned premiums. |
• | Expense Ratio - The ratio of (1) the sum of operating expenses and the amortization of policy acquisition costs to (2) net earned premiums. |
• | Combined Ratio - The sum of the Loss Ratio and the Expense Ratio. A Combined Ratio less than 100% generally indicates profitable underwriting prior to the consideration of net investment income. |
• | Combined Ratio Excluding Catastrophes and Prior Years’ Reserve Development or Underlying Combined Ratio - The sum of the Loss Ratio and the Expense Ratio adjusted to remove the effect of catastrophe costs and prior years’ reserve development. The Combined Ratio is the most directly comparable GAAP measure. Management believes this ratio provides a valuable measure of the Company’s underlying underwriting performance that may be obscured by the effects of catastrophe costs and prior years’ reserve development, the amounts of which may be significant and may vary significantly between periods. |
Document And Entity Information - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2017 |
Oct. 31, 2017 |
|
| Document And Entity Information [Abstract] | ||
| Document Type | 10-Q | |
| Amendment Flag | false | |
| Document Period End Date | Sep. 30, 2017 | |
| Document Fiscal Year Focus | 2017 | |
| Document Fiscal Period Focus | Q3 | |
| Entity Registrant Name | HORACE MANN EDUCATORS CORP /DE/ | |
| Entity Central Index Key | 0000850141 | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Filer Category | Large Accelerated Filer | |
| Trading Symbol | HMN | |
| Entity Common Stock, Shares Outstanding | 40,667,211 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Fixed maturities, available for sale, amortized cost (in usd) | $ 7,194,397 | $ 7,152,127 |
| Equity securities, available for sale, cost (in usd) | $ 140,200 | $ 134,013 |
| Preferred stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
| Preferred stock, shares issued | 0 | 0 |
| Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 75,000,000 | 75,000,000 |
| Common stock, shares issued | 65,382,877 | 64,917,683 |
| Treasury stock (in shares) | 24,721,372 | 24,672,932 |
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
| Revenues | ||||
| Insurance premiums and contract charges earned | $ 198,935 | $ 191,050 | $ 590,375 | $ 564,860 |
| Net investment income | 92,320 | 94,847 | 275,025 | 270,685 |
| Net realized investment gains (losses) | (3,486) | 3,985 | (1,656) | 6,911 |
| Other income | 2,048 | 1,294 | 4,813 | 3,581 |
| Total revenues | 289,817 | 291,176 | 868,557 | 846,037 |
| Benefits, losses and expenses | ||||
| Benefits, claims and settlement expenses | 134,895 | 135,710 | 444,870 | 403,631 |
| Interest credited | 50,078 | 48,658 | 148,200 | 142,924 |
| Policy acquisition expenses amortized | 24,210 | 24,474 | 73,904 | 73,113 |
| Operating expenses | 44,172 | 44,337 | 139,156 | 130,478 |
| Interest expense | 2,978 | 2,975 | 8,879 | 8,858 |
| Total benefits, losses and expenses | 256,333 | 256,154 | 815,009 | 759,004 |
| Income before income taxes | 33,484 | 35,022 | 53,548 | 87,033 |
| Income tax expense | 6,933 | 8,099 | 9,418 | 23,091 |
| Net income | $ 26,551 | $ 26,923 | $ 44,130 | $ 63,942 |
| Net income per share | ||||
| Basic (in usd per share) | $ 0.64 | $ 0.66 | $ 1.07 | $ 1.55 |
| Diluted (in usd per share) | $ 0.64 | $ 0.65 | $ 1.06 | $ 1.55 |
| Weighted average number of common and common equivalent shares (in thousands) | ||||
| Basic (in shares) | 41,433 | 41,092 | 41,337 | 41,155 |
| Diluted (in shares) | 41,575 | 41,347 | 41,467 | 41,386 |
| Net realized investment gains (losses) | ||||
| Total other-than-temporary impairment losses on securities | $ (6,091) | $ (160) | $ (12,452) | $ (7,686) |
| Portion of losses recognized in other comprehensive income | 0 | 0 | 0 | (290) |
| Net other-than-temporary impairment losses on securities recognized in earnings | (6,091) | (160) | (12,452) | (7,396) |
| Realized investment gains, net | 2,605 | 4,145 | 10,796 | 14,307 |
| Total | $ (3,486) | $ 3,985 | $ (1,656) | $ 6,911 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
| Comprehensive income | ||||
| Net income | $ 26,551 | $ 26,923 | $ 44,130 | $ 63,942 |
| Other comprehensive income, net of taxes: | ||||
| Change in net unrealized investment gains on fixed maturity and equity securities | 12,208 | 7,638 | 79,980 | 162,124 |
| Change in net funded status of benefit plans | 0 | 0 | 0 | 0 |
| Other comprehensive income | 12,208 | 7,638 | 79,980 | 162,124 |
| Total | $ 38,759 | $ 34,561 | $ 124,110 | $ 226,066 |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares |
9 Months Ended | |||
|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 | ||
| Treasury stock (in shares) | 24,721,372 | 24,672,932 | ||
| Common stock | ||||
| Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 | ||
| Options exercised (in shares) | 156,211 | 114,507 | ||
| Conversion of common stock units (in shares) | 15,981 | 15,629 | ||
| Conversion of restricted stock units (in shares) | 293,002 | 188,207 | ||
| Retained earnings | ||||
| Cash dividends (in usd per share) | $ 0.825 | $ 0.795 | ||
| Treasury stock, at cost | ||||
| Treasury stock (in shares) | 24,721,372 | 24,672,932 | 24,672,932 | 23,971,522 |
| Treasury stock, acquisitions (in shares) | 48,440 | 701,410 | ||
Basis of Presentation |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | The accompanying unaudited consolidated financial statements of Horace Mann Educators Corporation (“HMEC”; and together with its subsidiaries, the “Company” or “Horace Mann”) have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (“SEC”), specifically Regulation S-X and the instructions to Form 10-Q. Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP, but are not required for interim reporting purposes, have been omitted. The Company believes that these consolidated financial statements contain all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to present fairly the Company’s consolidated financial position as of September 30, 2017, the consolidated results of operations and comprehensive income for the three and nine month periods ended September 30, 2017 and 2016, and the consolidated changes in shareholders’ equity and cash flows for the nine month periods ended September 30, 2017 and 2016. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (1) the reported amounts of assets and liabilities, (2) disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and (3) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The subsidiaries of HMEC market and underwrite personal lines of property and casualty (primarily personal lines of automobile and homeowners) insurance, retirement annuities (primarily tax-qualified products) and life insurance, primarily to K-12 teachers, administrators and other employees of public schools and their families. HMEC’s principal operating subsidiaries are Horace Mann Life Insurance Company, Horace Mann Insurance Company, Teachers Insurance Company, Horace Mann Property & Casualty Insurance Company and Horace Mann Lloyds. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The results of operations for the three and nine month periods ended September 30, 2017 are not necessarily indicative of the results to be expected for the full year. The Company reclassified the presentation of certain prior period information to conform to the 2017 presentation. See “Adopted Accounting Standards”. Investment Contract and Life Policy Reserves This table summarizes the Company’s investment contract and life policy reserves.
Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) represents the accumulated change in shareholders’ equity from transactions and other events and circumstances from non-shareholder sources. For the Company, accumulated other comprehensive income (loss) includes the after tax change in net unrealized investment gains and losses on fixed maturity and equity securities and the after tax change in net funded status of benefit plans for the period as shown in the Consolidated Statement of Changes in Shareholders’ Equity. The following tables reconcile these components.
Comparative information for elements that are not required to be reclassified in their entirety to net income in the same reporting period is located in “Note 2 -- Investments -- Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities”. Adopted Accounting Standards Employee Share-based Payment Accounting Effective January 1, 2017, the Company adopted new accounting guidance for employee share-based payments which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The recognition and classification of the excess tax benefit provisions were applied prospectively in the results of operations. This adoption resulted in additional excess tax benefits of $2,864 thousand which reduced the current provision for income taxes in the results of operations. The statutory tax withholding classification, which are cash payments made to taxing authorities for withheld taxes funded through tendered shares, were applied retrospectively and the Company reclassified the statutory tax withholding requirements in the statement of cash flows from Other in operating activities to Withholding tax payments on RSUs tendered in financing activities. This statutory withholding reclassification resulted in $2,745 thousand and $3,321 thousand being included in financing activities for the nine month periods ended September 30, 2017 and 2016, respectively. There were no cumulative effect adjustments upon adoption of the new accounting guidance. Pending Accounting Standards Revenue Recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued accounting guidance to provide a single comprehensive model in accounting for revenue arising from contracts with customers. The guidance applies to all contracts with customers; however, insurance contracts are specifically excluded from this updated guidance. The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years. Early adoption is permitted only for annual reporting periods beginning after December 15, 2016. The Company plans to adopt the guidance as of January 1, 2018. Insurance contract revenue continues to fall under the scope of ASC 944, Financial Services - Insurance, and ASC 605, Revenue Recognition. The Company performed an evaluation of the non-insurance contract revenue that would be subject to ASC 606, Revenue from Contracts with Customers, and concluded that there is not a material impact to the consolidated financial statements upon adoption on January 1, 2018. Recognition and Measurement of Financial Assets and Liabilities In January 2016, the FASB issued accounting guidance to improve certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. Among other things, the guidance revises the accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value. The Company’s results of operations will be impacted as changes in fair value of equity securities will be reported in net income instead of reported in other comprehensive income. The effective date of the guidance is for interim and annual reporting periods beginning after December 15, 2017. The guidance has not yet been adopted. Had the Company adopted the guidance on September 30, 2017, $15,718 thousand of after-tax unrealized gains on equity securities would have been reclassified from accumulated other comprehensive income to retained earnings. The actual amount reclassified upon adoption will vary depending on the future changes in fair value of the Company's equity portfolio. Statement of Cash Flows -- Classification In August 2016, the FASB issued guidance to reduce diversity in practice in the statement of cash flows between operating, investing and financing activities related to the classification of cash receipts and cash payments for eight specific issues. The FASB acknowledged that current GAAP either is unclear or does not include specific guidance on these eight cash flow classification issues: (1) debt prepayment or extinguishment costs; (2) settlement of zero-coupon bonds (pertains to issuers); (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims (pertains to claimants); (5) proceeds from the settlement of corporate-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions (pertains to transferors) and (8) separately identifiable cash flows and application of the predominance principle. For public business entities, the guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years, using a retrospective approach. The guidance allows prospective adoption for individual issues if it is impracticable to apply the amendments retrospectively for those issues. Early application is permitted. Management believes the adoption of this accounting guidance will not have a material effect on the classifications in the Company’s consolidated statement of cash flows. The adoption of this accounting guidance will not have any effect on the results of operations or financial position of the Company. Accounting for Leases In February 2016, the FASB issued accounting and disclosure guidance to improve financial reporting and comparability among organizations about leasing transactions. Under the new guidance, for leases with lease terms of more than 12 months, a lessee will be required to recognize assets and liabilities on the balance sheet for the rights and obligations created by those leases. Consistent with current accounting guidance, the recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or an operating lease. However, while current guidance requires only capital leases to be recognized on the balance sheet, the new guidance will require both operating and capital leases to be recognized on the balance sheet. In transition to the new guidance, companies are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those years. Early application is permitted. Management is evaluating the impact this guidance will have on the results of operations and financial position of the Company. Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued guidance to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments, including reinsurance receivables, held by companies. The new guidance replaces the incurred loss impairment methodology and requires an organization to measure and recognize all current expected credit losses (“CECL”) for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Companies will need to utilize forward-looking information to better inform their credit loss estimates. Companies will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Credit losses related to available for sale debt securities -- which represent over 90% of Horace Mann’s total investment portfolio -- will be recorded through an allowance for credit losses with this allowance having a limit equal to the amount by which fair value is below amortized cost. The guidance also requires enhanced qualitative and quantitative disclosures to provide additional information about the amounts recorded in the financial statements. For public business entities that are SEC filers, the guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those years, using a modified-retrospective approach. Early application is permitted for annual reporting periods, and interim periods within those years, beginning after December 15, 2018. Management is evaluating the impact this guidance will have on the results of operations and financial position of the Company. Simplifying the Test for Goodwill Impairment |
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Investments |
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| Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments | The Company’s investment portfolio includes free-standing derivative financial instruments (currently over the counter (“OTC”) index call option contracts) to economically hedge risk associated with its fixed indexed annuity (“FIA”) and indexed universal life (“IUL”) products’ contingent liabilities. The Company’s FIA and IUL products include embedded derivative features that are discussed in “Note 1 -- Summary of Significant Accounting Policies -- Investment Contract and Life Policy Reserves -- Reserves for Fixed Indexed Annuities and Indexed Universal Life Policies” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The Company’s investment portfolio included no other free-standing derivative financial instruments (futures, forwards, swaps, option contracts or other financial instruments with similar characteristics), and there were no other embedded derivative features related to the Company’s investment or insurance products during the nine month periods ended September 30, 2017 and 2016. Fixed Maturity and Equity Securities The Company’s investment portfolio is comprised primarily of fixed maturity securities and also includes equity securities. The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairment (“OTTI”) included in accumulated other comprehensive income (“AOCI”) of all fixed maturity and equity securities in the portfolio were as follows:
The following table presents the fair value and gross unrealized losses of fixed maturity and equity securities in an unrealized loss position at September 30, 2017 and December 31, 2016, respectively. The Company views the decrease in value of all of the securities with unrealized losses at September 30, 2017 -- which was driven largely by changes in interest rates, spread widening, financial market illiquidity and/or market volatility from the date of acquisition -- as temporary. For fixed maturity securities, management does not have the intent to sell the securities and it is not more likely than not the Company will be required to sell the securities before the anticipated recovery of the amortized cost bases, and management expects to recover the entire amortized cost bases of the fixed maturity securities. For equity securities, the Company has the ability and intent to hold the securities for the recovery of cost and recovery of cost is expected within a reasonable period of time.
Fixed maturity and equity securities with an investment grade rating represented 92% of the gross unrealized losses as of September 30, 2017. With respect to fixed maturity securities involving securitized financial assets, the underlying collateral cash flows were stress tested to determine there was no adverse change in the present value of cash flows below the amortized cost basis. Credit Losses The following table summarizes the cumulative amounts related to the Company’s credit loss component of OTTI losses on fixed maturity securities held as of September 30, 2017 and 2016 that the Company did not intend to sell as of those dates, and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of the amortized cost bases, for which the non-credit portions of OTTI losses were recognized in other comprehensive income:
Expected Maturity of Fixed Maturity Securities The following table presents the distribution of the Company’s fixed maturity securities portfolio by estimated expected maturity. Estimated expected maturities differ from contractual maturities, reflecting assumptions regarding borrowers’ utilization of the right to call or prepay obligations with or without call or prepayment penalties. For structured securities, including mortgage-backed securities and other asset-backed securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments.
Sales of Fixed Maturity and Equity Securities Proceeds received from sales of fixed maturity and equity securities, each determined using the specific identification method, and gross gains and gross losses realized as a result of those sales for each period were:
Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities Net unrealized investment gains and losses are computed as the difference between fair value and amortized cost for fixed maturity securities or cost for equity securities. The following table reconciles the net unrealized investment gains and losses, net of tax, included in accumulated other comprehensive income (loss), before the impact on deferred policy acquisition costs:
Offsetting of Assets and Liabilities The Company’s derivative instruments (call options) are subject to enforceable master netting arrangements. Collateral support agreements associated with each master netting arrangement provide that the Company will receive or pledge financial collateral in the event minimum thresholds are reached. The following table presents the instruments that were subject to a master netting arrangement for the Company.
Deposits |
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Fair Value of Financial Instruments |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value of Financial Instruments | The Company is required under GAAP to disclose estimated fair values for certain financial and nonfinancial assets and liabilities. Fair values of the Company’s insurance contracts other than annuity contracts are not required to be disclosed. However, the estimated fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk through the matching of investment maturities with amounts due under insurance contracts. Information regarding the three-level hierarchy presented below and the valuation methodologies utilized by the Company to estimate fair values at a point in time is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, specifically in “Note 3 -- Fair Value of Financial Instruments”. Financial Instruments Measured and Carried at Fair Value The following table presents the Company’s fair value hierarchy for those assets and liabilities measured and carried at fair value on a recurring basis. At September 30, 2017, Level 3 invested assets comprised 3.3% of the Company’s total investment portfolio at fair value.
During the nine month period ended September 30, 2017, an equity security was transferred into Level 1 from Level 2 as a result of increased liquidity in the market and a sustained increase in the market activity for this asset. The following table presents reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis.
At September 30, 2017, the Company impaired two Level 3 securities for a $1,874 thousand realized loss. At September 30, 2016, there were no net realized investment gains or losses included in earnings that were attributable to changes in the fair value of Level 3 assets still held. For the three and nine month periods ended September 30, 2017, net realized losses of $2,587 thousand and $6,133 thousand, respectively, were included in earnings that were attributable to the changes in the fair value of Level 3 liabilities (embedded derivatives) still held; for the three and nine month periods ended September 30, 2016, the respective loss amounts were $68 thousand and $2,066 thousand. The valuation techniques and significant unobservable inputs used in the fair value measurement for financial assets classified as Level 3 are subject to the control processes as described in “Note 3 -- Fair Value of Financial Instruments -- Investments” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Generally, valuation techniques for fixed maturity securities include spread pricing, matrix pricing and discounted cash flow methodologies; include inputs such as quoted prices for identical or similar securities that are less liquid; and are based on lower levels of trading activity than securities classified as Level 2. The valuation techniques and significant unobservable inputs used in the fair value measurement for equity securities classified as Level 3 use similar valuation techniques and significant unobservable inputs as those used for fixed maturity securities. The sensitivity of the estimated fair values to changes in the significant unobservable inputs for fixed maturity and equity securities included in Level 3 generally relate to interest rate spreads, illiquidity premiums and default rates. Significant spread widening in isolation will adversely impact the overall valuation, while significant spread tightening will lead to substantial valuation increases. Significant increases (decreases) in illiquidity premiums in isolation will result in substantially lower (higher) valuations. Significant increases (decreases) in expected default rates in isolation will result in substantially lower (higher) valuations. Financial Instruments Not Carried at Fair Value; Disclosure Required The Company has various other financial assets and financial liabilities used in the normal course of business that are not carried at fair value, but for which fair value disclosure is required. The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities.
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Derivative Instruments |
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments | The Company offers FIA products, which are deferred fixed annuities that guarantee the return of principal to the contractholder and credit interest based on a percentage of the gain in a specified market index, and IUL products, which also credit interest based on a percentage of the gain in a specified market index. When deposits are received for FIA and IUL contracts, a portion is used to purchase derivatives consisting of OTC call options on the applicable market indices to fund the index credits due to FIA and IUL policyholders. For the Company, substantially all of such call options are one-year options purchased to match the funding requirements of the underlying contracts. The call options are carried at fair value with changes in fair value included in Net realized investment gains and losses, a component of Revenues, in the Consolidated Statements of Operations. The change in fair value of the derivatives includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open positions. Call options are not purchased to fund the index liabilities which may arise after the next deposit anniversary date. On the respective anniversary dates of the indexed deposits, the index used to compute the annual index credit is reset and new one-year call options are purchased to fund the next annual index credit. The cost of these purchases is managed through the terms of the FIA and IUL contracts, which permit changes to index return caps, participation rates and/or asset fees, subject to guaranteed minimums on each contract’s anniversary date. By adjusting the index return caps, participation rates or asset fees, crediting rates generally can be managed except in cases where the contractual features would prevent further modifications. The future annual index credits on FIA contracts are treated as a “series of embedded derivatives” over the expected life of the applicable contract with a corresponding reserve recorded. For the IUL contracts, the embedded derivative represents a single year liability for the index return. The Company carries all derivative instruments as assets or liabilities in the Consolidated Balance Sheets at fair value. The Company elected to not use hedge accounting for derivative transactions related to the FIA and IUL products. As a result, the Company records the purchased call options and the embedded derivatives related to the provision of a contingent return at fair value, with changes in the fair value of the derivatives recognized immediately as Net realized investment gains (losses) in the Consolidated Statements of Operations. The fair values of derivative instruments, including derivative instruments embedded in FIA and IUL contracts, presented in the Consolidated Balance Sheets were as follows:
In general, the change in the fair value of the embedded derivatives related to FIA contracts will not correspond to the change in fair value of the purchased call options because the purchased call options are one-year options while the options valued in those embedded derivatives represent the rights of the policyholder to receive index credits over the entire period the FIA contracts are expected to be in force, which typically exceeds 10 years. The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows:
The Company’s strategy attempts to mitigate potential risk of loss under these agreements through a regular monitoring process, which evaluates the program’s effectiveness. The Company is exposed to risk of loss in the event of nonperformance by the counterparties and, accordingly, option contracts are purchased from multiple counterparties, which are evaluated for creditworthiness prior to purchase of the contracts. All of these options have been purchased from nationally recognized financial institutions with a Standard and Poor’s Financial Services LLC ("S&P") long-term credit rating of “BBB+” or higher at the time of purchase and the maximum credit exposure to any single counterparty is subject to concentration limits. The Company also obtains credit support agreements that allow it to request the counterparty to provide collateral when the fair value of the exposure to the counterparty exceeds specified amounts. The notional amount and fair value of call options by counterparty and each counterparty’s long-term credit ratings were as follows:
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Property and Casualty Unpaid Claims and Claim Expenses |
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| Insurance Loss Reserves [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Casualty Unpaid Claims and Claim Expenses | The following table is a summary reconciliation of the beginning and ending Property and Casualty unpaid claims and claim expense reserves for the periods indicated. The table presents reserves on both gross and net (after reinsurance) bases. The total net Property and Casualty insurance claims and claim expense incurred amounts are reflected in the Consolidated Statements of Operations. The end of the period gross reserve (before reinsurance) balances and the reinsurance recoverable balances are reflected on a gross basis in the Consolidated Balance Sheets.
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Debt |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | Indebtedness outstanding was as follows:
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Reinsurance |
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| Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reinsurance | The Company recognizes the cost of reinsurance premiums over the contract periods for such premiums in proportion to the insurance protection provided. Amounts recoverable from reinsurers for unpaid claims and claim settlement expenses, including estimated amounts for unsettled claims, claims incurred but not yet reported and policy benefits, are estimated in a manner consistent with the insurance liability associated with the policy. The effects of reinsurance on premiums written and contract deposits; premiums and contract charges earned; and benefits, claims and settlement expenses were as follows:
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Commitments |
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Sep. 30, 2017 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments | Investment Commitments |
Segment Information |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Information | The Company conducts and manages its business through four segments. The three operating segments, representing the major lines of business, are: Property and Casualty, primarily personal lines automobile and homeowners insurance products; Retirement, primarily tax-qualified fixed and variable annuities; and Life, life insurance. The Company does not allocate the impact of corporate-level transactions to these operating segments, consistent with the basis for management’s evaluation of the results of those segments, but classifies those items in the fourth segment, Corporate and Other. In addition to ongoing transactions such as corporate debt service, net realized investment gains and losses and certain public company expenses, such items also have included corporate debt retirement costs/gains, when applicable. Summarized financial information for these segments is as follows:
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Basis of Presentation (Policies) |
9 Months Ended |
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Sep. 30, 2017 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Basis of Presentation | The accompanying unaudited consolidated financial statements of Horace Mann Educators Corporation (“HMEC”; and together with its subsidiaries, the “Company” or “Horace Mann”) have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (“SEC”), specifically Regulation S-X and the instructions to Form 10-Q. Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP, but are not required for interim reporting purposes, have been omitted. The Company believes that these consolidated financial statements contain all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to present fairly the Company’s consolidated financial position as of September 30, 2017, the consolidated results of operations and comprehensive income for the three and nine month periods ended September 30, 2017 and 2016, and the consolidated changes in shareholders’ equity and cash flows for the nine month periods ended September 30, 2017 and 2016. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (1) the reported amounts of assets and liabilities, (2) disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and (3) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The subsidiaries of HMEC market and underwrite personal lines of property and casualty (primarily personal lines of automobile and homeowners) insurance, retirement annuities (primarily tax-qualified products) and life insurance, primarily to K-12 teachers, administrators and other employees of public schools and their families. HMEC’s principal operating subsidiaries are Horace Mann Life Insurance Company, Horace Mann Insurance Company, Teachers Insurance Company, Horace Mann Property & Casualty Insurance Company and Horace Mann Lloyds. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The results of operations for the three and nine month periods ended September 30, 2017 are not necessarily indicative of the results to be expected for the full year. |
| Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) |
| Adopted and Pending Accounting Standards | Adopted Accounting Standards Employee Share-based Payment Accounting Effective January 1, 2017, the Company adopted new accounting guidance for employee share-based payments which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The recognition and classification of the excess tax benefit provisions were applied prospectively in the results of operations. This adoption resulted in additional excess tax benefits of $2,864 thousand which reduced the current provision for income taxes in the results of operations. The statutory tax withholding classification, which are cash payments made to taxing authorities for withheld taxes funded through tendered shares, were applied retrospectively and the Company reclassified the statutory tax withholding requirements in the statement of cash flows from Other in operating activities to Withholding tax payments on RSUs tendered in financing activities. This statutory withholding reclassification resulted in $2,745 thousand and $3,321 thousand being included in financing activities for the nine month periods ended September 30, 2017 and 2016, respectively. There were no cumulative effect adjustments upon adoption of the new accounting guidance. Pending Accounting Standards Revenue Recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued accounting guidance to provide a single comprehensive model in accounting for revenue arising from contracts with customers. The guidance applies to all contracts with customers; however, insurance contracts are specifically excluded from this updated guidance. The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years. Early adoption is permitted only for annual reporting periods beginning after December 15, 2016. The Company plans to adopt the guidance as of January 1, 2018. Insurance contract revenue continues to fall under the scope of ASC 944, Financial Services - Insurance, and ASC 605, Revenue Recognition. The Company performed an evaluation of the non-insurance contract revenue that would be subject to ASC 606, Revenue from Contracts with Customers, and concluded that there is not a material impact to the consolidated financial statements upon adoption on January 1, 2018. Recognition and Measurement of Financial Assets and Liabilities In January 2016, the FASB issued accounting guidance to improve certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. Among other things, the guidance revises the accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value. The Company’s results of operations will be impacted as changes in fair value of equity securities will be reported in net income instead of reported in other comprehensive income. The effective date of the guidance is for interim and annual reporting periods beginning after December 15, 2017. The guidance has not yet been adopted. Had the Company adopted the guidance on September 30, 2017, $15,718 thousand of after-tax unrealized gains on equity securities would have been reclassified from accumulated other comprehensive income to retained earnings. The actual amount reclassified upon adoption will vary depending on the future changes in fair value of the Company's equity portfolio. Statement of Cash Flows -- Classification In August 2016, the FASB issued guidance to reduce diversity in practice in the statement of cash flows between operating, investing and financing activities related to the classification of cash receipts and cash payments for eight specific issues. The FASB acknowledged that current GAAP either is unclear or does not include specific guidance on these eight cash flow classification issues: (1) debt prepayment or extinguishment costs; (2) settlement of zero-coupon bonds (pertains to issuers); (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims (pertains to claimants); (5) proceeds from the settlement of corporate-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions (pertains to transferors) and (8) separately identifiable cash flows and application of the predominance principle. For public business entities, the guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those years, using a retrospective approach. The guidance allows prospective adoption for individual issues if it is impracticable to apply the amendments retrospectively for those issues. Early application is permitted. Management believes the adoption of this accounting guidance will not have a material effect on the classifications in the Company’s consolidated statement of cash flows. The adoption of this accounting guidance will not have any effect on the results of operations or financial position of the Company. Accounting for Leases In February 2016, the FASB issued accounting and disclosure guidance to improve financial reporting and comparability among organizations about leasing transactions. Under the new guidance, for leases with lease terms of more than 12 months, a lessee will be required to recognize assets and liabilities on the balance sheet for the rights and obligations created by those leases. Consistent with current accounting guidance, the recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or an operating lease. However, while current guidance requires only capital leases to be recognized on the balance sheet, the new guidance will require both operating and capital leases to be recognized on the balance sheet. In transition to the new guidance, companies are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those years. Early application is permitted. Management is evaluating the impact this guidance will have on the results of operations and financial position of the Company. Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued guidance to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments, including reinsurance receivables, held by companies. The new guidance replaces the incurred loss impairment methodology and requires an organization to measure and recognize all current expected credit losses (“CECL”) for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Companies will need to utilize forward-looking information to better inform their credit loss estimates. Companies will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. Credit losses related to available for sale debt securities -- which represent over 90% of Horace Mann’s total investment portfolio -- will be recorded through an allowance for credit losses with this allowance having a limit equal to the amount by which fair value is below amortized cost. The guidance also requires enhanced qualitative and quantitative disclosures to provide additional information about the amounts recorded in the financial statements. For public business entities that are SEC filers, the guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those years, using a modified-retrospective approach. Early application is permitted for annual reporting periods, and interim periods within those years, beginning after December 15, 2018. Management is evaluating the impact this guidance will have on the results of operations and financial position of the Company. Simplifying the Test for Goodwill Impairment |
Basis of Presentation (Tables) |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment Contract And Life Policy Reserves | This table summarizes the Company’s investment contract and life policy reserves.
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| Accumulated Other Comprehensive Income (Loss) | The following tables reconcile these components.
(2) The pretax amounts reclassified from accumulated other comprehensive income (loss), $3,499 thousand and $8,566 thousand, are included in net realized investment gains and losses and the related income tax expense, $1,225 thousand and $2,998 thousand, are included in income tax expense in the Consolidated Statements of Operations for the three and nine month periods ended September 30, 2016, respectively.
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Investments (Tables) |
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| Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unrealized gains and losses on fixed maturities and equity securities | The amortized cost or cost, unrealized investment gains and losses, fair values and other-than-temporary impairment (“OTTI”) included in accumulated other comprehensive income (“AOCI”) of all fixed maturity and equity securities in the portfolio were as follows:
(3) Includes nonredeemable perpetual preferred stocks, common stocks and closed-end funds.
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| Summary of fair value and gross unrealized losses of fixed maturity securities and equity securities in an unrealized loss position | For equity securities, the Company has the ability and intent to hold the securities for the recovery of cost and recovery of cost is expected within a reasonable period of time.
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| Summary of cumulative credit losses | The following table summarizes the cumulative amounts related to the Company’s credit loss component of OTTI losses on fixed maturity securities held as of September 30, 2017 and 2016 that the Company did not intend to sell as of those dates, and it was not more likely than not that the Company would be required to sell the securities before the anticipated recovery of the amortized cost bases, for which the non-credit portions of OTTI losses were recognized in other comprehensive income:
(1) The cumulative credit loss amounts exclude OTTI losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis.
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| Distribution of the Company's fixed maturity portfolio by estimated expected maturity | The following table presents the distribution of the Company’s fixed maturity securities portfolio by estimated expected maturity. Estimated expected maturities differ from contractual maturities, reflecting assumptions regarding borrowers’ utilization of the right to call or prepay obligations with or without call or prepayment penalties. For structured securities, including mortgage-backed securities and other asset-backed securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments.
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| Proceeds received from sales of fixed maturities and equity securities | Proceeds received from sales of fixed maturity and equity securities, each determined using the specific identification method, and gross gains and gross losses realized as a result of those sales for each period were:
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| Reconciliation of net unrealized investment gains (losses) on fixed maturity securities and equity securities | The following table reconciles the net unrealized investment gains and losses, net of tax, included in accumulated other comprehensive income (loss), before the impact on deferred policy acquisition costs:
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| Offsetting assets and liability | The following table presents the instruments that were subject to a master netting arrangement for the Company.
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Fair Value of Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Company's fair value hierarchy measured at recurring basis | The following table presents the Company’s fair value hierarchy for those assets and liabilities measured and carried at fair value on a recurring basis. At September 30, 2017, Level 3 invested assets comprised 3.3% of the Company’s total investment portfolio at fair value.
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| Table for reconciliations for all Level 3 assets measured at fair value on a recurring basis | The following table presents reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis.
(3) Transfers into and out of Level 3 during the three and nine month periods ended September 30, 2017 were attributable to changes in the availability of observable market information for individual fixed maturity securities and short-term investments. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined.
(3) Transfers into and out of Level 3 during the three and nine month periods ended September 30, 2016 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined.
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| Summary of fair value assets and liabilities measured on nonrecurring basis | The Company has various other financial assets and financial liabilities used in the normal course of business that are not carried at fair value, but for which fair value disclosure is required. The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities.
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Derivative Instruments (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The fair values of derivative instruments, including derivative instruments embedded in FIA and IUL contracts, presented in the Consolidated Balance Sheets were as follows:
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| Derivative Instruments, Gain (Loss) | The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows:
(1) Includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options.
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| Financing Receivable Credit Quality Indicators | The notional amount and fair value of call options by counterparty and each counterparty’s long-term credit ratings were as follows:
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Property and Casualty Unpaid Claims and Claim Expenses (Tables) |
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| Insurance Loss Reserves [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of property and casualty unpaid claims and claim expenses | The end of the period gross reserve (before reinsurance) balances and the reinsurance recoverable balances are reflected on a gross basis in the Consolidated Balance Sheets.
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Debt (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Indebtedness outstanding | Indebtedness outstanding was as follows:
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Reinsurance (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Effects of reinsurance on premiums and benefits | The effects of reinsurance on premiums written and contract deposits; premiums and contract charges earned; and benefits, claims and settlement expenses were as follows:
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Segment Information (Tables) |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summarized financial information for these segments | Summarized financial information for these segments is as follows:
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Basis of Presentation - Investment Contract and Life Policy Reserves (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Investment contract reserves | $ 4,428,989 | $ 4,360,456 |
| Life policy reserves | 1,111,056 | 1,087,513 |
| Total | $ 5,540,045 | $ 5,447,969 |
Basis of Presentation - Narrative (Details) - USD ($) $ in Thousands |
9 Months Ended | |
|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
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| Basis of Presentation [Line Items] | ||
| Additional excess tax benefits | $ 2,864 | |
| Net cash provided by financing activities | 59,748 | $ (102,969) |
| Net cash provided by operating activities | $ 237,204 | 164,836 |
| Percentage of credit losses on available-for-sale deb securities to total investment portfolio | 90.00% | |
| Accounting Standards Update 2016-09, Statutory Tax Withholding Component | ||
| Basis of Presentation [Line Items] | ||
| Net cash provided by financing activities | $ 2,745 | 3,321 |
| Net cash provided by operating activities | 2,604 | $ 3,233 |
| Pro Forma [Member] | Adjustments for new accounting pronouncements | ||
| Basis of Presentation [Line Items] | ||
| After-tax unrealized gains on equity securities reclassified from AOCI | $ 15,718 | |
Investments - Rollforward of OTTI Losses (Details) - USD ($) $ in Thousands |
9 Months Ended | |
|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
| Cumulative credit loss | ||
| Beginning of period | $ 13,703 | $ 7,844 |
| New credit losses | 0 | 300 |
| Increases to previously recognized credit losses | 1,994 | 2,480 |
| Gains related to securities sold or paid down during the period | (2) | 0 |
| End of period | $ 15,695 | $ 10,624 |
Investments - Summary of Proceeds and Gains (Losses) Realized on Securities (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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| Proceeds received from sales of fixed maturities and equity securities | ||||
| Proceeds received, Fixed maturity securities | $ 85,841 | $ 94,706 | $ 315,531 | $ 351,739 |
| Proceeds received, Equity securities | 3,514 | 4,479 | 20,510 | 17,101 |
| Fixed maturity securities | ||||
| Proceeds received from sales of fixed maturities and equity securities | ||||
| Gross gains realized | 2,293 | 2,966 | 8,862 | 13,824 |
| Gross losses realized | (181) | (102) | (1,558) | (1,542) |
| Equity securities | ||||
| Proceeds received from sales of fixed maturities and equity securities | ||||
| Gross gains realized | 477 | 790 | 3,227 | 1,960 |
| Gross losses realized | $ (293) | $ (21) | $ (721) | $ (862) |
Investments - Offsetting of Assets and Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Asset derivatives: | ||
| Net Amounts of Assets/Liabilities Presented in the Consolidated Balance Sheets | $ 10,431 | $ 8,694 |
| Free-standing derivatives | ||
| Asset derivatives: | ||
| Gross Amounts | 10,431 | 8,694 |
| Gross Amounts Offset in the Consolidated Balance Sheets | 0 | 0 |
| Net Amounts of Assets/Liabilities Presented in the Consolidated Balance Sheets | 10,431 | 8,694 |
| Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments | 0 | 0 |
| Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Received | 10,954 | 8,824 |
| Net Amount | $ (523) | $ (130) |
Investments - Narrative (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Investment Holdings [Line Items] | ||
| Investment Grade Rate | 92.00% | |
| Fair value of issued securities | $ 7,630,634 | $ 7,456,708 |
| Federal Home Loan Bank Funding Agreements | 575,000 | 575,000 |
| Federal Home Loans Bank Of Chicago | ||
| Investment Holdings [Line Items] | ||
| Fair value of issued securities | 620,558 | 620,489 |
| Governmental Agencies as Required by Law in Various States | ||
| Investment Holdings [Line Items] | ||
| Fair value of issued securities | $ 18,133 | $ 18,119 |
Fair Value of Financial Instruments - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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| Fair Value of Financial Instruments (Textual) [Abstract] | ||||
| Realized loss on impairment of securities | $ 1,874 | |||
| Level 3 | ||||
| Fair Value of Financial Instruments (Textual) [Abstract] | ||||
| Percentage of invested assets in total investment portfolio Level 3 recurring | 3.30% | 3.30% | ||
| Net realized investment losses | $ 2,587 | $ 68 | $ 6,133 | $ 2,066 |
Derivative Instruments - Fair Value of Derivatives in Consolidated Balance Sheets (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Assets | ||
| Derivative instruments, included in Short-term and other investments | $ 10,431 | $ 8,694 |
| Short-term and other investments | ||
| Assets | ||
| Derivative instruments, included in Short-term and other investments | 10,431 | 8,694 |
| Other policyholder funds | ||
| Liabilities | ||
| FIA - embedded derivatives, included in Other policyholder funds | 72,986 | 59,393 |
| Investment contract and life policy reserves | ||
| Liabilities | ||
| IUL - embedded derivatives, included in Investment contract and life policy reserves | $ 390 | $ 158 |
Derivative Instruments - Fair Value of Derivatives Included in Consolidated Statements of Operations (Details) - Revenues - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
| Change in fair value of derivatives: | ||||
| Net realized investment gains | $ 2,943 | $ 562 | $ 7,109 | $ 422 |
| Change in fair value of embedded derivatives: | ||||
| Net realized investment losses | $ (2,702) | $ (76) | $ (6,363) | $ (2,077) |
Derivative Instruments - Narrative (Details) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
|
| Derivatives, Fair Value [Line Items] | ||
| Expected contract term | 10 years | |
| Maximum exposure | $ 250,000 | |
| Other liabilities | ||
| Derivatives, Fair Value [Line Items] | ||
| Fair value of collateral | $ 10,954,000 | $ 8,824,000 |
Property and Casualty Unpaid Claims and Claim Expenses - Narrative (Details) - USD ($) $ in Thousands |
9 Months Ended | |
|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
| Insurance Loss Reserves [Abstract] | ||
| Favorable development of total reserves for property and casualty claims occurring in prior years | $ 2,100 | $ 4,300 |
Debt - Summary of Indebtedness (Details) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
|
| Short-term debt: | ||
| Bank Credit Facility, expires July 30, 2019 | $ 0 | $ 0 |
| Long-term debt: | ||
| Long-term debt | $ 247,403,000 | 247,209,000 |
| Expiration date | Jul. 30, 2019 | |
| 4.50% Senior Notes | ||
| Long-term debt: | ||
| Long-term debt | $ 247,403,000 | 247,209,000 |
| Senior Notes 2025 | 4.50% Senior Notes | ||
| Long-term debt: | ||
| Unamortized discount | $ 561,000 | 603,000 |
| Stated rate | 4.50% | |
| Face amount | $ 250,000,000 | |
| Maturity date | Dec. 01, 2025 | |
| Unamortized debt issuance costs | $ 2,036,000 | $ 2,188,000 |
Commitments - Narrative (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Commitments and Contingencies Disclosure [Abstract] | ||
| Unfunded commitments to purchase investments | $ 111,265 | $ 135,054 |