Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Deferred policy acquisition costs asset by segment

The Company's DAC by reporting segment was as follows:



($ in thousands)	December 31,
	2018		2017

Retirement (annuity)	$	209,231	$	174,661
Life	59,478		53,974
Property and Casualty	30,033		29,191
Total	$	298,742	$	257,826

Adjustment to amortization expenses

The Company recognized the following adjustments to amortization expense as a result of evaluating actual experience and prospective assumptions, the impact of unlocking:



($ in thousands)	Year Ended December 31,
	2018		2017			2016
Increase (decrease) to DAC amortization expense:
Retirement	$	3,948	$	1,081		$	(313	)
Life	283		(200		)	(394		)
Total	$	4,231	$	881		$	(707	)

Allocation of goodwill by reporting unit

The allocation of goodwill by reporting unit is as follows:



($ in thousands)

Retirement	$	28,025
Life	9,911
Property and Casualty	9,460
Total	$	47,396

Property and Equipment

The following amounts are included in Other assets in the Consolidated Balance Sheets:



($ in thousands)	December 31,
	2018		2017

Property and equipment	$	142,243	$	133,803
Less: accumulated depreciation	101,267		94,862
Total	$	40,976	$	38,941

Investment Contract And Life Policy Reserves

This table summarizes the Company's investment contract and life policy reserves.



($ in thousands)	December 31,
	2018		2017

Investment contract reserves	$	4,555,856	$	4,452,972
Life policy reserves	1,155,337		1,120,763
Total	$	5,711,193	$	5,573,735

Summary of guaranteed minimum death benefit

The Company regularly monitors the GMDB reserve considering fluctuations in financial markets. The Company has a relatively low exposure to GMDB risk as shown below.



($ in thousands)	December 31,
	2018			2017

GMDB reserve	$	258		$	152
Aggregate in-the-money death benefits under the GMDB provision	48,083			28,345
Variable annuity contract value distribution based on GMDB feature:
No guarantee	30		%	29		%
Return of premium guarantee	65		%	65		%
Guarantee of premium roll-up at an annual rate of 3% or 5%	5		%	6		%
Total	100		%	100		%

Stock options fair value pricing model weighted-average assumptions

The fair value of stock options granted was estimated on the respective dates of grant using the Black-Scholes option pricing model with the weighted average assumptions shown in the following table.



	Year Ended December 31,
	2018			2017			2016

Number of stock options granted	223,208			222,828			307,176
Weighted average grant date fair value of stock options granted	$	7.16		$	6.57		$	5.01
Weighted average assumptions:
Risk-free interest rate	2.6		%	2.0		%	1.3		%
Expected dividend yield	2.6		%	2.5		%	3.2		%
Expected life, in years	4.8			4.9			4.9
Expected volatility (based on historical volatility)	21.5		%	21.4		%	25.6		%

Computations of net income per share on both basic and diluted bases, including reconciliations of the numerators and denominators

The computations of net income per share on both basic and diluted bases, including reconciliations of the numerators and denominators, were as follows:



($ in thousands)	Year Ended December 31,
	2018		2017		2016
Basic:
Net income for the period	$	18,343	$	169,459	$	83,765
Weighted average number of common shares during the period (in thousands)	41,570		41,365		41,158
Net income per share - basic	$	0.44	$	4.10	$	2.04

Diluted:
Net income for the period	$	18,343	$	169,459	$	83,765
Weighted average number of common shares during the period (in thousands)	41,570		41,365		41,158
Weighted average number of common equivalent shares to reflect the dilutive effect of common stock equivalent securities (in thousands):
Stock options	100		112		100
CSUs related to deferred compensation for employees	25		25		52
RSUs related to incentive compensation	199		63		166
Total common and common equivalent shares adjusted to calculate diluted earnings per share (in thousands)	41,894		41,565		41,476
Net income per share - diluted	$	0.44	$	4.08	$	2.02

Components of comprehensive income

The components of comprehensive income (loss) were as follows:



($ in thousands)	Year Ended December 31,
	2018			2017			2016

Net income	$	18,343		$	169,459		$	83,765
Other comprehensive income (loss):
Change in net unrealized investment gains (losses) on securities:
Net unrealized investment gains (losses) on securities arising during the period	(275,094		)	105,475			6,144
Less: reclassification adjustment for net gains (losses) included in income before income tax	(16,363		)	(4,863		)	5,176
Total, before tax	(258,731		)	110,338			968
Income tax expense (benefit)	(55,495		)	35,933			397
Total, net of tax	(203,236		)	74,405			571
Change in net funded status of benefit plans:
Before tax	1,294			1,461			(37		)
Income tax expense (benefit)	262			727			(14		)
Total, net of tax	1,032			734			(23		)
Total comprehensive income (loss)	$	(183,861	)	$	244,598		$	84,313

Accumulated Other Comprehensive Income (Loss)

The following table reconciles the components of AOCI for the periods indicated.



($ in thousands)	Net Unrealized Investment Gains (Losses) on Securities ⁽¹⁾⁽²⁾			Net Funded Status of Benefit Plans ⁽¹⁾			Total⁽¹⁾⁽³⁾

Beginning balance, January 1, 2018	$	300,177		$	(13,217	)	$	286,960
Other comprehensive income (loss) before reclassifications	(201,122		)	1,032			(200,090		)
Amounts reclassified from AOCI	12,927			—			12,927
Cumulative effect of change in accounting principle ⁽⁴⁾	(15,041		)	—			(15,041		)
Net current period other comprehensive income (loss)	(203,236		)	1,032			(202,204		)
Ending balance, December 31, 2018	$	96,941		$	(12,185	)	$	84,756

Beginning balance, January 1, 2017	$	175,738		$	(11,817	)	$	163,921
Other comprehensive income (loss) before reclassifications	71,244			734			71,978
Amounts reclassified from AOCI	3,161			—			3,161
Reclassification of deferred taxes ⁽³⁾	50,034			(2,134		)	47,900
Net current period other comprehensive income (loss)	124,439			(1,400		)	123,039
Ending balance, December 31, 2017	$	300,177		$	(13,217	)	$	286,960

Beginning balance, January 1, 2016	$	175,167		$	(11,794	)	$	163,373
Other comprehensive income (loss) before reclassifications	3,935			(23		)	3,912
Amounts reclassified from AOCI	(3,364		)	—			(3,364		)
Net current period other comprehensive income (loss)	571			(23		)	548
Ending balance, December 31, 2016	$	175,738		$	(11,817	)	$	163,921

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⁽¹⁾	All amounts are net of tax.


⁽²⁾	The pretax amounts reclassified from AOCI, $(16,363) thousand, $(4,863) thousand and $5,176 thousand, are included in net investment gains (losses) and the related tax expenses, $(3,436) thousand, $(1,702) thousand and $1,812 thousand, are included in income tax expense in the Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016, respectively.

⁽³⁾

For the period ended December 31, 2017, deferred taxes attributable to net unrealized investment gains (losses) on fixed maturity and equity securities and Defined benefit plans were re-measured as a result of the enactment of the Tax Cuts and Jobs Act (Tax Act). ASC 740, Income Taxes, requires that the income tax effect from the deferred tax re-measurement be reflected in the Company’s income tax expense, even if the deferred taxes being re-measured were originally established through AOCI. The mismatch between deferred taxes established in AOCI at 35% and re-measuring these same deferred taxes at 21% through income tax expense results in stranded deferred taxes in AOCI. On February 14, 2018, the Financial Accounting Standards Board (FASB) issued accounting guidance that permits recognition of a reclassification adjustment between AOCI and Retained earnings for stranded deferred tax amounts related to the reduced corporate tax rate enacted under the Tax Act. As permitted under its provisions, the Company early adopted the accounting guidance effective for the quarterly period that ended December 31, 2017 and has elected to reclassify the stranded deferred tax amounts. The impact from early adoption resulted in an increase to AOCI and a reduction to Retained earnings of approximately $47,900 thousand; representing the stranded deferred tax liabilities of $50,034 thousand and $(2,134) thousand for net unrealized investment gains (losses) on fixed maturity and equity securities and Defined benefit plans, respectively.


⁽⁴⁾	The Company adopted guidance on January 1, 2018 that resulted in reclassifying $15,041 thousand of after tax net unrealized gains on equity securities from AOCI to Retained earnings.