(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Securities registered pursuant to Section 12(b) of the Act: | ||||
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
☑ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☐ | Smaller reporting company | ||
Emerging growth company |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1A. | ||
Item 2. | ||
Item 5. | ||
Item 6. | ||
/s/ KPMG LLP | |
KPMG LLP | |
Chicago, Illinois | |
August 7, 2020 |
Horace Mann Educators Corporation | 1 | Quarterly Report on Form 10-Q |
June 30, 2020 | December 31, 2019 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Investments | ||||||||
Fixed maturity securities, available for sale, at fair value (amortized cost 2020, $5,604,405; 2019, $5,456,980) | $ | $ | ||||||
Equity securities at fair value | ||||||||
Limited partnership interests | ||||||||
Short-term and other investments | ||||||||
Total investments | ||||||||
Cash | ||||||||
Deferred policy acquisition costs | ||||||||
Deposit asset on reinsurance | ||||||||
Intangible assets, net | ||||||||
Goodwill | ||||||||
Other assets | ||||||||
Separate Account (variable annuity) assets | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Policy liabilities | ||||||||
Investment contract and policy reserves | $ | $ | ||||||
Unpaid claims and claim expenses | ||||||||
Unearned premiums | ||||||||
Total policy liabilities | ||||||||
Other policyholder funds | ||||||||
Other liabilities | ||||||||
Short-term debt | ||||||||
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, 2020, 66,218,003; 2019, 66,088,808 | ||||||||
Additional paid-in capital | ||||||||
Retained earnings | ||||||||
Accumulated other comprehensive income (loss), net of tax: | ||||||||
Net unrealized investment gains on fixed maturity securities | ||||||||
Net funded status of benefit plans | ( | ) | ( | ) | ||||
Treasury stock, at cost, 2020, 24,902,579 shares; 2019, 24,850,484 shares | ( | ) | ( | ) | ||||
Total shareholders’ equity | ||||||||
Total liabilities and shareholders’ equity | $ | $ |
Horace Mann Educators Corporation | 2 | Quarterly Report on Form 10-Q |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenues | ||||||||||||||||
Insurance premiums and contract charges earned | $ | $ | $ | $ | ||||||||||||
Net investment income | ||||||||||||||||
Net investment gains (losses) | ( | ) | ||||||||||||||
Other income | ||||||||||||||||
Total revenues | ||||||||||||||||
Benefits, losses and expenses | ||||||||||||||||
Benefits, claims and settlement expenses | ||||||||||||||||
Interest credited | ||||||||||||||||
Operating expenses | ||||||||||||||||
DAC unlocking and amortization expense | ||||||||||||||||
Intangible asset amortization expense | ||||||||||||||||
Interest expense | ||||||||||||||||
Other expense - goodwill impairment | ||||||||||||||||
Total benefits, losses and expenses | ||||||||||||||||
Income before income taxes | ||||||||||||||||
Income tax expense | ||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Net income per share | ||||||||||||||||
Basic | $ | $ | $ | $ | ||||||||||||
Diluted | $ | $ | $ | $ | ||||||||||||
Weighted average number of shares and equivalent shares | ||||||||||||||||
Basic | ||||||||||||||||
Diluted | ||||||||||||||||
Net investment gains (losses) | ||||||||||||||||
Total other-than-temporary impairment losses on securities | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Portion of losses recognized in other comprehensive income (loss) | ||||||||||||||||
Net other-than-temporary impairment losses on securities recognized in earnings | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Sales and other, net | ||||||||||||||||
Change in fair value - equity securities | ( | ) | ||||||||||||||
Change in fair value and gains (losses) realized on settlements - derivatives | ( | ) | ( | ) | ||||||||||||
Total | $ | $ | $ | ( | ) | $ |
Horace Mann Educators Corporation | 3 | Quarterly Report on Form 10-Q |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Comprehensive income (loss) | ||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
Change in net unrealized investment gains (losses) on fixed maturity securities | ( | ) | ||||||||||||||
Change in net funded status of benefit plans | ||||||||||||||||
Other comprehensive income (loss) | ( | ) | ||||||||||||||
Total | $ | $ | $ | $ |
Horace Mann Educators Corporation | 4 | Quarterly Report on Form 10-Q |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Common stock, $0.001 par value | ||||||||||||||||
Beginning balance | $ | $ | $ | $ | ||||||||||||
Options exercised | — | — | — | — | ||||||||||||
Conversion of common stock units | — | — | — | — | ||||||||||||
Conversion of restricted stock units | — | — | — | — | ||||||||||||
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 | ||||||||||||||||
Dividends, 2020, $0.30, $0.60 per share; 2019, $0.2875, $0.5750 per share | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Cumulative effect of change in accounting principle | — | — | ( | ) | — | |||||||||||
Ending balance | ||||||||||||||||
Accumulated other comprehensive income (loss), net of tax: | ||||||||||||||||
Beginning balance | ||||||||||||||||
Change in net unrealized investment gains (losses) on fixed maturity securities | ( | ) | ||||||||||||||
Change in net funded status of benefit plans | — | — | — | — | ||||||||||||
Ending balance | ||||||||||||||||
Treasury stock, at cost | ||||||||||||||||
Beginning balance | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Acquisition of shares | — | — | ( | ) | — | |||||||||||
Ending balance | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Shareholders' equity at end of period | $ | $ | $ | $ |
Horace Mann Educators Corporation | 5 | Quarterly Report on Form 10-Q |
Six Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Cash flows - operating activities | ||||||||
Net income | $ | $ | ||||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
Net investment (gains) losses | ( | ) | ||||||
Amortization of premiums and accretion of discounts on fixed maturity securities, net | ( | ) | ||||||
Depreciation and intangible asset amortization | ||||||||
Share-based compensation expense | ||||||||
Other expense - goodwill impairment | ||||||||
Changes in: | ||||||||
Accrued investment income | ( | ) | ||||||
Insurance liabilities | ( | ) | ||||||
Premium receivables | ||||||||
Deferred policy acquisitions | ||||||||
Reinsurance recoverables | ( | ) | ||||||
Income tax liabilities | ||||||||
Other operating assets and liabilities | ||||||||
Other | ( | ) | ||||||
Net cash provided by operating activities | ||||||||
Cash flows - investing activities | ||||||||
Fixed maturity securities | ||||||||
Purchases | ( | ) | ( | ) | ||||
Sales | ||||||||
Maturities, paydowns, calls and redemptions | ||||||||
Equity securities | ||||||||
Purchases | ( | ) | ( | ) | ||||
Sales and repayments | ||||||||
Limited partnership interests | ||||||||
Purchases | ( | ) | ( | ) | ||||
Sales | ||||||||
Change in short-term and other investments, net | ( | ) | ( | ) | ||||
Acquisition of business, net of cash acquired | ( | ) | ||||||
Net cash provided by (used in) investing activities | ( | ) | ||||||
Cash flows - financing activities | ||||||||
Dividends paid to shareholders | ( | ) | ( | ) | ||||
FHLB borrowings | ||||||||
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 | ( | ) | ( | ) | ||||
Life policy accounts | ||||||||
Deposits | ||||||||
Withdrawals and surrenders | ( | ) | ( | ) | ||||
Change in deposit asset on reinsurance | ( | ) | ( | ) | ||||
Change in book overdrafts | ( | ) | ( | ) | ||||
Net cash provided by (used in) financing activities | ( | ) | ||||||
Net increase (decrease) in cash | ( | ) | ||||||
Cash at beginning of period | ||||||||
Cash at end of period | $ | $ |
Horace Mann Educators Corporation | 6 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 7 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 8 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 9 | Quarterly Report on Form 10-Q |
($ in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Fixed maturity securities | $ | $ | $ | $ | ||||||||||||
Equity securities | ||||||||||||||||
Limited partnership interests | ( | ) | ( | ) | ||||||||||||
Short-term and other investments | ( | ) | ( | ) | ||||||||||||
Investment expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Net investment income - investment portfolio | ||||||||||||||||
Investment income - deposit asset on reinsurance | ||||||||||||||||
Total net investment income | $ | $ | $ | $ |
($ in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Fixed maturity securities | $ | ( | ) | $ | $ | $ | ||||||||||
Equity securities | ( | ) | ||||||||||||||
Short-term investments and other | ( | ) | ( | ) | ||||||||||||
Net investment gains (losses) | $ | $ | $ | ( | ) | $ |
($ in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Credit impairment write-downs | $ | $ | $ | $ | ||||||||||||
Change in intent write-downs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Net other-than-temporary impairment losses on securities recognized in earnings | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Sales and other, net | ||||||||||||||||
Change in fair value - equity securities | ( | ) | ||||||||||||||
Change in fair value and gains (losses) realized on settlements - derivatives | ( | ) | ( | ) | ||||||||||||
Net investment gains (losses) | $ | $ | $ | ( | ) | $ |
Horace Mann Educators Corporation | 10 | Quarterly Report on Form 10-Q |
($ in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
June 30, 2020 | ||||||||||||||||
Fixed maturity securities | ||||||||||||||||
U.S. Government and federally sponsored agency obligations: (1) | ||||||||||||||||
Mortgage-backed securities | $ | $ | $ | $ | ||||||||||||
Other, including U.S. Treasury securities | ||||||||||||||||
Municipal bonds | ||||||||||||||||
Foreign government bonds | ||||||||||||||||
Corporate bonds | ||||||||||||||||
Other asset-backed securities | ||||||||||||||||
Totals | $ | $ | $ | $ | ||||||||||||
December 31, 2019 | ||||||||||||||||
Fixed maturity securities | ||||||||||||||||
U.S. Government and federally sponsored agency obligations: (1) | ||||||||||||||||
Mortgage-backed securities | $ | $ | $ | $ | ||||||||||||
Other, including U.S. Treasury securities | ||||||||||||||||
Municipal bonds | ||||||||||||||||
Foreign government bonds | ||||||||||||||||
Corporate bonds | ||||||||||||||||
Other asset-backed securities | ||||||||||||||||
Totals | $ | $ | $ | $ |
(1) | Fair value includes securities issued by Federal National Mortgage Association (FNMA) of $ |
Horace Mann Educators Corporation | 11 | Quarterly Report on Form 10-Q |
($ 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 | |||||||||||||||||||
June 30, 2020 | ||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||
U.S. Government and federally sponsored agency obligations: | ||||||||||||||||||||||||
Mortgage-backed securities | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Other | ||||||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||||||
Foreign government bonds | ||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||
Other asset-backed securities | ||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Number of positions with a gross unrealized loss | ||||||||||||||||||||||||
Fair value as a percentage of total fixed maturity securities at fair value | % | % | % | |||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||
U.S. Government and federally sponsored agency obligations: | ||||||||||||||||||||||||
Mortgage-backed securities | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Other | ||||||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||||||
Foreign government bonds | ||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||
Other asset-backed securities | ||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Number of positions with a gross unrealized loss | ||||||||||||||||||||||||
Fair value as a percentage of total fixed maturity securities at fair value | % | % | % |
Horace Mann Educators Corporation | 12 | Quarterly Report on Form 10-Q |
($ in thousands) | Six Months Ended June 30, | |||||||
2020 | 2019 | |||||||
Cumulative credit loss (1) | ||||||||
Beginning of period | $ | $ | ||||||
New credit losses | ||||||||
Increases to previously recognized credit losses | ||||||||
Losses related to securities sold or paid down during the period | ( | ) | ||||||
$ | $ |
(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 an anticipated recovery of value. |
($ in thousands) | Percent of Total Fair Value | June 30, 2020 | ||||||||||||
June 30, 2020 | December 31, 2019 | 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 |
Horace Mann Educators Corporation | 13 | Quarterly Report on Form 10-Q |
($ in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 (1) | 2020 | 2019 (1) | |||||||||||||
Fixed maturity securities | ||||||||||||||||
Proceeds received | $ | $ | $ | $ | ||||||||||||
Gross gains realized | ||||||||||||||||
Gross losses realized | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Equity securities | ||||||||||||||||
Proceeds received | $ | $ | $ | $ | ||||||||||||
Gross gains realized | ||||||||||||||||
Gross losses realized | ( | ) | ( | ) | ( | ) | ( | ) |
(1) | Gross gains realized presented above include a $ |
($ in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | ||||||||||||||||
Beginning of period | $ | $ | $ | $ | ||||||||||||
Change in net unrealized investment gains (losses) on fixed maturity securities | ||||||||||||||||
Reclassification of net investment (gains) losses on securities to net income | ( | ) | ( | ) | ( | ) | ||||||||||
End of period | $ | $ | $ | $ |
Horace Mann Educators Corporation | 14 | Quarterly Report on Form 10-Q |
($ in thousands) | Gross Amounts Offset in the Consolidated Balance Sheets | Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets | |||||||||||||||||||||
Gross Amounts | Financial Instruments | Cash Collateral Received | Net Amount | |||||||||||||||||||||
June 30, 2020 | ||||||||||||||||||||||||
Asset derivatives: | ||||||||||||||||||||||||
Free-standing derivatives | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||
Asset derivatives: | ||||||||||||||||||||||||
Free-standing derivatives | ( | ) |
Horace Mann Educators Corporation | 15 | Quarterly Report on Form 10-Q |
($ in thousands) | Fair Value Measurements at | |||||||||||||||||||
Carrying | Fair | Reporting Date Using | ||||||||||||||||||
Amount | Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
June 30, 2020 | ||||||||||||||||||||
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 asset-backed securities | ||||||||||||||||||||
Total fixed maturity securities | ||||||||||||||||||||
Equity securities | ||||||||||||||||||||
Short-term investments | ||||||||||||||||||||
Other investments | ||||||||||||||||||||
Totals | $ | $ | $ | $ | $ | |||||||||||||||
Separate Account (variable annuity) assets (1) | $ | $ | $ | $ | $ | |||||||||||||||
Financial Liabilities | ||||||||||||||||||||
Investment contract and policy reserves, embedded derivatives | $ | $ | $ | $ | $ | |||||||||||||||
Other policyholder funds, embedded derivatives | $ | $ | $ | $ | $ | |||||||||||||||
December 31, 2019 | ||||||||||||||||||||
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 asset-backed securities | ||||||||||||||||||||
Total fixed maturity securities | ||||||||||||||||||||
Equity securities | ||||||||||||||||||||
Short-term investments | ||||||||||||||||||||
Other investments | ||||||||||||||||||||
Totals | $ | $ | $ | $ | $ | |||||||||||||||
Separate Account (variable annuity) assets (1) | $ | $ | $ | $ | $ | |||||||||||||||
Financial Liabilities | ||||||||||||||||||||
Investment contract and policy reserves, embedded derivatives | $ | $ | $ | $ | $ | |||||||||||||||
Other policyholder funds, embedded derivatives | $ | $ | $ | $ | $ |
Horace Mann Educators Corporation | 16 | Quarterly Report on Form 10-Q |
($ in thousands) | Financial Assets | Financial Liabilities(1) | ||||||||||||||||||||||||||
Municipal Bonds | Corporate Bonds | Other Mortgage- Backed Securities(2) | Total Fixed Maturity Securities | Equity Securities | Total | |||||||||||||||||||||||
Beginning balance, April 1, 2020 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Transfers into Level 3 (3) | ||||||||||||||||||||||||||||
Transfers out of Level 3 (3) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||
Net 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 OCI | ||||||||||||||||||||||||||||
Purchases | ||||||||||||||||||||||||||||
Issuances | ||||||||||||||||||||||||||||
Sales | ||||||||||||||||||||||||||||
Settlements | ||||||||||||||||||||||||||||
Paydowns, maturities and distributions | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
Ending balance, June 30, 2020 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Beginning balance, January 1, 2020 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Transfers into Level 3 (3) | ||||||||||||||||||||||||||||
Transfers out of Level 3 (3) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||
Net 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 OCI | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
Purchases | ||||||||||||||||||||||||||||
Issuances | ||||||||||||||||||||||||||||
Sales | ||||||||||||||||||||||||||||
Settlements | ||||||||||||||||||||||||||||
Paydowns, maturities and distributions | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
Ending balance, June 30, 2020 | $ | $ | $ | $ | $ | $ | $ |
(1) | Represents embedded derivatives, all related to the Company's fixed indexed annuity 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) | Transfers into and out of Level 3 during the three and six months ended June 30, 2020 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. |
Horace Mann Educators Corporation | 17 | Quarterly Report on Form 10-Q |
($ in thousands) | Financial Assets | Financial Liabilities(1) | ||||||||||||||||||||||||||
Municipal Bonds | Corporate Bonds | Other Mortgage- Backed Securities (2) | Total Fixed Maturity Securities | Equity Securities | Total | |||||||||||||||||||||||
Beginning balance, April 1, 2019 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Transfers into Level 3 (3) | ||||||||||||||||||||||||||||
Transfers out of Level 3 (3) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||
Net 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 OCI | ( | ) | ||||||||||||||||||||||||||
Purchases | ||||||||||||||||||||||||||||
Issuances | ||||||||||||||||||||||||||||
Sales | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Settlements | ||||||||||||||||||||||||||||
Paydowns, maturities and distributions | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
Ending balance, June 30, 2019 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Beginning balance, January 1, 2019 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Transfers into Level 3 (3) | ||||||||||||||||||||||||||||
Transfers out of Level 3 (3) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||
Net 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 OCI | ( | ) | ||||||||||||||||||||||||||
Purchases | ||||||||||||||||||||||||||||
Issuances | ||||||||||||||||||||||||||||
Sales | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Settlements | ||||||||||||||||||||||||||||
Paydowns, maturities and distributions | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
Ending balance, June 30, 2019 | $ | $ | $ | $ | $ | $ | $ |
(1) | Represents embedded derivatives, all related to the Company's fixed indexed annuity 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) | Transfers into and out of Level 3 during the three and six months ended June 30, 2019 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. |
Horace Mann Educators Corporation | 18 | Quarterly Report on Form 10-Q |
($ in thousands) | ||||||||||
Financial Assets | Fair Value at June 30, 2020 | Valuation Technique(s) | Unobservable Inputs | Range (Weighted Average) and Single Point Best Estimate (1) | ||||||
Municipal bonds | $ | discounted cash flow | I spread (2) | 578 bps | ||||||
Corporate bonds | discounted cash flow | N spread (3) | 762 bps | |||||||
discounted cash flow | T spread (4) | 378 bps | ||||||||
discounted cash flow | I spread (2) | 495 bps | ||||||||
market comparable | EV / TTM EBITDA (x) (5) | 5.11x | ||||||||
Other asset-backed securities | discounted cash flow | constant prepayment rate | ||||||||
vendor price | haircut | |||||||||
market comparable | EV / TTM EBITDA (x) (5) | 5.11x | ||||||||
discounted cash flow | N spread (3) | 732 bps | ||||||||
discounted cash flow | PDI interest margin (6) | |||||||||
discounted cash flow | SBL interest margin (7) | |||||||||
Government mortgage-backed securities | vendor price | haircut | ||||||||
discounted cash flow | N spread (3) | 109 bps | ||||||||
discounted cash flow | constant prepayment yield | 100 bps | ||||||||
discounted cash flow | constant default rate | |||||||||
Equity securities | Black Scholes | equity value | low - $43.27; high - $44.53 |
($ in thousands) | ||||||||||
Financial Liabilities | Fair Value at June 30, 2020 | Valuation Technique(s) | Unobservable Inputs | Range (Weighted Average) and Single Point Best Estimate (1) | ||||||
Derivatives embedded in fixed indexed annuity products | $ | discounted cash flow | lapse rate | |||||||
mortality multiplier (8) | ||||||||||
option budget | 1.00% - 2.50% | |||||||||
non-performance adjustment (9) |
(1) | When a range of unobservable inputs is not readily available, the Company uses a single point best estimate. |
(2) | "I spread" is the interpolated weighted average life point on the "on the run" (OTR) point of the curve. |
(3) | "N spread" is the interpolated weighted average life point on the swap curve. |
(4) | "T spread" is a specific point on the OTR curve. |
(5) | This represents the enterprise value (EV) for trailing twelve months (TTM) of EBITDA plus multiplier. |
(6) | "PDI" stands for private debt investment. |
(7) | "SBL" stands for broadly syndicated loans. |
(8) | Mortality multiplier is applied to the Annuity 2000 table. |
(9) | Determined as a percentage of a risk-free rate. |
Horace Mann Educators Corporation | 19 | Quarterly Report on Form 10-Q |
($ in thousands) | Fair Value Measurements at | |||||||||||||||||||
Carrying | Fair | Reporting Date Using | ||||||||||||||||||
Amount | Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
June 30, 2020 | ||||||||||||||||||||
Financial Assets | ||||||||||||||||||||
Investments | ||||||||||||||||||||
Other investments | $ | $ | $ | $ | $ | |||||||||||||||
Deposit asset on reinsurance | ||||||||||||||||||||
Financial Liabilities | ||||||||||||||||||||
Investment contract and policy reserves, fixed annuity contracts | ||||||||||||||||||||
Investment contract and policy reserves, account values on life contracts | ||||||||||||||||||||
Other policyholder funds | ||||||||||||||||||||
Short-term debt | ||||||||||||||||||||
Long-term debt | ||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||
Financial Assets | ||||||||||||||||||||
Investments | ||||||||||||||||||||
Other investments | $ | $ | $ | $ | $ | |||||||||||||||
Deposit asset on reinsurance | ||||||||||||||||||||
Financial Liabilities | ||||||||||||||||||||
Investment contract and policy reserves, fixed annuity contracts | ||||||||||||||||||||
Investment contract and policy reserves, account values on life contracts | ||||||||||||||||||||
Other policyholder funds | ||||||||||||||||||||
Short-term debt | ||||||||||||||||||||
Long-term debt |
Horace Mann Educators Corporation | 20 | Quarterly Report on Form 10-Q |
($ in thousands) | June 30, 2020 | December 31, 2019 | ||||||
Assets | ||||||||
Derivatives, included in Short-term and other investments | $ | $ | ||||||
Liabilities | ||||||||
FIA - embedded derivatives, included in Other policyholder funds | ||||||||
IUL - embedded derivatives, included in Investment contract and policy reserves |
($ in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Change in fair value of derivatives: (1) | ||||||||||||||||
Net investment gains (losses) | $ | $ | $ | ( | ) | $ | ||||||||||
Change in fair value of embedded derivatives: | ||||||||||||||||
Net investment gains (losses) | ( | ) | ( | ) | ( | ) | ( | ) |
(1) | Includes gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options. |
Horace Mann Educators Corporation | 21 | Quarterly Report on Form 10-Q |
($ in thousands) | June 30, 2020 | December 31, 2019 | ||||||||||||||||||
Credit Rating | Notional | Fair | Notional | Fair | ||||||||||||||||
Counterparty | S&P | Moody's | Amount | Value | Amount | Value | ||||||||||||||
Bank of America, N.A. | A+ | Aa2 | $ | $ | $ | $ | ||||||||||||||
Barclays Bank PLC | A | A1 | ||||||||||||||||||
Citigroup Inc. | BBB+ | A3 | ||||||||||||||||||
Credit Suisse International | A+ | A1 | ||||||||||||||||||
Societe Generale | A | A1 | ||||||||||||||||||
Total | $ | $ | $ | $ |
Horace Mann Educators Corporation | 22 | Quarterly Report on Form 10-Q |
($ in thousands) | June 30, 2020 | |||
Property and Casualty | $ | |||
Supplemental | ||||
Retirement | ||||
Life | ||||
Total | $ |
($ in thousands) | Weighted Average | |||||
Useful Life (in Years) | ||||||
At inception: | ||||||
Value of business acquired | $ | |||||
Value of distribution acquired | ||||||
Value of agency relationships | ||||||
Value of customer relationships | ||||||
Total | ||||||
Accumulated amortization: | ||||||
Value of business acquired | ( | ) | ||||
Value of distribution acquired | ( | ) | ||||
Value of agency relationships | ( | ) | ||||
Value of customer relationships | ( | ) | ||||
Total | ( | ) | ||||
Net intangible assets subject to amortization: | $ |
Horace Mann Educators Corporation | 23 | Quarterly Report on Form 10-Q |
($ in thousands) | ||||
Year Ending December 31, | ||||
2020 (excluding the six months ended June 30, 2020) | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
Thereafter | ||||
Total | $ |
($ in thousands) | ||||
Trade names | $ | |||
State licenses | ||||
Total | $ |
Horace Mann Educators Corporation | 24 | Quarterly Report on Form 10-Q |
($ in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Property and Casualty | ||||||||||||||||
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 Supplemental, Life and Retirement 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 Supplemental, Life and Retirement of $ |
Horace Mann Educators Corporation | 25 | Quarterly Report on Form 10-Q |
($ in thousands) | Gross Amount | Ceded to Other Companies (1) | Assumed from Other Companies | Net Amount | ||||||||||||
Three months ended June 30, 2020 | ||||||||||||||||
Premiums written and contract deposits (2) | $ | $ | $ | $ | ||||||||||||
Premiums and contract charges earned | ||||||||||||||||
Benefits, claims and settlement expenses | ||||||||||||||||
Three months ended June 30, 2019 | ||||||||||||||||
Premiums written and contract deposits (2) | $ | $ | $ | $ | ||||||||||||
Premiums and contract charges earned | ||||||||||||||||
Benefits, claims and settlement expenses | ||||||||||||||||
Six months ended June 30, 2020 | ||||||||||||||||
Premiums written and contract deposits (2) | $ | $ | $ | $ | ||||||||||||
Premiums and contract charges earned | ||||||||||||||||
Benefits, claims and settlement expenses | ||||||||||||||||
Six months ended June 30, 2019 | ||||||||||||||||
Premiums written and contract deposits (2) | $ | $ | $ | $ | ||||||||||||
Premiums and contract charges earned | ||||||||||||||||
Benefits, claims and settlement expenses |
(1) | Excludes the annuity reinsurance transaction accounted for using the deposit method that is discussed in Note 5. |
(2) | This measure is not based on accounting principles generally accepted in the United States of America (non-GAAP). An explanation of this non-GAAP measure is contained in the Glossary of Selected Terms included as an exhibit in the Company's reports filed with the SEC. |
Horace Mann Educators Corporation | 26 | Quarterly Report on Form 10-Q |
($ in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Insurance premiums and contract charges earned | ||||||||||||||||
Property and Casualty | $ | $ | $ | $ | ||||||||||||
Supplemental | N/A | N/A | ||||||||||||||
Retirement | ||||||||||||||||
Life | ||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||
Net investment income | ||||||||||||||||
Property and Casualty | $ | $ | $ | $ | ||||||||||||
Supplemental | N/A | N/A | ||||||||||||||
Retirement | ||||||||||||||||
Life | ||||||||||||||||
Corporate and Other | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Intersegment eliminations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Total | $ | $ | $ | $ | ||||||||||||
Net income (loss) | ||||||||||||||||
Property and Casualty | $ | $ | $ | $ | ||||||||||||
Supplemental | N/A | N/A | ||||||||||||||
Retirement | ( | ) | ( | ) | ||||||||||||
Life | ||||||||||||||||
Corporate and Other | ( | ) | ( | ) | ||||||||||||
Total | $ | $ | $ | $ |
($ in thousands) | June 30, 2020 | December 31, 2019 | ||||||
Assets | ||||||||
Property and Casualty | $ | $ | ||||||
Supplemental | ||||||||
Retirement | ||||||||
Life | ||||||||
Corporate and Other | ||||||||
Intersegment eliminations | ( | ) | ( | ) | ||||
Total | $ | $ |
Horace Mann Educators Corporation | 27 | Quarterly Report on Form 10-Q |
($ in thousands) | Net Unrealized Investment Gains (Losses) on Securities (1)(2) | Net Funded Status of Benefit Plans (1) | Total (1) | |||||||||
Beginning balance, April 1, 2020 | $ | $ | ( | ) | $ | |||||||
Other comprehensive income (loss) before reclassifications | ||||||||||||
Amounts reclassified from AOCI | ( | ) | ( | ) | ||||||||
Net current period other comprehensive income (loss) | ||||||||||||
Ending balance, June 30, 2020 | $ | $ | ( | ) | $ | |||||||
Beginning balance, January 1, 2020 | $ | $ | ( | ) | $ | |||||||
Other comprehensive income (loss) before reclassifications | ||||||||||||
Amounts reclassified from AOCI | ||||||||||||
Net current period other comprehensive income (loss) | ||||||||||||
Ending balance, June 30, 2020 | $ | $ | ( | ) | $ |
(1) | All amounts are net of tax. |
(2) | The pretax amounts reclassified from AOCI, $ |
($ in thousands) | Net Unrealized Investment Gains (Losses) on Securities (1)(2) | Net Funded Status of Benefit Plans (1) | Total (1) | |||||||||
Beginning balance, April 1, 2019 | $ | $ | ( | ) | $ | |||||||
Other comprehensive income (loss) before reclassifications | ||||||||||||
Amounts reclassified from AOCI | ( | ) | ( | ) | ||||||||
Net current period other comprehensive income (loss) | ( | ) | ( | ) | ||||||||
Ending balance, June 30, 2019 | $ | $ | ( | ) | $ | |||||||
Beginning balance, January 1, 2019 | $ | $ | ( | ) | $ | |||||||
Other comprehensive income (loss) before reclassifications | ||||||||||||
Amounts reclassified from AOCI | ( | ) | ( | ) | ||||||||
Net current period other comprehensive income (loss) | ||||||||||||
Ending balance, June 30, 2019 | $ | $ | ( | ) | $ |
(2) | The pretax amounts reclassified from AOCI, $ |
Horace Mann Educators Corporation | 28 | Quarterly Report on Form 10-Q |
($ in thousands) | June 30, | December 31, | ||||||
2020 | 2019 | |||||||
Cash | $ | $ | ||||||
Restricted cash | ||||||||
Total cash and restricted cash shown in the Consolidated Balance Sheets and Consolidated Statements of Cash Flows | $ | $ |
($ in thousands) | Six Months Ended June 30, | |||||||
2020 | 2019 | |||||||
Cash paid (recovered) during the six months for: | ||||||||
Interest | $ | $ | ||||||
Income taxes | ( | ) |
Horace Mann Educators Corporation | 29 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 30 | Quarterly Report on Form 10-Q |
($ in millions) | Three Months Ended June 30, | 2020-2019 | Six Months Ended June 30, | 2020-2019 | ||||||||||||||||||
2020 | 2019 | Change % | 2020 | 2019 | Change % | |||||||||||||||||
Total revenues | $ | 314.9 | $ | 454.1 | -30.7 | % | $ | 622.2 | $ | 770.0 | -19.2 | % | ||||||||||
Net income | 30.5 | 93.8 | -67.5 | % | 49.0 | 126.0 | -61.1 | % | ||||||||||||||
Per diluted share: | ||||||||||||||||||||||
Net income | 0.73 | 2.24 | -67.4 | % | 1.17 | 3.01 | -61.1 | % | ||||||||||||||
Net investment gains (losses), after tax | 0.06 | 2.74 | N.M. | (0.28 | ) | 2.88 | N.M. | |||||||||||||||
Book value per share | $ | 39.69 | $ | 36.41 | 9.0 | % | ||||||||||||||||
Net income return on equity - last twelve months | 6.9 | % | 8.6 | % | ||||||||||||||||||
Net income return on equity - annualized | 6.1 | % | 18.1 | % |
Horace Mann Educators Corporation | 31 | Quarterly Report on Form 10-Q |
($ in millions) | Three Months Ended June 30, | 2020-2019 | Six Months Ended June 30, | 2020-2019 | ||||||||||||||||||
2020 | 2019 | Change % | 2020 | 2019 | Change % | |||||||||||||||||
Insurance premiums and contract charges earned | $ | 225.4 | $ | 208.1 | 8.3 | % | $ | 461.7 | $ | 417.9 | 10.5 | % | ||||||||||
Net investment income | 80.4 | 93.5 | -14.0 | % | 162.7 | 186.3 | -12.7 | % | ||||||||||||||
Net investment gains (losses) | 3.2 | 146.3 | N.M. | (15.3 | ) | 153.7 | N.M. | |||||||||||||||
Other income | 5.9 | 6.2 | -4.8 | % | 13.1 | 12.1 | 8.3 | % | ||||||||||||||
Total revenues | 314.9 | 454.1 | -30.7 | % | 622.2 | 770.0 | -19.2 | % | ||||||||||||||
Benefits, claims and settlement expenses | 143.0 | 152.7 | -6.4 | % | 281.7 | 292.1 | -3.6 | % | ||||||||||||||
Interest credited | 50.7 | 53.6 | -5.4 | % | 102.2 | 106.5 | -4.0 | % | ||||||||||||||
Operating expenses | 55.7 | 57.3 | -2.8 | % | 116.4 | 113.5 | 2.6 | % | ||||||||||||||
DAC unlocking and amortization expense | 20.4 | 31.6 | -35.4 | % | 50.4 | 56.6 | -11.0 | % | ||||||||||||||
Intangible asset amortization expense | 3.7 | 0.6 | N.M. | 7.4 | 1.1 | N.M. | ||||||||||||||||
Interest expense | 4.0 | 3.3 | 21.2 | % | 8.2 | 6.6 | 24.2 | % | ||||||||||||||
Other expense - goodwill impairment | — | 28.0 | N.M. | — | 28.0 | N.M. | ||||||||||||||||
Total benefits, losses and expenses | 277.5 | 327.1 | -15.2 | % | 566.3 | 604.4 | -6.3 | % | ||||||||||||||
Income before income taxes | 37.4 | 127.0 | -70.6 | % | 55.9 | 165.6 | -66.2 | % | ||||||||||||||
Income tax expense | 6.9 | 33.2 | -79.2 | % | 6.9 | 39.6 | -82.6 | % | ||||||||||||||
Net income | $ | 30.5 | $ | 93.8 | -67.5 | % | $ | 49.0 | $ | 126.0 | -61.1 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2020 | 2019 | 2020 | 2019 | |||||
Investment yield, excluding limited partnership interests, pretax - annualized* | 4.4% | 4.7% | 4.4% | 4.8% | ||||
Investment yield, excluding limited partnership interests, after tax - annualized* | 3.5% | 3.8% | 3.6% | 3.8% |
Horace Mann Educators Corporation | 32 | Quarterly Report on Form 10-Q |
($ in millions) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net other-than-temporary impairment losses on securities recognized in earnings | $ | (0.5 | ) | $ | — | $ | (4.2 | ) | $ | (0.3 | ) | |||||
Sales and other, net | 0.4 | 142.1 | 4.9 | 146.9 | ||||||||||||
Change in fair value - equity securities | 6.6 | 3.4 | (7.9 | ) | 6.9 | |||||||||||
Change in fair value and gains (losses) realized on settlements - derivatives | (3.3 | ) | 0.8 | (8.1 | ) | 0.2 | ||||||||||
Net investment gains (losses) | $ | 3.2 | $ | 146.3 | $ | (15.3 | ) | $ | 153.7 |
Horace Mann Educators Corporation | 33 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 34 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 35 | Quarterly Report on Form 10-Q |
• | Valuation of hard-to-value fixed maturity securities, including evaluation of other-than-temporary impairments |
• | Evaluation of goodwill and intangible assets for impairment |
• | Valuation of life and annuity deferred policy acquisition costs |
• | Valuation of liabilities for property and casualty unpaid claims and claim expenses |
• | Valuation of investment contract and policy reserves |
• | Valuation of assets acquired and liabilities assumed under purchase accounting |
• | Property and Casualty |
• | Supplemental |
• | Retirement |
• | Life |
• | Corporate and Other |
Horace Mann Educators Corporation | 36 | Quarterly Report on Form 10-Q |
• | Written premiums* reduced by $9.8 million of COVID-19 related premium credits |
• | 18.0 points and 11.4 points of reduction in the Property and Casualty underlying loss ratio*, respectively |
• | Catastrophe losses increased by 9.3 points and 3.9 points, respectively |
• | A one-time tax benefit of $2.8 million in the first quarter of 2020 as a result of the CARES Act |
Horace Mann Educators Corporation | 37 | Quarterly Report on Form 10-Q |
($ in millions, unless otherwise indicated) | Three Months Ended June 30, | 2020-2019 | Six Months Ended June 30, | 2020-2019 | ||||||||||||||||||
2020 | 2019 | Change % | 2020 | 2019 | Change % | |||||||||||||||||
Financial Data: | ||||||||||||||||||||||
Written premiums*: | ||||||||||||||||||||||
Automobile | $ | 96.7 | $ | 114.6 | -15.6 | % | $ | 206.1 | $ | 231.4 | -10.9 | % | ||||||||||
Property and other | 59.4 | 59.7 | -0.5 | % | 103.6 | 104.6 | -1.0 | % | ||||||||||||||
Total premiums written | 156.1 | 174.3 | -10.4 | % | 309.7 | 336.0 | -7.8 | % | ||||||||||||||
Change in unearned insurance premiums | 0.1 | (3.0 | ) | 103.3 | % | 13.0 | 6.1 | 113.1 | % | |||||||||||||
Total insurance premiums earned | 156.2 | 171.3 | -8.8 | % | 322.7 | 342.1 | -5.7 | % | ||||||||||||||
Incurred claims and claims expenses: | ||||||||||||||||||||||
Claims occurring in the current year | 109.2 | 134.4 | -18.8 | % | 214.6 | 253.2 | -15.2 | % | ||||||||||||||
Prior years' reserve development | 1.0 | 2.0 | -50.0 | % | 2.0 | 4.0 | -50.0 | % | ||||||||||||||
Total claims and claim expenses incurred | 108.2 | 132.4 | -18.3 | % | 212.6 | 249.2 | -14.7 | % | ||||||||||||||
Operating expenses, including DAC amortization | 40.9 | 45.4 | -9.9 | % | 84.1 | 91.9 | -8.5 | % | ||||||||||||||
Underwriting gain (loss) | 7.1 | (6.5 | ) | 209.2 | % | 26.0 | 1.0 | N.M. | ||||||||||||||
Net investment income | 6.3 | 12.7 | -50.4 | % | 16.6 | 22.9 | -27.5 | % | ||||||||||||||
Income before income taxes | 14.1 | 6.6 | 113.6 | % | 43.9 | 24.4 | 79.9 | % | ||||||||||||||
Net income/core earnings* | 11.3 | 5.1 | 121.6 | % | 37.9 | 20.1 | 88.6 | % | ||||||||||||||
Operating Statistics: | ||||||||||||||||||||||
Automobile | ||||||||||||||||||||||
Loss and loss adjustment expense ratio | 53.2 | % | 73.8 | % | -20.6 | pts | 59.8 | % | 72.3 | % | -12.5 | pts | ||||||||||
Expense ratio | 27.1 | % | 26.6 | % | 0.5 | pts | 26.5 | % | 26.9 | % | -0.4 | pts | ||||||||||
Combined ratio: | 80.3 | % | 100.4 | % | -20.1 | pts | 86.3 | % | 99.2 | % | -12.9 | pts | ||||||||||
Prior years' reserve development | — | % | -0.9 | % | 0.9 | pts | -0.5 | % | -0.9 | % | 0.4 | pts | ||||||||||
Catastrophes | 3.1 | % | 1.9 | % | 1.2 | pts | 1.5 | % | 1.3 | % | 0.2 | pts | ||||||||||
Underlying combined ratio* | 77.2 | % | 99.4 | % | -22.2 | pts | 85.3 | % | 98.8 | % | -13.5 | pts | ||||||||||
Property | ||||||||||||||||||||||
Loss and loss adjustment expense ratio | 99.1 | % | 84.8 | % | 14.3 | pts | 77.8 | % | 73.9 | % | 3.9 | pts | ||||||||||
Expense ratio | 24.8 | % | 26.6 | % | -1.8 | pts | 25.5 | % | 27.1 | % | -1.6 | pts | ||||||||||
Combined ratio: | 123.9 | % | 111.4 | % | 12.5 | pts | 103.3 | % | 101.0 | % | 2.3 | pts | ||||||||||
Prior years' reserve development | -1.8 | % | -1.8 | % | — | -0.9 | % | -1.9 | % | 1.0 | pts | |||||||||||
Catastrophes | 57.9 | % | 36.8 | % | 21.1 | pts | 36.8 | % | 27.6 | % | 9.2 | pts | ||||||||||
Underlying combined ratio* | 67.8 | % | 76.4 | % | -8.6 | pts | 67.4 | % | 75.3 | % | -7.9 | pts | ||||||||||
Risks in force (in thousands) | ||||||||||||||||||||||
Automobile (1) | 418 | 448 | -6.7 | % | ||||||||||||||||||
Property | 191 | 198 | -3.5 | % | ||||||||||||||||||
Total | 609 | 646 | -5.7 | % |
Horace Mann Educators Corporation | 38 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 39 | Quarterly Report on Form 10-Q |
($ in millions, unless otherwise indicated) | Three Months Ended June 30, | 2020-2019 | Six Months Ended June 30, | 2020-2019 | ||||||||||||
2020 | 2019 | Change % | 2020 | 2019 | Change % | |||||||||||
Financial Data: | ||||||||||||||||
Insurance premiums and contract deposits* | $ | 33.7 | N/A | N/A | $ | 66.3 | N/A | N/A | ||||||||
Insurance premiums and contract charges earned | 33.3 | N/A | N/A | 66.3 | N/A | N/A | ||||||||||
Net investment income | 4.0 | N/A | N/A | 7.5 | N/A | N/A | ||||||||||
Benefits and settlement expenses | 12.5 | N/A | N/A | 23.0 | N/A | N/A | ||||||||||
Operating expenses (includes DAC unlocking and amortization expense) | 10.1 | N/A | N/A | 20.2 | N/A | N/A | ||||||||||
Intangible asset amortization expense | 3.2 | N/A | N/A | 6.4 | N/A | N/A | ||||||||||
Income before income taxes | 12.1 | N/A | N/A | 25.5 | N/A | N/A | ||||||||||
Net income / core earnings* | 9.5 | N/A | N/A | 20.0 | N/A | N/A | ||||||||||
Operating Statistics: | ||||||||||||||||
Supplemental insurance in force (thousands) | 298 | N/A | N/A | |||||||||||||
Benefits ratio (1) | 37.5 | % | N/A | N/A | 34.7 | % | N/A | N/A | ||||||||
Operating expense ratio (2) | 26.6 | % | N/A | N/A | 26.9 | % | N/A | N/A | ||||||||
Pretax profit margin (2) | 31.9 | % | N/A | N/A | 34.0 | % | N/A | N/A | ||||||||
Persistency | 89.3 | % | N/A | N/A |
Horace Mann Educators Corporation | 40 | Quarterly Report on Form 10-Q |
• | prior period results include a $28.0 million pretax goodwill impairment charge related to the annuity reinsurance transaction in the second quarter of 2019 |
• | $5.6 million pretax of unfavorable DAC unlocking in the prior year quarter primarily due to accelerated amortization of the DAC asset associated with the reinsured annuity block, compared to $4.6 million of favorable DAC unlocking in the current year quarter due to equity market recovery |
• | lower levels of net investment income in 2020, reflecting lower invested asset levels resulting from the prior year annuity reinsurance transaction and use of capital to purchase NTA as well as lower returns on limited partnership interests |
Horace Mann Educators Corporation | 41 | Quarterly Report on Form 10-Q |
($ in millions, unless otherwise indicated) | Three Months Ended June 30, | 2020-2019 | Six Months Ended June 30, | 2020-2019 | ||||||||||||||||||
2020 | 2019 | Change % | 2020 | 2019 | Change % | |||||||||||||||||
Financial Data: | ||||||||||||||||||||||
Contract charges earned | $ | 6.7 | $ | 6.9 | -2.9 | % | $ | 14.1 | $ | 15.5 | -9.0 | % | ||||||||||
Net investment income | 55.1 | 62.7 | -12.1 | % | 108.6 | 127.4 | -14.8 | % | ||||||||||||||
Interest credited | 39.4 | 42.3 | -6.9 | % | 79.7 | 84.0 | -5.1 | % | ||||||||||||||
Net interest margin without net investment gains (losses) | 16.7 | 21.5 | -22.3 | % | 30.8 | 44.5 | -30.8 | % | ||||||||||||||
Net interest margin - reinsured block | (1.0 | ) | (1.1 | ) | 9.1 | % | (1.9 | ) | (1.1 | ) | -72.7 | % | ||||||||||
Mortality loss and other reserve charges | 1.2 | 1.2 | — | % | 2.8 | 1.8 | 55.6 | % | ||||||||||||||
Operating expenses | 13.9 | 17.4 | -20.1 | % | 30.1 | 35.5 | -15.2 | % | ||||||||||||||
DAC and intangible asset amortization expense, excluding DAC unlocking | 4.8 | 4.9 | -2.0 | % | 10.0 | 10.3 | -2.9 | % | ||||||||||||||
DAC unlocking | (4.6 | ) | 5.6 | -182.1 | % | (0.6 | ) | 3.6 | -116.7 | % | ||||||||||||
Income (loss) before income taxes | 11.2 | (24.8 | ) | N.M. | 10.1 | (10.2 | ) | N.M. | ||||||||||||||
Net income (loss) | 9.7 | (25.0 | ) | N.M. | 8.8 | (12.8 | ) | N.M. | ||||||||||||||
Core earnings | 9.7 | 3.0 | 223.3 | % | 8.8 | 15.2 | -42.1 | % | ||||||||||||||
Operating Statistics: | ||||||||||||||||||||||
Annuity contract deposits* | ||||||||||||||||||||||
Variable | $ | 52.3 | $ | 54.1 | -3.3 | % | $ | 110.1 | $ | 102.9 | 7.0 | % | ||||||||||
Fixed | 59.5 | 54.9 | 8.4 | % | 119.4 | 113.4 | 5.3 | % | ||||||||||||||
Total | 111.8 | 109.0 | 2.6 | % | 229.5 | 216.3 | 6.1 | % | ||||||||||||||
Single | 55.9 | 55.8 | 0.2 | % | 118.1 | 111.7 | 5.7 | % | ||||||||||||||
Recurring | 55.9 | 53.2 | 5.1 | % | 111.4 | 104.6 | 6.5 | % | ||||||||||||||
Total | 111.8 | 109.0 | 2.6 | % | 229.5 | 216.3 | 6.1 | % | ||||||||||||||
Assets under administration (AUA) | ||||||||||||||||||||||
Annuity assets under management (1) | 4,324.3 | 4,170.3 | 3.7 | % | ||||||||||||||||||
Broker and advisory assets under administration | 2,168.0 | 2,236.1 | -3.0 | % | ||||||||||||||||||
Recordkeeping assets under administration | 1,460.5 | 1,395.1 | 4.7 | % | ||||||||||||||||||
Total | 7,952.8 | 7,801.5 | 1.9 | % | ||||||||||||||||||
Persistency | ||||||||||||||||||||||
Variable annuities | 94.9 | % | 94.3 | % | 0.6 | pts | ||||||||||||||||
Fixed annuities | 94.2 | % | 93.9 | % | 0.3 | pts | ||||||||||||||||
Total | 94.5 | % | 94.0 | % | 0.5 | pts | ||||||||||||||||
Annuity contracts in force (thousands) | 230 | 227 | 1.3 | % | ||||||||||||||||||
Fixed spread - YTD annualized (basis points) | 168 | 175 | -7bps |
(1) | Amounts reported as of June 30, 2020 and June 30, 2019 exclude $627.6 million and $691.6 million, respectively, of assets under management held under modified coinsurance reinsurance |
Horace Mann Educators Corporation | 42 | Quarterly Report on Form 10-Q |
($ in millions) | June 30, 2020 | ||||||||||||||||
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% | 53.7 | % | $ | 1,299.3 | 49.4 | % | 37.5 | % | $ | 642.1 | |||||||
Equal to 2% but less than 3% | 11.8 | % | 286.2 | 83.4 | % | 13.9 | % | 238.8 | |||||||||
Equal to 3% but less than 4% | 25.3 | % | 612.8 | 99.9 | % | 35.7 | % | 612.4 | |||||||||
Equal to 4% but less than 5% | 7.1 | % | 170.5 | 100.0 | % | 9.9 | % | 170.5 | |||||||||
5% or higher | 2.1 | % | 50.5 | 100.0 | % | 3.0 | % | 50.5 | |||||||||
Total | 100.0 | % | $ | 2,419.3 | 70.9 | % | 100.0 | % | $ | 1,714.3 |
Horace Mann Educators Corporation | 43 | Quarterly Report on Form 10-Q |
($ in millions, unless otherwise indicated) | Three Months Ended June 30, | 2020-2019 | Six Months Ended June 30, | 2020-2019 | ||||||||||||||||||
2020 | 2019 | Change % | 2020 | 2019 | Change % | |||||||||||||||||
Financial Data: | ||||||||||||||||||||||
Insurance premiums and contract deposits* | $ | 27.6 | $ | 28.4 | -2.8 | % | $ | 52.4 | $ | 54.8 | -4.4 | % | ||||||||||
Insurance premiums and contract charges earned | 29.2 | 29.9 | -2.3 | % | 58.6 | 60.3 | -2.8 | % | ||||||||||||||
Net investment income | 15.6 | 18.3 | -14.8 | % | 31.2 | 36.4 | -14.3 | % | ||||||||||||||
Benefits and settlement expenses | 21.1 | 19.1 | 10.5 | % | 43.3 | 41.1 | 5.4 | % | ||||||||||||||
Interest credited | 11.3 | 11.3 | — | % | 22.5 | 22.5 | — | % | ||||||||||||||
Operating expenses | 8.3 | 9.2 | -9.8 | % | 17.4 | 18.6 | -6.5 | % | ||||||||||||||
DAC amortization expense, excluding unlocking | 2.0 | 2.1 | -4.8 | % | 3.9 | 4.1 | -4.9 | % | ||||||||||||||
DAC unlocking | (0.2 | ) | (0.1 | ) | N.M. | (0.3 | ) | (0.1 | ) | N.M. | ||||||||||||
Income before income taxes | 2.3 | 6.7 | -65.7 | % | 3.0 | 10.7 | -72.0 | % | ||||||||||||||
Net income / core earnings* | 1.9 | 5.2 | -63.5 | % | 2.5 | 8.5 | -70.6 | % | ||||||||||||||
Operating Statistics: | ||||||||||||||||||||||
Life insurance in force | $ | 19,565 | $ | 18,598 | 5.2 | % | ||||||||||||||||
Number of policies in force (thousands) | 201 | 199 | 1.0 | % | ||||||||||||||||||
Average face amount in force (in dollars) | $ | 97,306 | $ | 93,506 | 4.1 | % | ||||||||||||||||
Lapse ratio (ordinary life insurance in force) | 4.2 | % | 4.5 | % | -0.3 | pts | ||||||||||||||||
Mortality costs | $ | 19.3 | $ | 18.0 | 7.2 | % |
Horace Mann Educators Corporation | 44 | Quarterly Report on Form 10-Q |
($ in millions) | Three Months Ended June 30, | 2020-2019 | Six Months Ended June 30, | 2020-2019 | ||||||||||||||||||
2020 | 2019 | Change % | 2020 | 2019 | Change % | |||||||||||||||||
Interest expense | $ | 3.9 | $ | 2.9 | 34.5 | % | $ | 7.9 | $ | 5.9 | 33.9 | % | ||||||||||
Net investment gains (losses) pretax | 3.2 | 146.3 | N.M. | (15.3 | ) | 153.7 | N.M. | |||||||||||||||
Tax on net investment gains (losses) | 0.7 | 31.6 | N.M. | (3.3 | ) | 33.2 | N.M. | |||||||||||||||
Net investment gains (losses) after tax | 2.5 | 114.7 | N.M. | (12.0 | ) | 120.5 | N.M. | |||||||||||||||
Net income (loss) | (1.9 | ) | 108.5 | -101.8 | % | (20.2 | ) | 110.2 | -118.3 | % | ||||||||||||
Core earnings (loss)* | (4.4 | ) | (6.2 | ) | 29.0 | % | (8.2 | ) | (10.3 | ) | 20.4 | % |
($ in millions) | Three Months Ended June 30, | 2020-2019 | Six Months Ended June 30, | 2020-2019 | ||||||||||||||||||
2020 | 2019 | Change % | 2020 | 2019 | Change % | |||||||||||||||||
Net investment income - Investment portfolio | $ | 56.5 | $ | 70.3 | -19.6 | % | $ | 115.1 | $ | 163.1 | -29.4 | % | ||||||||||
Investment income - Deposit asset on reinsurance | 23.9 | 23.2 | 3.0 | % | 47.6 | 23.2 | 105.2 | % | ||||||||||||||
Total net investment income | 80.4 | 93.5 | -14.0 | % | 162.7 | 186.3 | -12.7 | % | ||||||||||||||
Pretax net investment gains (losses) | 3.2 | 146.3 | N.M. | (15.3 | ) | 153.7 | N.M. | |||||||||||||||
Pretax net unrealized investment gains on fixed maturity securities | 417.6 | 292.5 | 42.8 | % |
Horace Mann Educators Corporation | 45 | Quarterly Report on Form 10-Q |
($ in millions) | June 30, 2020 | ||||||||||||||
Number of Issuers | Fair Value | Amortized Cost or Cost | Pretax Net Unrealized Gain (Loss) | ||||||||||||
Fixed maturity securities | |||||||||||||||
Corporate bonds | |||||||||||||||
Banking & Finance | 134 | $ | 476.8 | $ | 436.0 | $ | 40.8 | ||||||||
Insurance | 49 | 193.9 | 174.1 | 19.8 | |||||||||||
HealthCare,Pharmacy | 69 | 132.0 | 119.2 | 12.8 | |||||||||||
Energy (1) | 68 | 127.2 | 114.4 | 12.8 | |||||||||||
Real Estate | 34 | 120.0 | 113.0 | 7.0 | |||||||||||
Transportation | 38 | 94.5 | 92.0 | 2.5 | |||||||||||
Technology | 37 | 87.8 | 81.5 | 6.3 | |||||||||||
Utilities | 55 | 85.5 | 74.6 | 10.9 | |||||||||||
Food and Beverage | 31 | 76.6 | 66.7 | 9.9 | |||||||||||
Broadcasting & Media | 25 | 61.1 | 52.3 | 8.8 | |||||||||||
All other corporates (2) | 306 | 407.0 | 382.2 | 24.8 | |||||||||||
Total corporate bonds | 846 | 1,862.4 | 1,706.0 | 156.4 | |||||||||||
Mortgage-backed securities | |||||||||||||||
U.S. Government and federally sponsored agencies | 270 | 503.1 | 448.7 | 54.4 | |||||||||||
Commercial (3) | 125 | 348.7 | 319.6 | 29.1 | |||||||||||
Other | 42 | 63.4 | 63.7 | (0.3 | ) | ||||||||||
Municipal bonds (4) | 597 | 1,805.6 | 1,633.3 | 172.3 | |||||||||||
Government bonds | |||||||||||||||
U.S. | 34 | 374.9 | 333.4 | 41.5 | |||||||||||
Foreign | 7 | 43.6 | 39.7 | 3.9 | |||||||||||
Collateralized loan obligations (5) | 136 | 633.3 | 655.4 | (22.1 | ) | ||||||||||
Asset-backed securities | 106 | 387.0 | 404.6 | (17.6 | ) | ||||||||||
Total fixed maturity securities | 2,163 | $ | 6,022.0 | $ | 5,604.4 | $ | 417.6 | ||||||||
Equity securities | |||||||||||||||
Non-redeemable preferred stocks | 16 | $ | 62.8 | ||||||||||||
Common stocks | 95 | 6.5 | |||||||||||||
Closed-end fund | 1 | 21.0 | |||||||||||||
Total equity securities | 112 | $ | 90.3 | ||||||||||||
Total | 2,275 | $ | 6,112.3 |
(1) | At June 30, 2020, the fair value amount included $8.6 million which were non-investment grade. |
(2) | The All other corporates category contains 19 additional industry sectors. Telecom, Retail, Consumer Products, Metal & Mining and Misc. represented $222.4 million of fair value at June 30, 2020, with the remaining 14 sectors each representing less than $32.2 million. |
(3) | At June 30, 2020, 100% were investment grade, with an overall credit rating of AA+, and the positions were well diversified by property type, geography and sponsor. |
(4) | Holdings are geographically diversified, 52.5% are tax-exempt and 76.8% are revenue bonds tied to essential services, such as mass transit, water and sewer. The overall credit quality of the municipal bond portfolio was AA- at June 30, 2020. |
(5) | Based on fair value, 95.8% of the collateralized loan obligation securities were rated investment grade by Standard and Poor's Global Inc. (S&P), Moody's Investors Service, Inc. (Moody's) and/or Fitch Ratings, Inc. (Fitch) at June 30, 2020. |
Horace Mann Educators Corporation | 46 | Quarterly Report on Form 10-Q |
($ in millions) | June 30, 2020 | ||||||||||||||||
Number of Issuers | Fair Value | Amortized Cost or Cost | Pretax Net Unrealized Investment Gains (Losses) | Credit Quality | |||||||||||||
Fixed maturity securities (1) | |||||||||||||||||
Travel and leisure | 48 | $ | 107.3 | $ | 106.4 | $ | 0.9 | BBB+ | |||||||||
Energy-related | 83 | 150.6 | 135.3 | 15.3 | BBB+ | ||||||||||||
Retail | 22 | 66.5 | 62.8 | 3.7 | A- | ||||||||||||
Aircraft | 55 | 145.7 | 175.2 | (29.5 | ) | A- | |||||||||||
Total fixed maturity securities | 208 | $ | 470.1 | $ | 479.7 | $ | (9.6 | ) | BBB+ |
(1) | Below investment grade securities included in this population account for $55.7 million of amortized cost, $52.8 million of fair value, and $2.9 million of net unrealized investment losses. There are 90 issuers with an average rating of BB-. The majority of these securities are concentrated in the energy sector. |
Horace Mann Educators Corporation | 47 | Quarterly Report on Form 10-Q |
($ in millions) | Percent of Portfolio | |||||||||||||
Fair Value | June 30, 2020 | |||||||||||||
December 31, 2019 | June 30, 2020 | Fair Value | Amortized Cost | |||||||||||
Fixed maturity securities | ||||||||||||||
AAA | 11.5 | % | 11.6 | % | $ | 698.5 | $ | 685.2 | ||||||
AA (2) | 42.7 | 41.0 | 2,468.4 | 2,232.1 | ||||||||||
A | 23.3 | 20.5 | 1,235.7 | 1,148.0 | ||||||||||
BBB | 18.9 | 19.7 | 1,188.7 | 1,112.1 | ||||||||||
BB | 1.7 | 2.1 | 123.8 | 124.5 | ||||||||||
B | 0.4 | 0.9 | 54.1 | 55.4 | ||||||||||
CCC or lower | — | 0.1 | 3.0 | 3.6 | ||||||||||
Not rated (3) | 1.5 | 4.1 | 249.8 | 243.5 | ||||||||||
Total fixed maturity securities | 100.0 | % | 100.0 | % | $ | 6,022.0 | $ | 5,604.4 | ||||||
Equity securities | ||||||||||||||
AAA | — | % | — | % | $ | — | ||||||||
AA | — | — | — | |||||||||||
A | — | 0.6 | 0.5 | |||||||||||
BBB | 59.3 | 68.1 | 61.5 | |||||||||||
BB | — | 0.9 | 0.8 | |||||||||||
B | — | — | — | |||||||||||
CCC or lower | — | — | — | |||||||||||
Not rated | 40.7 | 30.4 | 27.5 | |||||||||||
Total equity securities | 100.0 | % | 100.0 | % | $ | 90.3 | ||||||||
Total | $ | 6,112.3 |
(1) | Ratings are as assigned primarily by S&P when available, with remaining ratings as assigned on an equivalent basis by Moody's or Fitch. Ratings for publicly traded securities are determined when the securities are acquired and are updated monthly to reflect any changes in ratings. |
(2) | At June 30, 2020, the AA rated fair value amount included $374.9 million of U.S. Government and federally sponsored agency securities and $706.0 million of mortgage-backed and asset-backed securities issued by U.S. Government and federally sponsored agencies. |
(3) | This category primarily represents private placement and municipal securities not rated by either S&P, Moody's or Fitch. |
Horace Mann Educators Corporation | 48 | Quarterly Report on Form 10-Q |
($ in millions) | Six Months Ended June 30, | 2020-2019 | |||||||||
2020 | 2019 | Change % | |||||||||
Net cash provided by operating activities | $ | 165.6 | $ | 97.8 | 69.3 | % | |||||
Net cash provided by (used in) investing activities | (195.0 | ) | 23.2 | N.M. | |||||||
Net cash provided by (used in) financing activities | 86.3 | (125.3 | ) | 168.9 | % | ||||||
Net increase (decrease) in cash | 56.9 | (4.3 | ) | N.M. | |||||||
Cash at beginning of period | 25.5 | 11.9 | 114.3 | % | |||||||
Cash at end of period | $ | 82.4 | $ | 7.6 | N.M. |
Horace Mann Educators Corporation | 49 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 50 | Quarterly Report on Form 10-Q |
($ in millions) | Effective Interest Rates | Final Maturity | ||||||||||
June 30, 2020 | December 31, 2019 | |||||||||||
Short-term debt | ||||||||||||
Bank Credit Facility | Variable | 2024 | $ | 135.0 | $ | 135.0 | ||||||
Long-term debt (1) | ||||||||||||
4.50% Senior Notes, Aggregate principal amount of $250,000 less unaccrued discount of $395 and $426 and unamortized debt issuance costs of $1,433 and $1,549 | 4.50% | 2025 | 248.2 | 248.0 | ||||||||
Federal Home Loan Bank borrowing | 0.52% | 2022 | 54.0 | 50.0 | ||||||||
Total | $ | 437.2 | $ | 433.0 |
Horace Mann Educators Corporation | 51 | Quarterly Report on Form 10-Q |
Insurance Financial | Affirmed/ | |||||||||
Strength Ratings (Outlook) | Debt Ratings (Outlook) | Reviewed | ||||||||
A.M. Best | 7/2/2020 | |||||||||
HMEC (parent company) | N.A. | bbb | (stable) | |||||||
HMEC's Life | A | (stable) | N.A. | |||||||
HMEC's Property and Casualty subsidiaries | A | (stable) | N.A. | |||||||
HMEC's Supplemental subsidiaries | A- | (stable) | N.A. | |||||||
Fitch | A | (stable) | BBB | (stable) | 6/2/2020 | |||||
Moody's | A2 | (stable) | Baa2 | (stable) | 7/2/2019 | |||||
S&P | A | (stable) | BBB | (stable) | 2/19/2020 |
Horace Mann Educators Corporation | 52 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 53 | Quarterly Report on Form 10-Q |
• | employees contracting COVID-19; |
• | reductions in our operating effectiveness as our employees work from home; |
• | sustained lack of access to schools and teachers that could materially impact our sales and premium volumes; |
• | public school systems facing budget constraints due to the economic impacts of the pandemic that could result in educator layoffs; |
• | unprecedented volatility in financial markets that could materially affect our investment portfolio valuations and returns as well as our ability to generate targeted spreads on the indexed products; |
• | regulatory mandates and/or legislative changes, including premium grace periods and premium credits; |
• | changes in frequency and/or severity of claims; |
• | increased credit risk; |
• | business disruption for insurance agents who market and sell our insurance products; and |
• | business disruptions to third parties at which we outsource certain business functions to or on which we rely for technology. |
Horace Mann Educators Corporation | 54 | Quarterly Report on Form 10-Q |
Exhibit | ||
No. | Description | |
(3) Articles of incorporation and bylaws: | ||
3.1 | ||
3.2 | ||
(4) Instruments defining the rights of security holders, including indentures: | ||
4.1 | ||
4.1(a) | ||
4.2 | ||
4.3 | ||
(10) Material contracts: | ||
10.1 | ||
10.1(a) | ||
Horace Mann Educators Corporation | 55 | Quarterly Report on Form 10-Q |
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)* | ||
Horace Mann Educators Corporation | 56 | Quarterly Report on Form 10-Q |
10.3(g)* | ||
10.4* | ||
10.5* | ||
10.6* | ||
10.7* | ||
10.8* | ||
10.9* | ||
10.10* | ||
10.10(a)* | ||
10.11* | ||
10.11(a)* | ||
10.11(b)* | ||
10.12 | ||
10.13 | ||
10.14 | ||
Horace Mann Educators Corporation | 57 | Quarterly Report on Form 10-Q |
(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 | 58 | Quarterly Report on Form 10-Q |
HORACE MANN EDUCATORS CORPORATION | |||
(Registrant) | |||
Date | August 7, 2020 | /s/ Marita Zuraitis | |
Marita Zuraitis | |||
President and Chief Executive Officer | |||
Date | August 7, 2020 | /s/ Bret A. Conklin | |
Bret A. Conklin | |||
Executive Vice President and | |||
Chief Financial Officer | |||
Date | August 7, 2020 | /s/ Kimberly A. Johnson | |
Kimberly A. Johnson | |||
Senior Vice President, Controller and | |||
Principal Accounting Officer |
Horace Mann Educators Corporation | 59 | Quarterly Report on Form 10-Q |
Compensation Element | Non-Employee Director Compensation (1)(2) | |
Board Chairman Annual Retainer | $125,000 | |
Board Member Annual Retainer (other than Board Chairman) | $70,000 | |
Audit Committee Chair Retainer | $25,000 | |
All Other Committee Chair Retainers | $15,000 | |
Technology Liaison | $10,000 | |
Share-based Compensation | Fair value on the date of the respective awards is used to determine the number of Restricted Stock Units ("RSUs") awarded. An annual award of $110,000 in RSUs following the Annual Shareholder Meeting. $110,000 in RSUs if joining the Board within six months after the prior Annual Shareholder Meeting, $55,000 in RSUs if joining more than six months after the prior Annual Shareholder Meeting but before the next Annual Shareholder Meeting. All awards have a 1-year vesting period. | |
Basic Group Term Life Insurance | Premium for $10,000 face amount | |
Business Travel Accident Insurance | Premium for $100,000 coverage |
(1) | Annual retainer fees are paid following the Annual Shareholder Meeting each year. The annual retainer fees are prorated to the extent that a non-employee Director joins the Board after the Annual Shareholder Meeting. |
(2) | Non-employee Directors may elect to defer cash compensation into RSUs. |
Named Executive Officer | Annualized Salary |
Marita Zuraitis President and Chief Executive Officer | $975,000 |
Bret A. Conklin Executive Vice President and Chief Financial Officer | $450,000 |
Matthew P. Sharpe Executive Vice President, Distribution & Business Strategy | $450,000 |
William J. Caldwell Executive Vice President, Property & Casualty and Life & Retirement (1) | $450,000 |
Wade A. Rugenstein Executive Vice President, Supplemental & Operations | $450,000 |
Note: The effective date of entry shall be subject to Section 4.2(a) | ||
NAME OR TITLE | EFFECTIVE DATE OF | |
PARTICIPATION* | ||
TIER I PARTICIPANTS | ||
President and CEO | May 16, 2013 | |
TIER II PARTICIPANTS | ||
EVP and CFO | May 23, 2017 | |
EVP, Distribution & Business Strategy | February 15, 2012 | |
EVP, Property & Casualty and Life & Retirement (1) | July 1, 2015 | |
EVP, Supplemental & Operations | August 15, 2019 | |
TIER III PARTICIPANTS | ||
*Subject to acceptance within 30 days of effective date of participation. |
NAME OR TITLE | EFFECTIVE DATE OF | |
PARTICIPATION* | ||
TIER I PARTICIPANTS | ||
President and CEO | May 16, 2013 | |
TIER II PARTICIPANTS | ||
EVP and CFO | May 23, 2017 | |
EVP, Distribution & Business Strategy | February 15, 2012 | |
EVP, Property & Casualty and Life & Retirement (1) | July 1, 2015 | |
EVP, Supplemental & Operations | August 15, 2019 | |
TIER III PARTICIPANTS | ||
*Subject to acceptance within 30 days of effective date of participation. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Basic: | ||||||||||||||||
Net income | $ | 30,578 | $ | 93,822 | $ | 49,050 | $ | 125,988 | ||||||||
Weighted average number of common shares during the period (in thousands) | 41,879 | 41,762 | 41,856 | 41,685 | ||||||||||||
Net income per share – basic | $ | 0.73 | $ | 2.25 | $ | 1.17 | $ | 3.02 | ||||||||
Diluted: | ||||||||||||||||
Net income | $ | 30,578 | $ | 93,822 | $ | 49,050 | $ | 125,988 | ||||||||
Weighted average number of common shares during the period | 41,879 | 41,762 | 41,856 | 41,685 | ||||||||||||
Weighted average number of common equivalent shares to reflect the dilutive effect of common stock equivalent securities: | ||||||||||||||||
Stock options | 31 | 61 | 52 | 64 | ||||||||||||
Common stock units related to deferred compensation for employees | — | — | — | — | ||||||||||||
Restricted common stock units related to incentive compensation | 86 | 98 | 100 | 102 | ||||||||||||
Total common and common equivalent shares adjusted to calculate diluted earnings per share | 41,996 | 41,921 | 42,008 | 41,851 | ||||||||||||
Net income per share – diluted | $ | 0.73 | $ | 2.24 | $ | 1.17 | $ | 3.01 |
/s/ KPMG LLP | |
KPMG LLP | |
Chicago, Illinois |
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: | August 7, 2020 |
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: | August 7, 2020 |
(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: | August 7, 2020 |
(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: | August 7, 2020 |
• | Pretax core earnings (loss) - Pretax net income (loss) excluding pretax impact of net investment gains (losses), discontinued operations, goodwill impairment charges and cumulative effect of changes in accounting principles when applicable. Income before income taxes is the most comparable GAAP measure. |
• | Segment core earnings - Determined in the same manner as core earnings on a consolidated basis. Management uses segment core earnings to analyze each segment's performance and as a tool in making business decisions. Financial statement users also consider core earnings when analyzing the results and trends of insurance companies. |
• | Core return on equity - LTM: The ratio of (1) trailing 12 month core earnings to (2) 5 quarter average shareholders’ equity excluding net unrealized investment gains and losses on securities and the effect of a change in tax laws and tax rates at enactment date. Net income return on equity - LTM is the most comparable GAAP measure. |
• | Net income return on equity - Annualized: The ratio of (1) annualized net income to (2) the 2 quarter average shareholders' equity (but the year-end measures are still based on a 5 quarter average). |
• | Core return on equity - Annualized: The ratio of (1) annualized core earnings to (2) the 2 quarter average shareholders’ equity excluding net unrealized investment gains and losses on securities and the effect of a change in tax laws and tax rates at enactment date (but the year-end measures are still based on a 5 quarter average). Net income return on equity - Annualized is the most comparable GAAP measure. |
• | Loss ratio - The ratio of (1) the sum of net incurred losses and loss adjustment expenses to (2) net earned premiums. |
• | Underlying loss ratio - The sum of the Loss Ratio adjusted to remove the effect of catastrophe costs and prior years' reserve development. The Loss 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. |
• | 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. |
• | Underlying combined ratio or combined ratio excluding catastrophe costs and prior years’ reserve development - 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. |
&/B?\._A-\.]7^&EA\5?B#XK\2_$GX7212Z=JTZZIXBU!='
MU#Q!KWB?3]/L=(\7^(/$6DP:YXS\'SKI'B:TB%W?6YXC_@KQXZ\*^%/@A\'O
M#OCKPK)KO@[XC_M'_#CP=KNL^)?BAXU^$OP.\'P&TU[5[;7?VB_$7P_L[OQ%
MK7PE-WIT5IJ'@F233=$\4ZS+I5OKFKV5G;8F\]86E4Q-#"4G557GG2Q#:I27
M/" )?B=^UC^SK^TK\3_A==_M?#QQ:?
M$G_@F[\5/VEM"\5?M$:7\,_"/PP^"WQX\&^)]$\,Z5XDMM1T#PQH%CX2^$$4
MFO)+?Z'XBFUZUTRUACNM8U'5I(9KJ;#^R:O+&:Q%!\Z \%67Q'UWXB^"M(\ ZDMJVF^,M2\3:19^&=2%]YIL1IVLSW2
M6-^]\(9C916HHHKSC]%"BBB@ HHH
MH **** "DS[$_E_4BEK\Z/VI?^"3'_!/3]M3XF0_&']IW]FOPW\5_B1!X9TC
MP=#XHU7Q9\3-%ND\-:%
$7ND:LL3Y5:]WM?TLF
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M,/#7CCP\UW/8?VSX4UK3]>TY;ZU$1NK&6ZTV>XCAO;830FYM)C'
#]*^*VB:;\:;6SLK.V(\&:3XOT+XL^*OAGX&TR87%X&U+3-/U6#0["
M_OI;NV;7%@GOV6S-Z88><\._MC^*/AC\'?VD_BEXS_:+^&G[2>O_ @\*>$)
M+/X;>'O@AXC_ &=-8T'Q9XPU@>'O"=WX@;QEXFUO5]4\">,]?U72K+3/%]CH
ML.B_V;IVIZGIE]J3M]F@]R^%G[-GQR^&'[&-]\$O"_C;P#X<^,]IXQ^)'C'P
MUXEN]%'CGX?M+XC^.GB/XI:/HNOZ7KVAQ7$VFZSX>U2'PUX@O;/2_P"U?#US
M>W>K>')KB_TO3[B;Q[XG_L7?&G]JV7X[^+/C>_PP^%7B3QU^SQX>^ ?P^\+^
M!]=UWXJZ':7/AGXFP?&&/QKX\UW7/"O@*?5+&Z\;Z1HMCI_A33-%633_ H=
M7^U:M<:MJ2QVM+DUO91YWZ\MXV25N:UKZQ:\^B:]ZR>KERI6=[
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Fixed maturities, available for sale, amortized cost | $ 5,604,405 | $ 5,456,980 |
Preferred stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
Common stock, shares issued (in shares) | 66,218,003 | 66,088,808 |
Treasury stock (in shares) | 24,902,579 | 24,850,484 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Comprehensive income (loss) | ||||
Net income | $ 30,578 | $ 93,822 | $ 49,050 | $ 125,988 |
Other comprehensive income (loss), net of tax: | ||||
Change in net unrealized investment gains (losses) on fixed maturity securities | 142,450 | (7,762) | 48,681 | 106,136 |
Change in net funded status of benefit plans | 0 | 0 | 0 | 0 |
Other comprehensive income (loss) | 142,450 | (7,762) | 48,681 | 106,136 |
Total | $ 173,028 | $ 86,060 | $ 97,731 | $ 232,124 |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Statement of Stockholders' Equity [Abstract] | ||||
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 |
Cash dividends (in usd per share) | $ 0.30 | $ 0.2875 | $ 0.60 | $ 0.5750 |
Basis of Presentation and Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Business Horace Mann Educators Corporation is a holding company for insurance subsidiaries that market and underwrite personal lines of property and casualty insurance products (primarily personal lines of automobile and property insurance), supplemental insurance products (primarily heart, cancer, accident and limited short-term supplemental disability coverages), retirement products (primarily tax-qualified annuities) and life insurance, primarily to K-12 teachers, administrators and other employees of public schools and their families (collectively, HMEC, the Company or Horace Mann). On July 1, 2019, the Company acquired NTA Life Enterprises, LLC (NTA). As a result, the Company’s reporting segments were changed effective in the third quarter of 2019. A newly created Supplemental segment was added to report on the personal lines of supplemental insurance products that are marketed and underwritten by NTA. Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) and with the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in annual financial statements prepared in conformity with GAAP, but are not required for interim reporting purposes, have been omitted. These Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Part II - Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the full year. The accompanying Consolidated Financial Statements and Notes are unaudited. These financial statements reflect all adjustments (generally consisting only of normal recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position, results of operations and cash flows for the interim periods. The Company's significant accounting policies are summarized in Part II - Item 8, Note 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Effective for the year ended December 31, 2019, the Company decided to change the approach it uses for presentation in its Consolidated Statements of Cash Flows from the direct method to the indirect method as management considers presentation under the indirect method as more comparable to the method used by others in the insurance industry. Accordingly, the Company has recast all prior periods presented in the Consolidated Statements of Cash Flows to conform to the current year’s presentation. The Company has reclassified the presentation of certain prior period information to conform to the current year's presentation. Consolidation All intercompany transactions and balances between HMEC and its subsidiaries and affiliates have been eliminated. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The most significant accounting estimates include valuation of hard-to-value fixed maturity securities (including evaluation of other-than-temporary impairments), evaluation of goodwill and intangible assets for impairment, valuation of supplemental, annuity and life deferred policy acquisition costs, valuation of liabilities for property and casualty unpaid claims and claim expenses, valuation of certain investment contracts and policy reserves and valuation of assets acquired and liabilities assumed under purchase accounting. Adoption of New Accounting Standards Measurement of Credit Losses on Financial Instruments In June 2016, the Financial Accounting Standards Board (FASB) issued guidance which revises the credit loss recognition criteria for certain financial assets measured at amortized cost, including reinsurance recoverables. The new guidance replaces the existing incurred loss recognition model with an expected loss recognition model. The objective of the expected credit loss model is for a reporting entity to recognize its estimate of expected credit losses for affected financial assets in a valuation allowance that when deducted from the amortized cost basis of the related financial assets results in a net carrying value at the amount expected to be collected. A reporting entity must consider all relevant information available when estimating expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts over the life of an asset. Financial assets may be evaluated individually or on a pooled basis when they share similar risk characteristics. The measurement of credit losses for available for sale debt securities measured at fair value is not affected except that credit losses recognized are limited to the amount by which fair value is below amortized cost and the carrying value adjustment is recognized through a valuation allowance which may change over time but once recorded cannot subsequently be reduced to an amount below zero. The guidance is effective for reporting periods beginning after December 15, 2019, and for most affected instruments must be adopted using a modified retrospective approach, with a cumulative effect adjustment recorded to beginning retained earnings. The Company’s implementation activities are complete and the impacts related to the Company’s commercial mortgage loan portfolio, agent advances, reinsurance recoverables and off-balance-sheet credit exposures for unfunded commercial mortgage loan commitments. The Company adopted the new guidance on January 1, 2020 and recognized a cumulative effect adjustment that decreased retained earnings by $0.5 million. Future Adoption of New Accounting Standards Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued accounting and disclosure guidance that contains targeted improvements to the accounting for long-duration insurance contracts. Under the new guidance, the cash flow assumptions used to measure the liability for future policy benefits for traditional insurance contracts will be required to be updated at least annually with changes recognized as a benefit expense (i.e., assumptions will no longer be locked-in). Insurance entities will be required to use a standard discount rate to measure the liabilities that will be equivalent to the yield from a high-quality bond. The new guidance also changes the amortization of deferred acquisition costs (DAC) to be on a constant-level basis over the expected term of the related contracts with no interest accruing on the DAC balance. The new guidance also introduces a new category of contract features associated with deposit type contracts referred to as market risk benefits (MRBs). Contract features meeting the definition of a MRB will be measured at fair value. New disclosures will be required for long-duration insurance contracts in order to provide better transparency into the exposure of insurance entities and the drivers of their results. For public business entities, the guidance is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those years. With regards to the liability for future policy benefits and DAC, the guidance applies to contracts in force as of the beginning of the earliest period presented and may be applied retrospectively. With regards to MRBs, the guidance is to be applied retrospectively at the beginning of the earliest period presented. Early adoption is permitted. Management is currently evaluating the impact this guidance will have on the results of operations and financial position of the Company. Accounting Policies The following accounting policy has been updated to reflect the Company's adoption of Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments as described above. The Company conducts a periodic review to identify and evaluate invested assets that may have credit impairments. Credit Impairments of Fixed Maturity Securities Some of the factors considered in assessing impairment of fixed maturity securities due to credit-related factors include: (1) the extent to which the fair value has been less than amortized cost; (2) the financial condition, near-term and long-term prospects for the issuer, including the relevant industry conditions and trends, and implications of rating agency actions and offering prices; (3) the likelihood of the recoverability of principal and interest; and (4) whether it is more likely than not that the Company will be required to sell the investment prior to an anticipated recovery in value. Beginning on January 1, 2020, credit losses are recognized through an allowance account. See Note 1 - Adoption of New Accounting Standards - Measurement of Credit Losses on Financial Instruments for additional information. For fixed maturity securities that the Company does not intend to sell or for which it is more likely than not that the Company would not be required to sell before an anticipated recovery in value, the Company separates the credit loss component of the impairment from the amount related to all other factors and reports the credit loss component in net investment gains (losses). The impairment related to all other factors (non-credit factors) is reported in other comprehensive income (OCI). The allowance is adjusted for any additional credit losses and subsequent recoveries. Upon recognizing a credit loss, the cost basis is not adjusted. For fixed maturity securities where the Company records a credit loss, a determination is made as to the cause of the impairment and whether the Company expects a recovery in the value. For fixed maturity securities where the Company expects a recovery in value, the constant effective yield method is utilized, and the investment is amortized to par. For fixed maturity securities the Company intends to sell or for which it is more likely than not that the Company will be required to sell before an anticipated recovery in value, the full amount of the impairment is included in net investment gains (losses). The new cost basis of the investment is the previous amortized cost basis less the impairment recognized in net investment gains (losses). The new cost basis is not adjusted for any subsequent recoveries in fair value. The Company reports investment income accrued separately from fixed maturity securities, available for sale, and has elected not to measure an allowance for credit losses for investment income accrued. Investment income accrued is written off through net investment gains (losses) at the time the issuer of the fixed maturity security defaults or is expected to default on payments. Uncollectible available for sale fixed maturity securities are written off when the Company determines that no additional payments of principal or interest will be received. Subsequent Event PG&E Corporation and Pacific Gas and Electric Company (together, PG&E) emerged from bankruptcy on July 1, 2020, the date the Debtors' and Shareholder Proponents' Joint Chapter 11 Plan of Reorganization Dated June 19, 2020 (the Plan) became effective. In accordance with the terms of the Plan, PG&E funded a trust from which the Company and other subrogation claimants will receive payments related to the 2018 California Camp Fire in the third quarter of 2020. The Company expects to recognize in the third quarter of 2020 a subrogation benefit related to these claims of approximately $4.8 million pretax, net of expenses and amounts that would inure to the benefit of the Company's reinsurers, and the return of $3.5 million pretax of reinsurance reinstatement premiums for a total of $8.3 million.
|
Investments |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Net Investment Income The components of net investment income for the following periods were:
Net Investment Gains (Losses) Net investment gains (losses) for the following periods were:
The Company, from time to time, sells invested assets subsequent to the reporting date that were considered temporarily impaired at the reporting date. Such sales are due to issuer specific events occurring subsequent to the reporting date that result in a change in the Company's intent or ability to hold an invested asset. The types of events that may result in a sale include significant changes in the economic facts and circumstances related to the invested asset, significant unforeseen changes in liquidity needs, or changes in the Company's investment strategy. Net Investment Gains (Losses) by Transaction Type The following table reconciles net investment gains (losses) pretax by transaction type:
Fixed Maturity Securities The Company's investment portfolio is comprised primarily of fixed maturity securities. Amortized cost, net unrealized investment gains (losses) and fair values of all fixed maturity securities in the portfolio were as follows:
The following table presents the fair value and gross unrealized losses for fixed maturity securities in an unrealized loss position at June 30, 2020 and December 31, 2019, respectively. The Company views the decrease in fair value of all of the fixed maturity securities with unrealized losses at June 30, 2020 — which was driven largely by increasing interest rates, spread widening, financial market illiquidity and/or market volatility from the date of acquisition — as temporary. As of June 30, 2020, the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell fixed maturity securities with unrealized losses before an anticipated recovery in value. Therefore, it was determined that the unrealized losses on the securities presented in the table below were not other-than-temporarily impaired as of June 30, 2020.
Fixed maturity securities with an investment grade rating represented 84.5% of the gross unrealized losses as of June 30, 2020. 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 other-than-temporary impairment (OTTI) losses on fixed maturity securities held as of June 30, 2020 and 2019 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 an anticipated recovery in value, for which the non-credit portions of OTTI losses were recognized in OCI:
For the three and six months ended June 30, 2020, there was no allowance recognized for current expected credit losses with respect to fixed maturity securities classified as available for sale. Maturities 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 mortgage-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 (Losses) on Fixed Maturity Securities The following table reconciles net unrealized investment gains (losses) on fixed maturity securities, net of tax, included in accumulated other comprehensive income (AOCI), before the impact of DAC:
Limited Partnership Interests As of June 30, 2020 and December 31, 2019, the carrying value of equity method limited partnership interests totaled $392.2 million and $383.7 million, respectively. Principal factors influencing carrying value appreciation or decline include operating performance, comparable public company earnings multiples, capitalization rates and the economic environment. The Company recognizes an impairment loss for equity method limited partnership interests when evidence demonstrates that the loss is other than temporary. Evidence of a loss in value that is other than temporary may include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain a level of earnings that would justify the carrying amount of the investment. Offsetting of Assets and Liabilities The Company's derivatives 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 have been reached. The following table presents instruments that were subject to a master netting arrangement for the Company.
Deposits At June 30, 2020 and December 31, 2019, fixed maturity securities with a fair value of $26.9 million and $26.0 million, respectively, were on deposit with governmental agencies as required by law in various states in which the insurance subsidiaries of HMEC conduct business. In addition, at June 30, 2020 and December 31, 2019, fixed maturity securities with a fair value of $701.9 million and $594.2 million, respectively, were on deposit with the Federal Home Loan Bank of Chicago (FHLB) as collateral for amounts subject to funding agreements, advances and borrowings which were equal to $644.5 million at June 30, 2020 and $545.0 million at December 31, 2019. The deposited securities are included in Fixed maturity securities on the Company’s Consolidated Balance Sheets.
|
Fair Value of Financial Instruments |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | The Company is required 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 (which are investment 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 each reporting date is included in Part II - Item 8, Note 4 of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Financial Instruments Measured and Carried at Fair Value on a 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. During the six months ended June 30, 2020 and 2019, there were no transfers between Level 1 and Level 2. At June 30, 2020, Level 3 invested assets comprised 6.3% of the Company’s total investment portfolio at fair value.
(1) Separate Account (variable annuity) liabilities are equal to the estimated fair value of the Separate Account (variable annuity) assets. Changes in Level 3 Fair Value Measurements The reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) was as follows:
For the six months ended June 30, 2020 and June 30, 2019, the Company had no net losses on Level 3 securities. For the three and six months ended June 30, 2020, net investment losses of $6.0 million and $0.9 million 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 six months ended June 30, 2019, the respective net investment losses were $0.4 million and $4.7 million. Quantitative Information about Level 3 Fair Value Measurements The following table provides quantitative information about the significant unobservable inputs for recurring fair value measurements categorized within Level 3.
The valuation techniques and significant unobservable inputs used in the fair value measurement for financial assets and liabilities classified as Level 3 are subject to the control processes as described in Part II - Item 8, Note 4 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. 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 include: benchmark yield, liquidity premium, estimated cash flows, prepayment and default speeds, spreads, weighted average life, and credit rating. Significant spread widening in isolation will adversely impact the overall valuation, while significant 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. These financial assets and financial liabilities are further described in Part II - Item 8, Note 4 in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities.
|
Derivatives |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | The Company offers fixed indexed annuity (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. The Company also offers indexed universal life (IUL) products which 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 call options on the applicable market indices to fund the index credits due to FIA and IUL policyholders. For the Company, substantially all 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 investment gains (losses) in the Consolidated Statements of Operations. The change in fair value of 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 determine 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 are accounted for as a "series of embedded derivatives" over the expected life of the applicable contract with a corresponding reserve recorded. For IUL, the embedded derivative represents a single year liability for the index return. The Company carries all derivatives at fair value in the Consolidated Balance Sheets. The Company elected to not use hedge accounting for derivative transactions related to the FIA and IUL products. As a result, the Company recognizes 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 recognized immediately as Net investment gains (losses) in the Consolidated Statements of Operations. The fair values of derivatives, including derivatives embedded in FIA and IUL contracts, are presented in the Consolidated Balance Sheets as follows:
In general, the change in the fair value of the embedded derivatives related to FIA 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 the 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 Global Inc. (S&P)/Moody's Investors Service, Inc. (Moody's) long-term credit rating of "BBB+/A3" 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:
As of June 30, 2020 and December 31, 2019, the Company held $6.9 million and $14.3 million, respectively, of cash and financial instruments received from counterparties for derivative collateral, which is included in Other liabilities on the Consolidated Balance Sheets. This derivative collateral limits the Company’s maximum amount of economic loss due to credit risk that would be incurred if parties to the call options failed completely to perform according to the terms of the contracts to $0.3 million per counterparty.
|
Deposit Asset on Reinsurance |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Reinsurance Disclosures [Abstract] | |
Deposit Asset on Reinsurance | In the second quarter of 2019, the Company reinsured a $2.9 billion block of in force fixed and variable annuity business with a minimum crediting rate of 4.5%. This represented approximately 50% of the Company’s in force fixed annuity account balances. The arrangement contains investment guidelines and a trust to help meet the Company’s risk management objectives. The annuity reinsurance transaction was effective April 1, 2019. Under the agreement, approximately $2.2 billion of fixed annuity reserves were reinsured on a coinsurance basis for consideration of approximately $2.3 billion which resulted in recognition of an after tax realized investment gain of $106.9 million. The separate account assets and liabilities of approximately $0.7 billion were reinsured on a modified coinsurance basis and thus, remain on the Company's consolidated financial statements, but the related results of operations are fully reinsured. The Company determined that the reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk. Therefore, the Company recognizes the reinsurance agreement using the deposit method of accounting. The assets transferred to the reinsurer as consideration paid is reported as a Deposit asset on reinsurance. As amounts are received or paid, consistent with the underlying reinsured contracts, the Deposit asset on reinsurance is adjusted. The Deposit asset on reinsurance is accreted to the estimated ultimate cash flows using the interest method and the adjustment is reported as Net investment income in the Consolidated Statements of Operations.
|
Goodwill and Intangible Assets, net |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets, net | The Company conducts impairment testing for goodwill at least annually, or more often if events, changes or circumstances indicate that the carrying amount may not be recoverable. See Part II - Item 8, Note 1 in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 for further description of impairment testing. There were no changes in the carrying amount of goodwill by reporting unit for the three and six months ended June 30, 2020. The carrying amount of goodwill by reporting unit as of June 30, 2020 was as follows:
As of June 30, 2020, the outstanding amounts of definite-lived intangible assets subject to amortization are attributable to the acquisitions of BCG and NTA during 2019. The acquisition of Benefit Consultants Group, Inc. (BCG) resulted in initial recognition of definite-lived intangible assets subject to amortization in the amount of $14.1 million and the acquisition of NTA resulted in initial recognition of definite-lived intangible assets subject to amortization in the amount of $160.4 million. As of June 30, 2020 the outstanding amounts of definite-lived intangible assets subject to amortization were as follows:
In regards to the definite-lived intangible assets in the table above, the value of business acquired intangible asset represents the present value of the expected underwriting profit within policies that were in force on the date of acquisition. The value of distribution acquired intangible asset represents the present value of future business to be written by the existing agency force. The value of agency relationships intangible asset represents the present value of the commission overrides retained by NTA. The value of customer relationships intangible asset represents the present value of the expected profits from existing BCG customers in force at the date of acquisition. All of the aforementioned definite-lived intangible assets were valued using the income approach. Estimated future amortization of the Company's definite-lived intangible assets were as follows:
The value of business acquired intangible asset is being amortized by product based on the present value of future premiums to be received. The value of distribution acquired intangible asset is being amortized on a straight-line basis. The value of agency relationships intangible asset is being amortized based on the present value of future premiums to be received. The value of customer relationships intangible asset is being amortized based on the present value of future profits to be received. Indefinite-lived intangible assets (not subject to amortization) as of June 30, 2020 were as follows:
The trade names intangible asset represents the present value of future savings accruing NTA and BCG by virtue of not having to pay royalties for the use of the trade names, valued using the relief from royalty method. The state licenses intangible asset represents the regulatory licenses held by NTA that were valued using the cost approach.
|
Reinsurance |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
(2) This measure is not based on accounting principles generally accepted in the United States of America (non-GAAP). An explanation of this non-GAAP measure is contained in the Glossary of Selected Terms included as an exhibit in the Company's reports filed with the SEC.
|
Unpaid Claims and Claim Expenses |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance Loss Reserves [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 a gross and net (after reinsurance) basis. 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.
Net favorable development of total reserves for Property and Casualty claims occurring in prior years was $2.0 million and $4.0 million for the six months ended June 30, 2020 and 2019, respectively. The favorable development for the six months ended June 30, 2020 was the result of favorable loss trends in auto and homeowners loss emergence for accident years 2019 and prior. The favorable development for the six months ended June 30, 2019 was the result of favorable loss trends in auto and homeowners loss emergence for accident years 2018 and prior.
|
Commitments |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Investment Commitments From time to time, the Company has outstanding commitments to fund investments in limited partnership interests, commercial mortgage loans and bank loans. Such unfunded commitments were $358.9 million and $306.2 million at June 30, 2020 and December 31, 2019, respectively.
|
Segment Information |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | The Company conducts and manages its business through five segments. See Note 1 for a description of the Company's reporting segments that changed effective in the third quarter of 2019. The four operating segments, representing the major lines of insurance business, are: Property and Casualty (primarily personal lines automobile and property insurance products), the newly created Supplemental (primarily heart, cancer, accident and limited short-term supplemental disability insurance coverages), 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 fifth segment, Corporate and Other. In addition to ongoing transactions such as corporate debt service, net investment gains (losses) and certain public company expenses, such items also have included corporate debt retirement costs, when applicable. Summarized financial information for these segments is as follows:
N/A - The acquisition of NTA closed on July 1, 2019.
|
Accumulated Other Comprehensive Income (Loss) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | AOCI represents the accumulated change in shareholders’ equity from transactions and other events and circumstances from non-shareholder sources. For the Company, AOCI includes the after tax change in net unrealized investment gains (losses) on fixed maturity securities and the after tax change in net funded status of benefit plans for the periods as shown in the Consolidated Statements of Changes in Shareholders’ Equity. The following table reconciles these components.
(1) All amounts are net of tax.
Comparative information for elements that are not required to be reclassified in their entirety to net income in the same reporting period is disclosed in Note 2.
|
Supplemental Disclosure of Consolidated Cash Flow Information |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Disclosure of Consolidated Cash Flow Information |
Non-cash investing activities include $2.1 billion of investments transferred to a reinsurer as consideration paid during the second quarter of 2019 in connection with the Company's reinsurance of a $2.9 billion block of in force fixed and variable annuity business. See Note 5 for further information. Non-cash investing activities in respect to modifications or exchanges of fixed maturity securities as well as paid-in-kind activity for policy loans were insignificant for the three and six months ended June 30, 2020 and 2019, respectively.
|
Basis of Presentation and Significant Accounting Policies (Policies) |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) and with the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in annual financial statements prepared in conformity with GAAP, but are not required for interim reporting purposes, have been omitted. These Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Part II - Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the full year. The accompanying Consolidated Financial Statements and Notes are unaudited. These financial statements reflect all adjustments (generally consisting only of normal recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position, results of operations and cash flows for the interim periods. The Company's significant accounting policies are summarized in Part II - Item 8, Note 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Effective for the year ended December 31, 2019, the Company decided to change the approach it uses for presentation in its Consolidated Statements of Cash Flows from the direct method to the indirect method as management considers presentation under the indirect method as more comparable to the method used by others in the insurance industry. Accordingly, the Company has recast all prior periods presented in the Consolidated Statements of Cash Flows to conform to the current year’s presentation. The Company has reclassified the presentation of certain prior period information to conform to the current year's presentation.
|
Consolidation | Consolidation All intercompany transactions and balances between HMEC and its subsidiaries and affiliates have been eliminated.
|
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The most significant accounting estimates include valuation of hard-to-value fixed maturity securities (including evaluation of other-than-temporary impairments), evaluation of goodwill and intangible assets for impairment, valuation of supplemental, annuity and life deferred policy acquisition costs, valuation of liabilities for property and casualty unpaid claims and claim expenses, valuation of certain investment contracts and policy reserves and valuation of assets acquired and liabilities assumed under purchase accounting.
|
Adoption of New Accounting Standards and Future Adoption of New Accounting Standards | Adoption of New Accounting Standards Measurement of Credit Losses on Financial Instruments In June 2016, the Financial Accounting Standards Board (FASB) issued guidance which revises the credit loss recognition criteria for certain financial assets measured at amortized cost, including reinsurance recoverables. The new guidance replaces the existing incurred loss recognition model with an expected loss recognition model. The objective of the expected credit loss model is for a reporting entity to recognize its estimate of expected credit losses for affected financial assets in a valuation allowance that when deducted from the amortized cost basis of the related financial assets results in a net carrying value at the amount expected to be collected. A reporting entity must consider all relevant information available when estimating expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts over the life of an asset. Financial assets may be evaluated individually or on a pooled basis when they share similar risk characteristics. The measurement of credit losses for available for sale debt securities measured at fair value is not affected except that credit losses recognized are limited to the amount by which fair value is below amortized cost and the carrying value adjustment is recognized through a valuation allowance which may change over time but once recorded cannot subsequently be reduced to an amount below zero. The guidance is effective for reporting periods beginning after December 15, 2019, and for most affected instruments must be adopted using a modified retrospective approach, with a cumulative effect adjustment recorded to beginning retained earnings. The Company’s implementation activities are complete and the impacts related to the Company’s commercial mortgage loan portfolio, agent advances, reinsurance recoverables and off-balance-sheet credit exposures for unfunded commercial mortgage loan commitments. The Company adopted the new guidance on January 1, 2020 and recognized a cumulative effect adjustment that decreased retained earnings by $0.5 million. Future Adoption of New Accounting Standards Accounting for Long-Duration Insurance Contracts In August 2018, the FASB issued accounting and disclosure guidance that contains targeted improvements to the accounting for long-duration insurance contracts. Under the new guidance, the cash flow assumptions used to measure the liability for future policy benefits for traditional insurance contracts will be required to be updated at least annually with changes recognized as a benefit expense (i.e., assumptions will no longer be locked-in). Insurance entities will be required to use a standard discount rate to measure the liabilities that will be equivalent to the yield from a high-quality bond. The new guidance also changes the amortization of deferred acquisition costs (DAC) to be on a constant-level basis over the expected term of the related contracts with no interest accruing on the DAC balance. The new guidance also introduces a new category of contract features associated with deposit type contracts referred to as market risk benefits (MRBs). Contract features meeting the definition of a MRB will be measured at fair value. New disclosures will be required for long-duration insurance contracts in order to provide better transparency into the exposure of insurance entities and the drivers of their results. For public business entities, the guidance is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those years. With regards to the liability for future policy benefits and DAC, the guidance applies to contracts in force as of the beginning of the earliest period presented and may be applied retrospectively. With regards to MRBs, the guidance is to be applied retrospectively at the beginning of the earliest period presented. Early adoption is permitted. Management is currently evaluating the impact this guidance will have on the results of operations and financial position of the Company.
|
Credit Losses | The Company conducts a periodic review to identify and evaluate invested assets that may have credit impairments. Credit Impairments of Fixed Maturity Securities Some of the factors considered in assessing impairment of fixed maturity securities due to credit-related factors include: (1) the extent to which the fair value has been less than amortized cost; (2) the financial condition, near-term and long-term prospects for the issuer, including the relevant industry conditions and trends, and implications of rating agency actions and offering prices; (3) the likelihood of the recoverability of principal and interest; and (4) whether it is more likely than not that the Company will be required to sell the investment prior to an anticipated recovery in value. Beginning on January 1, 2020, credit losses are recognized through an allowance account. See Note 1 - Adoption of New Accounting Standards - Measurement of Credit Losses on Financial Instruments for additional information. For fixed maturity securities that the Company does not intend to sell or for which it is more likely than not that the Company would not be required to sell before an anticipated recovery in value, the Company separates the credit loss component of the impairment from the amount related to all other factors and reports the credit loss component in net investment gains (losses). The impairment related to all other factors (non-credit factors) is reported in other comprehensive income (OCI). The allowance is adjusted for any additional credit losses and subsequent recoveries. Upon recognizing a credit loss, the cost basis is not adjusted. For fixed maturity securities where the Company records a credit loss, a determination is made as to the cause of the impairment and whether the Company expects a recovery in the value. For fixed maturity securities where the Company expects a recovery in value, the constant effective yield method is utilized, and the investment is amortized to par. For fixed maturity securities the Company intends to sell or for which it is more likely than not that the Company will be required to sell before an anticipated recovery in value, the full amount of the impairment is included in net investment gains (losses). The new cost basis of the investment is the previous amortized cost basis less the impairment recognized in net investment gains (losses). The new cost basis is not adjusted for any subsequent recoveries in fair value. The Company reports investment income accrued separately from fixed maturity securities, available for sale, and has elected not to measure an allowance for credit losses for investment income accrued. Investment income accrued is written off through net investment gains (losses) at the time the issuer of the fixed maturity security defaults or is expected to default on payments. Uncollectible available for sale fixed maturity securities are written off when the Company determines that no additional payments of principal or interest will be received.
|
Subsequent Event | Subsequent Event PG&E Corporation and Pacific Gas and Electric Company (together, PG&E) emerged from bankruptcy on July 1, 2020, the date the Debtors' and Shareholder Proponents' Joint Chapter 11 Plan of Reorganization Dated June 19, 2020 (the Plan) became effective. In accordance with the terms of the Plan, PG&E funded a trust from which the Company and other subrogation claimants will receive payments related to the 2018 California Camp Fire in the third quarter of 2020. The Company expects to recognize in the third quarter of 2020 a subrogation benefit related to these claims of approximately $4.8 million pretax, net of expenses and amounts that would inure to the benefit of the Company's reinsurers, and the return of $3.5 million pretax of reinsurance reinstatement premiums for a total of $8.3 million.
|
Investments (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net investment income | The components of net investment income for the following periods were:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of net investment gains (losses) | The following table reconciles net investment gains (losses) pretax by transaction type:
Net investment gains (losses) for the following periods were:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gains and losses on fixed maturities and equity securities | Amortized cost, net unrealized investment gains (losses) and fair values of all fixed maturity securities in the portfolio were as follows:
(1) Fair value includes securities issued by Federal National Mortgage Association (FNMA) of $392.6 million and $405.1 million; Federal Home Loan Mortgage Corporation (FHLMC) of $312.9 million and $283.1 million; and Government National Mortgage Association (GNMA) of $145.6 million and $147.4 million as of June 30, 2020 and December 31, 2019, respectively.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of fair value and gross unrealized losses of fixed maturity securities and equity securities in an unrealized loss position | The following table presents the fair value and gross unrealized losses for fixed maturity securities in an unrealized loss position at June 30, 2020 and December 31, 2019, respectively. The Company views the decrease in fair value of all of the fixed maturity securities with unrealized losses at June 30, 2020 — which was driven largely by increasing interest rates, spread widening, financial market illiquidity and/or market volatility from the date of acquisition — as temporary. As of June 30, 2020, the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell fixed maturity securities with unrealized losses before an anticipated recovery in value. Therefore, it was determined that the unrealized losses on the securities presented in the table below were not other-than-temporarily impaired as of June 30, 2020.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of cumulative credit losses | The following table summarizes the cumulative amounts related to the Company's credit loss component of other-than-temporary impairment (OTTI) losses on fixed maturity securities held as of June 30, 2020 and 2019 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 an anticipated recovery in value, for which the non-credit portions of OTTI losses were recognized in OCI:
(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 an anticipated recovery of value.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 mortgage-backed securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of net unrealized investment gains (losses) on fixed maturity securities and equity securities | The following table reconciles net unrealized investment gains (losses) on fixed maturity securities, net of tax, included in accumulated other comprehensive income (AOCI), before the impact of DAC:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Offsetting assets and liability | The following table presents instruments that were subject to a master netting arrangement for the Company.
|
Fair Value of Financial Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. During the six months ended June 30, 2020 and 2019, there were no transfers between Level 1 and Level 2. At June 30, 2020, Level 3 invested assets comprised 6.3% of the Company’s total investment portfolio at fair value.
(1) Separate Account (variable annuity) liabilities are equal to the estimated fair value of the Separate Account (variable annuity) assets.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Table for reconciliations for all Level 3 assets measured at fair value on a recurring basis | The reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) was as follows:
(3) Transfers into and out of Level 3 during the three and six months ended June 30, 2019 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.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quantitative Information about Level 3 Fair Value Measurements | The following table provides quantitative information about the significant unobservable inputs for recurring fair value measurements categorized within Level 3.
(9) Determined as a percentage of a risk-free rate.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. These financial assets and financial liabilities are further described in Part II - Item 8, Note 4 in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities.
|
Derivatives (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of derivative instruments embedded in FIA and IUL | The fair values of derivatives, including derivatives embedded in FIA and IUL contracts, are presented in the Consolidated Balance Sheets as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value of derivatives | The changes in fair value of derivatives included in the Consolidated Statements of Operations were as follows:
(1) Includes gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of counterparty's long-term credit ratings | The notional amount and fair value of call options by counterparty and each counterparty's long-term credit ratings were as follows:
|
Goodwill and Intangible Assets, net (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill | The carrying amount of goodwill by reporting unit as of June 30, 2020 was as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of finite-lived intangible assets | As of June 30, 2020 the outstanding amounts of definite-lived intangible assets subject to amortization were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future amortization expense | Estimated future amortization of the Company's definite-lived intangible assets were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of indefinite-lived intangible assets | Indefinite-lived intangible assets (not subject to amortization) as of June 30, 2020 were as follows:
|
Reinsurance (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
(2) This measure is not based on accounting principles generally accepted in the United States of America (non-GAAP). An explanation of this non-GAAP measure is contained in the Glossary of Selected Terms included as an exhibit in the Company's reports filed with the SEC.
|
Unpaid Claims and Claim Expenses (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance Loss Reserves [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of property and casualty unpaid claims and claim expense | 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 a gross and net (after reinsurance) basis. 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.
|
Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarized financial information for these segments | Summarized financial information for these segments is as follows:
N/A - The acquisition of NTA closed on July 1, 2019. |
Accumulated Other Comprehensive Income (Loss) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accumulated other comprehensive income (loss) | The following table reconciles these components.
(1) All amounts are net of tax. (2) The pretax amounts reclassified from AOCI, $145.5 million and $153.6 million, are included in Net investment gains (losses) and the related income tax expenses, $30.5 million and $32.3 million, are included in Income tax expense in the Consolidated Statements of Operations for the three and six month periods ended June 30, 2019, respectively.
|
Supplemental Disclosure of Consolidated Cash Flow Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of cash and restricted cash |
|
Basis of Presentation and Significant Accounting Policies (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Sep. 30, 2020 |
Jan. 01, 2020 |
|
Cumulative Effect, Period of Adoption, Adjustment | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Cumulative effect adjustment to reduce retained earnings | $ 0.5 | |
Forecast | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Subrogation benefit related to claims | $ 4.8 | |
Increase (decrease) in prepaid reinsurance premiums | 3.5 | |
Reinsurance recoverables | $ 8.3 |
Investments - Realized Investment Gains (Losses) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Gain (Loss) on Securities [Line Items] | ||||
Net investment gains (losses) | $ 3,162 | $ 146,333 | $ (15,302) | $ 153,750 |
Fixed maturity securities | ||||
Gain (Loss) on Securities [Line Items] | ||||
Net investment gains (losses) | (642) | 141,548 | 460 | 141,749 |
Equity securities | ||||
Gain (Loss) on Securities [Line Items] | ||||
Net investment gains (losses) | 7,071 | 3,926 | (7,652) | 11,833 |
Short-term investments and other | ||||
Gain (Loss) on Securities [Line Items] | ||||
Net investment gains (losses) | $ (3,267) | $ 859 | $ (8,110) | $ 168 |
Investments - Net Investment Gains (Losses) By Transaction Type (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Credit impairment write-downs | $ 0 | $ 0 | $ 0 | $ 0 |
Change in intent write-downs | (523) | (34) | (4,215) | (271) |
Net other-than-temporary impairment losses on securities recognized in earnings | (523) | (34) | (4,215) | (271) |
Sales and other, net | 352 | 142,067 | 4,909 | 146,905 |
Change in fair value - equity securities | 6,600 | 3,441 | (7,886) | 6,948 |
Change in fair value and gains (losses) realized on settlements - derivatives | (3,267) | 859 | (8,110) | 168 |
Net investment gains (losses) | $ 3,162 | $ 146,333 | $ (15,302) | $ 153,750 |
Investments - Rollforward of OTTI Losses (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Cumulative credit loss | ||
Beginning of period | $ 1,529 | $ 1,529 |
New credit losses | 184 | 0 |
Increases to previously recognized credit losses | 0 | 0 |
Losses related to securities sold or paid down during the period | (103) | 0 |
End of period | $ 1,610 | $ 1,529 |
Investments - Distribution of Fixed Maturity Securities by Expected Maturity (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
|
Percent of Total Fair Value | ||
Due in 1 year or less | 4.00% | 3.60% |
Due after 1 year through 5 years | 27.90% | 27.40% |
Due after 5 years through 10 years | 30.10% | 29.60% |
Due after 10 years through 20 years | 24.70% | 26.10% |
Due after 20 years | 13.30% | 13.30% |
Total | 100.00% | 100.00% |
Fair Value | ||
Due in 1 year or less | $ 240,942 | |
Due after 1 year through 5 years | 1,680,037 | |
Due after 5 years through 10 years | 1,814,204 | |
Due after 10 years through 20 years | 1,487,294 | |
Due after 20 years | 799,506 | |
Total | 6,021,983 | $ 5,791,676 |
Amortized Cost | ||
Due in 1 year or less | 240,701 | |
Due after 1 year through 5 years | 1,650,193 | |
Due after 5 years through 10 years | 1,680,118 | |
Due after 10 years through 20 years | 1,314,841 | |
Due after 20 years | 718,552 | |
Amortized Cost | $ 5,604,405 | $ 5,456,980 |
Average option-adjusted duration, in years | 6 years 2 months 12 days | 6 years |
Investments - Summary of Proceeds and Gains (Losses) Realized on Securities (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Fixed maturity securities | ||||
Proceeds received | $ 196,004 | $ 442,015 | $ 294,162 | $ 501,739 |
Gross gains realized | 5,506 | 147,774 | 10,285 | 148,316 |
Gross losses realized | (5,625) | (5,976) | (5,893) | (6,081) |
Equity Securities, FV-NI, Realized Gain (Loss) [Abstract] | ||||
Proceeds received | 10,602 | 1,633 | 12,059 | 17,122 |
Gross gains realized | 1,721 | 389 | 2,040 | 5,134 |
Gross losses realized | $ (1,249) | (166) | (1,805) | (510) |
Investment gain realized on transfer | $ 135,300 | |||
Reinsurance block of in-force fixed and variable annuity business | $ 2,900,000 | $ 2,900,000 |
Investments - Offsetting of Assets and Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Asset derivatives: | ||
Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheets | $ 7,276 | $ 13,239 |
Free-standing derivatives | ||
Asset derivatives: | ||
Gross Amounts | 7,276 | 13,239 |
Gross Amounts Offset in the Consolidated Balance Sheets | 0 | 0 |
Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheets | 7,276 | 13,239 |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Financial Instruments | 4,340 | 7,687 |
Gross Amounts Not Offset in the Consolidated Balance Sheets, Cash Collateral Received | 2,600 | 6,640 |
Net Amount | $ 336 | $ (1,088) |
Investments - Narrative (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Investment Holdings [Line Items] | ||
Investment grade rating | 84.50% | |
Limited partnership interests | $ 392,192 | $ 383,717 |
Fixed maturity securities | 6,021,983 | 5,791,676 |
FHLB funding agreements | 644,500 | 545,000 |
FHLB of Chicago | ||
Investment Holdings [Line Items] | ||
Fixed maturity securities | 701,900 | 594,200 |
Governmental Agencies as Required by Law in Various States | ||
Investment Holdings [Line Items] | ||
Fixed maturity securities | $ 26,900 | $ 26,000 |
Fair Value of Financial Instruments - Narrative (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Net investment losses included in net income related to financial assets | $ 32,000 | $ 0 | $ 8,000 | $ 0 |
Level 3 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Net investment losses included in net income related to financial assets | $ 0 | 0 | ||
Percentage of invested assets in total investment portfolio Level 3 recurring | 6.30% | 6.30% | ||
Net realized investment losses | $ 6,000,000.0 | $ 400,000 | $ 900,000 | $ 4,700,000 |
Derivatives - Fair Value of Derivatives in Consolidated Balance Sheets (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Assets | ||
Derivatives, included in Short-term and other investments | $ 7,276 | $ 13,239 |
Short-term and other investments | ||
Assets | ||
Derivatives, included in Short-term and other investments | 7,276 | 13,239 |
Other policyholder funds | ||
Liabilities | ||
FIA - embedded derivatives, included in Other policyholder funds | 93,619 | 93,733 |
Investment contract and life policy reserves | ||
Liabilities | ||
IUL - embedded derivatives, included in Investment contract and policy reserves | $ 1,113 | $ 1,314 |
Derivatives - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
|
Derivatives, Fair Value [Line Items] | ||
Expected contract term | 10 years | |
Maximum exposure | $ 0.3 | |
Other Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of collateral | $ 6.9 | $ 14.3 |
Derivatives - Fair Value of Derivatives Included in Consolidated Statements of Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Change in fair value of derivatives: | ||||
Net investment gains (losses) | $ 3,210 | $ 1,375 | $ (7,790) | $ 5,429 |
Change in fair value of embedded derivatives: | ||||
Net investment gains (losses) | $ (6,477) | $ (516) | $ (320) | $ (5,261) |
Derivatives - Notional and Fair Value Amounts of Derivative Instruments (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Derivative [Line Items] | ||
Notional Amount | $ 312,000 | $ 318,000 |
Fair Value | 7,276 | 13,239 |
Bank of America, N.A. | ||
Derivative [Line Items] | ||
Notional Amount | 185,100 | 174,900 |
Fair Value | 5,090 | 8,523 |
Barclays Bank PLC | ||
Derivative [Line Items] | ||
Notional Amount | 108,500 | 115,300 |
Fair Value | 1,747 | 3,347 |
Citigroup Inc. | ||
Derivative [Line Items] | ||
Notional Amount | 0 | 0 |
Fair Value | 0 | 0 |
Credit Suisse International | ||
Derivative [Line Items] | ||
Notional Amount | 0 | 0 |
Fair Value | 0 | 0 |
Societe Generale | ||
Derivative [Line Items] | ||
Notional Amount | 18,400 | 27,800 |
Fair Value | $ 439 | $ 1,369 |
Deposit Asset on Reinsurance - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 01, 2019 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Dec. 31, 2019 |
|
Effects of Reinsurance [Line Items] | ||||
Reinsurance block of in-force fixed and variable annuity business | $ 2,900,000 | |||
Fixed annuity reserves reinsured on a coinsurance basis | $ 2,200,000 | |||
Deposit asset on reinsurance | 2,300,000 | $ 2,373,267 | $ 2,346,166 | |
Investment gain realized, net of tax | $ 106,900 | |||
Separate account asset | 2,316,900 | 2,490,469 | ||
Separate account liability | 2,316,900 | $ 2,490,469 | ||
Reinsurance Contract Modified Coinsurance Basis | ||||
Effects of Reinsurance [Line Items] | ||||
Separate account asset | $ 700,000 | |||
Reinsurance Deposit Receivable | Third Party Reinsurer Risk | ||||
Effects of Reinsurance [Line Items] | ||||
Concentration risk, percent | 50.00% | |||
Minimum | ||||
Effects of Reinsurance [Line Items] | ||||
Minimum crediting rating | 4.50% |
Goodwill and Intangible Assets, net - Goodwill (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Goodwill [Line Items] | ||
Goodwill | $ 49,079 | $ 49,079 |
Property and Casualty | ||
Goodwill [Line Items] | ||
Goodwill | 9,460 | |
Supplemental | ||
Goodwill [Line Items] | ||
Goodwill | 19,621 | |
Retirement | ||
Goodwill [Line Items] | ||
Goodwill | 10,087 | |
Life | ||
Goodwill [Line Items] | ||
Goodwill | $ 9,911 |
Goodwill and Intangible Assets, net - Narrative (Details) $ in Millions |
Jun. 30, 2020
USD ($)
|
---|---|
Benefit Consultants Group Inc. | |
Goodwill [Line Items] | |
Acquired finite-lived intangible assets | $ 14.1 |
NTA | |
Goodwill [Line Items] | |
Acquired finite-lived intangible assets | $ 160.4 |
Goodwill and Intangible Assets, net - Summary of Finite-Lived Intangible Assets (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2020
USD ($)
| |
Finite-Lived Intangible Assets [Line Items] | |
At inception | $ 174,476 |
Accumulated amortization | (16,162) |
Total | $ 158,314 |
Weighted Average useful Life (in Years) | 23 years |
Business acquired | |
Finite-Lived Intangible Assets [Line Items] | |
At inception | $ 94,419 |
Accumulated amortization | $ (7,393) |
Weighted Average useful Life (in Years) | 30 years |
Distribution acquired | |
Finite-Lived Intangible Assets [Line Items] | |
At inception | $ 53,996 |
Accumulated amortization | $ (3,527) |
Weighted Average useful Life (in Years) | 17 years |
Agency relationships | |
Finite-Lived Intangible Assets [Line Items] | |
At inception | $ 16,981 |
Accumulated amortization | $ (2,774) |
Weighted Average useful Life (in Years) | 14 years |
Customer relationships | |
Finite-Lived Intangible Assets [Line Items] | |
At inception | $ 9,080 |
Accumulated amortization | $ (2,468) |
Weighted Average useful Life (in Years) | 10 years |
Goodwill and Intangible Assets, net - Estimated Future Amortization (Details) $ in Thousands |
Jun. 30, 2020
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2020 (excluding the six months ended June 30, 2020) | $ 7,116 |
2021 | 13,411 |
2022 | 12,433 |
2023 | 11,577 |
2024 | 10,805 |
Thereafter | 102,972 |
Total | $ 158,314 |
Goodwill and Intangible Assets, net - Summary of Indefinite-Lived Intangibles (Details) $ in Thousands |
Jun. 30, 2020
USD ($)
|
---|---|
Indefinite-lived Intangible Assets [Line Items] | |
Indefinite-lived intangible assets | $ 11,531 |
Trade names | |
Indefinite-lived Intangible Assets [Line Items] | |
Indefinite-lived intangible assets | 8,645 |
State licenses | |
Indefinite-lived Intangible Assets [Line Items] | |
Indefinite-lived intangible assets | $ 2,886 |
Unpaid Claims and Claim Expenses - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Insurance Loss Reserves [Abstract] | ||
Favorable development of total reserves for property and casualty claims occurring in prior years | $ 2.0 | $ 4.0 |
Commitments (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Unfunded commitments to purchase investments | $ 358.9 | $ 306.2 |
Supplemental Disclosure of Consolidated Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
Dec. 31, 2018 |
|
Supplemental Cash Flow Elements [Abstract] | |||||
Cash | $ 81,709 | $ 25,206 | |||
Restricted cash | 681 | 302 | |||
Total cash and restricted cash shown in the Consolidated Balance Sheets and Consolidated Statements of Cash Flows | $ 7,616 | 82,390 | $ 7,616 | $ 25,508 | $ 11,906 |
Interest | 8,247 | 6,440 | |||
Income taxes | $ (617) | 78 | |||
Transfer of investments and policy loans | 2,100,000 | ||||
Reinsurance block of in-force fixed and variable annuity business | $ 2,900,000 | $ 2,900,000 |
@QD,=[,KA^BT'[+CD1> $1]1*=BF1)#:N['X!2E9SB 5_I#
M'1!JSF_!(2FC2,$"+/Q*9+(S6NB BL9PQAN]XOUGZ#/,:, >'0X4H2HK8'*9
MZ$]SW\$5L, (@XO?!30K,5?_Q.8.L'-RCG9-3=-43DW.I1TJ>'MZ?,GK%G:(
MI :-Z5>T@DX>M^PR^;6YN]\],%GSFA>\+?AFQUO!-Z)IWQ?7'WY783<:N[?_
MV/@B*#OX=1?R"U!+ P04 " #]0 =1F5R<(Q & "<)P $P 'AL+W1H
M96UE+W1H96UE,2YX;6SM6EMSVC@4?N^OT'AG]FT+QC:!MK03 MV"C1T8JR]8**JZ^(<=HE7I1[.]XT1@^/I+QS;?1\'DZ7Y#1=#Z#&\^3Z2/"2IW"^IPZM!/I*0V]R&V'
MGI&%@>%&E"8CE4JCW^#?+VU"A?K-&(-\Y\^T#N0S?R43'P9?L J\C!3I[@I)
MM]=T+BCM=;H8(2L(61W"H>]#\4C.C@?D'IXC4UF>.UR2DCOH#T^0!RXEF87\
M7XZA%CY.W?^%.K)GT-7/:B=+,7&Y1:P#N5X%(L2*'BUJ L5=_3->/A1G6FT#
MZ96G$M>
RRH'IY@
M6(%.3%T[ED8D&5/9@X>&P;-7#2_DO9?;U&4*83%V
:^]1@"'M<@;H.8YPLA#.8V[())00UK"\2:%(&D./-@
MSSQP,G_06U4Z7G%@S2HC;H3AS ;YG)LT;1 3-#+?+X+B- IPDN&>9.@D^5SH
M. 4E@:6+CF:(O$\OXI%!U(9YTF-FQ,]M&/B#!9[!U88%?A2%/DXVVI.-G%GQ
M3N5JG6BH?EW\MHE,_00Q5SE3):-#E:9.=PXS+-,XZ5-EI;1.5;M\\,GZ>DN1
M12&HE30PG.1^9*R*.8+C(?,#P]X"PT62A9VH'%J!\( 24:I5HO'B
MT-LX6D;4-P-BAL&$C#R3LPUC% (L,CEC.%^R,9>Z0!"7,593(0)<[%F#%6-$;3Z>@3(?D5N9Q%BEJ@RA;J/P>
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MR:C:CK 7@\I^Y8NZEA@11R/"+8TJ5=B09T DQOKIJ(LUI@V(R8?TC 1P0M;!ALBR>"Y &W[?=5._!'"
M3P8SC5[PAAH@&/:KMN<6T1$L24 ?- N'5LW
MJ2'.KC3LD1CW7AKG[]].G-]01MG#;&2N7'<0/%+@YW X[I@5:F,T8CW#\<
M898A IA1&Z ("W8(;INX#VA!Y')80(*D_M(U66)/+YX+O?#&L0M08_/=
MPV?]Z=,/D].G;X;3I\?V;T[MEW%;(ZDJ[M(,390N,9K4AJ+KW%E7[GY1O*5-
M4W=_#]*+/,"._M'A[MP'A!S3QJ3#:&5%E>$"'. AM8SVN4HV6!?]SB=B0@9;
M48^HCYSE1G4],=QPF$!$LG@])94I95J@]]0\0:4X'&7" FST)B>W39.-;I*A
M&N"=.)9D[^C( D+=$]Q(:8<-1:
V/>MV0P6P2)8(S-UAW(,4SL#O-#V AI(,>J3I0;NG'?#A$A3K
M<:DF7=E)^[4_!TIG2>F?&WK=KKF[4=,9U%JLDGO:NE0,/=*5RAXY :#)*=OU
M>#+5-'5'927G1.J/7G>2'*D-#7RZ[7I.QH[C.=*B+G.=L0I?)#F#D(_TIY.:
M$UD_:C#YS9Z]/QSNVYZCM\\'P,DW\+(_]O5@EC<3W=U1WWKB+[_U.'84Y""D
MLTA3-WTJ7L.WGM!)7FXG3#V8=D9UT H_1&77%Y-B0BI8\:ZVMVKS,_3VS)V\4M7&_Y)-H$WF$U)VQJJF
M9T8$C9#AR1][/XP8BN@( ^L9F,<=%'F4;[CEE^=:;8AVU"C-+;RIGAO!">F"
ME^+5)/#Q%PN?FAK@*12$K;$$5CDQ3-._U$^J#=.L/R6?_;!!TL4WIG%VPD?#RD:T@1TB]D]&
M->(6%@5S5CO:2_A$1>-+;MD8=,U@WO.O#>:F0']<"I,@(=,=K.!8\7S9;,?G
M%DHR&,?!=)KN@&B!S%VQ">^ 6?/: $F I,%T0G:X=IXQ_3TRQ&(()^&V&*(8
M=: I60J+/&^J!K&H=S]$O;X,LR">QG!^RI%A'(RC;!]WT(]A%&19L@\[X@8"
MDW2"P-:-(7I/T@CW?S#[X]F_Q$20\22(2=+3#6G7#6EOR;YOK!M>;\J+/>.-
M;MBA^N\G>V