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Share Name | Share Symbol | Market | Type |
---|---|---|---|
American Equity Investment Life Holding Company | NYSE:AEL | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.10 | 0.18% | 56.31 | 56.385 | 56.20 | 56.21 | 337,968 | 01:00:00 |
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Iowa
|
|
42-1447959
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer
x
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
Emerging growth company
o
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Investments:
|
|
|
|
||||
Fixed maturity securities:
|
|
|
|
||||
Available for sale, at fair value (amortized cost: 2018 - $45,688,342; 2017 - $43,116,759)
|
$
|
45,822,017
|
|
|
$
|
45,372,989
|
|
Held for investment, at amortized cost (fair value: 2018 - $71,113; 2017 - $76,460)
|
77,213
|
|
|
77,041
|
|
||
Mortgage loans on real estate
|
2,892,155
|
|
|
2,665,531
|
|
||
Derivative instruments
|
1,290,387
|
|
|
1,568,380
|
|
||
Other investments
|
536,594
|
|
|
616,764
|
|
||
Total investments
|
50,618,366
|
|
|
50,300,705
|
|
||
|
|
|
|
||||
Cash and cash equivalents
|
1,129,242
|
|
|
1,434,045
|
|
||
Coinsurance deposits
|
5,017,255
|
|
|
4,858,289
|
|
||
Accrued investment income
|
481,999
|
|
|
429,008
|
|
||
Deferred policy acquisition costs
|
3,318,733
|
|
|
2,714,523
|
|
||
Deferred sales inducements
|
2,384,161
|
|
|
2,001,892
|
|
||
Deferred income taxes
|
250,734
|
|
|
38,147
|
|
||
Income taxes recoverable
|
13,712
|
|
|
—
|
|
||
Other assets
|
234,796
|
|
|
254,127
|
|
||
Total assets
|
$
|
63,448,998
|
|
|
$
|
62,030,736
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Policy benefit reserves
|
$
|
57,992,164
|
|
|
$
|
56,142,673
|
|
Other policy funds and contract claims
|
271,765
|
|
|
282,884
|
|
||
Notes payable
|
494,464
|
|
|
494,093
|
|
||
Subordinated debentures
|
242,875
|
|
|
242,565
|
|
||
Amounts due under repurchase agreements
|
116,399
|
|
|
—
|
|
||
Income taxes payable
|
—
|
|
|
34,285
|
|
||
Other liabilities
|
1,842,035
|
|
|
1,984,079
|
|
||
Total liabilities
|
60,959,702
|
|
|
59,180,579
|
|
||
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, par value $1 per share, 2,000,000 shares authorized,
2018 and 2017 - no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $1 per share, 200,000,000 shares authorized; issued and outstanding:
2018 - 90,277,626 shares (excluding 1,598,190 treasury shares);
2017 - 89,331,087 shares (excluding 2,064,727 treasury shares)
|
90,278
|
|
|
89,331
|
|
||
Additional paid-in capital
|
807,310
|
|
|
791,446
|
|
||
Accumulated other comprehensive income
|
70,288
|
|
|
724,599
|
|
||
Retained earnings
|
1,521,420
|
|
|
1,244,781
|
|
||
Total stockholders' equity
|
2,489,296
|
|
|
2,850,157
|
|
||
Total liabilities and stockholders' equity
|
$
|
63,448,998
|
|
|
$
|
62,030,736
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Premiums and other considerations
|
$
|
7,240
|
|
|
$
|
8,569
|
|
|
$
|
22,050
|
|
|
$
|
25,691
|
|
Annuity product charges
|
58,365
|
|
|
51,931
|
|
|
164,094
|
|
|
144,106
|
|
||||
Net investment income
|
549,391
|
|
|
500,202
|
|
|
1,593,457
|
|
|
1,479,288
|
|
||||
Change in fair value of derivatives
|
595,311
|
|
|
362,525
|
|
|
276,433
|
|
|
1,015,878
|
|
||||
Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses
|
(2,196
|
)
|
|
1,579
|
|
|
(40,275
|
)
|
|
7,790
|
|
||||
OTTI losses on investments:
|
|
|
|
|
|
|
|
||||||||
Total OTTI losses
|
(14,373
|
)
|
|
(273
|
)
|
|
(16,025
|
)
|
|
(273
|
)
|
||||
Portion of OTTI losses recognized in (from) other comprehensive income
|
—
|
|
|
(191
|
)
|
|
(1,651
|
)
|
|
(1,281
|
)
|
||||
Net OTTI losses recognized in operations
|
(14,373
|
)
|
|
(464
|
)
|
|
(17,676
|
)
|
|
(1,554
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
(18,389
|
)
|
|
—
|
|
|
(18,817
|
)
|
||||
Total revenues
|
1,193,738
|
|
|
905,953
|
|
|
1,998,083
|
|
|
2,652,382
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Benefits and expenses:
|
|
|
|
|
|
|
|
||||||||
Insurance policy benefits and change in future policy benefits
|
10,721
|
|
|
10,823
|
|
|
32,091
|
|
|
32,684
|
|
||||
Interest sensitive and index product benefits
|
413,089
|
|
|
501,028
|
|
|
1,355,135
|
|
|
1,392,763
|
|
||||
Amortization of deferred sales inducements
|
55,244
|
|
|
14,707
|
|
|
233,779
|
|
|
110,727
|
|
||||
Change in fair value of embedded derivatives
|
383,716
|
|
|
229,702
|
|
|
(585,465
|
)
|
|
628,845
|
|
||||
Interest expense on notes and loan payable
|
6,376
|
|
|
7,597
|
|
|
19,122
|
|
|
23,997
|
|
||||
Interest expense on subordinated debentures
|
3,942
|
|
|
3,502
|
|
|
11,450
|
|
|
10,260
|
|
||||
Amortization of deferred policy acquisition costs
|
81,053
|
|
|
23,023
|
|
|
336,741
|
|
|
162,248
|
|
||||
Other operating costs and expenses
|
31,924
|
|
|
28,782
|
|
|
95,704
|
|
|
82,325
|
|
||||
Total benefits and expenses
|
986,065
|
|
|
819,164
|
|
|
1,498,557
|
|
|
2,443,849
|
|
||||
Income before income taxes
|
207,673
|
|
|
86,789
|
|
|
499,526
|
|
|
208,533
|
|
||||
Income tax expense
|
38,345
|
|
|
29,832
|
|
|
95,333
|
|
|
70,691
|
|
||||
Net income
|
$
|
169,328
|
|
|
$
|
56,957
|
|
|
$
|
404,193
|
|
|
$
|
137,842
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common share
|
$
|
1.87
|
|
|
$
|
0.64
|
|
|
$
|
4.48
|
|
|
$
|
1.55
|
|
Earnings per common share - assuming dilution
|
$
|
1.85
|
|
|
$
|
0.63
|
|
|
$
|
4.42
|
|
|
$
|
1.53
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding (in thousands):
|
|
|
|
|
|
|
|
||||||||
Earnings per common share
|
90,486
|
|
|
89,069
|
|
|
90,278
|
|
|
88,873
|
|
||||
Earnings per common share - assuming dilution
|
91,651
|
|
|
90,421
|
|
|
91,355
|
|
|
90,171
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
169,328
|
|
|
$
|
56,957
|
|
|
$
|
404,193
|
|
|
$
|
137,842
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Change in net unrealized investment gains/losses (1)
|
(138,863
|
)
|
|
75,017
|
|
|
(971,451
|
)
|
|
487,486
|
|
||||
Noncredit component of OTTI losses (1)
|
—
|
|
|
110
|
|
|
775
|
|
|
625
|
|
||||
Reclassification of unrealized investment gains/losses to net income (1)
|
(525
|
)
|
|
825
|
|
|
(19,026
|
)
|
|
3,466
|
|
||||
Other comprehensive income (loss) before income tax
|
(139,388
|
)
|
|
75,952
|
|
|
(989,702
|
)
|
|
491,577
|
|
||||
Income tax effect related to other comprehensive income (loss)
|
29,270
|
|
|
(26,583
|
)
|
|
207,837
|
|
|
(172,052
|
)
|
||||
Other comprehensive income (loss)
|
(110,118
|
)
|
|
49,369
|
|
|
(781,865
|
)
|
|
319,525
|
|
||||
Comprehensive income (loss)
|
$
|
59,210
|
|
|
$
|
106,326
|
|
|
$
|
(377,672
|
)
|
|
$
|
457,367
|
|
(1)
|
Net of related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs.
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Income |
|
Retained
Earnings
|
|
Total
Stockholders'
Equity
|
||||||||||
Balance at December 31, 2016
|
$
|
88,001
|
|
|
$
|
770,344
|
|
|
$
|
339,966
|
|
|
$
|
1,093,284
|
|
|
$
|
2,291,595
|
|
Net income for period
|
—
|
|
|
—
|
|
|
—
|
|
|
137,842
|
|
|
137,842
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
319,525
|
|
|
—
|
|
|
319,525
|
|
|||||
Share-based compensation
|
—
|
|
|
5,414
|
|
|
—
|
|
|
—
|
|
|
5,414
|
|
|||||
Issuance of 932,798 shares of common stock under compensation plans
|
933
|
|
|
7,358
|
|
|
—
|
|
|
—
|
|
|
8,291
|
|
|||||
Balance at September 30, 2017
|
$
|
88,934
|
|
|
$
|
783,116
|
|
|
$
|
659,491
|
|
|
$
|
1,231,126
|
|
|
$
|
2,762,667
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2017
|
$
|
89,331
|
|
|
$
|
791,446
|
|
|
$
|
724,599
|
|
|
$
|
1,244,781
|
|
|
$
|
2,850,157
|
|
Net income for period
|
—
|
|
|
—
|
|
|
—
|
|
|
404,193
|
|
|
404,193
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
(781,865
|
)
|
|
—
|
|
|
(781,865
|
)
|
|||||
Implementation of accounting standard related to the reclassification of certain tax effects
|
—
|
|
|
—
|
|
|
127,554
|
|
|
(127,554
|
)
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
8,444
|
|
|
—
|
|
|
—
|
|
|
8,444
|
|
|||||
Issuance of 946,539 shares of common stock under compensation plans
|
947
|
|
|
7,420
|
|
|
—
|
|
|
—
|
|
|
8,367
|
|
|||||
Balance at September 30, 2018
|
$
|
90,278
|
|
|
$
|
807,310
|
|
|
$
|
70,288
|
|
|
$
|
1,521,420
|
|
|
$
|
2,489,296
|
|
|
Nine Months Ended
September 30, |
||||||
|
2018
|
|
2017
|
||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
404,193
|
|
|
$
|
137,842
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Interest sensitive and index product benefits
|
1,355,135
|
|
|
1,392,763
|
|
||
Amortization of deferred sales inducements
|
233,779
|
|
|
110,727
|
|
||
Annuity product charges
|
(164,094
|
)
|
|
(144,106
|
)
|
||
Change in fair value of embedded derivatives
|
(585,465
|
)
|
|
628,845
|
|
||
Change in traditional life and accident and health insurance reserves
|
2,241
|
|
|
170
|
|
||
Policy acquisition costs deferred
|
(289,131
|
)
|
|
(312,355
|
)
|
||
Amortization of deferred policy acquisition costs
|
336,741
|
|
|
162,248
|
|
||
Provision for depreciation and other amortization
|
2,584
|
|
|
2,793
|
|
||
Amortization of discounts and premiums on investments
|
15,315
|
|
|
11,079
|
|
||
Realized (gains) losses on investments and net OTTI losses recognized in operations
|
57,951
|
|
|
(6,236
|
)
|
||
Distributions from equity method investments
|
1,043
|
|
|
1,191
|
|
||
Change in fair value of derivatives
|
(276,688
|
)
|
|
(1,016,714
|
)
|
||
Deferred income taxes
|
(4,750
|
)
|
|
(38,998
|
)
|
||
Loss on extinguishment of debt
|
—
|
|
|
18,817
|
|
||
Share-based compensation
|
8,444
|
|
|
5,414
|
|
||
Change in accrued investment income
|
(52,991
|
)
|
|
(41,409
|
)
|
||
Change in income taxes recoverable/payable
|
(47,997
|
)
|
|
407
|
|
||
Change in other assets
|
(469
|
)
|
|
31
|
|
||
Change in other policy funds and contract claims
|
(16,203
|
)
|
|
(19,941
|
)
|
||
Change in collateral held for derivatives
|
(335,548
|
)
|
|
446,920
|
|
||
Change in other liabilities
|
(48,663
|
)
|
|
(62,487
|
)
|
||
Other
|
(9,188
|
)
|
|
(11,016
|
)
|
||
Net cash provided by operating activities
|
586,239
|
|
|
1,265,985
|
|
||
|
|
|
|
||||
Investing activities
|
|
|
|
||||
Sales, maturities, or repayments of investments:
|
|
|
|
||||
Fixed maturity securities - available for sale
|
2,797,834
|
|
|
1,333,829
|
|
||
Mortgage loans on real estate
|
239,135
|
|
|
240,245
|
|
||
Derivative instruments
|
1,252,754
|
|
|
1,150,793
|
|
||
Other investments
|
156,536
|
|
|
8,182
|
|
||
Acquisitions of investments:
|
|
|
|
||||
Fixed maturity securities - available for sale
|
(5,215,295
|
)
|
|
(3,755,011
|
)
|
||
Mortgage loans on real estate
|
(465,473
|
)
|
|
(370,229
|
)
|
||
Derivative instruments
|
(642,849
|
)
|
|
(494,226
|
)
|
||
Other investments
|
(67,646
|
)
|
|
(18,654
|
)
|
||
Purchases of property, furniture and equipment
|
(3,510
|
)
|
|
(3,894
|
)
|
||
Net cash used in investing activities
|
(1,948,514
|
)
|
|
(1,908,965
|
)
|
|
Nine Months Ended
September 30, |
||||||
|
2018
|
|
2017
|
||||
Financing activities
|
|
|
|
||||
Receipts credited to annuity and single premium universal life policyholder account balances
|
$
|
3,255,014
|
|
|
$
|
3,151,516
|
|
Coinsurance deposits
|
(53,806
|
)
|
|
30,892
|
|
||
Return of annuity policyholder account balances
|
(2,248,876
|
)
|
|
(2,048,967
|
)
|
||
Financing fees incurred and deferred
|
—
|
|
|
(5,609
|
)
|
||
Proceeds from issuance of notes payable
|
—
|
|
|
499,650
|
|
||
Repayment of notes payable
|
—
|
|
|
(413,252
|
)
|
||
Repayment of loan payable
|
—
|
|
|
(100,000
|
)
|
||
Net proceeds from amounts due under repurchase agreements
|
116,399
|
|
|
23,542
|
|
||
Proceeds from issuance of common stock
|
8,367
|
|
|
8,291
|
|
||
Change in checks in excess of cash balance
|
(19,626
|
)
|
|
(8,687
|
)
|
||
Net cash provided by financing activities
|
1,057,472
|
|
|
1,137,376
|
|
||
Increase (decrease) in cash and cash equivalents
|
(304,803
|
)
|
|
494,396
|
|
||
Cash and cash equivalents at beginning of period
|
1,434,045
|
|
|
791,266
|
|
||
Cash and cash equivalents at end of period
|
$
|
1,129,242
|
|
|
$
|
1,285,662
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information
|
|
|
|
||||
Cash paid during period for:
|
|
|
|
||||
Interest expense
|
$
|
24,009
|
|
|
$
|
39,583
|
|
Income taxes
|
148,157
|
|
|
109,581
|
|
||
Non-cash operating activity:
|
|
|
|
||||
Deferral of sales inducements
|
135,015
|
|
|
175,076
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Available for sale
|
$
|
45,822,017
|
|
|
$
|
45,822,017
|
|
|
$
|
45,372,989
|
|
|
$
|
45,372,989
|
|
Held for investment
|
77,213
|
|
|
71,113
|
|
|
77,041
|
|
|
76,460
|
|
||||
Mortgage loans on real estate
|
2,892,155
|
|
|
2,835,345
|
|
|
2,665,531
|
|
|
2,670,037
|
|
||||
Derivative instruments
|
1,290,387
|
|
|
1,290,387
|
|
|
1,568,380
|
|
|
1,568,380
|
|
||||
Other investments
|
536,594
|
|
|
528,867
|
|
|
616,764
|
|
|
605,894
|
|
||||
Cash and cash equivalents
|
1,129,242
|
|
|
1,129,242
|
|
|
1,434,045
|
|
|
1,434,045
|
|
||||
Coinsurance deposits
|
5,017,255
|
|
|
4,547,180
|
|
|
4,858,289
|
|
|
4,347,990
|
|
||||
Interest rate caps
|
1,244
|
|
|
1,244
|
|
|
415
|
|
|
415
|
|
||||
Interest rate swap
|
1,125
|
|
|
1,125
|
|
|
—
|
|
|
—
|
|
||||
Counterparty collateral
|
179,512
|
|
|
179,512
|
|
|
186,108
|
|
|
186,108
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Policy benefit reserves
|
57,633,261
|
|
|
48,792,935
|
|
|
55,786,011
|
|
|
46,344,931
|
|
||||
Single premium immediate annuity (SPIA) benefit reserves
|
271,275
|
|
|
279,993
|
|
|
282,563
|
|
|
292,153
|
|
||||
Notes payable
|
494,464
|
|
|
500,000
|
|
|
494,093
|
|
|
521,800
|
|
||||
Subordinated debentures
|
242,875
|
|
|
238,703
|
|
|
242,565
|
|
|
244,117
|
|
||||
Amounts due under repurchase agreements
|
116,399
|
|
|
116,399
|
|
|
—
|
|
|
—
|
|
||||
Interest rate swap
|
—
|
|
|
—
|
|
|
789
|
|
|
789
|
|
Level 1—
|
Quoted prices are available in active markets for identical financial instruments as of the reporting date. We do not adjust the quoted price for these financial instruments, even in situations where we hold a large position and a sale could reasonably impact the quoted price.
|
Level 2—
|
Quoted prices in active markets for similar financial instruments, quoted prices for identical or similar financial instruments in markets that are not active; and models and other valuation methodologies using inputs other than quoted prices that are observable.
|
Level 3—
|
Models and other valuation methodologies using significant inputs that are unobservable for financial instruments and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in Level 3 are securities for which no market activity or data exists and for which we used discounted expected future cash flows with our own assumptions about what a market participant would use in determining fair value.
|
|
Total
Fair Value
|
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
10,962
|
|
|
$
|
5,454
|
|
|
$
|
5,508
|
|
|
$
|
—
|
|
United States Government sponsored agencies
|
1,224,587
|
|
|
—
|
|
|
1,224,587
|
|
|
—
|
|
||||
United States municipalities, states and territories
|
4,142,257
|
|
|
—
|
|
|
4,142,257
|
|
|
—
|
|
||||
Foreign government obligations
|
226,500
|
|
|
—
|
|
|
226,500
|
|
|
—
|
|
||||
Corporate securities
|
28,479,603
|
|
|
7
|
|
|
28,479,596
|
|
|
—
|
|
||||
Residential mortgage backed securities
|
1,181,682
|
|
|
—
|
|
|
1,181,682
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
5,337,368
|
|
|
—
|
|
|
5,337,368
|
|
|
—
|
|
||||
Other asset backed securities
|
5,219,058
|
|
|
—
|
|
|
5,219,058
|
|
|
—
|
|
||||
Other investments: equity securities
|
207,434
|
|
|
200,000
|
|
|
7,434
|
|
|
—
|
|
||||
Derivative instruments
|
1,290,387
|
|
|
—
|
|
|
1,290,387
|
|
|
—
|
|
||||
Cash and cash equivalents
|
1,129,242
|
|
|
1,129,242
|
|
|
—
|
|
|
—
|
|
||||
Interest rate caps
|
1,244
|
|
|
—
|
|
|
1,244
|
|
|
—
|
|
||||
Interest rate swap
|
1,125
|
|
|
—
|
|
|
1,125
|
|
|
—
|
|
||||
Counterparty collateral
|
179,512
|
|
|
—
|
|
|
179,512
|
|
|
—
|
|
||||
|
$
|
48,630,961
|
|
|
$
|
1,334,703
|
|
|
$
|
47,296,258
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Fixed index annuities - embedded derivatives
|
$
|
8,947,193
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,947,193
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
11,876
|
|
|
$
|
5,640
|
|
|
$
|
6,236
|
|
|
$
|
—
|
|
United States Government sponsored agencies
|
1,305,017
|
|
|
—
|
|
|
1,305,017
|
|
|
—
|
|
||||
United States municipalities, states and territories
|
4,166,812
|
|
|
—
|
|
|
4,166,812
|
|
|
—
|
|
||||
Foreign government obligations
|
239,360
|
|
|
—
|
|
|
239,360
|
|
|
—
|
|
||||
Corporate securities
|
29,878,971
|
|
|
5
|
|
|
29,878,966
|
|
|
—
|
|
||||
Residential mortgage backed securities
|
1,105,567
|
|
|
—
|
|
|
1,105,567
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
5,544,850
|
|
|
—
|
|
|
5,544,850
|
|
|
—
|
|
||||
Other asset backed securities
|
3,120,536
|
|
|
—
|
|
|
3,120,536
|
|
|
—
|
|
||||
Other investments: equity securities, available for sale
|
292,429
|
|
|
285,000
|
|
|
7,429
|
|
|
—
|
|
||||
Derivative instruments
|
1,568,380
|
|
|
—
|
|
|
1,568,380
|
|
|
—
|
|
||||
Cash and cash equivalents
|
1,434,045
|
|
|
1,434,045
|
|
|
—
|
|
|
—
|
|
||||
Interest rate caps
|
415
|
|
|
—
|
|
|
415
|
|
|
—
|
|
||||
Counterparty collateral
|
186,108
|
|
|
—
|
|
|
186,108
|
|
|
—
|
|
||||
|
$
|
48,854,366
|
|
|
$
|
1,724,690
|
|
|
$
|
47,129,676
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
$
|
789
|
|
|
$
|
—
|
|
|
$
|
789
|
|
|
$
|
—
|
|
Fixed index annuities - embedded derivatives
|
8,790,427
|
|
|
—
|
|
|
—
|
|
|
8,790,427
|
|
||||
|
$
|
8,791,216
|
|
|
$
|
—
|
|
|
$
|
789
|
|
|
$
|
8,790,427
|
|
•
|
reported trading prices,
|
•
|
benchmark yields,
|
•
|
broker-dealer quotes,
|
•
|
benchmark securities,
|
•
|
bids and offers,
|
•
|
credit ratings,
|
•
|
relative credit information, and
|
•
|
other reference data.
|
|
|
Average Lapse Rates
|
|
Average Partial Withdrawal Rates
|
||||
Contract Duration (Years)
|
|
September 30, 2018
|
|
December 31, 2017
|
|
September 30, 2018
|
|
December 31, 2017
|
1 - 5
|
|
2.05%
|
|
1.83%
|
|
3.33%
|
|
3.32%
|
6 - 10
|
|
7.28%
|
|
7.01%
|
|
3.33%
|
|
3.32%
|
11 - 15
|
|
11.35%
|
|
11.31%
|
|
3.35%
|
|
3.34%
|
16 - 20
|
|
11.91%
|
|
11.96%
|
|
3.21%
|
|
3.20%
|
20+
|
|
11.58%
|
|
11.62%
|
|
3.21%
|
|
3.20%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Fixed index annuities - embedded derivatives
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
$
|
8,351,151
|
|
|
$
|
7,552,365
|
|
|
$
|
8,790,427
|
|
|
$
|
6,563,288
|
|
Premiums less benefits
|
399,234
|
|
|
475,600
|
|
|
1,354,881
|
|
|
1,384,791
|
|
||||
Change in fair value, net
|
196,808
|
|
|
41,140
|
|
|
(1,198,115
|
)
|
|
121,026
|
|
||||
Ending balance
|
$
|
8,947,193
|
|
|
$
|
8,069,105
|
|
|
$
|
8,947,193
|
|
|
$
|
8,069,105
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
11,528
|
|
|
$
|
79
|
|
|
$
|
(645
|
)
|
|
$
|
10,962
|
|
United States Government sponsored agencies
|
1,308,358
|
|
|
11,824
|
|
|
(95,595
|
)
|
|
1,224,587
|
|
||||
United States municipalities, states and territories
|
3,949,293
|
|
|
224,586
|
|
|
(31,622
|
)
|
|
4,142,257
|
|
||||
Foreign government obligations
|
226,931
|
|
|
7,240
|
|
|
(7,671
|
)
|
|
226,500
|
|
||||
Corporate securities
|
28,406,182
|
|
|
746,913
|
|
|
(673,492
|
)
|
|
28,479,603
|
|
||||
Residential mortgage backed securities
|
1,129,176
|
|
|
64,183
|
|
|
(11,677
|
)
|
|
1,181,682
|
|
||||
Commercial mortgage backed securities
|
5,434,044
|
|
|
22,684
|
|
|
(119,360
|
)
|
|
5,337,368
|
|
||||
Other asset backed securities
|
5,222,830
|
|
|
35,553
|
|
|
(39,325
|
)
|
|
5,219,058
|
|
||||
|
$
|
45,688,342
|
|
|
$
|
1,113,062
|
|
|
$
|
(979,387
|
)
|
|
$
|
45,822,017
|
|
Held for investment:
|
|
|
|
|
|
|
|
||||||||
Corporate security
|
$
|
77,213
|
|
|
$
|
—
|
|
|
$
|
(6,100
|
)
|
|
$
|
71,113
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
11,861
|
|
|
$
|
162
|
|
|
$
|
(147
|
)
|
|
$
|
11,876
|
|
United States Government sponsored agencies
|
1,308,290
|
|
|
28,457
|
|
|
(31,730
|
)
|
|
1,305,017
|
|
||||
United States municipalities, states and territories
|
3,804,360
|
|
|
366,048
|
|
|
(3,596
|
)
|
|
4,166,812
|
|
||||
Foreign government obligations
|
228,214
|
|
|
13,171
|
|
|
(2,025
|
)
|
|
239,360
|
|
||||
Corporate securities
|
28,127,653
|
|
|
1,897,005
|
|
|
(145,687
|
)
|
|
29,878,971
|
|
||||
Residential mortgage backed securities
|
1,028,484
|
|
|
79,554
|
|
|
(2,471
|
)
|
|
1,105,567
|
|
||||
Commercial mortgage backed securities
|
5,531,922
|
|
|
82,768
|
|
|
(69,840
|
)
|
|
5,544,850
|
|
||||
Other asset backed securities
|
3,075,975
|
|
|
57,966
|
|
|
(13,405
|
)
|
|
3,120,536
|
|
||||
|
$
|
43,116,759
|
|
|
$
|
2,525,131
|
|
|
$
|
(268,901
|
)
|
|
$
|
45,372,989
|
|
Held for investment:
|
|
|
|
|
|
|
|
||||||||
Corporate security
|
$
|
77,041
|
|
|
$
|
—
|
|
|
$
|
(581
|
)
|
|
$
|
76,460
|
|
|
|
|
|
|
|
|
|
||||||||
Other investments: equity securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
Finance, insurance, and real estate
|
$
|
292,429
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
292,429
|
|
|
Available for sale
|
|
Held for investment
|
||||||||||||
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Due in one year or less
|
$
|
283,309
|
|
|
$
|
287,677
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
|
5,564,840
|
|
|
5,561,473
|
|
|
—
|
|
|
—
|
|
||||
Due after five years through ten years
|
9,893,201
|
|
|
9,753,983
|
|
|
—
|
|
|
—
|
|
||||
Due after ten years through twenty years
|
9,562,224
|
|
|
9,883,734
|
|
|
—
|
|
|
—
|
|
||||
Due after twenty years
|
8,598,718
|
|
|
8,597,042
|
|
|
77,213
|
|
|
71,113
|
|
||||
|
33,902,292
|
|
|
34,083,909
|
|
|
77,213
|
|
|
71,113
|
|
||||
Residential mortgage backed securities
|
1,129,176
|
|
|
1,181,682
|
|
|
—
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
5,434,044
|
|
|
5,337,368
|
|
|
—
|
|
|
—
|
|
||||
Other asset backed securities
|
5,222,830
|
|
|
5,219,058
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
45,688,342
|
|
|
$
|
45,822,017
|
|
|
$
|
77,213
|
|
|
$
|
71,113
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(Dollars in thousands)
|
||||||
Net unrealized gains on available for sale fixed maturity securities
|
$
|
133,675
|
|
|
$
|
2,256,230
|
|
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements
|
(73,225
|
)
|
|
(1,206,078
|
)
|
||
Deferred income tax valuation allowance reversal
|
22,534
|
|
|
22,534
|
|
||
Deferred income tax expense (a)
|
(12,696
|
)
|
|
(348,087
|
)
|
||
Net unrealized gains reported as accumulated other comprehensive income
|
$
|
70,288
|
|
|
$
|
724,599
|
|
(a)
|
December 31, 2017 includes
$128 million
related to the impact of Tax Reform that was reclassified between accumulated other comprehensive income and retained earnings within our consolidated balance sheet during the first quarter of 2018. For more information regarding the reclassification, see Note 1 to our unaudited consolidated financial statements.
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government full faith and credit
|
$
|
3,178
|
|
|
$
|
(98
|
)
|
|
$
|
5,989
|
|
|
$
|
(547
|
)
|
|
$
|
9,167
|
|
|
$
|
(645
|
)
|
United States Government sponsored agencies
|
43,310
|
|
|
(2,770
|
)
|
|
927,678
|
|
|
(92,825
|
)
|
|
970,988
|
|
|
(95,595
|
)
|
||||||
United States municipalities, states and territories
|
684,699
|
|
|
(21,142
|
)
|
|
123,625
|
|
|
(10,480
|
)
|
|
808,324
|
|
|
(31,622
|
)
|
||||||
Foreign government obligations
|
106,283
|
|
|
(4,031
|
)
|
|
60,641
|
|
|
(3,640
|
)
|
|
166,924
|
|
|
(7,671
|
)
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
2,825,957
|
|
|
(83,452
|
)
|
|
783,568
|
|
|
(75,867
|
)
|
|
3,609,525
|
|
|
(159,319
|
)
|
||||||
Manufacturing, construction and mining
|
2,145,542
|
|
|
(70,140
|
)
|
|
294,755
|
|
|
(26,064
|
)
|
|
2,440,297
|
|
|
(96,204
|
)
|
||||||
Utilities and related sectors
|
2,569,490
|
|
|
(87,914
|
)
|
|
383,587
|
|
|
(34,057
|
)
|
|
2,953,077
|
|
|
(121,971
|
)
|
||||||
Wholesale/retail trade
|
1,026,417
|
|
|
(36,525
|
)
|
|
143,605
|
|
|
(18,263
|
)
|
|
1,170,022
|
|
|
(54,788
|
)
|
||||||
Services, media and other
|
4,472,035
|
|
|
(135,921
|
)
|
|
950,004
|
|
|
(105,289
|
)
|
|
5,422,039
|
|
|
(241,210
|
)
|
||||||
Residential mortgage backed securities
|
396,096
|
|
|
(9,620
|
)
|
|
41,760
|
|
|
(2,057
|
)
|
|
437,856
|
|
|
(11,677
|
)
|
||||||
Commercial mortgage backed securities
|
2,423,197
|
|
|
(40,541
|
)
|
|
1,610,912
|
|
|
(78,819
|
)
|
|
4,034,109
|
|
|
(119,360
|
)
|
||||||
Other asset backed securities
|
3,066,340
|
|
|
(27,693
|
)
|
|
191,639
|
|
|
(11,632
|
)
|
|
3,257,979
|
|
|
(39,325
|
)
|
||||||
|
$
|
19,762,544
|
|
|
$
|
(519,847
|
)
|
|
$
|
5,517,763
|
|
|
$
|
(459,540
|
)
|
|
$
|
25,280,307
|
|
|
$
|
(979,387
|
)
|
Held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate security:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
71,113
|
|
|
$
|
(6,100
|
)
|
|
$
|
71,113
|
|
|
$
|
(6,100
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government full faith and credit
|
$
|
1,565
|
|
|
$
|
(10
|
)
|
|
$
|
6,731
|
|
|
$
|
(137
|
)
|
|
$
|
8,296
|
|
|
$
|
(147
|
)
|
United States Government sponsored agencies
|
44,794
|
|
|
(180
|
)
|
|
958,965
|
|
|
(31,550
|
)
|
|
1,003,759
|
|
|
(31,730
|
)
|
||||||
United States municipalities, states and territories
|
44,736
|
|
|
(128
|
)
|
|
128,499
|
|
|
(3,468
|
)
|
|
173,235
|
|
|
(3,596
|
)
|
||||||
Foreign government obligations
|
49,663
|
|
|
(337
|
)
|
|
12,625
|
|
|
(1,688
|
)
|
|
62,288
|
|
|
(2,025
|
)
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
456,244
|
|
|
(5,135
|
)
|
|
600,655
|
|
|
(28,043
|
)
|
|
1,056,899
|
|
|
(33,178
|
)
|
||||||
Manufacturing, construction and mining
|
222,985
|
|
|
(3,475
|
)
|
|
231,196
|
|
|
(10,849
|
)
|
|
454,181
|
|
|
(14,324
|
)
|
||||||
Utilities and related sectors
|
395,183
|
|
|
(4,099
|
)
|
|
249,416
|
|
|
(8,901
|
)
|
|
644,599
|
|
|
(13,000
|
)
|
||||||
Wholesale/retail trade
|
152,941
|
|
|
(1,249
|
)
|
|
178,635
|
|
|
(11,371
|
)
|
|
331,576
|
|
|
(12,620
|
)
|
||||||
Services, media and other
|
729,124
|
|
|
(19,000
|
)
|
|
891,654
|
|
|
(53,565
|
)
|
|
1,620,778
|
|
|
(72,565
|
)
|
||||||
Residential mortgage backed securities
|
39,771
|
|
|
(387
|
)
|
|
32,917
|
|
|
(2,084
|
)
|
|
72,688
|
|
|
(2,471
|
)
|
||||||
Commercial mortgage backed securities
|
1,096,757
|
|
|
(10,385
|
)
|
|
1,306,437
|
|
|
(59,455
|
)
|
|
2,403,194
|
|
|
(69,840
|
)
|
||||||
Other asset backed securities
|
765,531
|
|
|
(3,499
|
)
|
|
217,595
|
|
|
(9,906
|
)
|
|
983,126
|
|
|
(13,405
|
)
|
||||||
|
$
|
3,999,294
|
|
|
$
|
(47,884
|
)
|
|
$
|
4,815,325
|
|
|
$
|
(221,017
|
)
|
|
$
|
8,814,619
|
|
|
$
|
(268,901
|
)
|
Held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate security:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
76,460
|
|
|
$
|
(581
|
)
|
|
$
|
76,460
|
|
|
$
|
(581
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Fixed maturity securities held for investment carried at amortized cost
|
$
|
2,947
|
|
|
$
|
(1,711
|
)
|
|
$
|
(5,519
|
)
|
|
$
|
6,119
|
|
Investments carried at fair value:
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, available for sale
|
$
|
(311,954
|
)
|
|
$
|
128,981
|
|
|
$
|
(2,122,555
|
)
|
|
$
|
1,008,483
|
|
Equity securities, available for sale
|
—
|
|
|
(457
|
)
|
|
—
|
|
|
(479
|
)
|
||||
|
(311,954
|
)
|
|
128,524
|
|
|
(2,122,555
|
)
|
|
1,008,004
|
|
||||
Adjustment for effect on other balance sheet accounts:
|
|
|
|
|
|
|
|
||||||||
Deferred policy acquisition costs and deferred sales inducements
|
172,566
|
|
|
(52,572
|
)
|
|
1,132,853
|
|
|
(516,427
|
)
|
||||
Deferred income tax asset/liability
|
29,270
|
|
|
(26,583
|
)
|
|
207,837
|
|
|
(172,052
|
)
|
||||
|
201,836
|
|
|
(79,155
|
)
|
|
1,340,690
|
|
|
(688,479
|
)
|
||||
Change in net unrealized gains on investments carried at fair value
|
$
|
(110,118
|
)
|
|
$
|
49,369
|
|
|
$
|
(781,865
|
)
|
|
$
|
319,525
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Available for sale fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Gross realized gains
|
$
|
505
|
|
|
$
|
1,520
|
|
|
$
|
2,845
|
|
|
$
|
11,571
|
|
Gross realized losses
|
(1,913
|
)
|
|
(1
|
)
|
|
(43,648
|
)
|
|
(4,463
|
)
|
||||
|
(1,408
|
)
|
|
1,519
|
|
|
(40,803
|
)
|
|
7,108
|
|
||||
Available for sale equity securities:
|
|
|
|
|
|
|
|
||||||||
Gross realized gains
|
—
|
|
|
348
|
|
|
—
|
|
|
348
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other investments:
|
|
|
|
|
|
|
|
||||||||
Gain on sale of real estate
|
—
|
|
|
12
|
|
|
—
|
|
|
56
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Mortgage loans on real estate:
|
|
|
|
|
|
|
|
||||||||
Decrease (increase) in allowance for credit losses
|
(1,255
|
)
|
|
(300
|
)
|
|
(785
|
)
|
|
278
|
|
||||
Recovery of specific allowance
|
467
|
|
|
—
|
|
|
1,189
|
|
|
—
|
|
||||
Gain on sale of mortgage loans
|
—
|
|
|
—
|
|
|
124
|
|
|
—
|
|
||||
|
(788
|
)
|
|
(300
|
)
|
|
528
|
|
|
278
|
|
||||
|
$
|
(2,196
|
)
|
|
$
|
1,579
|
|
|
$
|
(40,275
|
)
|
|
$
|
7,790
|
|
•
|
the length of time and the extent to which the fair value has been less than amortized cost or cost;
|
•
|
whether the issuer is current on all payments and all contractual payments have been made as agreed;
|
•
|
the remaining payment terms and the financial condition and near-term prospects of the issuer;
|
•
|
the lack of ability to refinance due to liquidity problems in the credit market;
|
•
|
the fair value of any underlying collateral;
|
•
|
the existence of any credit protection available;
|
•
|
our intent to sell and whether it is more likely than not we would be required to sell prior to recovery for debt securities;
|
•
|
consideration of rating agency actions; and
|
•
|
changes in estimated cash flows of mortgage and asset backed securities.
|
|
|
|
|
Discount Rate
|
|
Default Rate
|
|
Loss Severity
|
||||||||||||
|
|
Vintage
|
|
Min
|
|
Max
|
|
Min
|
|
Max
|
|
Min
|
|
Max
|
||||||
Nine months ended September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Prime
|
|
2005
|
|
7.0
|
%
|
|
7.7
|
%
|
|
14
|
%
|
|
23
|
%
|
|
40
|
%
|
|
50
|
%
|
|
|
2007
|
|
6.6
|
%
|
|
6.6
|
%
|
|
17
|
%
|
|
17
|
%
|
|
60
|
%
|
|
60
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Nine months ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Prime
|
|
2005
|
|
7.0
|
%
|
|
7.7
|
%
|
|
8
|
%
|
|
22
|
%
|
|
40
|
%
|
|
50
|
%
|
|
|
2006
|
|
7.3
|
%
|
|
7.3
|
%
|
|
14
|
%
|
|
14
|
%
|
|
40
|
%
|
|
40
|
%
|
|
|
2007
|
|
6.2
|
%
|
|
6.6
|
%
|
|
15
|
%
|
|
19
|
%
|
|
50
|
%
|
|
60
|
%
|
|
Number
of
Securities
|
|
Total OTTI
Losses
|
|
Portion of OTTI
Losses
Recognized
in (from) Other
Comprehensive
Income
|
|
Net OTTI
Losses
Recognized in
Operations
|
|||||||
|
|
|
(Dollars in thousands)
|
|||||||||||
Three months ended September 30, 2018
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Capital goods
|
1
|
|
|
$
|
(719
|
)
|
|
$
|
—
|
|
|
$
|
(719
|
)
|
Consumer discretionary
|
6
|
|
|
(5,968
|
)
|
|
—
|
|
|
(5,968
|
)
|
|||
Energy
|
2
|
|
|
(1,212
|
)
|
|
—
|
|
|
(1,212
|
)
|
|||
Financials
|
5
|
|
|
(3,495
|
)
|
|
—
|
|
|
(3,495
|
)
|
|||
Information technology
|
1
|
|
|
(550
|
)
|
|
—
|
|
|
(550
|
)
|
|||
Telecommunications
|
2
|
|
|
(249
|
)
|
|
—
|
|
|
(249
|
)
|
|||
Transportation
|
1
|
|
|
(178
|
)
|
|
—
|
|
|
(178
|
)
|
|||
Utilities
|
1
|
|
|
(94
|
)
|
|
—
|
|
|
(94
|
)
|
|||
Commercial mortgage backed securities
|
1
|
|
|
(1,908
|
)
|
|
—
|
|
|
(1,908
|
)
|
|||
|
20
|
|
|
$
|
(14,373
|
)
|
|
$
|
—
|
|
|
$
|
(14,373
|
)
|
|
|
|
|
|
|
|
|
|||||||
Three months ended September 30, 2017
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
Residential mortgage backed securities
|
3
|
|
|
$
|
(273
|
)
|
|
$
|
(191
|
)
|
|
$
|
(464
|
)
|
|
|
|
|
|
|
|
|
|||||||
Nine months ended September 30, 2018
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Capital goods
|
1
|
|
|
$
|
(719
|
)
|
|
$
|
—
|
|
|
$
|
(719
|
)
|
Consumer discretionary
|
7
|
|
|
(6,875
|
)
|
|
—
|
|
|
(6,875
|
)
|
|||
Energy
|
2
|
|
|
(1,212
|
)
|
|
—
|
|
|
(1,212
|
)
|
|||
Financials
|
5
|
|
|
(3,495
|
)
|
|
—
|
|
|
(3,495
|
)
|
|||
Information technology
|
1
|
|
|
(550
|
)
|
|
—
|
|
|
(550
|
)
|
|||
Telecommunications
|
2
|
|
|
(249
|
)
|
|
—
|
|
|
(249
|
)
|
|||
Transportation
|
1
|
|
|
(178
|
)
|
|
—
|
|
|
(178
|
)
|
|||
Utilities
|
1
|
|
|
(94
|
)
|
|
—
|
|
|
(94
|
)
|
|||
Residential mortgage backed securities
|
3
|
|
|
(63
|
)
|
|
(295
|
)
|
|
(358
|
)
|
|||
Commercial mortgage backed securities
|
1
|
|
|
(1,908
|
)
|
|
—
|
|
|
(1,908
|
)
|
|||
Other asset backed securities
|
1
|
|
|
(682
|
)
|
|
(1,356
|
)
|
|
(2,038
|
)
|
|||
|
25
|
|
|
$
|
(16,025
|
)
|
|
$
|
(1,651
|
)
|
|
$
|
(17,676
|
)
|
|
|
|
|
|
|
|
|
|||||||
Nine months ended September 30, 2017
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
Residential mortgage backed securities
|
8
|
|
|
$
|
(273
|
)
|
|
$
|
(994
|
)
|
|
$
|
(1,267
|
)
|
Other asset backed securities
|
1
|
|
|
—
|
|
|
(287
|
)
|
|
(287
|
)
|
|||
|
9
|
|
|
$
|
(273
|
)
|
|
$
|
(1,281
|
)
|
|
$
|
(1,554
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Cumulative credit loss at beginning of period
|
$
|
(156,469
|
)
|
|
$
|
(153,526
|
)
|
|
$
|
(157,066
|
)
|
|
$
|
(166,375
|
)
|
Additions for the amount related to credit losses for which OTTI has not previously been recognized
|
(14,373
|
)
|
|
(273
|
)
|
|
(16,025
|
)
|
|
(273
|
)
|
||||
Additional credit losses on securities for which OTTI has previously been recognized
|
—
|
|
|
(191
|
)
|
|
(1,651
|
)
|
|
(1,281
|
)
|
||||
Accumulated losses on securities that were disposed of during the period
|
—
|
|
|
—
|
|
|
3,900
|
|
|
13,939
|
|
||||
Cumulative credit loss at end of period
|
$
|
(170,842
|
)
|
|
$
|
(153,990
|
)
|
|
$
|
(170,842
|
)
|
|
$
|
(153,990
|
)
|
|
Amortized Cost
|
|
OTTI
Recognized in
Other
Comprehensive
Income
|
|
Change in Fair
Value Since
OTTI was
Recognized
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
Corporate securities
|
$
|
389,729
|
|
|
$
|
(3,700
|
)
|
|
$
|
10,041
|
|
|
$
|
396,070
|
|
Residential mortgage backed securities
|
255,611
|
|
|
(168,060
|
)
|
|
202,923
|
|
|
290,474
|
|
||||
Commercial mortgage backed securities
|
7,823
|
|
|
—
|
|
|
—
|
|
|
7,823
|
|
||||
Other asset backed securities
|
2,529
|
|
|
—
|
|
|
(1,682
|
)
|
|
847
|
|
||||
|
$
|
655,692
|
|
|
$
|
(171,760
|
)
|
|
$
|
211,282
|
|
|
$
|
695,214
|
|
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
Corporate securities
|
$
|
13,015
|
|
|
$
|
(4,263
|
)
|
|
$
|
10,739
|
|
|
$
|
19,491
|
|
Residential mortgage backed securities
|
297,582
|
|
|
(168,355
|
)
|
|
201,620
|
|
|
330,847
|
|
||||
Other asset backed securities
|
4,567
|
|
|
(1,356
|
)
|
|
(1,875
|
)
|
|
1,336
|
|
||||
|
$
|
315,164
|
|
|
$
|
(173,974
|
)
|
|
$
|
210,484
|
|
|
$
|
351,674
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(Dollars in thousands)
|
||||||
Principal outstanding
|
$
|
2,900,458
|
|
|
$
|
2,674,315
|
|
Loan loss allowance
|
(7,114
|
)
|
|
(7,518
|
)
|
||
Deferred prepayment fees
|
(1,189
|
)
|
|
(1,266
|
)
|
||
Carrying value
|
$
|
2,892,155
|
|
|
$
|
2,665,531
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
|
Principal
|
|
Percent
|
|
Principal
|
|
Percent
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Geographic distribution
|
|
|
|
|
|
|
|
||||||
East
|
$
|
598,239
|
|
|
20.6
|
%
|
|
$
|
548,067
|
|
|
20.5
|
%
|
Middle Atlantic
|
170,836
|
|
|
5.9
|
%
|
|
163,485
|
|
|
6.1
|
%
|
||
Mountain
|
348,233
|
|
|
12.0
|
%
|
|
308,486
|
|
|
11.5
|
%
|
||
New England
|
9,482
|
|
|
0.3
|
%
|
|
12,265
|
|
|
0.5
|
%
|
||
Pacific
|
494,791
|
|
|
17.1
|
%
|
|
466,030
|
|
|
17.4
|
%
|
||
South Atlantic
|
667,043
|
|
|
23.0
|
%
|
|
609,736
|
|
|
22.8
|
%
|
||
West North Central
|
309,332
|
|
|
10.7
|
%
|
|
324,808
|
|
|
12.2
|
%
|
||
West South Central
|
302,502
|
|
|
10.4
|
%
|
|
241,438
|
|
|
9.0
|
%
|
||
|
$
|
2,900,458
|
|
|
100.0
|
%
|
|
$
|
2,674,315
|
|
|
100.0
|
%
|
Property type distribution
|
|
|
|
|
|
|
|
||||||
Office
|
$
|
267,017
|
|
|
9.2
|
%
|
|
$
|
283,926
|
|
|
10.6
|
%
|
Medical Office
|
33,950
|
|
|
1.2
|
%
|
|
34,338
|
|
|
1.3
|
%
|
||
Retail
|
1,076,573
|
|
|
37.1
|
%
|
|
1,040,028
|
|
|
38.9
|
%
|
||
Industrial/Warehouse
|
743,787
|
|
|
25.7
|
%
|
|
677,770
|
|
|
25.3
|
%
|
||
Apartment
|
604,120
|
|
|
20.8
|
%
|
|
462,897
|
|
|
17.3
|
%
|
||
Mixed use/other
|
175,011
|
|
|
6.0
|
%
|
|
175,356
|
|
|
6.6
|
%
|
||
|
$
|
2,900,458
|
|
|
100.0
|
%
|
|
$
|
2,674,315
|
|
|
100.0
|
%
|
|
Three Months Ended
September 30, 2018 |
|
Three Months Ended
September 30, 2017 |
||||||||||||
|
Specific
Allowance
|
|
General Allowance
|
|
Specific
Allowance
|
|
General Allowance
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Beginning allowance balance
|
$
|
(696
|
)
|
|
$
|
(5,630
|
)
|
|
$
|
(2,049
|
)
|
|
$
|
(5,800
|
)
|
Charge-offs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Recoveries
|
467
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Change in provision for credit losses
|
(1,255
|
)
|
|
—
|
|
|
—
|
|
|
(300
|
)
|
||||
Ending allowance balance
|
$
|
(1,484
|
)
|
|
$
|
(5,630
|
)
|
|
$
|
(2,049
|
)
|
|
$
|
(6,100
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Nine Months Ended
September 30, 2018 |
|
Nine Months Ended
September 30, 2017 |
||||||||||||
|
Specific
Allowance
|
|
General Allowance
|
|
Specific
Allowance
|
|
General Allowance
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Beginning allowance balance
|
$
|
(1,418
|
)
|
|
$
|
(6,100
|
)
|
|
$
|
(1,327
|
)
|
|
$
|
(7,100
|
)
|
Charge-offs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Recoveries
|
1,189
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Change in provision for credit losses
|
(1,255
|
)
|
|
470
|
|
|
(722
|
)
|
|
1,000
|
|
||||
Ending allowance balance
|
$
|
(1,484
|
)
|
|
$
|
(5,630
|
)
|
|
$
|
(2,049
|
)
|
|
$
|
(6,100
|
)
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(Dollars in thousands)
|
||||||
Individually evaluated for impairment
|
$
|
3,179
|
|
|
$
|
5,445
|
|
Collectively evaluated for impairment
|
2,897,279
|
|
|
2,668,870
|
|
||
Total loans evaluated for impairment
|
$
|
2,900,458
|
|
|
$
|
2,674,315
|
|
|
30 - 59 Days
|
|
60 - 89 Days
|
|
90 Days
and Over
|
|
Total
Past Due
|
|
Current
|
|
Collateral Dependent Receivables
|
|
Total Financing Receivables
|
||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||||
Commercial Mortgage Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
September 30, 2018
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,898,538
|
|
|
$
|
1,920
|
|
|
$
|
2,900,458
|
|
December 31, 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,672,093
|
|
|
$
|
2,222
|
|
|
$
|
2,674,315
|
|
|
Recorded
Investment
|
|
Unpaid Principal Balance
|
|
Related
Allowance
|
||||||
|
(Dollars in thousands)
|
||||||||||
September 30, 2018
|
|
|
|
|
|
||||||
Mortgage loans with an allowance
|
$
|
1,695
|
|
|
$
|
3,179
|
|
|
$
|
(1,484
|
)
|
Mortgage loans with no related allowance
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
$
|
1,695
|
|
|
$
|
3,179
|
|
|
$
|
(1,484
|
)
|
December 31, 2017
|
|
|
|
|
|
||||||
Mortgage loans with an allowance
|
$
|
4,027
|
|
|
$
|
5,445
|
|
|
$
|
(1,418
|
)
|
Mortgage loans with no related allowance
|
1,436
|
|
|
1,436
|
|
|
—
|
|
|||
|
$
|
5,463
|
|
|
$
|
6,881
|
|
|
$
|
(1,418
|
)
|
|
Average Recorded Investment
|
|
Interest Income Recognized
|
||||
|
(Dollars in thousands)
|
||||||
Three months ended September 30, 2018
|
|
|
|
||||
Mortgage loans with an allowance
|
$
|
2,337
|
|
|
$
|
37
|
|
Mortgage loans with no related allowance
|
—
|
|
|
—
|
|
||
|
$
|
2,337
|
|
|
$
|
37
|
|
Three months ended September 30, 2017
|
|
|
|
||||
Mortgage loans with an allowance
|
$
|
4,702
|
|
|
$
|
21
|
|
Mortgage loans with no related allowance
|
1,496
|
|
|
22
|
|
||
|
$
|
6,198
|
|
|
$
|
43
|
|
Nine months ended September 30, 2018
|
|
|
|
||||
Mortgage loans with an allowance
|
$
|
2,386
|
|
|
$
|
136
|
|
Mortgage loans with no related allowance
|
—
|
|
|
—
|
|
||
|
$
|
2,386
|
|
|
$
|
136
|
|
Nine months ended September 30, 2017
|
|
|
|
||||
Mortgage loans with an allowance
|
$
|
5,112
|
|
|
$
|
228
|
|
Mortgage loans with no related allowance
|
1,533
|
|
|
69
|
|
||
|
$
|
6,645
|
|
|
$
|
297
|
|
•
|
borrower is in default,
|
•
|
borrower has declared bankruptcy,
|
•
|
there is growing concern about the borrower's ability to continue as a going concern,
|
•
|
borrower has insufficient cash flows to service debt,
|
•
|
borrower's inability to obtain funds from other sources, and
|
•
|
there is a breach of financial covenants by the borrower.
|
•
|
assets used to satisfy debt are less than our recorded investment,
|
•
|
interest rate is modified,
|
•
|
maturity date extension at an interest rate less than market rate,
|
•
|
capitalization of interest,
|
•
|
delaying principal and/or interest for a period of three months or more, and
|
•
|
partial forgiveness of the balance or charge-off.
|
Geographic Region
|
|
Number
of TDRs
|
|
Principal
Balance
Outstanding
|
|
Specific Loan Loss Allowance
|
|
Net
Carrying
Amount
|
|||||||
|
|
|
|
(Dollars in thousands)
|
|||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|||||||
South Atlantic
|
|
1
|
|
|
$
|
2,947
|
|
|
$
|
—
|
|
|
$
|
2,947
|
|
East
|
|
1
|
|
|
1,933
|
|
|
(467
|
)
|
|
1,466
|
|
|||
|
|
2
|
|
|
$
|
4,880
|
|
|
$
|
(467
|
)
|
|
$
|
4,413
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(Dollars in thousands)
|
||||||
Assets
|
|
|
|
||||
Derivative instruments
|
|
|
|
||||
Call options
|
$
|
1,290,387
|
|
|
$
|
1,568,380
|
|
Other assets
|
|
|
|
||||
Interest rate caps
|
1,244
|
|
|
415
|
|
||
Interest rate swap
|
1,125
|
|
|
—
|
|
||
|
$
|
1,292,756
|
|
|
$
|
1,568,795
|
|
Liabilities
|
|
|
|
||||
Policy benefit reserves - annuity products
|
|
|
|
||||
Fixed index annuities - embedded derivatives
|
$
|
8,947,193
|
|
|
$
|
8,790,427
|
|
Other liabilities
|
|
|
|
||||
Interest rate swap
|
—
|
|
|
789
|
|
||
|
$
|
8,947,193
|
|
|
$
|
8,791,216
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Change in fair value of derivatives:
|
|
|
|
|
|
|
|
||||||||
Call options
|
$
|
594,872
|
|
|
$
|
362,560
|
|
|
$
|
273,946
|
|
|
$
|
1,017,001
|
|
Interest rate swap
|
258
|
|
|
63
|
|
|
1,658
|
|
|
(411
|
)
|
||||
Interest rate caps
|
181
|
|
|
(98
|
)
|
|
829
|
|
|
(712
|
)
|
||||
|
$
|
595,311
|
|
|
$
|
362,525
|
|
|
$
|
276,433
|
|
|
$
|
1,015,878
|
|
Change in fair value of embedded derivatives:
|
|
|
|
|
|
|
|
||||||||
Fixed index annuities - embedded derivatives
|
$
|
196,808
|
|
|
$
|
41,140
|
|
|
$
|
(1,198,115
|
)
|
|
$
|
121,026
|
|
Other changes in difference between policy benefit reserves computed using derivative accounting vs. long-duration contracts accounting
|
186,908
|
|
|
188,562
|
|
|
612,650
|
|
|
507,819
|
|
||||
|
$
|
383,716
|
|
|
$
|
229,702
|
|
|
$
|
(585,465
|
)
|
|
$
|
628,845
|
|
|
|
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
Counterparty
|
|
Credit Rating
(S&P)
|
|
Credit Rating (Moody's)
|
|
Notional
Amount
|
|
Fair Value
|
|
Notional
Amount
|
|
Fair Value
|
||||||||
|
|
|
|
|
|
(Dollars in thousands)
|
||||||||||||||
Bank of America
|
|
A+
|
|
Aa3
|
|
$
|
6,215,626
|
|
|
$
|
214,380
|
|
|
$
|
4,645,366
|
|
|
$
|
237,955
|
|
Barclays
|
|
A
|
|
A2
|
|
2,509,716
|
|
|
76,397
|
|
|
4,135,537
|
|
|
154,127
|
|
||||
BNP Paribas
|
|
A
|
|
Aa3
|
|
—
|
|
|
—
|
|
|
1,411,989
|
|
|
73,650
|
|
||||
Canadian Imperial Bank of Commerce
|
|
A+
|
|
Aa2
|
|
5,200,352
|
|
|
173,803
|
|
|
2,808,030
|
|
|
84,268
|
|
||||
Citibank, N.A.
|
|
A+
|
|
A1
|
|
4,904,171
|
|
|
176,825
|
|
|
4,104,666
|
|
|
219,900
|
|
||||
Credit Suisse
|
|
A
|
|
A1
|
|
2,640,799
|
|
|
62,867
|
|
|
3,538,855
|
|
|
137,384
|
|
||||
J.P. Morgan
|
|
A+
|
|
Aa3
|
|
3,225,810
|
|
|
116,332
|
|
|
1,753,649
|
|
|
109,689
|
|
||||
Morgan Stanley
|
|
A+
|
|
A1
|
|
3,941,705
|
|
|
124,691
|
|
|
3,408,179
|
|
|
184,323
|
|
||||
Royal Bank of Canada
|
|
AA-
|
|
A2
|
|
1,942,305
|
|
|
67,105
|
|
|
3,027,469
|
|
|
104,141
|
|
||||
Societe Generale
|
|
A
|
|
A1
|
|
1,769,787
|
|
|
53,835
|
|
|
—
|
|
|
—
|
|
||||
SunTrust
|
|
A-
|
|
Baa1
|
|
1,644,816
|
|
|
54,149
|
|
|
2,331,168
|
|
|
90,399
|
|
||||
Wells Fargo
|
|
A+
|
|
Aa2
|
|
4,659,622
|
|
|
163,569
|
|
|
4,036,255
|
|
|
162,781
|
|
||||
Exchange traded
|
|
|
|
|
|
235,663
|
|
|
6,434
|
|
|
296,840
|
|
|
9,763
|
|
||||
|
|
|
|
|
|
$
|
38,890,372
|
|
|
$
|
1,290,387
|
|
|
$
|
35,498,003
|
|
|
$
|
1,568,380
|
|
|
|
Notional
|
|
|
|
Cap
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
|||||||
Maturity Date
|
|
Amount
|
|
Floating Rate
|
|
Rate
|
|
Counterparty
|
|
Fair Value
|
|||||||||
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|||||||||
July 7, 2021
|
|
$
|
40,000
|
|
|
LIBOR
|
|
2.50
|
%
|
|
SunTrust
|
|
$
|
624
|
|
|
$
|
207
|
|
July 8, 2021
|
|
12,000
|
|
|
LIBOR
|
|
2.50
|
%
|
|
SunTrust
|
|
187
|
|
|
62
|
|
|||
July 29, 2021
|
|
27,000
|
|
|
LIBOR
|
|
2.50
|
%
|
|
SunTrust
|
|
433
|
|
|
146
|
|
|||
|
|
$
|
79,000
|
|
|
|
|
|
|
|
|
$
|
1,244
|
|
|
$
|
415
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(Dollars in thousands)
|
||||||
Senior notes due 2027
|
|
|
|
||||
Principal
|
$
|
500,000
|
|
|
$
|
500,000
|
|
Unamortized debt issue costs
|
(5,222
|
)
|
|
(5,572
|
)
|
||
Unamortized discount
|
(314
|
)
|
|
(335
|
)
|
||
|
$
|
494,464
|
|
|
$
|
494,093
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands, except share and per share data)
|
||||||||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income - numerator for earnings per common share
|
$
|
169,328
|
|
|
$
|
56,957
|
|
|
$
|
404,193
|
|
|
$
|
137,842
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
90,485,567
|
|
|
89,068,770
|
|
|
90,278,209
|
|
|
88,872,562
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Stock options and deferred compensation agreements
|
705,465
|
|
|
974,208
|
|
|
750,588
|
|
|
924,465
|
|
||||
Restricted stock and restricted stock units
|
459,854
|
|
|
377,552
|
|
|
326,613
|
|
|
373,993
|
|
||||
Denominator for earnings per common share - assuming dilution
|
91,650,886
|
|
|
90,420,530
|
|
|
91,355,410
|
|
|
90,171,020
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings per common share
|
$
|
1.87
|
|
|
$
|
0.64
|
|
|
$
|
4.48
|
|
|
$
|
1.55
|
|
Earnings per common share - assuming dilution
|
$
|
1.85
|
|
|
$
|
0.63
|
|
|
$
|
4.42
|
|
|
$
|
1.53
|
|
•
|
general economic conditions and other factors, including prevailing interest rate levels and stock and credit market performance which may affect (among other things) our ability to sell our products, our ability to access capital resources and the costs associated therewith, the fair value of our investments, which could result in impairments and other than temporary impairments, and certain liabilities, and the lapse rate and profitability of policies;
|
•
|
customer response to new products and marketing initiatives;
|
•
|
changes in Federal income tax laws and regulations which may affect the relative income tax advantages of our products;
|
•
|
increasing competition in the sale of annuities;
|
•
|
regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) bank sales and underwriting of insurance products and regulation of the sale, underwriting and pricing of products; and
|
•
|
the risk factors or uncertainties listed from time to time in our filings with the SEC.
|
•
|
the amount of assets under our management,
|
•
|
investment spreads we earn on our policyholder account balances,
|
•
|
our ability to manage our investment portfolio to maximize returns and minimize risks such as interest rate changes and defaults or impairment of investments,
|
•
|
our ability to manage interest rates credited to policyholders and costs of the options purchased to fund the annual index credits on our fixed index annuities,
|
•
|
our ability to manage the costs of acquiring new business (principally commissions paid to agents and distribution partners and bonuses credited to policyholders),
|
•
|
our ability to manage our operating expenses, and
|
•
|
income taxes.
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Average yield on invested assets
|
4.54%
|
|
4.43%
|
|
4.46%
|
|
4.45%
|
Aggregate cost of money
|
1.87%
|
|
1.73%
|
|
1.84%
|
|
1.75%
|
Aggregate investment spread
|
2.67%
|
|
2.70%
|
|
2.62%
|
|
2.70%
|
|
|
|
|
|
|
|
|
Impact of:
|
|
|
|
|
|
|
|
Investment yield - additional prepayment income
|
0.11%
|
|
0.05%
|
|
0.08%
|
|
0.06%
|
Cost of money benefit of over hedging
|
0.07%
|
|
0.06%
|
|
0.05%
|
|
0.06%
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
Product Type
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
Fixed index annuities
|
|
$
|
994,630
|
|
|
$
|
871,760
|
|
|
$
|
3,114,338
|
|
|
$
|
3,021,791
|
|
Annual reset fixed rate annuities
|
|
8,840
|
|
|
20,142
|
|
|
41,133
|
|
|
55,855
|
|
||||
Multi-year fixed rate annuities
|
|
35,211
|
|
|
16,434
|
|
|
99,543
|
|
|
73,870
|
|
||||
Single premium immediate annuities
|
|
4,977
|
|
|
6,505
|
|
|
20,920
|
|
|
17,037
|
|
||||
Total before coinsurance ceded
|
|
1,043,658
|
|
|
914,841
|
|
|
3,275,934
|
|
|
3,168,553
|
|
||||
Coinsurance ceded
|
|
109,201
|
|
|
81,451
|
|
|
327,943
|
|
|
261,484
|
|
||||
Net after coinsurance ceded
|
|
$
|
934,457
|
|
|
$
|
833,390
|
|
|
$
|
2,947,991
|
|
|
$
|
2,907,069
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Decrease in amortization of deferred sales inducements
|
$
|
(21,465
|
)
|
|
$
|
(34,274
|
)
|
|
$
|
(21,465
|
)
|
|
$
|
(34,274
|
)
|
Decrease in amortization of deferred policy acquisition costs
|
(30,572
|
)
|
|
(48,198
|
)
|
|
(30,572
|
)
|
|
(48,198
|
)
|
||||
Increase (decrease) in interest sensitive and index product benefits
|
(53,607
|
)
|
|
21,608
|
|
|
(53,607
|
)
|
|
21,608
|
|
||||
Effect on net income
|
82,825
|
|
|
39,196
|
|
|
82,825
|
|
|
39,196
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Reconciliation from net income to non-GAAP operating income:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
169,328
|
|
|
$
|
56,957
|
|
|
$
|
404,193
|
|
|
$
|
137,842
|
|
Adjustments to arrive at non-GAAP operating income:
|
|
|
|
|
|
|
|
||||||||
Net realized investment (gains) losses, including OTTI
|
10,278
|
|
|
(916
|
)
|
|
35,925
|
|
|
(4,417
|
)
|
||||
Change in fair value of derivatives and embedded derivatives - fixed index annuities
|
545
|
|
|
47,835
|
|
|
(108,367
|
)
|
|
116,383
|
|
||||
Change in fair value of derivatives - debt
|
(597
|
)
|
|
(357
|
)
|
|
(3,168
|
)
|
|
(139
|
)
|
||||
Income taxes
|
(8,491
|
)
|
|
(16,281
|
)
|
|
6,822
|
|
|
(39,127
|
)
|
||||
Non-GAAP operating income
|
$
|
171,063
|
|
|
$
|
87,238
|
|
|
$
|
335,405
|
|
|
$
|
210,542
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Decrease in amortization of deferred sales inducements
|
$
|
(20,466
|
)
|
|
$
|
(31,317
|
)
|
|
$
|
(20,466
|
)
|
|
$
|
(31,317
|
)
|
Decrease in amortization of deferred policy acquisition costs
|
(28,702
|
)
|
|
(43,716
|
)
|
|
(28,702
|
)
|
|
(43,716
|
)
|
||||
Increase (decrease) in interest sensitive and index product benefits
|
(53,607
|
)
|
|
21,608
|
|
|
(53,607
|
)
|
|
21,608
|
|
||||
Effect on non-GAAP operating income
|
80,576
|
|
|
34,405
|
|
|
80,576
|
|
|
34,405
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Surrender charges
|
$
|
17,132
|
|
|
$
|
13,521
|
|
|
$
|
49,934
|
|
|
$
|
41,051
|
|
Lifetime income benefit riders (LIBR) fees
|
41,233
|
|
|
38,410
|
|
|
114,160
|
|
|
103,055
|
|
||||
|
$
|
58,365
|
|
|
$
|
51,931
|
|
|
$
|
164,094
|
|
|
$
|
144,106
|
|
|
|
|
|
|
|
|
|
||||||||
Withdrawals from annuity policies subject to surrender charges
|
$
|
161,653
|
|
|
$
|
119,103
|
|
|
$
|
428,248
|
|
|
$
|
341,244
|
|
Average surrender charge collected on withdrawals subject to surrender charges
|
10.6
|
%
|
|
11.4
|
%
|
|
11.7
|
%
|
|
12.0
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Fund values on policies subject to LIBR fees
|
$
|
5,578,775
|
|
|
$
|
5,279,268
|
|
|
$
|
15,846,057
|
|
|
$
|
14,643,535
|
|
Weighted average per policy LIBR fee
|
0.74
|
%
|
|
0.73
|
%
|
|
0.72
|
%
|
|
0.70
|
%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Call options:
|
|
|
|
|
|
|
|
||||||||
Gain on option expiration
|
$
|
213,789
|
|
|
$
|
238,428
|
|
|
$
|
684,295
|
|
|
$
|
676,793
|
|
Change in unrealized gains/losses
|
381,083
|
|
|
124,132
|
|
|
(410,349
|
)
|
|
340,208
|
|
||||
Interest rate swap
|
258
|
|
|
63
|
|
|
1,658
|
|
|
(411
|
)
|
||||
Interest rate caps
|
181
|
|
|
(98
|
)
|
|
829
|
|
|
(712
|
)
|
||||
|
$
|
595,311
|
|
|
$
|
362,525
|
|
|
$
|
276,433
|
|
|
$
|
1,015,878
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
S&P 500 Index
|
|
|
|
|
|
|
|
Point-to-point strategy
|
1.0% - 9.6%
|
|
1.0 - 8.7%
|
|
1.0% - 13.9%
|
|
1.0 - 13.3%
|
Monthly average strategy
|
1.0% - 8.1%
|
|
0.6 - 8.8%
|
|
0.6% - 8.1%
|
|
0.1 - 10.6%
|
Monthly point-to-point strategy
|
0.0% - 12.8%
|
|
0.0 - 13.6%
|
|
0.0% - 17.5%
|
|
0.0 - 15.2%
|
Fixed income (bond index) strategies
|
0.0% - 5.1%
|
|
0.0 - 5.9%
|
|
0.0% - 5.1%
|
|
0.0 - 5.9%
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Index credits on index policies
|
$
|
369,011
|
|
|
$
|
375,019
|
|
|
$
|
1,127,556
|
|
|
$
|
1,068,522
|
|
Interest credited (including changes in minimum guaranteed interest for fixed index annuities)
|
54,762
|
|
|
64,704
|
|
|
166,040
|
|
|
196,843
|
|
||||
Lifetime income benefit riders
|
(10,684
|
)
|
|
61,305
|
|
|
61,539
|
|
|
127,398
|
|
||||
|
$
|
413,089
|
|
|
$
|
501,028
|
|
|
$
|
1,355,135
|
|
|
$
|
1,392,763
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Amortization of deferred sales inducements before gross profit adjustments
|
$
|
48,025
|
|
|
$
|
37,149
|
|
|
$
|
183,460
|
|
|
$
|
173,178
|
|
Gross profit adjustments:
|
|
|
|
|
|
|
|
||||||||
Fair value accounting for derivatives and embedded derivatives
|
9,912
|
|
|
(22,444
|
)
|
|
59,763
|
|
|
(63,168
|
)
|
||||
Net realized gains (losses) on investments and net OTTI losses recognized in operations
|
(2,693
|
)
|
|
2
|
|
|
(9,444
|
)
|
|
717
|
|
||||
Amortization of deferred sales inducements after gross profit adjustments
|
$
|
55,244
|
|
|
$
|
14,707
|
|
|
$
|
233,779
|
|
|
$
|
110,727
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Fixed index annuities - embedded derivatives
|
$
|
196,808
|
|
|
$
|
41,140
|
|
|
$
|
(1,198,115
|
)
|
|
$
|
121,026
|
|
Other changes in difference between policy benefit reserves computed using derivative accounting vs. long-duration contracts accounting
|
186,908
|
|
|
188,562
|
|
|
612,650
|
|
|
507,819
|
|
||||
|
$
|
383,716
|
|
|
$
|
229,702
|
|
|
$
|
(585,465
|
)
|
|
$
|
628,845
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
2027 Notes
|
$
|
6,376
|
|
|
$
|
6,369
|
|
|
$
|
19,122
|
|
|
$
|
7,431
|
|
2021 Notes
|
—
|
|
|
1,227
|
|
|
—
|
|
|
15,023
|
|
||||
Term loan due 2019
|
—
|
|
|
1
|
|
|
—
|
|
|
1,543
|
|
||||
|
$
|
6,376
|
|
|
$
|
7,597
|
|
|
$
|
19,122
|
|
|
$
|
23,997
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Amortization of deferred policy acquisition costs before gross profit adjustments
|
$
|
69,652
|
|
|
$
|
52,456
|
|
|
$
|
262,807
|
|
|
$
|
244,230
|
|
Gross profit adjustments:
|
|
|
|
|
|
|
|
||||||||
Fair value accounting for derivatives and embedded derivatives
|
15,000
|
|
|
(29,631
|
)
|
|
86,517
|
|
|
(83,085
|
)
|
||||
Net realized gains (losses) on investments and net OTTI losses recognized in operations
|
(3,599
|
)
|
|
198
|
|
|
(12,583
|
)
|
|
1,103
|
|
||||
Amortization of deferred policy acquisition costs after gross profit adjustments
|
$
|
81,053
|
|
|
$
|
23,023
|
|
|
$
|
336,741
|
|
|
$
|
162,248
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
|
|
|
|
(Dollars in thousands)
|
||||||||||
Salary and benefits
|
$
|
18,291
|
|
|
$
|
15,693
|
|
|
$
|
52,225
|
|
|
$
|
42,752
|
|
Risk charges
|
7,828
|
|
|
7,391
|
|
|
23,364
|
|
|
21,590
|
|
||||
Other
|
5,805
|
|
|
5,698
|
|
|
20,115
|
|
|
17,983
|
|
||||
Total other operating costs and expenses
|
$
|
31,924
|
|
|
$
|
28,782
|
|
|
$
|
95,704
|
|
|
$
|
82,325
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
|
Carrying
Amount
|
|
Percent
|
|
Carrying
Amount
|
|
Percent
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||
United States Government full faith and credit
|
$
|
10,962
|
|
|
—
|
%
|
|
$
|
11,876
|
|
|
—
|
%
|
United States Government sponsored agencies
|
1,224,587
|
|
|
2.4
|
%
|
|
1,305,017
|
|
|
2.6
|
%
|
||
United States municipalities, states and territories
|
4,142,257
|
|
|
8.2
|
%
|
|
4,166,812
|
|
|
8.3
|
%
|
||
Foreign government obligations
|
226,500
|
|
|
0.5
|
%
|
|
239,360
|
|
|
0.5
|
%
|
||
Corporate securities
|
28,556,816
|
|
|
56.4
|
%
|
|
29,956,012
|
|
|
59.6
|
%
|
||
Residential mortgage backed securities
|
1,181,682
|
|
|
2.3
|
%
|
|
1,105,567
|
|
|
2.2
|
%
|
||
Commercial mortgage backed securities
|
5,337,368
|
|
|
10.5
|
%
|
|
5,544,850
|
|
|
11.0
|
%
|
||
Other asset backed securities
|
5,219,058
|
|
|
10.3
|
%
|
|
3,120,536
|
|
|
6.2
|
%
|
||
Total fixed maturity securities
|
45,899,230
|
|
|
90.6
|
%
|
|
45,450,030
|
|
|
90.4
|
%
|
||
Mortgage loans on real estate
|
2,892,155
|
|
|
5.7
|
%
|
|
2,665,531
|
|
|
5.3
|
%
|
||
Derivative instruments
|
1,290,387
|
|
|
2.6
|
%
|
|
1,568,380
|
|
|
3.1
|
%
|
||
Other investments
|
536,594
|
|
|
1.1
|
%
|
|
616,764
|
|
|
1.2
|
%
|
||
|
$
|
50,618,366
|
|
|
100.0
|
%
|
|
$
|
50,300,705
|
|
|
100.0
|
%
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
Rating Agency Rating
|
|
Carrying
Amount
|
|
Percent of
Fixed Maturity
Securities
|
|
Carrying
Amount
|
|
Percent of
Fixed Maturity
Securities
|
||||||
|
|
(Dollars in thousands)
|
||||||||||||
Aaa/Aa/A
|
|
$
|
27,405,387
|
|
|
59.7
|
%
|
|
$
|
27,909,879
|
|
|
61.4
|
%
|
Baa
|
|
16,773,927
|
|
|
36.6
|
%
|
|
16,048,610
|
|
|
35.3
|
%
|
||
Total investment grade
|
|
44,179,314
|
|
|
96.3
|
%
|
|
43,958,489
|
|
|
96.7
|
%
|
||
Ba
|
|
1,293,678
|
|
|
2.8
|
%
|
|
1,035,676
|
|
|
2.3
|
%
|
||
B
|
|
152,999
|
|
|
0.3
|
%
|
|
130,857
|
|
|
0.3
|
%
|
||
Caa
|
|
148,582
|
|
|
0.3
|
%
|
|
134,586
|
|
|
0.3
|
%
|
||
Ca and lower
|
|
124,657
|
|
|
0.3
|
%
|
|
190,422
|
|
|
0.4
|
%
|
||
Total below investment grade
|
|
1,719,916
|
|
|
3.7
|
%
|
|
1,491,541
|
|
|
3.3
|
%
|
||
|
|
$
|
45,899,230
|
|
|
100.0
|
%
|
|
$
|
45,450,030
|
|
|
100.0
|
%
|
NAIC Designation
|
|
NRSRO Equivalent Rating
|
1
|
|
Aaa/Aa/A
|
2
|
|
Baa
|
3
|
|
Ba
|
4
|
|
B
|
5
|
|
Caa
|
6
|
|
Ca and lower
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||
NAIC Designation
|
|
Amortized
Cost
|
|
Fair Value
|
|
Carrying
Amount
|
|
Percent
of Total
Carrying
Amount
|
|
Amortized
Cost
|
|
Fair Value
|
|
Carrying
Amount
|
|
Percent
of Total
Carrying
Amount
|
||||||||||||||
|
|
(Dollars in thousands)
|
|
|
|
(Dollars in thousands)
|
|
|
||||||||||||||||||||||
1
|
|
$
|
27,186,979
|
|
|
$
|
27,478,961
|
|
|
$
|
27,478,961
|
|
|
59.9
|
%
|
|
$
|
26,669,427
|
|
|
$
|
28,274,379
|
|
|
$
|
28,274,379
|
|
|
62.2
|
%
|
2
|
|
16,972,448
|
|
|
16,868,800
|
|
|
16,868,800
|
|
|
36.8
|
%
|
|
15,198,551
|
|
|
15,869,219
|
|
|
15,869,219
|
|
|
34.9
|
%
|
||||||
3
|
|
1,406,867
|
|
|
1,365,147
|
|
|
1,371,247
|
|
|
3.0
|
%
|
|
1,161,737
|
|
|
1,157,420
|
|
|
1,158,001
|
|
|
2.5
|
%
|
||||||
4
|
|
180,233
|
|
|
156,449
|
|
|
156,449
|
|
|
0.3
|
%
|
|
134,838
|
|
|
117,542
|
|
|
117,542
|
|
|
0.3
|
%
|
||||||
5
|
|
11,200
|
|
|
16,898
|
|
|
16,898
|
|
|
—
|
%
|
|
17,015
|
|
|
20,927
|
|
|
20,927
|
|
|
0.1
|
%
|
||||||
6
|
|
7,828
|
|
|
6,875
|
|
|
6,875
|
|
|
—
|
%
|
|
12,232
|
|
|
9,962
|
|
|
9,962
|
|
|
—
|
%
|
||||||
|
|
$
|
45,765,555
|
|
|
$
|
45,893,130
|
|
|
$
|
45,899,230
|
|
|
100.0
|
%
|
|
$
|
43,193,800
|
|
|
$
|
45,449,449
|
|
|
$
|
45,450,030
|
|
|
100.0
|
%
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Unrealized
Losses
|
|
Fair Value
|
|||||||
|
|
|
(Dollars in thousands)
|
|||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
United States Government full faith and credit
|
5
|
|
|
$
|
9,812
|
|
|
$
|
(645
|
)
|
|
$
|
9,167
|
|
United States Government sponsored agencies
|
23
|
|
|
1,066,583
|
|
|
(95,595
|
)
|
|
970,988
|
|
|||
United States municipalities, states and territories
|
233
|
|
|
839,946
|
|
|
(31,622
|
)
|
|
808,324
|
|
|||
Foreign government obligations
|
9
|
|
|
174,595
|
|
|
(7,671
|
)
|
|
166,924
|
|
|||
Corporate securities:
|
|
|
|
|
|
|
|
|
||||||
Finance, insurance and real estate
|
301
|
|
|
3,768,844
|
|
|
(159,319
|
)
|
|
3,609,525
|
|
|||
Manufacturing, construction and mining
|
230
|
|
|
2,536,501
|
|
|
(96,204
|
)
|
|
2,440,297
|
|
|||
Utilities and related sectors
|
273
|
|
|
3,075,048
|
|
|
(121,971
|
)
|
|
2,953,077
|
|
|||
Wholesale/retail trade
|
97
|
|
|
1,224,810
|
|
|
(54,788
|
)
|
|
1,170,022
|
|
|||
Services, media and other
|
495
|
|
|
5,663,249
|
|
|
(241,210
|
)
|
|
5,422,039
|
|
|||
Residential mortgage backed securities
|
51
|
|
|
449,533
|
|
|
(11,677
|
)
|
|
437,856
|
|
|||
Commercial mortgage backed securities
|
469
|
|
|
4,153,469
|
|
|
(119,360
|
)
|
|
4,034,109
|
|
|||
Other asset backed securities
|
443
|
|
|
3,297,304
|
|
|
(39,325
|
)
|
|
3,257,979
|
|
|||
|
2,629
|
|
|
$
|
26,259,694
|
|
|
$
|
(979,387
|
)
|
|
$
|
25,280,307
|
|
Fixed maturity securities, held for investment:
|
|
|
|
|
|
|
|
|||||||
Corporate security:
|
|
|
|
|
|
|
|
|||||||
Insurance
|
1
|
|
|
$
|
77,213
|
|
|
$
|
(6,100
|
)
|
|
$
|
71,113
|
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2017
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
United States Government full faith and credit
|
4
|
|
|
$
|
8,443
|
|
|
$
|
(147
|
)
|
|
$
|
8,296
|
|
United States Government sponsored agencies
|
18
|
|
|
1,035,489
|
|
|
(31,730
|
)
|
|
1,003,759
|
|
|||
United States municipalities, states and territories
|
48
|
|
|
176,831
|
|
|
(3,596
|
)
|
|
173,235
|
|
|||
Foreign government obligations
|
2
|
|
|
64,313
|
|
|
(2,025
|
)
|
|
62,288
|
|
|||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Finance, insurance and real estate
|
92
|
|
|
1,090,077
|
|
|
(33,178
|
)
|
|
1,056,899
|
|
|||
Manufacturing, construction and mining
|
55
|
|
|
468,505
|
|
|
(14,324
|
)
|
|
454,181
|
|
|||
Utilities and related sectors
|
63
|
|
|
657,599
|
|
|
(13,000
|
)
|
|
644,599
|
|
|||
Wholesale/retail trade
|
31
|
|
|
344,196
|
|
|
(12,620
|
)
|
|
331,576
|
|
|||
Services, media and other
|
165
|
|
|
1,693,343
|
|
|
(72,565
|
)
|
|
1,620,778
|
|
|||
Residential mortgage backed securities
|
20
|
|
|
75,159
|
|
|
(2,471
|
)
|
|
72,688
|
|
|||
Commercial mortgage backed securities
|
310
|
|
|
2,473,034
|
|
|
(69,840
|
)
|
|
2,403,194
|
|
|||
Other asset backed securities
|
146
|
|
|
996,531
|
|
|
(13,405
|
)
|
|
983,126
|
|
|||
|
954
|
|
|
$
|
9,083,520
|
|
|
$
|
(268,901
|
)
|
|
$
|
8,814,619
|
|
Fixed maturity securities, held for investment:
|
|
|
|
|
|
|
|
|||||||
Corporate security:
|
|
|
|
|
|
|
|
|||||||
Insurance
|
1
|
|
|
$
|
77,041
|
|
|
$
|
(581
|
)
|
|
$
|
76,460
|
|
NAIC Designation
|
|
Carrying Value of
Securities with
Gross Unrealized
Losses
|
|
Percent of
Total
|
|
Gross
Unrealized Losses |
|
Percent of
Total
|
||||||
|
|
(Dollars in thousands)
|
||||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
|
||||||
1
|
|
$
|
13,978,334
|
|
|
55.1
|
%
|
|
$
|
(551,221
|
)
|
|
55.9
|
%
|
2
|
|
10,247,031
|
|
|
40.4
|
%
|
|
(361,458
|
)
|
|
36.7
|
%
|
||
3
|
|
988,662
|
|
|
3.9
|
%
|
|
(46,439
|
)
|
|
4.7
|
%
|
||
4
|
|
135,165
|
|
|
0.6
|
%
|
|
(24,105
|
)
|
|
2.4
|
%
|
||
5
|
|
6,273
|
|
|
—
|
%
|
|
(481
|
)
|
|
0.1
|
%
|
||
6
|
|
2,055
|
|
|
—
|
%
|
|
(1,783
|
)
|
|
0.2
|
%
|
||
|
|
$
|
25,357,520
|
|
|
100.0
|
%
|
|
$
|
(985,487
|
)
|
|
100.0
|
%
|
December 31, 2017
|
|
|
|
|
|
|
|
|
||||||
1
|
|
$
|
5,433,608
|
|
|
61.1
|
%
|
|
$
|
(158,991
|
)
|
|
59.0
|
%
|
2
|
|
2,809,981
|
|
|
31.6
|
%
|
|
(64,369
|
)
|
|
23.9
|
%
|
||
3
|
|
540,320
|
|
|
6.1
|
%
|
|
(23,166
|
)
|
|
8.6
|
%
|
||
4
|
|
94,004
|
|
|
1.1
|
%
|
|
(17,972
|
)
|
|
6.7
|
%
|
||
5
|
|
11,130
|
|
|
0.1
|
%
|
|
(1,460
|
)
|
|
0.5
|
%
|
||
6
|
|
2,617
|
|
|
—
|
%
|
|
(3,524
|
)
|
|
1.3
|
%
|
||
|
|
$
|
8,891,660
|
|
|
100.0
|
%
|
|
$
|
(269,482
|
)
|
|
100.0
|
%
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|||||||
|
|
|
(Dollars in thousands)
|
|||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
1,122
|
|
|
$
|
10,650,726
|
|
|
$
|
10,493,038
|
|
|
$
|
(157,688
|
)
|
Six months or more and less than twelve months
|
890
|
|
|
9,022,469
|
|
|
8,672,449
|
|
|
(350,020
|
)
|
|||
Twelve months or greater
|
491
|
|
|
5,505,067
|
|
|
5,099,782
|
|
|
(405,285
|
)
|
|||
Total investment grade
|
2,503
|
|
|
25,178,262
|
|
|
24,265,269
|
|
|
(912,993
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
54
|
|
|
373,092
|
|
|
368,001
|
|
|
(5,091
|
)
|
|||
Six months or more and less than twelve months
|
21
|
|
|
236,104
|
|
|
229,056
|
|
|
(7,048
|
)
|
|||
Twelve months or greater
|
52
|
|
|
549,449
|
|
|
489,094
|
|
|
(60,355
|
)
|
|||
Total below investment grade
|
127
|
|
|
1,158,645
|
|
|
1,086,151
|
|
|
(72,494
|
)
|
|||
|
2,630
|
|
|
$
|
26,336,907
|
|
|
$
|
25,351,420
|
|
|
$
|
(985,487
|
)
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2017
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
409
|
|
|
$
|
3,550,774
|
|
|
$
|
3,520,164
|
|
|
$
|
(30,610
|
)
|
Six months or more and less than twelve months
|
27
|
|
|
257,924
|
|
|
249,690
|
|
|
(8,234
|
)
|
|||
Twelve months or greater
|
430
|
|
|
4,668,838
|
|
|
4,486,239
|
|
|
(182,599
|
)
|
|||
Total investment grade
|
866
|
|
|
8,477,536
|
|
|
8,256,093
|
|
|
(221,443
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
32
|
|
|
201,885
|
|
|
194,821
|
|
|
(7,064
|
)
|
|||
Six months or more and less than twelve months
|
12
|
|
|
36,595
|
|
|
34,619
|
|
|
(1,976
|
)
|
|||
Twelve months or greater
|
45
|
|
|
444,545
|
|
|
405,546
|
|
|
(38,999
|
)
|
|||
Total below investment grade
|
89
|
|
|
683,025
|
|
|
634,986
|
|
|
(48,039
|
)
|
|||
|
955
|
|
|
$
|
9,160,561
|
|
|
$
|
8,891,079
|
|
|
$
|
(269,482
|
)
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|||||||
|
|
|
(Dollars in thousands)
|
|||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
3
|
|
|
$
|
104,959
|
|
|
$
|
84,047
|
|
|
$
|
(20,912
|
)
|
Six months or more and less than twelve months
|
1
|
|
|
20,193
|
|
|
15,336
|
|
|
(4,857
|
)
|
|||
Twelve months or greater
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total investment grade
|
4
|
|
|
125,152
|
|
|
99,383
|
|
|
(25,769
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
1
|
|
|
14,281
|
|
|
11,656
|
|
|
(2,625
|
)
|
|||
Six months or more and less than twelve months
|
1
|
|
|
11,003
|
|
|
8,075
|
|
|
(2,928
|
)
|
|||
Twelve months or greater
|
3
|
|
|
38,127
|
|
|
27,217
|
|
|
(10,910
|
)
|
|||
Total below investment grade
|
5
|
|
|
63,411
|
|
|
46,948
|
|
|
(16,463
|
)
|
|||
|
9
|
|
|
$
|
188,563
|
|
|
$
|
146,331
|
|
|
$
|
(42,232
|
)
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2017
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
3
|
|
|
$
|
8,597
|
|
|
$
|
6,931
|
|
|
$
|
(1,666
|
)
|
Six months or more and less than twelve months
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total investment grade
|
3
|
|
|
8,597
|
|
|
6,931
|
|
|
(1,666
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
1
|
|
|
11,021
|
|
|
8,275
|
|
|
(2,746
|
)
|
|||
Six months or more and less than twelve months
|
1
|
|
|
3,523
|
|
|
2,674
|
|
|
(849
|
)
|
|||
Twelve months or greater
|
4
|
|
|
55,647
|
|
|
37,591
|
|
|
(18,056
|
)
|
|||
Total below investment grade
|
6
|
|
|
70,191
|
|
|
48,540
|
|
|
(21,651
|
)
|
|||
|
9
|
|
|
$
|
78,788
|
|
|
$
|
55,471
|
|
|
$
|
(23,317
|
)
|
|
Available for sale
|
|
Held for investment
|
||||||||||||
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
September 30, 2018
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
$
|
20,624
|
|
|
$
|
20,063
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
|
2,735,681
|
|
|
2,684,707
|
|
|
—
|
|
|
—
|
|
||||
Due after five years through ten years
|
7,122,188
|
|
|
6,863,274
|
|
|
—
|
|
|
—
|
|
||||
Due after ten years through twenty years
|
3,442,315
|
|
|
3,251,850
|
|
|
—
|
|
|
—
|
|
||||
Due after twenty years
|
5,038,580
|
|
|
4,730,469
|
|
|
77,213
|
|
|
71,113
|
|
||||
|
18,359,388
|
|
|
17,550,363
|
|
|
77,213
|
|
|
71,113
|
|
||||
Residential mortgage backed securities
|
449,533
|
|
|
437,856
|
|
|
—
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
4,153,469
|
|
|
4,034,109
|
|
|
—
|
|
|
—
|
|
||||
Other asset backed securities
|
3,297,304
|
|
|
3,257,979
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
26,259,694
|
|
|
$
|
25,280,307
|
|
|
$
|
77,213
|
|
|
$
|
71,113
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
|
463,667
|
|
|
454,062
|
|
|
—
|
|
|
—
|
|
||||
Due after five years through ten years
|
1,996,166
|
|
|
1,945,474
|
|
|
—
|
|
|
—
|
|
||||
Due after ten years through twenty years
|
1,937,009
|
|
|
1,881,162
|
|
|
—
|
|
|
—
|
|
||||
Due after twenty years
|
1,141,954
|
|
|
1,074,913
|
|
|
77,041
|
|
|
76,460
|
|
||||
|
5,538,796
|
|
|
5,355,611
|
|
|
77,041
|
|
|
76,460
|
|
||||
Residential mortgage backed securities
|
75,159
|
|
|
72,688
|
|
|
—
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
2,473,034
|
|
|
2,403,194
|
|
|
—
|
|
|
—
|
|
||||
Other asset backed securities
|
996,531
|
|
|
983,126
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
9,083,520
|
|
|
$
|
8,814,619
|
|
|
$
|
77,041
|
|
|
$
|
76,460
|
|
|
September 30, 2018
|
|||||||||
|
Amortized
Cost
|
|
Carrying Amount/
Fair Value
|
|
Percent
of Total
Carrying
Amount
|
|||||
|
(Dollars in thousands)
|
|
|
|||||||
GIIPS (1)
|
$
|
264,725
|
|
|
$
|
270,511
|
|
|
0.6
|
%
|
Asia/Pacific
|
431,680
|
|
|
430,193
|
|
|
0.9
|
%
|
||
Non-GIIPS Europe
|
2,976,094
|
|
|
2,960,815
|
|
|
6.5
|
%
|
||
Latin America
|
289,246
|
|
|
290,999
|
|
|
0.6
|
%
|
||
Non-U.S. North America
|
1,345,961
|
|
|
1,355,910
|
|
|
3.0
|
%
|
||
Australia & New Zealand
|
858,986
|
|
|
833,722
|
|
|
1.8
|
%
|
||
Other
|
4,780,713
|
|
|
4,747,506
|
|
|
10.3
|
%
|
||
|
$
|
10,947,405
|
|
|
$
|
10,889,656
|
|
|
23.7
|
%
|
(1)
|
Greece, Ireland, Italy, Portugal and Spain ("GIIPS"). All of our exposure in GIIPS are corporate securities with issuers domiciled in these countries. None of our foreign government obligations were held in any of these countries.
|
|
September 30, 2018
|
||||||
|
Amortized Cost
|
|
Carrying Amount/
Fair Value
|
||||
|
(Dollars in thousands)
|
||||||
GIIPS
|
$
|
19,521
|
|
|
$
|
19,618
|
|
Asia/Pacific
|
11,000
|
|
|
9,479
|
|
||
Non-GIIPS Europe
|
163,072
|
|
|
157,101
|
|
||
Latin America
|
71,675
|
|
|
67,577
|
|
||
Non-U.S. North America
|
66,259
|
|
|
65,242
|
|
||
Other
|
385,849
|
|
|
378,304
|
|
||
|
$
|
717,376
|
|
|
$
|
697,321
|
|
General Description
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Unrealized
Gains (Losses)
|
|
Fair Value
|
|
Months in
Continuous
Unrealized
Loss Position
|
|
Months
Unrealized
Losses
Greater
Than 20%
|
||||||
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
||||||||||
Below investment grade
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Consumer discretionary
|
|
2
|
|
$
|
25,962
|
|
|
$
|
(5,287
|
)
|
|
$
|
20,675
|
|
|
10 - 44
|
|
0 - 7
|
Energy
|
|
4
|
|
29,051
|
|
|
(4,642
|
)
|
|
24,409
|
|
|
8 - 49
|
|
0 - 14
|
|||
Industrials
|
|
1
|
|
2,766
|
|
|
(479
|
)
|
|
2,287
|
|
|
47
|
|
—
|
|||
Materials
|
|
1
|
|
3,990
|
|
|
823
|
|
|
4,813
|
|
|
—
|
|
—
|
|||
Other asset backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Financials
|
|
2
|
|
3,838
|
|
|
(1,783
|
)
|
|
2,055
|
|
|
64 - 90
|
|
0 - 45
|
|||
|
|
10
|
|
$
|
65,607
|
|
|
$
|
(11,368
|
)
|
|
$
|
54,239
|
|
|
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
|
Principal Outstanding
|
|
Percent of Total Principal Outstanding
|
|
Principal Outstanding
|
|
Percent of Total Principal Outstanding
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Debt Service Coverage Ratio:
|
|
|
|
|
|
|
|
||||||
Greater than or equal to 1.5
|
$
|
2,075,642
|
|
|
71.6
|
%
|
|
$
|
1,826,596
|
|
|
68.3
|
%
|
Greater than or equal to 1.2 and less than 1.5
|
635,774
|
|
|
21.9
|
%
|
|
638,299
|
|
|
23.9
|
%
|
||
Greater than or equal to 1.0 and less than 1.2
|
129,954
|
|
|
4.5
|
%
|
|
148,881
|
|
|
5.6
|
%
|
||
Less than 1.0
|
59,088
|
|
|
2.0
|
%
|
|
60,539
|
|
|
2.2
|
%
|
||
|
$
|
2,900,458
|
|
|
100.0
|
%
|
|
$
|
2,674,315
|
|
|
100.0
|
%
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(Dollars in thousands)
|
||||||
Impaired mortgage loans with an allowance
|
$
|
3,179
|
|
|
$
|
5,445
|
|
Impaired mortgage loans with no related allowance
|
—
|
|
|
1,436
|
|
||
Allowance for probable loan losses
|
(1,484
|
)
|
|
(1,418
|
)
|
||
Net carrying value of impaired mortgage loans
|
$
|
1,695
|
|
|
$
|
5,463
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Annual index credits to policyholders on their anniversaries
|
$
|
369,011
|
|
|
$
|
375,019
|
|
|
$
|
1,127,556
|
|
|
$
|
1,068,522
|
|
Proceeds received at expiration of options related to such credits
|
378,149
|
|
|
382,949
|
|
|
1,145,322
|
|
|
1,088,018
|
|
Period
|
|
Total Number of
Shares Purchased (a)
|
|
Average Price
Paid Per Share
|
|||
January 1, 2018 - January 31, 2018
|
|
—
|
|
|
$
|
—
|
|
February 1, 2018 - February 28, 2018
|
|
913
|
|
|
$
|
31.92
|
|
March 1, 2018 - March 31, 2018
|
|
8,759
|
|
|
$
|
31.82
|
|
April 1, 2018 - April 30, 2018
|
|
—
|
|
|
$
|
—
|
|
May 1, 2018 - May 31, 2018
|
|
—
|
|
|
$
|
—
|
|
June 1, 2018 - June 30, 2018
|
|
2,018
|
|
|
$
|
35.70
|
|
July 1, 2018 - July 31, 2018
|
|
—
|
|
|
$
|
—
|
|
August 1, 2018 - August 31, 2018
|
|
—
|
|
|
$
|
—
|
|
September 1, 2018 - September 30, 2018
|
|
—
|
|
|
$
|
—
|
|
Total
|
|
11,690
|
|
|
|
(a)
|
Includes the number of shares of common stock utilized to execute certain stock incentive awards.
|
Exhibit No.
|
|
Description
|
|
Method of Filing
|
31.1
|
|
|
Filed herewith
|
|
31.2
|
|
|
Filed herewith
|
|
32.1
|
|
|
Filed herewith
|
|
32.2
|
|
|
Filed herewith
|
|
101.INS
|
|
XBRL Instance Document
|
|
Filed herewith
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
Filed herewith
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
Filed herewith
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
Filed herewith
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
Filed herewith
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
Filed herewith
|
Date:
|
November 6, 2018
|
|
AMERICAN EQUITY INVESTMENT LIFE
|
|
|
|
|
|
HOLDING COMPANY
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ John M. Matovina
|
|
|
|
|
|
John M. Matovina, Chief Executive Officer and President
|
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Ted M. Johnson
|
|
|
|
|
|
Ted M. Johnson, Chief Financial Officer and Treasurer
|
|
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Scott A. Samuelson
|
|
|
|
|
|
Scott A. Samuelson, Vice President and Chief Accounting Officer
|
|
|
|
|
|
(Principal Accounting Officer)
|
|
1 Year American Equity Investme... Chart |
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