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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Horace Mann Educators Corporation | NYSE:HMN | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.64 | 1.88% | 34.74 | 34.935 | 34.13 | 34.24 | 30,643 | 15:24:53 |
Delaware
|
37-0911756
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(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer
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☑
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Accelerated filer
|
☐
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Non-accelerated filer
|
☐
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Smaller reporting company
|
☐
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|
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Emerging growth company
|
☐
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Securities registered pursuant to Section 12(b) of the Act:
|
||||
Title of each class
|
|
Trading Symbol
|
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Name of each exchange
on which registered
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Common Stock, $0.001 par value
|
|
HMN
|
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New York Stock Exchange
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1A.
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Item 2.
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Item 5.
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Item 6.
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|
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/s/ KPMG LLP
|
|
KPMG LLP
|
|
|
|
Chicago, Illinois
|
|
August 8, 2019
|
|
|
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June 30, 2019
|
|
December 31, 2018
|
||||
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|
(Unaudited)
|
|
|
||||
ASSETS
|
||||||||
Investments
|
|
|
|
|
||||
Fixed maturity securities, available for sale, at fair value
(amortized cost 2019, $5,241,755; 2018, $7,373,911)
|
|
$
|
5,534,270
|
|
|
$
|
7,515,318
|
|
Equity securities, at fair value
|
|
100,143
|
|
|
111,750
|
|
||
Limited partnership interests
|
|
351,515
|
|
|
328,516
|
|
||
Short-term and other investments
|
|
433,688
|
|
|
295,093
|
|
||
Total investments
|
|
6,419,616
|
|
|
8,250,677
|
|
||
Cash
|
|
7,616
|
|
|
11,906
|
|
||
Deferred policy acquisition costs
|
|
279,041
|
|
|
298,742
|
|
||
Deposit asset on reinsurance
|
|
2,315,330
|
|
|
—
|
|
||
Goodwill
|
|
29,458
|
|
|
47,396
|
|
||
Other assets
|
|
417,460
|
|
|
422,047
|
|
||
Separate Account (variable annuity) assets
|
|
2,310,886
|
|
|
2,001,128
|
|
||
Total assets
|
|
$
|
11,779,407
|
|
|
$
|
11,031,896
|
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Policy liabilities
|
|
|
|
|
||||
Investment contract and life policy reserves
|
|
$
|
5,776,769
|
|
|
$
|
5,711,193
|
|
Unpaid claims and claim expenses
|
|
398,339
|
|
|
396,714
|
|
||
Unearned premiums
|
|
270,163
|
|
|
276,225
|
|
||
Total policy liabilities
|
|
6,445,271
|
|
|
6,384,132
|
|
||
Other policyholder funds
|
|
821,880
|
|
|
767,988
|
|
||
Other liabilities
|
|
403,812
|
|
|
290,358
|
|
||
Long-term debt
|
|
297,881
|
|
|
297,740
|
|
||
Separate Account (variable annuity) liabilities
|
|
2,310,886
|
|
|
2,001,128
|
|
||
Total liabilities
|
|
10,279,730
|
|
|
9,741,346
|
|
||
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, 2019, 66,036,205; 2018, 65,820,369
|
|
66
|
|
|
66
|
|
||
Additional paid-in capital
|
|
476,353
|
|
|
475,109
|
|
||
Retained earnings
|
|
1,318,329
|
|
|
1,216,582
|
|
||
Accumulated other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|||
Net unrealized investment gains on fixed maturity securities
|
|
203,077
|
|
|
96,941
|
|
||
Net funded status of benefit plans
|
|
(12,185
|
)
|
|
(12,185
|
)
|
||
Treasury stock, at cost, 2019, 24,850,484 shares;
2018, 24,850,484 shares
|
|
(485,963
|
)
|
|
(485,963
|
)
|
||
Total shareholders’ equity
|
|
1,499,677
|
|
|
1,290,550
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
11,779,407
|
|
|
$
|
11,031,896
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
||||||
Insurance premiums and contract charges earned
|
|
$
|
208,096
|
|
|
$
|
205,610
|
|
|
$
|
417,881
|
|
|
$
|
408,608
|
|
Net investment income
|
|
93,458
|
|
|
97,101
|
|
|
186,258
|
|
|
188,965
|
|
||||
Net investment gains (losses)
|
|
146,333
|
|
|
735
|
|
|
153,750
|
|
|
(919
|
)
|
||||
Other income
|
|
3,591
|
|
|
2,811
|
|
|
6,802
|
|
|
5,092
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total revenues
|
|
451,478
|
|
|
306,257
|
|
|
764,691
|
|
|
601,746
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Benefits, losses and expenses
|
|
|
|
|
|
|
|
|
||||||||
Benefits, claims and settlement expenses
|
|
152,692
|
|
|
168,278
|
|
|
292,076
|
|
|
311,840
|
|
||||
Interest credited
|
|
53,594
|
|
|
51,071
|
|
|
106,516
|
|
|
101,105
|
|
||||
DAC amortization expense
|
|
31,648
|
|
|
26,586
|
|
|
56,621
|
|
|
53,291
|
|
||||
Operating expenses
|
|
55,252
|
|
|
50,218
|
|
|
109,305
|
|
|
98,387
|
|
||||
Interest expense
|
|
3,312
|
|
|
3,291
|
|
|
6,615
|
|
|
6,464
|
|
||||
Other expense
|
|
28,025
|
|
|
—
|
|
|
28,025
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total benefits, losses and expenses
|
|
324,523
|
|
|
299,444
|
|
|
599,158
|
|
|
571,087
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income before income taxes
|
|
126,955
|
|
|
6,813
|
|
|
165,533
|
|
|
30,659
|
|
||||
Income tax expense
|
|
33,133
|
|
|
896
|
|
|
39,545
|
|
|
4,587
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
93,822
|
|
|
$
|
5,917
|
|
|
$
|
125,988
|
|
|
$
|
26,072
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
2.25
|
|
|
$
|
0.14
|
|
|
$
|
3.02
|
|
|
$
|
0.63
|
|
Diluted
|
|
$
|
2.24
|
|
|
$
|
0.14
|
|
|
$
|
3.01
|
|
|
$
|
0.63
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares
and equivalent shares
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
41,762
|
|
|
41,600
|
|
|
41,685
|
|
|
41,531
|
|
||||
Diluted
|
|
41,921
|
|
|
41,735
|
|
|
41,851
|
|
|
41,659
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net investment gains (losses)
|
|
|
|
|
|
|
|
|
||||||||
Total other-than-temporary impairment losses
on securities
|
|
$
|
(34
|
)
|
|
$
|
(1,177
|
)
|
|
$
|
(271
|
)
|
|
$
|
(1,287
|
)
|
Portion of losses recognized in other
comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Net other-than-temporary impairment losses
on securities recognized in earnings
|
|
(34
|
)
|
|
(1,177
|
)
|
|
(271
|
)
|
|
(1,287
|
)
|
||||
Sales and other, net
|
|
142,067
|
|
|
1,789
|
|
|
146,905
|
|
|
3,992
|
|
||||
Change in fair value - equity securities
|
|
3,441
|
|
|
(1,156
|
)
|
|
6,948
|
|
|
(6,342
|
)
|
||||
Change in fair value and gains realized
on settlements - derivative instruments
|
|
859
|
|
|
1,279
|
|
|
168
|
|
|
2,718
|
|
||||
Total
|
|
$
|
146,333
|
|
|
$
|
735
|
|
|
$
|
153,750
|
|
|
$
|
(919
|
)
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
93,822
|
|
|
$
|
5,917
|
|
|
$
|
125,988
|
|
|
$
|
26,072
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
||||||
Change in net unrealized investment gains
(losses) on fixed maturity securities
|
|
(7,762
|
)
|
|
(52,444
|
)
|
|
106,136
|
|
|
(159,540
|
)
|
||||
Change in net funded status of benefit plans
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Cumulative effect of change in accounting principle
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,041
|
)
|
||||
Other comprehensive income (loss)
|
|
(7,762
|
)
|
|
(52,444
|
)
|
|
106,136
|
|
|
(174,581
|
)
|
||||
Total
|
|
$
|
86,060
|
|
|
$
|
(46,527
|
)
|
|
$
|
232,124
|
|
|
$
|
(148,509
|
)
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Common stock, $0.001 par value
|
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
|
$
|
66
|
|
|
$
|
66
|
|
|
$
|
66
|
|
|
$
|
65
|
|
Options exercised
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Conversion of common stock units
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Conversion of restricted stock units
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Ending balance
|
|
66
|
|
|
66
|
|
|
66
|
|
|
66
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Additional paid-in capital
|
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
|
474,336
|
|
|
466,277
|
|
|
475,109
|
|
|
464,246
|
|
||||
Options exercised and conversion of common stock
units and restricted stock units
|
|
344
|
|
|
2,384
|
|
|
(1,761
|
)
|
|
2,259
|
|
||||
Share-based compensation expense
|
|
1,673
|
|
|
1,991
|
|
|
3,005
|
|
|
4,147
|
|
||||
Ending balance
|
|
476,353
|
|
|
470,652
|
|
|
476,353
|
|
|
470,652
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Retained earnings
|
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
|
1,236,621
|
|
|
1,254,394
|
|
|
1,216,582
|
|
|
1,231,177
|
|
||||
Net income
|
|
93,822
|
|
|
5,917
|
|
|
125,988
|
|
|
26,072
|
|
||||
Dividends, 2019, $0.2875, $0.5750 per share;
2018, $0.2850, $0.5700 per share
|
|
(12,114
|
)
|
|
(12,006
|
)
|
|
(24,241
|
)
|
|
(23,985
|
)
|
||||
Cumulative effect of change in accounting principle
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,041
|
|
||||
Ending balance
|
|
1,318,329
|
|
|
1,248,305
|
|
|
1,318,329
|
|
|
1,248,305
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Accumulated other comprehensive income (loss),
net of tax:
|
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
|
198,654
|
|
|
164,823
|
|
|
84,756
|
|
|
286,960
|
|
||||
Change in net unrealized investment gains
on fixed maturity securities
|
|
(7,762
|
)
|
|
(52,444
|
)
|
|
106,136
|
|
|
(159,540
|
)
|
||||
Change in net funded status of benefit plans
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Cumulative effect of change in accounting principle
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,041
|
)
|
||||
Ending balance
|
|
190,892
|
|
|
112,379
|
|
|
190,892
|
|
|
112,379
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Treasury stock, at cost
|
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
|
(485,963
|
)
|
|
(480,881
|
)
|
|
(485,963
|
)
|
|
(480,875
|
)
|
||||
Acquisition of shares
|
|
—
|
|
|
(80
|
)
|
|
—
|
|
|
(86
|
)
|
||||
Ending balance
|
|
(485,963
|
)
|
|
(480,961
|
)
|
|
(485,963
|
)
|
|
(480,961
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Shareholders’ equity at end of period
|
|
$
|
1,499,677
|
|
|
$
|
1,350,441
|
|
|
$
|
1,499,677
|
|
|
$
|
1,350,441
|
|
|
|
Six Months Ended
June 30, |
||||||
|
|
2019
|
|
2018
|
||||
Cash flows - operating activities
|
|
|
|
|
||||
Premiums collected
|
|
$
|
396,887
|
|
|
$
|
392,103
|
|
Policyholder benefits paid
|
|
(275,437
|
)
|
|
(272,769
|
)
|
||
Policy acquisition and other operating expenses paid
|
|
(161,863
|
)
|
|
(141,620
|
)
|
||
Income taxes paid
|
|
(78
|
)
|
|
(7,393
|
)
|
||
Investment income collected
|
|
139,210
|
|
|
184,749
|
|
||
Interest expense paid
|
|
(6,440
|
)
|
|
(6,190
|
)
|
||
Other
|
|
5,557
|
|
|
2,429
|
|
||
Net cash provided by operating activities
|
|
97,836
|
|
|
151,309
|
|
||
|
|
|
|
|
||||
Cash flows - investing activities
|
|
|
|
|
|
|
||
Fixed maturity securities
|
|
|
|
|
|
|
||
Purchases
|
|
(644,104
|
)
|
|
(551,984
|
)
|
||
Sales
|
|
501,739
|
|
|
190,023
|
|
||
Maturities, paydowns, calls and redemptions
|
|
342,998
|
|
|
383,090
|
|
||
Equity securities
|
|
|
|
|
||||
Purchases
|
|
(5,282
|
)
|
|
(6,028
|
)
|
||
Sales and repayments
|
|
17,122
|
|
|
5,783
|
|
||
Limited partnership interests
|
|
|
|
|
||||
Purchases
|
|
(29,357
|
)
|
|
(33,031
|
)
|
||
Sales
|
|
15,029
|
|
|
9,457
|
|
||
Change in short-term and other investments, net
|
|
(156,748
|
)
|
|
(109,711
|
)
|
||
Acquisition of business, net of cash acquired
|
|
(18,198
|
)
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
|
23,199
|
|
|
(112,401
|
)
|
||
|
|
|
|
|
||||
Cash flows - financing activities
|
|
|
|
|
|
|
||
Dividends paid to shareholders
|
|
(23,630
|
)
|
|
(23,320
|
)
|
||
Acquisition of treasury stock
|
|
—
|
|
|
(86
|
)
|
||
Proceeds from exercise of stock options
|
|
722
|
|
|
2,460
|
|
||
Withholding tax payments on RSUs tendered
|
|
(3,366
|
)
|
|
(2,155
|
)
|
||
Annuity contracts: variable, fixed and FHLB funding agreements
|
|
|
|
|
|
|
||
Deposits
|
|
266,310
|
|
|
199,074
|
|
||
Benefits, withdrawals and net transfers to
Separate Account (variable annuity) assets
|
|
(214,243
|
)
|
|
(218,694
|
)
|
||
Life policy accounts
|
|
|
|
|
|
|||
Deposits
|
|
4,638
|
|
|
3,163
|
|
||
Withdrawals and surrenders
|
|
(1,733
|
)
|
|
(2,525
|
)
|
||
Change in deposit asset on reinsurance, net
|
|
(134,682
|
)
|
|
—
|
|
||
Change in book overdrafts
|
|
(19,341
|
)
|
|
3,795
|
|
||
Net cash used in financing activities
|
|
(125,325
|
)
|
|
(38,288
|
)
|
||
|
|
|
|
|
||||
Net increase (decrease) in cash
|
|
(4,290
|
)
|
|
620
|
|
||
|
|
|
|
|
||||
Cash at beginning of period
|
|
11,906
|
|
|
7,627
|
|
||
|
|
|
|
|
||||
Cash at end of period
|
|
$
|
7,616
|
|
|
$
|
8,247
|
|
($ in thousands)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Investment contract reserves
|
|
$
|
4,605,272
|
|
|
$
|
4,555,856
|
|
Life policy reserves
|
|
1,171,497
|
|
|
1,155,337
|
|
||
Total
|
|
$
|
5,776,769
|
|
|
$
|
5,711,193
|
|
($ in thousands)
|
|
Net Unrealized Investment Gains (Losses) on Fixed Maturity Securities
(1)(2)
|
|
Net Funded Status of
Benefit Plans
(1)
|
|
Total
(1)
|
||||||
Beginning balance, April 1, 2019
|
|
$
|
210,839
|
|
|
$
|
(12,185
|
)
|
|
$
|
198,654
|
|
Other comprehensive income (loss) before reclassifications
|
|
107,163
|
|
|
—
|
|
|
107,163
|
|
|||
Amounts reclassified from AOCI
|
|
(114,925
|
)
|
|
—
|
|
|
(114,925
|
)
|
|||
Net current period other comprehensive income (loss)
|
|
(7,762
|
)
|
|
—
|
|
|
(7,762
|
)
|
|||
Ending balance, June 30, 2019
|
|
$
|
203,077
|
|
|
$
|
(12,185
|
)
|
|
$
|
190,892
|
|
|
|
|
|
|
|
|
||||||
Beginning balance, January 1, 2019
|
|
$
|
96,941
|
|
|
$
|
(12,185
|
)
|
|
$
|
84,756
|
|
Other comprehensive income (loss) before reclassifications
|
|
227,466
|
|
|
—
|
|
|
227,466
|
|
|||
Amounts reclassified from AOCI
|
|
(121,330
|
)
|
|
—
|
|
|
(121,330
|
)
|
|||
Net current period other comprehensive income (loss)
|
|
106,136
|
|
|
—
|
|
|
106,136
|
|
|||
Ending balance, June 30, 2019
|
|
$
|
203,077
|
|
|
$
|
(12,185
|
)
|
|
$
|
190,892
|
|
(1)
|
All amounts are net of tax.
|
(2)
|
The pretax amounts reclassified from AOCI,
$145,474 thousand
and
$153,582 thousand
, are included in net investment gains (losses) and the related income tax expenses,
$30,549 thousand
and
$32,252 thousand
, are included in income tax expense in the Consolidated Statements of Operations for the
three and six
month periods ended
June 30, 2019
, respectively.
|
($ in thousands)
|
|
Net Unrealized Investment
Gains (Losses) on Fixed Maturity Securities (1)(2) |
|
Net Funded Status of
Benefit Plans (1) |
|
Total
(1)(3)
|
||||||
Beginning balance, April 1, 2018,
|
|
$
|
178,040
|
|
|
$
|
(13,217
|
)
|
|
$
|
164,823
|
|
Other comprehensive income (loss) before reclassifications
|
|
(52,873
|
)
|
|
—
|
|
|
(52,873
|
)
|
|||
Amounts reclassified from AOCI
|
|
429
|
|
|
—
|
|
|
429
|
|
|||
Net current period other comprehensive income (loss)
|
|
(52,444
|
)
|
|
—
|
|
|
(52,444
|
)
|
|||
Ending balance, June 30, 2018
|
|
$
|
125,596
|
|
|
$
|
(13,217
|
)
|
|
$
|
112,379
|
|
|
|
|
|
|
|
|
||||||
Beginning balance, January 1, 2018
|
|
$
|
300,177
|
|
|
$
|
(13,217
|
)
|
|
$
|
286,960
|
|
Other comprehensive income (loss) before reclassifications
|
|
(162,412
|
)
|
|
—
|
|
|
(162,412
|
)
|
|||
Amounts reclassified from AOCI
|
|
2,872
|
|
|
—
|
|
|
2,872
|
|
|||
Cumulative effect of change in accounting principle
(3)
|
|
(15,041
|
)
|
|
—
|
|
|
(15,041
|
)
|
|||
Net current period other comprehensive income (loss)
|
|
(174,581
|
)
|
|
—
|
|
|
(174,581
|
)
|
|||
Ending balance, June 30, 2018
|
|
$
|
125,596
|
|
|
$
|
(13,217
|
)
|
|
$
|
112,379
|
|
(1)
|
All amounts are net of tax.
|
(2)
|
The pretax amounts reclassified from AOCI,
$(544) thousand
and
$(3,636) thousand
, are included in Net investment gains (losses) and the related income tax expenses,
$(115) thousand
and
$(764) thousand
, are included in Income tax expense in the Consolidated Statements of Operations for the
three and six
month periods ended
June 30, 2018
, respectively.
|
(3)
|
The Company adopted guidance on January 1, 2018 that resulted in reclassifying
$15,041 thousand
of after tax net unrealized gains on equity securities from AOCI to Retained earnings.
|
($ in thousands)
|
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
||||||||
June 30, 2019
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Government and federally
sponsored agency obligations:
(1)
|
|
|
|
|
|
|
|
|
||||||||
Mortgage-backed securities
|
|
$
|
550,059
|
|
|
$
|
37,900
|
|
|
$
|
1,201
|
|
|
$
|
586,758
|
|
Other, including U.S. Treasury securities
|
|
546,396
|
|
|
20,574
|
|
|
533
|
|
|
566,437
|
|
||||
Municipal bonds
|
|
1,472,794
|
|
|
127,700
|
|
|
801
|
|
|
1,599,693
|
|
||||
Foreign government bonds
|
|
45,303
|
|
|
2,064
|
|
|
—
|
|
|
47,367
|
|
||||
Corporate bonds
|
|
1,226,962
|
|
|
96,535
|
|
|
2,211
|
|
|
1,321,286
|
|
||||
Other mortgage-backed securities
|
|
1,400,241
|
|
|
20,786
|
|
|
8,298
|
|
|
1,412,729
|
|
||||
Totals
|
|
$
|
5,241,755
|
|
|
$
|
305,559
|
|
|
$
|
13,044
|
|
|
$
|
5,534,270
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Government and federally
sponsored agency obligations:
(1)
|
|
|
|
|
|
|
|
|
||||||||
Mortgage-backed securities
|
|
$
|
778,038
|
|
|
$
|
22,724
|
|
|
$
|
13,321
|
|
|
$
|
787,441
|
|
Other, including U.S. Treasury securities
|
|
835,096
|
|
|
16,127
|
|
|
17,681
|
|
|
833,542
|
|
||||
Municipal bonds
|
|
1,884,313
|
|
|
133,150
|
|
|
13,494
|
|
|
2,003,969
|
|
||||
Foreign government bonds
|
|
83,343
|
|
|
2,321
|
|
|
760
|
|
|
84,904
|
|
||||
Corporate bonds
|
|
2,054,105
|
|
|
64,296
|
|
|
38,891
|
|
|
2,079,510
|
|
||||
Other mortgage-backed securities
|
|
1,739,016
|
|
|
10,467
|
|
|
23,531
|
|
|
1,725,952
|
|
||||
Totals
|
|
$
|
7,373,911
|
|
|
$
|
249,085
|
|
|
$
|
107,678
|
|
|
$
|
7,515,318
|
|
(1)
|
Fair value includes securities issued by Federal National Mortgage Association (FNMA) of
$370,182 thousand
and
$441,308 thousand
; Federal Home Loan Mortgage Corporation (FHLMC) of
$256,531 thousand
and
$417,308 thousand
; and Government National Mortgage Association (GNMA) of
$79,141 thousand
and
$96,466 thousand
as of
June 30, 2019
and
December 31, 2018
, respectively.
|
($ 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, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government and federally
sponsored agency obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
|
$
|
10,504
|
|
|
$
|
27
|
|
|
$
|
44,564
|
|
|
$
|
1,174
|
|
|
$
|
55,068
|
|
|
$
|
1,201
|
|
Other
|
|
11,463
|
|
|
32
|
|
|
37,575
|
|
|
501
|
|
|
49,038
|
|
|
533
|
|
||||||
Municipal bonds
|
|
16,900
|
|
|
93
|
|
|
34,031
|
|
|
708
|
|
|
50,931
|
|
|
801
|
|
||||||
Foreign government bonds
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Corporate bonds
|
|
27,858
|
|
|
518
|
|
|
32,997
|
|
|
1,693
|
|
|
60,855
|
|
|
2,211
|
|
||||||
Other mortgage-backed securities
|
|
391,170
|
|
|
3,895
|
|
|
277,694
|
|
|
4,403
|
|
|
668,864
|
|
|
8,298
|
|
||||||
Total
|
|
$
|
457,895
|
|
|
$
|
4,565
|
|
|
$
|
426,861
|
|
|
$
|
8,479
|
|
|
$
|
884,756
|
|
|
$
|
13,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Number of positions with a
gross unrealized loss
|
|
143
|
|
|
|
|
156
|
|
|
|
|
299
|
|
|
|
|||||||||
Fair value as a percentage of total fixed
maturity securities fair value
|
|
8.3
|
%
|
|
|
|
7.7
|
%
|
|
|
|
16.0
|
%
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government and federally
sponsored agency obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
|
$
|
193,447
|
|
|
$
|
5,026
|
|
|
$
|
157,295
|
|
|
$
|
8,295
|
|
|
$
|
350,742
|
|
|
$
|
13,321
|
|
Other
|
|
263,497
|
|
|
6,746
|
|
|
246,213
|
|
|
10,935
|
|
|
509,710
|
|
|
17,681
|
|
||||||
Municipal bonds
|
|
291,869
|
|
|
7,603
|
|
|
95,297
|
|
|
5,891
|
|
|
387,166
|
|
|
13,494
|
|
||||||
Foreign government bonds
|
|
16,250
|
|
|
760
|
|
|
—
|
|
|
—
|
|
|
16,250
|
|
|
760
|
|
||||||
Corporate bonds
|
|
818,519
|
|
|
27,429
|
|
|
99,171
|
|
|
11,462
|
|
|
917,690
|
|
|
38,891
|
|
||||||
Other mortgage-backed securities
|
|
913,858
|
|
|
16,076
|
|
|
291,442
|
|
|
7,455
|
|
|
1,205,300
|
|
|
23,531
|
|
||||||
Total
|
|
$
|
2,497,440
|
|
|
$
|
63,640
|
|
|
$
|
889,418
|
|
|
$
|
44,038
|
|
|
$
|
3,386,858
|
|
|
$
|
107,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Number of positions with a
gross unrealized loss
|
|
1,052
|
|
|
|
|
359
|
|
|
|
|
1,411
|
|
|
|
|||||||||
Fair value as a percentage of total fixed
maturity securities fair value
|
|
33.2
|
%
|
|
|
|
11.8
|
%
|
|
|
|
45.0
|
%
|
|
|
($ in thousands)
|
|
Six Months Ended
June 30, |
||||||
|
|
2019
|
|
2018
|
||||
Cumulative credit loss
(1)
|
|
|
|
|
||||
Beginning of period
|
|
$
|
1,529
|
|
|
$
|
3,825
|
|
New credit losses
|
|
—
|
|
|
—
|
|
||
Increases to previously recognized credit losses
|
|
—
|
|
|
246
|
|
||
Losses related to securities sold or paid down during the period
|
|
—
|
|
|
—
|
|
||
End of period
|
|
$
|
1,529
|
|
|
$
|
4,071
|
|
(1)
|
The cumulative credit loss amounts exclude OTTI losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis.
|
($ in thousands)
|
|
Percent of Total Fair Value
|
|
June 30, 2019
|
||||||||||
|
|
June 30, 2019
|
|
December 31, 2018
|
|
Fair
Value
|
|
Amortized
Cost
|
||||||
Estimated expected maturity:
|
|
|
|
|
|
|
|
|
||||||
Due in 1 year or less
|
|
4.7
|
%
|
|
4.8
|
%
|
|
$
|
258,331
|
|
|
$
|
252,586
|
|
Due after 1 year through 5 years
|
|
26.7
|
%
|
|
22.8
|
%
|
|
1,478,291
|
|
|
1,439,296
|
|
||
Due after 5 years through 10 years
|
|
29.6
|
%
|
|
32.8
|
%
|
|
1,638,887
|
|
|
1,555,825
|
|
||
Due after 10 years through 20 years
|
|
25.6
|
%
|
|
26.5
|
%
|
|
1,414,857
|
|
|
1,316,715
|
|
||
Due after 20 years
|
|
13.4
|
%
|
|
13.1
|
%
|
|
743,904
|
|
|
677,333
|
|
||
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
$
|
5,534,270
|
|
|
$
|
5,241,755
|
|
|
|
|
|
|
|
|
|
|
||||||
Average option-adjusted duration, in years
|
|
5.6
|
|
|
5.9
|
|
|
|
|
|
($ in thousands)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
(1)
|
|
2018
|
|
2019
(1)
|
|
2018
|
||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
||||||||
Proceeds received
|
|
$
|
442,015
|
|
|
$
|
100,129
|
|
|
$
|
501,739
|
|
|
$
|
190,023
|
|
Gross gains realized
|
|
147,774
|
|
|
2,352
|
|
|
148,316
|
|
|
4,022
|
|
||||
Gross losses realized
|
|
(5,976
|
)
|
|
(1,584
|
)
|
|
(6,081
|
)
|
|
(1,637
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Equity securities
|
|
|
|
|
|
|
|
|
||||||||
Proceeds received
|
|
$
|
1,633
|
|
|
$
|
3,735
|
|
|
$
|
17,122
|
|
|
$
|
5,783
|
|
Gross gains realized
|
|
389
|
|
|
977
|
|
|
5,134
|
|
|
1,593
|
|
||||
Gross losses realized
|
|
(166
|
)
|
|
(147
|
)
|
|
(510
|
)
|
|
(181
|
)
|
(1)
|
Gross gains realized presented above include a
$135.3 million
realized investment gain associated with a transfer of investments to a reinsurer as consideration paid during the second quarter of 2019 in connection with the reinsurance of a
$2.9 billion
block of in force fixed and variable annuity business. See Notes 6 and 13 for further information.
|
($ in thousands)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Impairment write-downs
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Change in intent write-downs
|
|
(34
|
)
|
|
(1,177
|
)
|
|
(271
|
)
|
|
(1,287
|
)
|
||||
Net OTTI losses recognized in earnings
|
|
(34
|
)
|
|
(1,177
|
)
|
|
(271
|
)
|
|
(1,287
|
)
|
||||
Sales and other, net
|
|
142,067
|
|
|
1,789
|
|
|
146,905
|
|
|
3,992
|
|
||||
Change in fair value - equity securities
|
|
3,441
|
|
|
(1,156
|
)
|
|
6,948
|
|
|
(6,342
|
)
|
||||
Change in fair value and gains (losses) realized
on settlements - derivative instruments
|
|
859
|
|
|
1,279
|
|
|
168
|
|
|
2,718
|
|
||||
Net investment gains (losses)
|
|
$
|
146,333
|
|
|
$
|
735
|
|
|
$
|
153,750
|
|
|
$
|
(919
|
)
|
($ in thousands)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net unrealized investment gains (losses)
on fixed maturity securities, net of tax
|
|
|
|
|
|
|
|
|
||||||||
Beginning of period
|
|
$
|
245,319
|
|
|
$
|
206,293
|
|
|
$
|
111,712
|
|
|
$
|
286,176
|
|
Change in net unrealized investment gains
(losses) on fixed maturity securities
|
|
100,693
|
|
|
(61,724
|
)
|
|
240,705
|
|
|
(129,009
|
)
|
||||
Reclassification of net investment (gains) losses
on securities to net income
|
|
(114,925
|
)
|
|
429
|
|
|
(121,330
|
)
|
|
2,872
|
|
||||
Cumulative effect of change in accounting principle
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,041
|
)
|
||||
End of period
|
|
$
|
231,087
|
|
|
$
|
144,998
|
|
|
$
|
231,087
|
|
|
$
|
144,998
|
|
(1)
|
Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, available for sale equity securities were reclassified to equity securities at fair value and the related net unrealized gains were reclassified from AOCI to Retained earnings.
|
($ in thousands)
|
|
|
|
Gross
Amounts
Offset in the
|
|
Net Amounts
of Assets/
Liabilities
Presented
in the
|
|
Gross Amounts Not Offset
in the Consolidated
Balance Sheets
|
|
|
||||||||||||||
|
|
Gross
Amounts
|
|
Consolidated
Balance
Sheets
|
|
Consolidated
Balance
Sheets
|
|
Financial
Instruments
|
|
Cash
Collateral
Received
|
|
Net
Amount
|
||||||||||||
June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Free-standing derivatives
|
|
$
|
8,753
|
|
|
$
|
—
|
|
|
$
|
8,753
|
|
|
$
|
—
|
|
|
$
|
8,663
|
|
|
$
|
90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Free-standing derivatives
|
|
$
|
2,647
|
|
|
$
|
—
|
|
|
$
|
2,647
|
|
|
$
|
—
|
|
|
$
|
1,868
|
|
|
$
|
779
|
|
($ in thousands)
|
|
|
|
Fair Value Measurements at
|
||||||||||||||||
|
|
Carrying
|
|
Fair
|
|
Reporting Date Using
|
||||||||||||||
|
|
Amount
|
|
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Government and federally
sponsored agency obligations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage-backed securities
|
|
$
|
586,758
|
|
|
$
|
586,758
|
|
|
$
|
—
|
|
|
$
|
584,070
|
|
|
$
|
2,688
|
|
Other, including U.S. Treasury securities
|
|
566,437
|
|
|
566,437
|
|
|
16,288
|
|
|
550,149
|
|
|
—
|
|
|||||
Municipal bonds
|
|
1,599,693
|
|
|
1,599,693
|
|
|
—
|
|
|
1,552,709
|
|
|
46,984
|
|
|||||
Foreign government bonds
|
|
47,367
|
|
|
47,367
|
|
|
—
|
|
|
47,367
|
|
|
—
|
|
|||||
Corporate bonds
|
|
1,321,286
|
|
|
1,321,286
|
|
|
13,997
|
|
|
1,228,067
|
|
|
79,222
|
|
|||||
Other mortgage-backed securities
|
|
1,412,729
|
|
|
1,412,729
|
|
|
—
|
|
|
1,286,979
|
|
|
125,750
|
|
|||||
Total fixed maturity securities
|
|
5,534,270
|
|
|
5,534,270
|
|
|
30,285
|
|
|
5,249,341
|
|
|
254,644
|
|
|||||
Equity securities
|
|
100,143
|
|
|
100,143
|
|
|
57,530
|
|
|
42,544
|
|
|
69
|
|
|||||
Short-term investments
|
|
247,872
|
|
|
247,872
|
|
|
246,872
|
|
|
1,000
|
|
|
—
|
|
|||||
Other investments
|
|
24,503
|
|
|
24,503
|
|
|
—
|
|
|
24,503
|
|
|
—
|
|
|||||
Totals
|
|
$
|
5,906,788
|
|
|
$
|
5,906,788
|
|
|
$
|
334,687
|
|
|
$
|
5,317,388
|
|
|
$
|
254,713
|
|
Separate Account (variable annuity) assets
(1)
|
|
$
|
2,310,886
|
|
|
$
|
2,310,886
|
|
|
$
|
2,310,886
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment contract and life policy
reserves, embedded derivatives
|
|
$
|
940
|
|
|
$
|
940
|
|
|
$
|
—
|
|
|
$
|
940
|
|
|
$
|
—
|
|
Other policyholder funds, embedded derivatives
|
|
$
|
85,961
|
|
|
$
|
85,961
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
85,961
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Government and federally
sponsored agency obligations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage-backed securities
|
|
$
|
787,441
|
|
|
$
|
787,441
|
|
|
$
|
—
|
|
|
$
|
784,224
|
|
|
$
|
3,217
|
|
Other, including U.S. Treasury securities
|
|
833,542
|
|
|
833,542
|
|
|
13,291
|
|
|
820,251
|
|
|
—
|
|
|||||
Municipal bonds
|
|
2,003,969
|
|
|
2,003,969
|
|
|
—
|
|
|
1,956,438
|
|
|
47,531
|
|
|||||
Foreign government bonds
|
|
84,904
|
|
|
84,904
|
|
|
—
|
|
|
84,904
|
|
|
—
|
|
|||||
Corporate bonds
|
|
2,079,510
|
|
|
2,079,510
|
|
|
12,281
|
|
|
1,986,487
|
|
|
80,742
|
|
|||||
Other mortgage-backed securities
|
|
1,725,952
|
|
|
1,725,952
|
|
|
—
|
|
|
1,608,958
|
|
|
116,994
|
|
|||||
Total fixed maturity securities
|
|
7,515,318
|
|
|
7,515,318
|
|
|
25,572
|
|
|
7,241,262
|
|
|
248,484
|
|
|||||
Equity securities
|
|
111,750
|
|
|
111,750
|
|
|
64,330
|
|
|
47,415
|
|
|
5
|
|
|||||
Short-term investments
|
|
122,222
|
|
|
122,222
|
|
|
117,296
|
|
|
4,926
|
|
|
—
|
|
|||||
Other investments
|
|
16,147
|
|
|
16,147
|
|
|
—
|
|
|
16,147
|
|
|
—
|
|
|||||
Totals
|
|
$
|
7,765,437
|
|
|
$
|
7,765,437
|
|
|
$
|
207,198
|
|
|
$
|
7,309,750
|
|
|
$
|
248,489
|
|
Separate Account (variable annuity) assets
(1)
|
|
$
|
2,001,128
|
|
|
$
|
2,001,128
|
|
|
$
|
2,001,128
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment contract and life policy
reserves, embedded derivatives
|
|
$
|
248
|
|
|
$
|
248
|
|
|
$
|
—
|
|
|
$
|
248
|
|
|
$
|
—
|
|
Other policyholder funds, embedded derivatives
|
|
$
|
78,700
|
|
|
$
|
78,700
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
78,700
|
|
($ 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
|
|
$
|
47,756
|
|
|
$
|
82,482
|
|
|
$
|
135,790
|
|
|
$
|
266,028
|
|
|
$
|
5
|
|
|
$
|
266,033
|
|
|
$
|
84,629
|
|
Transfers into Level 3
(3)
|
|
—
|
|
|
2,808
|
|
|
—
|
|
|
2,808
|
|
|
64
|
|
|
2,872
|
|
|
—
|
|
|||||||
Transfers out of Level 3
(3)
|
|
—
|
|
|
(4,876
|
)
|
|
—
|
|
|
(4,876
|
)
|
|
—
|
|
|
(4,876
|
)
|
|
—
|
|
|||||||
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
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
371
|
|
|||||||
Net unrealized investment gains
(losses) included in OCI
|
|
(537
|
)
|
|
1,961
|
|
|
2,807
|
|
|
4,231
|
|
|
—
|
|
|
4,231
|
|
|
—
|
|
|||||||
Purchases
|
|
—
|
|
|
1,566
|
|
|
—
|
|
|
1,566
|
|
|
—
|
|
|
1,566
|
|
|
—
|
|
|||||||
Issuances
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,431
|
|
|||||||
Sales
|
|
—
|
|
|
—
|
|
|
(607
|
)
|
|
(607
|
)
|
|
—
|
|
|
(607
|
)
|
|
—
|
|
|||||||
Settlements
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Paydowns, maturities and distributions
|
|
(235
|
)
|
|
(4,719
|
)
|
|
(9,552
|
)
|
|
(14,506
|
)
|
|
—
|
|
|
(14,506
|
)
|
|
(1,470
|
)
|
|||||||
Ending balance, June 30, 2019
|
|
$
|
46,984
|
|
|
$
|
79,222
|
|
|
$
|
128,438
|
|
|
$
|
254,644
|
|
|
$
|
69
|
|
|
$
|
254,713
|
|
|
$
|
85,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Beginning balance, January 1, 2019
|
|
$
|
47,531
|
|
|
$
|
80,742
|
|
|
$
|
120,211
|
|
|
$
|
248,484
|
|
|
$
|
5
|
|
|
$
|
248,489
|
|
|
$
|
78,700
|
|
Transfers into Level 3
(3)
|
|
—
|
|
|
5,882
|
|
|
21,934
|
|
|
27,816
|
|
|
64
|
|
|
27,880
|
|
|
—
|
|
|||||||
Transfers out of Level 3
(3)
|
|
—
|
|
|
(4,876
|
)
|
|
—
|
|
|
(4,876
|
)
|
|
—
|
|
|
(4,876
|
)
|
|
—
|
|
|||||||
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 |
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,705
|
|
|||||||
Net unrealized investment gains
(losses) included in OCI
|
|
(193
|
)
|
|
4,510
|
|
|
2,655
|
|
|
6,972
|
|
|
—
|
|
|
6,972
|
|
|
—
|
|
|||||||
Purchases
|
|
—
|
|
|
1,566
|
|
|
—
|
|
|
1,566
|
|
|
—
|
|
|
1,566
|
|
|
—
|
|
|||||||
Issuances
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,449
|
|
|||||||
Sales
|
|
—
|
|
|
—
|
|
|
(607
|
)
|
|
(607
|
)
|
|
—
|
|
|
(607
|
)
|
|
—
|
|
|||||||
Settlements
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Paydowns, maturities and distributions
|
|
(354
|
)
|
|
(8,602
|
)
|
|
(15,755
|
)
|
|
(24,711
|
)
|
|
—
|
|
|
(24,711
|
)
|
|
(2,893
|
)
|
|||||||
Ending balance, June 30, 2019
|
|
$
|
46,984
|
|
|
$
|
79,222
|
|
|
$
|
128,438
|
|
|
$
|
254,644
|
|
|
$
|
69
|
|
|
$
|
254,713
|
|
|
$
|
85,961
|
|
(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
month periods 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.
|
($ 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, 2018
|
|
$
|
49,748
|
|
|
$
|
78,780
|
|
|
$
|
115,334
|
|
|
$
|
243,862
|
|
|
$
|
6
|
|
|
$
|
243,868
|
|
|
$
|
78,486
|
|
Transfers into Level 3
(3)
|
|
—
|
|
|
29,709
|
|
|
18,322
|
|
|
48,031
|
|
|
—
|
|
|
48,031
|
|
|
—
|
|
|||||||
Transfers out of Level 3
(3)
|
|
—
|
|
|
(11,279
|
)
|
|
(4,230
|
)
|
|
(15,509
|
)
|
|
—
|
|
|
(15,509
|
)
|
|
—
|
|
|||||||
Total gains or losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net investment gains (losses) included in
net income related to financial assets |
|
—
|
|
|
(246
|
)
|
|
—
|
|
|
(246
|
)
|
|
—
|
|
|
(246
|
)
|
|
—
|
|
|||||||
Net realized (gains) losses included in net
income related to financial liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,291
|
)
|
|||||||
Net unrealized investment gains
(losses) included in OCI |
|
397
|
|
|
(700
|
)
|
|
1,659
|
|
|
1,356
|
|
|
—
|
|
|
1,356
|
|
|
—
|
|
|||||||
Purchases
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Issuances
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,107
|
|
|||||||
Sales
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Settlements
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Paydowns, maturities and distributions
|
|
(224
|
)
|
|
(3,601
|
)
|
|
(2,024
|
)
|
|
(5,849
|
)
|
|
—
|
|
|
(5,849
|
)
|
|
(1,514
|
)
|
|||||||
Ending balance, June 30, 2018
|
|
$
|
49,921
|
|
|
$
|
92,663
|
|
|
$
|
129,061
|
|
|
$
|
271,645
|
|
|
$
|
6
|
|
|
$
|
271,651
|
|
|
$
|
77,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Beginning balance, January 1, 2018
|
|
$
|
49,328
|
|
|
$
|
72,979
|
|
|
$
|
107,944
|
|
|
$
|
230,251
|
|
|
$
|
6
|
|
|
$
|
230,257
|
|
|
$
|
80,733
|
|
Transfers into Level 3
(3)
|
|
—
|
|
|
40,487
|
|
|
33,144
|
|
|
73,631
|
|
|
—
|
|
|
73,631
|
|
|
—
|
|
|||||||
Transfers out of Level 3
(3)
|
|
—
|
|
|
(11,279
|
)
|
|
(4,230
|
)
|
|
(15,509
|
)
|
|
—
|
|
|
(15,509
|
)
|
|
—
|
|
|||||||
Total gains or losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net investment gains (losses) included in
net income related to financial assets |
|
—
|
|
|
(246
|
)
|
|
—
|
|
|
(246
|
)
|
|
3
|
|
|
(243
|
)
|
|
—
|
|
|||||||
Net (gains) losses included in net
income related to financial liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,513
|
)
|
|||||||
Net unrealized investment gains
(losses) included in OCI |
|
840
|
|
|
(1,587
|
)
|
|
637
|
|
|
(110
|
)
|
|
—
|
|
|
(110
|
)
|
|
—
|
|
|||||||
Purchases
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Issuances
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,439
|
|
|||||||
Sales
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|
—
|
|
|||||||
Settlements
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Paydowns, maturities and distributions
|
|
(247
|
)
|
|
(7,691
|
)
|
|
(8,434
|
)
|
|
(16,372
|
)
|
|
—
|
|
|
(16,372
|
)
|
|
(2,871
|
)
|
|||||||
Ending balance, June 30, 2018
|
|
$
|
49,921
|
|
|
$
|
92,663
|
|
|
$
|
129,061
|
|
|
$
|
271,645
|
|
|
$
|
6
|
|
|
$
|
271,651
|
|
|
$
|
77,788
|
|
(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
month periods ended
June 30, 2018
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.
|
($ in thousands)
|
|
|
|
Fair Value Measurements at
|
||||||||||||||||
|
|
Carrying
|
|
Fair
|
|
Reporting Date Using
|
||||||||||||||
|
|
Amount
|
|
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other investments
|
|
$
|
161,313
|
|
|
$
|
166,023
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
166,023
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment contract and life policy reserves,
fixed annuity contracts
|
|
4,605,272
|
|
|
4,529,317
|
|
|
—
|
|
|
—
|
|
|
4,529,317
|
|
|||||
Investment contract and life policy reserves,
account values on life contracts
|
|
90,239
|
|
|
93,366
|
|
|
—
|
|
|
—
|
|
|
93,366
|
|
|||||
Other policyholder funds
|
|
735,919
|
|
|
735,919
|
|
|
—
|
|
|
676,460
|
|
|
59,459
|
|
|||||
Long-term debt
|
|
297,881
|
|
|
315,938
|
|
|
—
|
|
|
315,938
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other investments
|
|
$
|
156,725
|
|
|
$
|
161,449
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
161,449
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment contract and life policy reserves,
fixed annuity contracts
|
|
4,555,849
|
|
|
4,478,338
|
|
|
—
|
|
|
—
|
|
|
4,478,338
|
|
|||||
Investment contract and life policy reserves,
account values on life contracts |
|
87,229
|
|
|
90,402
|
|
|
—
|
|
|
—
|
|
|
90,402
|
|
|||||
Other policyholder funds
|
|
689,287
|
|
|
689,287
|
|
|
—
|
|
|
626,325
|
|
|
62,962
|
|
|||||
Long-term debt
|
|
297,740
|
|
|
291,938
|
|
|
—
|
|
|
291,938
|
|
|
—
|
|
($ in thousands)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
|
||||
Derivative instruments, included in Short-term and other investments
|
|
$
|
8,753
|
|
|
$
|
2,647
|
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
||||
FIA - embedded derivatives, included in Other policyholder funds
|
|
$
|
85,961
|
|
|
$
|
78,700
|
|
IUL - embedded derivatives, included in
Investment contract and life policy reserves
|
|
940
|
|
|
248
|
|
($ in thousands)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Change in fair value of derivatives:
(1)
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
||||||||
Net investment gains (losses)
|
|
$
|
1,375
|
|
|
$
|
(2
|
)
|
|
$
|
5,429
|
|
|
$
|
(851
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Change in fair value of embedded derivatives:
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
||||||||
Net investment gains (losses)
|
|
$
|
(516
|
)
|
|
$
|
1,281
|
|
|
$
|
(5,261
|
)
|
|
$
|
3,569
|
|
(1)
|
Includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options.
|
($ in thousands)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||
|
|
Credit Rating
|
|
Notional
|
|
Fair
|
|
Notional
|
|
Fair
|
||||||||||
Counterparty
|
|
S&P
|
|
Moody's
|
|
Amount
|
|
Value
|
|
Amount
|
|
Value
|
||||||||
Bank of America, N.A.
|
|
A+
|
|
Aa2
|
|
$
|
156,800
|
|
|
$
|
3,560
|
|
|
$
|
144,500
|
|
|
$
|
870
|
|
Barclays Bank PLC
|
|
A
|
|
A2
|
|
72,500
|
|
|
1,696
|
|
|
28,500
|
|
|
247
|
|
||||
Citigroup Inc.
|
|
BBB+
|
|
A3
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Credit Suisse International
|
|
A+
|
|
A1
|
|
16,100
|
|
|
295
|
|
|
16,100
|
|
|
55
|
|
||||
Societe Generale
|
|
A
|
|
|
|
55,000
|
|
|
3,202
|
|
|
89,100
|
|
|
1,475
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
|
|
|
|
$
|
300,400
|
|
|
$
|
8,753
|
|
|
$
|
278,200
|
|
|
$
|
2,647
|
|
($ in thousands)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Property and Casualty
|
|
|
|
|
|
|
|
|
|
|
||||||
Beginning gross reserves
(1)
|
|
$
|
359,701
|
|
|
$
|
331,255
|
|
|
$
|
367,180
|
|
|
$
|
319,182
|
|
Less: reinsurance recoverables
|
|
78,328
|
|
|
62,917
|
|
|
89,725
|
|
|
57,409
|
|
||||
Net reserves, beginning of period
(2)
|
|
281,373
|
|
|
268,338
|
|
|
277,455
|
|
|
261,773
|
|
||||
Incurred claims and claim expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||
Claims occurring in the current period
|
|
134,411
|
|
|
147,005
|
|
|
253,178
|
|
|
267,993
|
|
||||
Decrease in estimated reserves for claims occurring
in prior periods
(3)
|
|
(2,000
|
)
|
|
—
|
|
|
(4,000
|
)
|
|
(300
|
)
|
||||
Total claims and claim expenses incurred
(4)
|
|
132,411
|
|
|
147,005
|
|
|
249,178
|
|
|
267,693
|
|
||||
Claims and claim expense payments
for claims occurring during:
|
|
|
|
|
|
|
|
|
|
|
||||||
Current period
|
|
83,755
|
|
|
80,403
|
|
|
129,469
|
|
|
127,451
|
|
||||
Prior periods
|
|
39,512
|
|
|
45,006
|
|
|
106,647
|
|
|
112,081
|
|
||||
Total claims and claim expense payments
|
|
123,267
|
|
|
125,409
|
|
|
236,116
|
|
|
239,532
|
|
||||
Net reserves, end of period
(2)
|
|
290,517
|
|
|
289,934
|
|
|
290,517
|
|
|
289,934
|
|
||||
Plus: reinsurance recoverables
|
|
77,345
|
|
|
62,883
|
|
|
77,345
|
|
|
62,883
|
|
||||
Ending gross reserves
(1)
|
|
$
|
367,862
|
|
|
$
|
352,817
|
|
|
$
|
367,862
|
|
|
$
|
352,817
|
|
(1)
|
Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for Life and Retirement of
$30,477 thousand
and
$27,016 thousand
as of
June 30, 2019
and
2018
, respectively, in addition to Property and Casualty reserves.
|
(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 Life and Retirement of
$20,281 thousand
and
$42,898 thousand
for the
three and six
month periods ended
June 30, 2019
, respectively, in addition to Property and Casualty amounts. Benefits, claims and settlement expenses for Life and Retirement were
$21,273 thousand
and
$44,147 thousand
for the three and six month periods ended
June 30, 2018
, respectively.
|
($ in thousands)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Short-term debt:
|
|
|
|
|
|
|
||
Bank Credit Facility, expires June 21, 2024
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Long-term debt:
|
|
|
|
|
|
|
||
4.50% Senior Notes, due December 1, 2025. Aggregate principal amount of $250,000 thousand less unaccrued discount of $458 and $488 thousand (4.5% imputed rate) and unamortized debt issuance costs of $1,661 thousand and $1,772 thousand
|
|
247,881
|
|
|
247,740
|
|
||
FHLB borrowing
|
|
50,000
|
|
|
50,000
|
|
||
Total
|
|
$
|
297,881
|
|
|
$
|
297,740
|
|
($ in thousands)
|
|
Gross
Amount
|
|
Ceded to
Other
Companies
(1)
|
|
Assumed
from Other
Companies
|
|
Net
Amount
|
||||||||
Three months ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Premiums written and contract deposits
(2)
|
|
$
|
314,897
|
|
|
$
|
6,028
|
|
|
$
|
2,822
|
|
|
$
|
311,691
|
|
Premiums and contract charges earned
|
|
213,415
|
|
|
8,155
|
|
|
2,836
|
|
|
208,096
|
|
||||
Benefits, claims and settlement expenses
|
|
153,436
|
|
|
2,797
|
|
|
2,053
|
|
|
152,692
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Three months ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Premiums written and contract deposits
(2)
|
|
$
|
305,864
|
|
|
$
|
5,483
|
|
|
$
|
1,341
|
|
|
$
|
301,722
|
|
Premiums and contract charges earned
|
|
209,892
|
|
|
5,505
|
|
|
1,223
|
|
|
205,610
|
|
||||
Benefits, claims and settlement expenses
|
|
170,459
|
|
|
3,330
|
|
|
1,149
|
|
|
168,278
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Six months ended June 30, 2019
|
|
|
|
|
|
|
|
|
||||||||
Premiums written and contract deposits
(2)
|
|
$
|
613,990
|
|
|
$
|
11,876
|
|
|
$
|
4,971
|
|
|
$
|
607,085
|
|
Premiums and contract charges earned
|
|
426,671
|
|
|
13,977
|
|
|
5,187
|
|
|
417,881
|
|
||||
Benefits, claims and settlement expenses
|
|
295,488
|
|
|
7,089
|
|
|
3,677
|
|
|
292,076
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Six months ended June 30, 2018
|
|
|
|
|
|
|
|
|
||||||||
Premiums written and contract deposits
(2)
|
|
$
|
594,680
|
|
|
$
|
10,997
|
|
|
$
|
2,047
|
|
|
$
|
585,730
|
|
Premiums and contract charges earned
|
|
417,629
|
|
|
11,033
|
|
|
2,012
|
|
|
408,608
|
|
||||
Benefits, claims and settlement expenses
|
|
322,427
|
|
|
12,344
|
|
|
1,757
|
|
|
311,840
|
|
(1)
|
Excludes the annuity reinsurance agreement accounted for under the deposit method that is discussed in Note 6.
|
(2)
|
This measure is not based on accounting principles generally accepted in the U.S. (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.
|
($ in thousands)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Insurance premiums and contract charges earned
|
|
|
|
|
|
|
|
|
||||||||
Property and Casualty
|
|
$
|
171,303
|
|
|
$
|
167,333
|
|
|
$
|
342,143
|
|
|
$
|
332,791
|
|
Retirement
|
|
6,931
|
|
|
7,825
|
|
|
15,509
|
|
|
15,893
|
|
||||
Life
|
|
29,862
|
|
|
30,452
|
|
|
60,229
|
|
|
59,924
|
|
||||
Total
|
|
$
|
208,096
|
|
|
$
|
205,610
|
|
|
$
|
417,881
|
|
|
$
|
408,608
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net investment income
|
|
|
|
|
|
|
|
|
||||||||
Property and Casualty
|
|
$
|
12,643
|
|
|
$
|
10,300
|
|
|
$
|
22,861
|
|
|
$
|
19,816
|
|
Retirement
|
|
62,684
|
|
|
67,787
|
|
|
127,423
|
|
|
131,956
|
|
||||
Life
|
|
18,324
|
|
|
19,166
|
|
|
36,376
|
|
|
37,506
|
|
||||
Corporate and Other
|
|
(14
|
)
|
|
42
|
|
|
(37
|
)
|
|
78
|
|
||||
Intersegment eliminations
|
|
(179
|
)
|
|
(194
|
)
|
|
(365
|
)
|
|
(391
|
)
|
||||
Total
|
|
$
|
93,458
|
|
|
$
|
97,101
|
|
|
$
|
186,258
|
|
|
$
|
188,965
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
|
|
|
|
|
|
|
||||||||
Property and Casualty
|
|
$
|
5,101
|
|
|
$
|
(10,896
|
)
|
|
$
|
20,153
|
|
|
$
|
(1,174
|
)
|
Retirement
|
|
(25,045
|
)
|
|
14,141
|
|
|
(12,894
|
)
|
|
25,562
|
|
||||
Life
|
|
5,239
|
|
|
5,879
|
|
|
8,516
|
|
|
9,666
|
|
||||
Corporate and Other
|
|
108,527
|
|
|
(3,207
|
)
|
|
110,213
|
|
|
(7,982
|
)
|
||||
Total
|
|
$
|
93,822
|
|
|
$
|
5,917
|
|
|
$
|
125,988
|
|
|
$
|
26,072
|
|
($ in thousands)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
|
||||
Property and Casualty
|
|
$
|
1,281,344
|
|
|
$
|
1,236,362
|
|
Retirement
|
|
8,493,089
|
|
|
7,866,969
|
|
||
Life
|
|
1,911,569
|
|
|
1,821,351
|
|
||
Corporate and Other
|
|
145,022
|
|
|
149,014
|
|
||
Intersegment eliminations
|
|
(51,617
|
)
|
|
(41,800
|
)
|
||
Total
|
|
$
|
11,779,407
|
|
|
$
|
11,031,896
|
|
($ in thousands)
|
|
Three Months Ended
June 30, 2019 |
|
Six Months Ended
June 30, 2019 |
||||
Operating lease cost
|
|
$
|
791
|
|
|
$
|
1,600
|
|
Short-term lease cost
|
|
27
|
|
|
51
|
|
||
Total lease cost
|
|
$
|
818
|
|
|
$
|
1,651
|
|
($ in thousands)
|
|
Three Months Ended
June 30, 2019 |
|
Six Months Ended
June 30, 2019 |
||||
Cash paid for amounts included in the measurement of lease liabilities
|
|
$
|
575
|
|
|
$
|
1,341
|
|
($ in thousands, except lease term and discount rate)
|
|
June 30, 2019
|
||
Assets
|
|
|
||
Right of use assets, included in Other assets
|
|
$
|
12,692
|
|
|
|
|
||
Liabilities
|
|
|
||
Operating lease liabilities, included in Other liabilities
|
|
$
|
13,429
|
|
|
|
|
||
Weighted Average Remaining Lease Term
|
|
5.00
|
|
|
|
|
|
||
Weighted Average Discount Rate
|
|
4.10
|
%
|
($ in millions)
|
|
Three Months Ended
June 30, |
|
2019-2018
|
|
Six Months Ended
June 30, |
|
2019-2018
|
||||||||||||||
|
|
2019
|
|
2018
|
|
Change %
|
|
2019
|
|
2018
|
|
Change %
|
||||||||||
Total revenues
|
|
$
|
451.5
|
|
|
$
|
306.2
|
|
|
47.5
|
%
|
|
$
|
764.7
|
|
|
$
|
601.7
|
|
|
27.1
|
%
|
Net income
|
|
93.8
|
|
|
5.9
|
|
|
N.M.
|
|
126.0
|
|
|
26.1
|
|
|
N.M.
|
||||||
Per diluted share:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
|
$
|
2.24
|
|
|
$
|
0.14
|
|
|
N.M.
|
|
$
|
3.01
|
|
|
$
|
0.63
|
|
|
N.M.
|
||
Net investment gains (losses), after tax
|
|
2.74
|
|
|
0.01
|
|
|
N.M.
|
|
2.88
|
|
|
(0.01
|
)
|
|
N.M.
|
||||||
Book value per share
|
|
|
|
|
|
|
|
$
|
36.41
|
|
|
$
|
32.93
|
|
|
10.6
|
%
|
|||||
Net income return on equity - last twelve months
|
|
|
|
|
|
|
|
8.6
|
%
|
|
12.7
|
%
|
|
|
|
|||||||
Net income return on equity - annualized
|
|
|
|
|
|
|
|
18.1
|
%
|
|
3.7
|
%
|
|
|
|
($ in millions)
|
|
Three Months Ended
June 30, |
|
2019-2018
|
|
Six Months Ended
June 30, |
|
2019-2018
|
||||||||||||||
|
|
2019
|
|
2018
|
|
Change %
|
|
2019
|
|
2018
|
|
Change %
|
||||||||||
Analysis of net income (loss) by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Property and Casualty
|
|
$
|
5.1
|
|
|
$
|
(10.9
|
)
|
|
146.8
|
%
|
|
$
|
20.1
|
|
|
$
|
(1.2
|
)
|
|
N.M.
|
|
Retirement
|
|
(25.0
|
)
|
|
14.1
|
|
|
N.M.
|
|
(12.8
|
)
|
|
25.5
|
|
|
N.M.
|
||||||
Life
|
|
5.2
|
|
|
5.9
|
|
|
-11.9
|
%
|
|
8.5
|
|
|
9.7
|
|
|
-12.4
|
%
|
||||
Corporate and Other
|
|
108.5
|
|
|
(3.2
|
)
|
|
N.M.
|
|
110.2
|
|
|
(7.9
|
)
|
|
N.M.
|
||||||
Net income
|
|
$
|
93.8
|
|
|
$
|
5.9
|
|
|
N.M.
|
|
$
|
126.0
|
|
|
$
|
26.1
|
|
|
N.M.
|
($ in millions)
|
|
Three Months Ended
June 30, |
|
2019-2018
|
|
Six Months Ended
June 30, |
|
2019-2018
|
||||||||||||||
|
|
2019
|
|
2018
|
|
Change %
|
|
2019
|
|
2018
|
|
Change %
|
||||||||||
Insurance premiums and
contract charges earned
|
|
$
|
208.1
|
|
|
$
|
205.6
|
|
|
1.2
|
%
|
|
$
|
417.9
|
|
|
$
|
408.6
|
|
|
2.3
|
%
|
Net investment income
|
|
93.5
|
|
|
97.1
|
|
|
-3.7
|
%
|
|
186.3
|
|
|
189.0
|
|
|
-1.4
|
%
|
||||
Net investment gains (losses)
|
|
146.3
|
|
|
0.7
|
|
|
N.M.
|
|
153.7
|
|
|
(1.0
|
)
|
|
N.M.
|
||||||
Other income
|
|
3.6
|
|
|
2.8
|
|
|
28.6
|
%
|
|
6.8
|
|
|
5.1
|
|
|
33.3
|
%
|
||||
Total revenues
|
|
451.5
|
|
|
306.2
|
|
|
47.5
|
%
|
|
764.7
|
|
|
601.7
|
|
|
27.1
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Benefits, claims and settlement expenses
|
|
152.7
|
|
|
168.3
|
|
|
-9.3
|
%
|
|
292.1
|
|
|
311.9
|
|
|
-6.3
|
%
|
||||
Interest credited
|
|
53.6
|
|
|
51.1
|
|
|
4.9
|
%
|
|
106.5
|
|
|
101.1
|
|
|
5.3
|
%
|
||||
DAC amortization expense
|
|
31.6
|
|
|
26.5
|
|
|
19.2
|
%
|
|
56.6
|
|
|
53.2
|
|
|
6.4
|
%
|
||||
Operating expenses
|
|
55.3
|
|
|
50.2
|
|
|
10.2
|
%
|
|
109.3
|
|
|
98.4
|
|
|
11.1
|
%
|
||||
Interest expense
|
|
3.3
|
|
|
3.3
|
|
|
—
|
%
|
|
6.6
|
|
|
6.5
|
|
|
1.5
|
%
|
||||
Other expense
|
|
28.0
|
|
|
—
|
|
|
N.M.
|
|
28.0
|
|
|
—
|
|
|
N.M.
|
||||||
Total benefits, losses and expenses
|
|
324.5
|
|
|
299.4
|
|
|
8.4
|
%
|
|
599.1
|
|
|
571.1
|
|
|
4.9
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
|
127.0
|
|
|
6.8
|
|
|
N.M.
|
|
165.6
|
|
|
30.6
|
|
|
N.M.
|
||||||
Income tax expense
|
|
33.2
|
|
|
0.9
|
|
|
N.M.
|
|
39.6
|
|
|
4.5
|
|
|
N.M.
|
||||||
Net income
|
|
$
|
93.8
|
|
|
$
|
5.9
|
|
|
N.M.
|
|
$
|
126.0
|
|
|
$
|
26.1
|
|
|
N.M.
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Pretax yield
|
|
5.1%
|
|
5.3%
|
|
5.1%
|
|
5.1%
|
After tax yield
|
|
4.1%
|
|
4.2%
|
|
4.1%
|
|
4.1%
|
($ in millions)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
OTTI losses recognized in earnings
|
|
$
|
—
|
|
|
$
|
(1.2
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(1.3
|
)
|
Sales and other, net
|
|
142.1
|
|
|
1.8
|
|
|
146.9
|
|
|
4.0
|
|
||||
Change in fair value - equity securities
|
|
3.4
|
|
|
(1.2
|
)
|
|
6.9
|
|
|
(6.4
|
)
|
||||
Change in fair value and gains (losses) realized
on settlements - derivative instruments |
|
0.8
|
|
|
1.3
|
|
|
0.2
|
|
|
2.7
|
|
||||
Net investment gains (losses)
|
|
$
|
146.3
|
|
|
$
|
0.7
|
|
|
$
|
153.7
|
|
|
$
|
(1.0
|
)
|
•
|
Valuation of fixed maturity securities, including evaluation of other-than-temporary impairments
|
•
|
Evaluation of goodwill 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 life policy reserves
|
•
|
Property and Casualty
|
•
|
Retirement
|
•
|
Life
|
•
|
Corporate and Other
|
($ in millions, unless otherwise indicated)
|
|
Three Months Ended
June 30, |
|
2019-2018
|
|
Six Months Ended
June 30, |
|
2019-2018
|
||||||||||||||
|
|
2019
|
|
2018
|
|
Change %
|
|
2019
|
|
2018
|
|
Change %
|
||||||||||
Financial Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Premiums written*:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Automobile
|
|
$
|
114.6
|
|
|
$
|
114.6
|
|
|
—
|
%
|
|
$
|
231.4
|
|
|
$
|
229.5
|
|
|
0.8
|
%
|
Property and other
|
|
59.7
|
|
|
58.4
|
|
|
2.2
|
%
|
|
104.6
|
|
|
102.9
|
|
|
1.7
|
%
|
||||
Total premiums written
|
|
174.3
|
|
|
173.0
|
|
|
0.8
|
%
|
|
336.0
|
|
|
332.4
|
|
|
1.1
|
%
|
||||
Change in unearned insurance premiums
|
|
(3.0
|
)
|
|
(5.7
|
)
|
|
|
|
|
6.1
|
|
|
0.4
|
|
|
|
|||||
Total insurance premiums earned
|
|
171.3
|
|
|
167.3
|
|
|
2.4
|
%
|
|
342.1
|
|
|
332.8
|
|
|
2.8
|
%
|
||||
Incurred claims and claims expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Claims occurring in the current year
|
|
134.4
|
|
|
147.0
|
|
|
-8.6
|
%
|
|
253.2
|
|
|
268.0
|
|
|
-5.5
|
%
|
||||
Prior years' reserve development
|
|
2.0
|
|
|
—
|
|
|
N.M.
|
|
4.0
|
|
|
0.3
|
|
|
N.M.
|
||||||
Total claims and claim expenses incurred
|
|
132.4
|
|
|
147.0
|
|
|
-9.9
|
%
|
|
249.2
|
|
|
267.7
|
|
|
-6.9
|
%
|
||||
Operating expenses,
including DAC amortization
|
|
45.4
|
|
|
44.8
|
|
|
1.3
|
%
|
|
91.9
|
|
|
87.9
|
|
|
4.6
|
%
|
||||
Underwriting gain (loss)
|
|
(6.5
|
)
|
|
(24.5
|
)
|
|
73.5
|
%
|
|
1.0
|
|
|
(22.8
|
)
|
|
104.4
|
%
|
||||
Net investment income
|
|
12.7
|
|
|
10.3
|
|
|
23.3
|
%
|
|
22.9
|
|
|
19.8
|
|
|
15.7
|
%
|
||||
Income (loss) before income taxes
|
|
6.6
|
|
|
(13.7
|
)
|
|
148.2
|
%
|
|
24.4
|
|
|
(2.5
|
)
|
|
N.M.
|
|||||
Net income (loss)/core earnings*
|
|
5.1
|
|
|
(10.9
|
)
|
|
146.8
|
%
|
|
20.1
|
|
|
(1.2
|
)
|
|
N.M.
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Automobile
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss and loss adjustment expense ratio
|
|
73.8
|
%
|
|
82.0
|
%
|
|
-8.2
|
pts
|
|
72.3
|
%
|
|
79.1
|
%
|
|
-6.8
|
pts
|
||||
Expense ratio
|
|
26.6
|
%
|
|
26.9
|
%
|
|
-0.3
|
pts
|
|
26.9
|
%
|
|
26.3
|
%
|
|
0.6
|
pts
|
||||
Combined ratio:
|
|
100.4
|
%
|
|
108.9
|
%
|
|
-8.5
|
pts
|
|
99.2
|
%
|
|
105.4
|
%
|
|
-6.2
|
pts
|
||||
Prior years' reserve development
|
|
-0.9
|
%
|
|
—
|
%
|
|
-0.9
|
pts
|
|
-0.9
|
%
|
|
—
|
%
|
|
-0.9
|
pts
|
||||
Catastrophes
|
|
1.9
|
%
|
|
3.3
|
%
|
|
-1.4
|
pts
|
|
1.3
|
%
|
|
2.0
|
%
|
|
-0.7
|
pts
|
||||
Underlying combined ratio*
|
|
99.4
|
%
|
|
105.6
|
%
|
|
-6.2
|
pts
|
|
98.8
|
%
|
|
103.4
|
%
|
|
-4.6
|
pts
|
||||
Property
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss and loss adjustment expense ratio
|
|
84.8
|
%
|
|
100.4
|
%
|
|
-15.6
|
pts
|
|
73.9
|
%
|
|
83.3
|
%
|
|
-9.4
|
pts
|
||||
Expense ratio
|
|
26.6
|
%
|
|
26.7
|
%
|
|
-0.1
|
pts
|
|
27.1
|
%
|
|
26.9
|
%
|
|
0.2
|
pts
|
||||
Combined ratio:
|
|
111.4
|
%
|
|
127.1
|
%
|
|
-15.7
|
pts
|
|
101.0
|
%
|
|
110.2
|
%
|
|
-9.2
|
pts
|
||||
Prior years' reserve development
|
|
-1.8
|
%
|
|
—
|
%
|
|
-1.8
|
pts
|
|
-1.9
|
%
|
|
-0.3
|
%
|
|
-1.6
|
pts
|
||||
Catastrophes
|
|
36.8
|
%
|
|
43.3
|
%
|
|
-6.5
|
pts
|
|
27.6
|
%
|
|
30.3
|
%
|
|
-2.7
|
pts
|
||||
Underlying combined ratio*
|
|
76.4
|
%
|
|
83.8
|
%
|
|
-7.4
|
pts
|
|
75.3
|
%
|
|
80.2
|
%
|
|
-4.9
|
pts
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Policies in force (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Automobile
(1)
|
|
|
|
|
|
|
|
448
|
|
|
471
|
|
|
-4.9
|
%
|
|||||||
Property
|
|
|
|
|
|
|
|
198
|
|
|
203
|
|
|
-2.5
|
%
|
|||||||
Total
|
|
|
|
|
|
|
|
646
|
|
|
674
|
|
|
-4.2
|
%
|
($ in millions, unless otherwise indicated)
|
|
Three Months Ended
June 30, |
|
2019-2018
|
|
Six Months Ended
June 30, |
|
2019-2018
|
|||||||||||||||
|
|
2019
|
|
2018
|
|
Change %
|
|
2019
|
|
2018
|
|
Change %
|
|||||||||||
Financial Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Contract charges earned
|
|
$
|
6.9
|
|
|
$
|
7.9
|
|
|
-12.7
|
%
|
|
$
|
15.5
|
|
|
$
|
15.9
|
|
|
-2.5
|
%
|
|
Net investment income
|
|
62.7
|
|
|
67.8
|
|
|
-7.5
|
%
|
|
127.4
|
|
|
132.0
|
|
|
-3.5
|
%
|
|||||
Interest credited
|
|
42.3
|
|
|
39.9
|
|
|
6.0
|
%
|
|
84.0
|
|
|
78.6
|
|
|
6.9
|
%
|
|||||
Net interest margin without
net investment gains (losses)
|
|
21.5
|
|
|
27.9
|
|
|
-22.9
|
%
|
|
44.5
|
|
|
53.4
|
|
|
-16.7
|
%
|
|||||
Net interest margin - Reinsured block
|
|
(1.1
|
)
|
|
—
|
|
|
N.M.
|
|
(1.1
|
)
|
|
—
|
|
|
N.M.
|
|||||||
Mortality loss and other reserve charges
|
|
1.2
|
|
|
1.4
|
|
|
-14.3
|
%
|
|
1.8
|
|
—
|
|
3.3
|
|
|
-45.5
|
%
|
||||
DAC amortization expense,
excluding unlocking
|
|
4.3
|
|
|
4.8
|
|
|
-10.4
|
%
|
|
9.2
|
|
|
9.6
|
|
|
-4.2
|
%
|
|||||
DAC unlocking
|
|
5.6
|
|
|
0.2
|
|
|
N.M.
|
|
3.6
|
|
|
0.4
|
|
|
N.M.
|
|||||||
Operating expenses
|
|
15.4
|
|
|
13.9
|
|
|
10.8
|
%
|
|
31.3
|
|
|
28.3
|
|
|
10.6
|
%
|
|||||
Other expense - goodwill impairment
|
|
28.0
|
|
|
—
|
|
|
N.M.
|
|
28.0
|
|
|
—
|
|
|
N.M.
|
|||||||
Income (loss) before income taxes
|
|
(24.8
|
)
|
|
17.2
|
|
|
N.M.
|
|
(10.2
|
)
|
|
31.2
|
|
|
-132.7
|
%
|
||||||
Net income (loss)
|
|
(25.0
|
)
|
|
14.1
|
|
|
N.M.
|
|
(12.8
|
)
|
|
25.5
|
|
|
N.M.
|
|||||||
Core earnings*
|
|
3.0
|
|
|
14.1
|
|
|
-78.7
|
%
|
|
15.2
|
|
|
25.5
|
|
|
-40.4
|
%
|
|||||
Operating Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Annuity sales deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Variable
|
|
$
|
54.1
|
|
|
$
|
50.7
|
|
|
6.7
|
%
|
|
$
|
102.9
|
|
|
$
|
97.5
|
|
|
5.5
|
%
|
|
Fixed
|
|
54.9
|
|
|
49.5
|
|
|
10.9
|
%
|
|
113.4
|
|
|
101.5
|
|
|
11.7
|
%
|
|||||
Total
|
|
109.0
|
|
|
100.2
|
|
|
8.8
|
%
|
|
216.3
|
|
|
199.0
|
|
|
8.7
|
%
|
|||||
Single
|
|
55.8
|
|
|
46.9
|
|
|
19.0
|
%
|
|
111.7
|
|
|
95.5
|
|
|
17.0
|
%
|
|||||
Recurring
|
|
53.2
|
|
|
53.3
|
|
|
-0.2
|
%
|
|
104.6
|
|
|
103.5
|
|
|
1.1
|
%
|
|||||
Total
|
|
109.0
|
|
|
100.2
|
|
|
8.8
|
%
|
|
216.3
|
|
|
199.0
|
|
|
8.7
|
%
|
|||||
Assets under administration (AUA)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Annuity assets under management
(1)
|
|
|
|
|
|
|
|
|
4,170.3
|
|
|
6,851.7
|
|
|
-39.1
|
%
|
|||||||
Broker and advisory assets
under administration
(2)
|
|
|
|
|
|
|
|
|
2,236.0
|
|
|
300.5
|
|
|
N.M.
|
||||||||
Recordkeeping assets
under administration
(2)
|
|
|
|
|
|
|
|
|
1,395.1
|
|
|
—
|
|
|
N.M.
|
||||||||
Total
|
|
|
|
|
|
|
|
|
|
|
7,801.4
|
|
|
7,152.2
|
|
|
9.1
|
%
|
|||||
Persistency
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Variable annuities
|
|
|
|
|
|
|
|
|
94.3
|
%
|
|
94.6
|
%
|
|
-0.3
|
pts
|
|||||||
Fixed annuities
|
|
|
|
|
|
|
|
|
93.9
|
%
|
|
94.4
|
%
|
|
-0.5
|
pts
|
|||||||
Total
|
|
|
|
|
|
|
|
|
94.0
|
%
|
|
94.5
|
%
|
|
-0.5
|
pts
|
|||||||
Annuity contracts in force
|
|
|
|
|
|
|
|
|
227
|
|
|
224
|
|
|
1.3
|
%
|
|||||||
Fixed spread - YTD annualized (basis points)
|
|
|
|
|
|
|
|
|
175
|
|
|
181
|
|
|
-6bps
|
|
(1)
|
Amount reported as of June 30, 2019 excludes $691.6 of assets under management held under modified coinsurance reinsurance.
|
($ in millions)
|
|
June 30, 2019
|
|||||||||||||||
|
|
|
|
|
|
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%
|
|
52.0
|
%
|
|
$
|
1,216.2
|
|
|
46.9
|
%
|
|
34.7
|
%
|
|
$
|
570.9
|
|
Equal to 2% but less than 3%
|
|
12.5
|
%
|
|
293.0
|
|
|
82.8
|
%
|
|
14.8
|
%
|
|
242.7
|
|
||
Equal to 3% but less than 4%
|
|
26.0
|
%
|
|
607.5
|
|
|
99.9
|
%
|
|
36.9
|
%
|
|
607.0
|
|
||
Equal to 4% but less than 5%
|
|
7.3
|
%
|
|
171.1
|
|
|
100.0
|
%
|
|
10.4
|
%
|
|
171.1
|
|
||
5% or higher
|
|
2.2
|
%
|
|
52.0
|
|
|
100.0
|
%
|
|
3.2
|
%
|
|
52.0
|
|
||
Total
|
|
100.0
|
%
|
|
$
|
2,339.8
|
|
|
70.2
|
%
|
|
100.0
|
%
|
|
$
|
1,643.7
|
|
($ in millions, unless otherwise indicated)
|
|
Three Months Ended
June 30, |
|
2019-2018
|
|
Six Months Ended
June 30, |
|
2019-2018
|
||||||||||||||
|
|
2019
|
|
2018
|
|
Change %
|
|
2019
|
|
2018
|
|
Change %
|
||||||||||
Financial Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance premiums and contract deposits
|
|
$
|
28.4
|
|
|
$
|
28.5
|
|
|
-0.4
|
%
|
|
$
|
54.8
|
|
|
$
|
54.3
|
|
|
0.9
|
%
|
Insurance premiums and
contract charges earned
|
|
29.9
|
|
|
30.4
|
|
|
-1.6
|
%
|
|
60.3
|
|
|
59.9
|
|
|
0.7
|
%
|
||||
Net investment income
|
|
18.3
|
|
|
19.2
|
|
|
-4.7
|
%
|
|
36.4
|
|
|
37.5
|
|
|
-2.9
|
%
|
||||
Benefits and settlement expenses
|
|
19.1
|
|
|
19.9
|
|
|
-4.0
|
%
|
|
41.1
|
|
|
40.9
|
|
|
0.5
|
%
|
||||
Interest credited
|
|
11.3
|
|
|
11.2
|
|
|
0.9
|
%
|
|
22.5
|
|
|
22.5
|
|
|
—
|
%
|
||||
DAC amortization expense,
excluding unlocking
|
|
2.1
|
|
|
1.9
|
|
|
10.5
|
%
|
|
4.1
|
|
|
3.7
|
|
|
10.8
|
%
|
||||
DAC unlocking
|
|
(0.1
|
)
|
|
—
|
|
|
N.M.
|
|
(0.1
|
)
|
|
0.1
|
|
|
N.M.
|
||||||
Operating expenses
|
|
9.2
|
|
|
9.3
|
|
|
-1.1
|
%
|
|
18.6
|
|
|
18.3
|
|
|
1.6
|
%
|
||||
Income before income taxes
|
|
6.7
|
|
|
7.3
|
|
|
-8.2
|
%
|
|
10.7
|
|
|
12.0
|
|
|
-10.8
|
%
|
||||
Net income /core earnings*
|
|
5.2
|
|
|
5.9
|
|
|
-11.9
|
%
|
|
8.5
|
|
|
9.7
|
|
|
-12.4
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Life insurance in force
|
|
|
|
|
|
|
|
$
|
18,598
|
|
|
$
|
17,862
|
|
|
4.1
|
%
|
|||||
Number of policies in force (in thousands)
|
|
|
|
|
|
|
|
199
|
|
|
198
|
|
|
0.5
|
%
|
|||||||
Average face amount in force (in dollars)
|
|
|
|
|
|
|
|
$
|
93,506
|
|
|
$
|
90,282
|
|
|
3.6
|
%
|
|||||
Lapse ratio (ordinary life insurance in force)
|
|
|
|
|
|
|
|
4.5
|
%
|
|
4.9
|
%
|
|
-0.4
|
pts
|
|||||||
Mortality costs
|
|
|
|
|
|
|
|
$
|
18.0
|
|
|
$
|
17.2
|
|
|
4.7
|
%
|
($ in millions)
|
|
Three Months Ended
June 30, |
|
2019-2018
|
|
Six Months Ended
June 30, |
|
2019-2018
|
||||||||||||||
|
|
2019
|
|
2018
|
|
Change %
|
|
2019
|
|
2018
|
|
Change %
|
||||||||||
Interest expense
|
|
$
|
(2.9
|
)
|
|
$
|
(3.0
|
)
|
|
3.3
|
%
|
|
$
|
(5.9
|
)
|
|
$
|
(6.0
|
)
|
|
1.7
|
%
|
Net investment gains (losses) pretax
|
|
146.3
|
|
|
0.7
|
|
|
N.M.
|
|
153.7
|
|
|
(1.0
|
)
|
|
N.M.
|
||||||
Tax on net investment gains (losses)
|
|
31.6
|
|
|
0.1
|
|
|
N.M.
|
|
33.2
|
|
|
(0.3
|
)
|
|
N.M.
|
||||||
Net investment gains (losses) after tax
|
|
114.7
|
|
|
0.6
|
|
|
N.M.
|
|
120.5
|
|
|
(0.7
|
)
|
|
N.M.
|
||||||
Net income (loss)
|
|
108.5
|
|
|
(3.2
|
)
|
|
N.M.
|
|
110.2
|
|
|
(7.9
|
)
|
|
N.M.
|
||||||
Core earnings (loss)*
|
|
(6.2
|
)
|
|
(3.8
|
)
|
|
-63.2
|
%
|
|
(10.3
|
)
|
|
(7.2
|
)
|
|
-43.1
|
%
|
($ in millions)
|
|
Three Months Ended
June 30, |
|
2019-2018
|
|
Six Months Ended
June 30, |
|
2019-2018
|
||||||||||||||
|
|
2019
|
|
2018
|
|
Change %
|
|
2019
|
|
2018
|
|
Change %
|
||||||||||
Net investment income - investment portfolio
|
|
$
|
70.3
|
|
|
$
|
97.1
|
|
|
-27.6
|
%
|
|
$
|
163.1
|
|
|
$
|
189.0
|
|
|
-13.7
|
%
|
Investment income - Deposit asset on reinsurance
|
|
23.2
|
|
|
—
|
|
|
N.M.
|
|
23.2
|
|
|
—
|
|
|
N.M.
|
||||||
Pretax net investment gains (losses)
|
|
146.3
|
|
|
0.7
|
|
|
N.M.
|
|
153.7
|
|
|
(1.0
|
)
|
|
N.M.
|
||||||
Pretax net unrealized investment
gains on fixed maturity securities
|
|
|
|
|
|
|
|
292.5
|
|
|
183.5
|
|
|
59.4
|
%
|
($ in millions)
|
|
June 30, 2019
|
|||||||||||||
|
|
Number of
Issuers
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Pretax Net
Unrealized
Gain (Loss)
|
|||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Corporate bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Banking & Finance
|
|
96
|
|
|
$
|
358.3
|
|
|
$
|
335.6
|
|
|
$
|
22.7
|
|
Insurance
|
|
36
|
|
|
134.7
|
|
|
120.2
|
|
|
14.5
|
|
|||
Real Estate
|
|
35
|
|
|
105.9
|
|
|
101.4
|
|
|
4.5
|
|
|||
Energy
(1)
|
|
52
|
|
|
103.5
|
|
|
94.9
|
|
|
8.6
|
|
|||
HealthCare, Pharmacy
|
|
43
|
|
|
92.2
|
|
|
86.1
|
|
|
6.1
|
|
|||
Technology
|
|
29
|
|
|
78.8
|
|
|
75.3
|
|
|
3.5
|
|
|||
Transportation
|
|
29
|
|
|
73.2
|
|
|
68.8
|
|
|
4.4
|
|
|||
Utilities
|
|
36
|
|
|
59.3
|
|
|
52.1
|
|
|
7.2
|
|
|||
Food and Beverage
|
|
17
|
|
|
41.7
|
|
|
39.6
|
|
|
2.1
|
|
|||
Telecommunications
|
|
21
|
|
|
40.7
|
|
|
36.4
|
|
|
4.3
|
|
|||
All other corporates
(2)
|
|
158
|
|
|
233.0
|
|
|
216.5
|
|
|
16.5
|
|
|||
Total corporate bonds
|
|
552
|
|
|
1,321.3
|
|
|
1,226.9
|
|
|
94.4
|
|
|||
Mortgage-backed securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
U.S. Government and federally sponsored agencies
|
|
216
|
|
|
363.6
|
|
|
338.5
|
|
|
25.1
|
|
|||
Commercial
(3)
|
|
107
|
|
|
340.5
|
|
|
326.6
|
|
|
13.9
|
|
|||
Other
|
|
25
|
|
|
69.9
|
|
|
69.4
|
|
|
0.5
|
|
|||
Municipal bonds
(4)
|
|
493
|
|
|
1,599.7
|
|
|
1,472.9
|
|
|
126.8
|
|
|||
Government bonds
|
|
|
|
|
|
|
|
|
|||||||
U.S.
|
|
37
|
|
|
566.4
|
|
|
546.4
|
|
|
20.0
|
|
|||
Foreign
|
|
10
|
|
|
47.4
|
|
|
45.3
|
|
|
2.1
|
|
|||
Collateralized loan obligations
(5)
|
|
131
|
|
|
753.2
|
|
|
758.2
|
|
|
(5.0
|
)
|
|||
Asset-backed securities
|
|
94
|
|
|
472.3
|
|
|
457.6
|
|
|
14.7
|
|
|||
Total fixed maturity securities
|
|
1,665
|
|
|
$
|
5,534.3
|
|
|
$
|
5,241.8
|
|
|
$
|
292.5
|
|
|
|
|
|
|
|
|
|
|
|||||||
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Non-redeemable preferred stocks
|
|
12
|
|
|
$
|
50.5
|
|
|
|
|
|
||||
Common stocks
|
|
91
|
|
|
27.9
|
|
|
|
|
|
|||||
Closed-end fund
|
|
1
|
|
|
21.7
|
|
|
|
|
|
|||||
Total equity securities
|
|
104
|
|
|
$
|
100.1
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|||||||
Total
|
|
1,769
|
|
|
$
|
5,634.4
|
|
|
|
|
|
(1)
|
At
June 30, 2019
, the fair value amount included $10.1 million which were non-investment grade.
|
(2)
|
The All other corporates category contains 19 additional industry sectors. Gaming, broadcasting & media, leisure/entertainment, metal and mining and retail represented $133.3 million of fair value at
June 30, 2019
, with the remaining 14 sectors each representing less than $15.0 million.
|
(3)
|
At
June 30, 2019
, 100% were investment grade, with an overall credit rating of AA+, and the positions were well diversified by property type, geography and sponsor.
|
(4)
|
Holdings are geographically diversified, 54.4% are tax-exempt and 77.2% are revenue bonds tied to essential services, such as mass transit, water and sewer. The overall credit quality of the municipal bond portfolio was AA- at
June 30, 2019
.
|
(5)
|
Based on fair value, 97.7% of the collateralized loan obligation securities were rated investment grade by Standard and Poor’s Global Inc. (S&P), Moody’s Investors Service, Inc. (Moody’s) and/or Fitch Ratings, Inc. (Fitch) at
June 30, 2019
.
|
($ in millions)
|
|
Percent of Portfolio
|
|
|
|
|
||||||||
|
|
Fair Value
|
|
June 30, 2019
|
||||||||||
|
|
December 31, 2018
|
|
June 30, 2019
|
|
Fair
Value
|
|
Amortized
Cost
|
||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||
AAA
|
|
9.1
|
%
|
|
12.3
|
%
|
|
$
|
680.6
|
|
|
$
|
671.1
|
|
AA
(2)
|
|
44.5
|
|
|
43.9
|
|
|
2,429.4
|
|
|
2,296.2
|
|
||
A
|
|
22.4
|
|
|
22.8
|
|
|
1,260.6
|
|
|
1,171.5
|
|
||
BBB
|
|
21.2
|
|
|
17.9
|
|
|
996.4
|
|
|
940.7
|
|
||
BB
|
|
1.8
|
|
|
1.8
|
|
|
98.2
|
|
|
95.8
|
|
||
B
|
|
0.4
|
|
|
0.4
|
|
|
27.5
|
|
|
27.4
|
|
||
CCC or lower
|
|
0.1
|
|
|
0.1
|
|
|
0.5
|
|
|
0.5
|
|
||
Not rated
(3)
|
|
0.5
|
|
|
0.8
|
|
|
41.1
|
|
|
38.6
|
|
||
Total fixed maturity securities
|
|
100.0
|
%
|
|
100.0
|
%
|
|
$
|
5,534.3
|
|
|
$
|
5,241.8
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||
AAA
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
AA
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
A
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
BBB
|
|
49.0
|
%
|
|
50.4
|
%
|
|
$
|
50.5
|
|
|
|
||
BB
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
B
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
CCC or lower
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
Not rated
|
|
51.0
|
|
|
49.6
|
|
|
49.6
|
|
|
|
|||
Total equity securities
|
|
100.0
|
%
|
|
100.0
|
%
|
|
$
|
100.1
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||||
Total
|
|
|
|
|
|
|
|
$
|
5,634.4
|
|
|
|
(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, 2019
, the AA rated fair value amount included $566.4 million of U.S. Government and federally sponsored agency securities and $572.2 million of mortgage-backed and asset-backed securities issued by U.S. Government and federally sponsored agencies.
|
(3)
|
This category primarily represents private placement and municipal securities not rated by either S&P, Moody’s or Fitch.
|
($ in millions)
|
|
Six Months Ended
June 30, |
|
2019-2018
|
|||||||
|
|
2019
|
|
2018
|
|
Change %
|
|||||
Net cash provided by operating activities
|
|
$
|
97.8
|
|
|
$
|
151.3
|
|
|
-35.4
|
%
|
Net cash provided by (used in) investing activities
|
|
23.2
|
|
|
(112.4
|
)
|
|
120.6
|
%
|
||
Net cash used in financing activities
|
|
(125.3
|
)
|
|
(38.3
|
)
|
|
N.M.
|
|||
Net increase (decrease) in cash
|
|
(4.3
|
)
|
|
0.6
|
|
|
N.M.
|
|||
Cash at beginning of period
|
|
11.9
|
|
|
7.6
|
|
|
56.6
|
%
|
||
Cash at end of period
|
|
$
|
7.6
|
|
|
$
|
8.2
|
|
|
-7.3
|
%
|
($ in millions)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Short-term debt:
|
|
|
|
|
||||
Bank Credit Facility, expires June 21, 2024
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Long-term debt:
|
|
|
|
|
||||
4.50% Senior Notes, due December 1, 2025. Aggregate principal
amount of $250 million less unaccrued discount of $0.4 million
and $0.5 million (4.5% imputed rate) and unamortized debt
issuance costs of $1.7 million and $1.8 million
|
|
247.9
|
|
|
247.7
|
|
||
FHLB borrowing
|
|
50.0
|
|
|
50.0
|
|
||
Total
|
|
$
|
297.9
|
|
|
$
|
297.7
|
|
|
|
Insurance Financial
|
|
|
||||
|
|
Strength Ratings (Outlook)
|
|
Debt Ratings (Outlook)
|
||||
As of July 31, 2019
|
|
|
|
|
||||
S&P
|
|
A
|
|
(stable)
|
|
BBB
|
|
(stable)
|
Moody’s
|
|
A2
|
|
(stable)
|
|
Baa2
|
|
(stable)
|
A.M. Best
|
|
A
|
|
(stable)
|
|
bbb
|
|
(stable)
|
Fitch
|
|
A
|
|
(stable)
|
|
BBB
|
|
(stable)
|
10.2(a)*
|
|
|
|
|
|
10.2(b)*
|
|
|
|
|
|
10.2(c)*
|
|
|
|
|
|
10.2(d)*
|
|
|
|
|
|
10.2(e)*
|
|
|
|
|
|
10.3*
|
|
|
|
|
|
10.3(a)*
|
|
|
|
|
|
10.3(b)*
|
|
|
|
|
|
10.3(c)*
|
|
|
|
|
|
10.3(d)*
|
|
|
|
|
|
10.3(e)*
|
|
10.3(f)*
|
|
|
|
|
|
10.3(g)*
|
|
|
|
|
|
10.4*
|
|
|
|
|
|
10.5*
|
|
|
|
|
|
10.6*
|
|
|
|
|
|
10.7*
|
|
|
|
|
|
10.8*
|
|
|
|
|
|
10.9*
|
|
|
|
|
|
10.9(a)*
|
|
|
|
|
|
10.10*
|
|
|
|
|
|
10.10(a)*
|
|
|
|
|
|
10.11*
|
|
|
|
|
|
10.11(a)*
|
|
|
|
|
|
|
|
|
HORACE MANN EDUCATORS CORPORATION
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
August 8, 2019
|
|
/s/ Marita Zuraitis
|
|
|
|
|
|
|
|
Marita Zuraitis
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
August 8, 2019
|
|
/s/ Bret A. Conklin
|
|
|
|
|
|
|
|
Bret A. Conklin
|
|
|
|
Executive Vice President and
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
August 8, 2019
|
|
/s/ Kimberly A. Johnson
|
|
|
|
|
|
|
|
Kimberly A. Johnson
|
|
|
|
Vice President, Controller and
|
|
|
|
Principal Accounting Officer
|
1 Year Horace Mann Educators Chart |
1 Month Horace Mann Educators Chart |
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