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
|
|
Page
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Investments:
|
|
|
|
||||
Fixed maturity securities:
|
|
|
|
||||
Available for sale, at fair value (amortized cost: 2016 - $36,696,786; 2015 - $35,823,710)
|
$
|
38,410,000
|
|
|
$
|
36,421,839
|
|
Held for investment, at amortized cost (fair value: 2016 - $67,672; 2015 - $65,377)
|
76,672
|
|
|
76,622
|
|
||
Equity securities, available for sale, at fair value (cost: 2016 - $7,517; 2015 - $7,515)
|
7,813
|
|
|
7,828
|
|
||
Mortgage loans on real estate
|
2,471,435
|
|
|
2,435,257
|
|
||
Derivative instruments
|
387,469
|
|
|
337,256
|
|
||
Other investments
|
290,556
|
|
|
291,530
|
|
||
Total investments
|
41,643,945
|
|
|
39,570,332
|
|
||
|
|
|
|
||||
Cash and cash equivalents
|
707,177
|
|
|
397,749
|
|
||
Coinsurance deposits
|
3,586,871
|
|
|
3,187,470
|
|
||
Accrued investment income
|
393,333
|
|
|
362,104
|
|
||
Deferred policy acquisition costs
|
2,667,185
|
|
|
2,905,136
|
|
||
Deferred sales inducements
|
2,047,763
|
|
|
2,232,148
|
|
||
Deferred income taxes
|
101,098
|
|
|
232,683
|
|
||
Income taxes recoverable
|
9,026
|
|
|
29,599
|
|
||
Other assets
|
106,538
|
|
|
112,171
|
|
||
Total assets
|
$
|
51,262,936
|
|
|
$
|
49,029,392
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Policy benefit reserves
|
$
|
47,456,425
|
|
|
$
|
45,495,431
|
|
Other policy funds and contract claims
|
314,068
|
|
|
324,850
|
|
||
Notes payable
|
393,482
|
|
|
393,227
|
|
||
Subordinated debentures
|
241,550
|
|
|
241,452
|
|
||
Other liabilities
|
623,095
|
|
|
629,897
|
|
||
Total liabilities
|
49,028,620
|
|
|
47,084,857
|
|
||
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, par value $1 per share, 2,000,000 shares authorized,
2016 and 2015 - no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $1 per share, 200,000,000 shares authorized; issued and outstanding:
2016 - 82,155,327 shares (excluding 3,198,805 treasury shares);
2015 - 81,354,079 shares (excluding 3,448,750 treasury shares)
|
82,155
|
|
|
81,354
|
|
||
Additional paid-in capital
|
635,732
|
|
|
630,367
|
|
||
Accumulated other comprehensive income
|
530,119
|
|
|
201,663
|
|
||
Retained earnings
|
986,310
|
|
|
1,031,151
|
|
||
Total stockholders' equity
|
2,234,316
|
|
|
1,944,535
|
|
||
Total liabilities and stockholders' equity
|
$
|
51,262,936
|
|
|
$
|
49,029,392
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Revenues:
|
|
|
|
||||
Premiums and other considerations
|
$
|
7,345
|
|
|
$
|
6,997
|
|
Annuity product charges
|
36,505
|
|
|
28,682
|
|
||
Net investment income
|
450,826
|
|
|
399,669
|
|
||
Change in fair value of derivatives
|
(74,065
|
)
|
|
(31,100
|
)
|
||
Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses
|
2,687
|
|
|
4,879
|
|
||
OTTI losses on investments:
|
|
|
|
||||
Total OTTI losses
|
(6,018
|
)
|
|
(132
|
)
|
||
Portion of OTTI losses recognized in (from) other comprehensive income
|
324
|
|
|
—
|
|
||
Net OTTI losses recognized in operations
|
(5,694
|
)
|
|
(132
|
)
|
||
Total revenues
|
417,604
|
|
|
408,995
|
|
||
|
|
|
|
||||
Benefits and expenses:
|
|
|
|
||||
Insurance policy benefits and change in future policy benefits
|
9,109
|
|
|
9,220
|
|
||
Interest sensitive and index product benefits
|
97,671
|
|
|
282,825
|
|
||
Amortization of deferred sales inducements
|
27,479
|
|
|
10,953
|
|
||
Change in fair value of embedded derivatives
|
265,857
|
|
|
51,213
|
|
||
Interest expense on notes payable
|
6,880
|
|
|
7,339
|
|
||
Interest expense on subordinated debentures
|
3,168
|
|
|
3,016
|
|
||
Amortization of deferred policy acquisition costs
|
49,713
|
|
|
14,286
|
|
||
Other operating costs and expenses
|
26,830
|
|
|
21,122
|
|
||
Total benefits and expenses
|
486,707
|
|
|
399,974
|
|
||
Income (loss) before income taxes
|
(69,103
|
)
|
|
9,021
|
|
||
Income tax expense (benefit)
|
(24,262
|
)
|
|
3,118
|
|
||
Net income (loss)
|
$
|
(44,841
|
)
|
|
$
|
5,903
|
|
|
|
|
|
||||
Earnings (loss) per common share
|
$
|
(0.55
|
)
|
|
$
|
0.08
|
|
Earnings (loss) per common share - assuming dilution
|
$
|
(0.55
|
)
|
|
$
|
0.07
|
|
Weighted average common shares outstanding (in thousands):
|
|
|
|
||||
Earnings (loss) per common share
|
82,129
|
|
|
77,042
|
|
||
Earnings (loss) per common share - assuming dilution
|
82,961
|
|
|
79,118
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
|
|
|
||||
Net income (loss)
|
$
|
(44,841
|
)
|
|
$
|
5,903
|
|
Other comprehensive income:
|
|
|
|
||||
Change in net unrealized investment gains/losses (1)
|
505,348
|
|
|
264,113
|
|
||
Noncredit component of OTTI losses (1)
|
(147
|
)
|
|
—
|
|
||
Reclassification of unrealized investment gains/losses to net income (loss) (1)
|
116
|
|
|
1,019
|
|
||
Other comprehensive income before income tax
|
505,317
|
|
|
265,132
|
|
||
Income tax effect related to other comprehensive income
|
(176,861
|
)
|
|
(92,795
|
)
|
||
Other comprehensive income
|
328,456
|
|
|
172,337
|
|
||
Comprehensive income
|
$
|
283,615
|
|
|
$
|
178,240
|
|
(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, 2015
|
$
|
81,354
|
|
|
$
|
630,367
|
|
|
$
|
201,663
|
|
|
$
|
1,031,151
|
|
|
$
|
1,944,535
|
|
Net loss for period
|
—
|
|
|
—
|
|
|
—
|
|
|
(44,841
|
)
|
|
(44,841
|
)
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
328,456
|
|
|
—
|
|
|
328,456
|
|
|||||
Share-based compensation, including excess income tax benefits
|
—
|
|
|
2,674
|
|
|
—
|
|
|
—
|
|
|
2,674
|
|
|||||
Issuance of 721,349 shares of common stock under compensation plans, including excess income tax benefits
|
721
|
|
|
2,771
|
|
|
—
|
|
|
—
|
|
|
3,492
|
|
|||||
Issuance of 79,899 shares of common stock to settle warrants that have reached their expiration
|
80
|
|
|
(80
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance at March 31, 2016
|
$
|
82,155
|
|
|
$
|
635,732
|
|
|
$
|
530,119
|
|
|
$
|
986,310
|
|
|
$
|
2,234,316
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2014
|
$
|
76,062
|
|
|
$
|
513,218
|
|
|
$
|
721,401
|
|
|
$
|
829,195
|
|
|
$
|
2,139,876
|
|
Net income for period
|
—
|
|
|
—
|
|
|
—
|
|
|
5,903
|
|
|
5,903
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
172,337
|
|
|
—
|
|
|
172,337
|
|
|||||
Share-based compensation, including excess income tax benefits
|
—
|
|
|
4,515
|
|
|
—
|
|
|
—
|
|
|
4,515
|
|
|||||
Issuance of 618,880 shares of common stock under compensation plans, including excess income tax benefits
|
619
|
|
|
3,470
|
|
|
—
|
|
|
—
|
|
|
4,089
|
|
|||||
Balance at March 31, 2015
|
$
|
76,681
|
|
|
$
|
521,203
|
|
|
$
|
893,738
|
|
|
$
|
835,098
|
|
|
$
|
2,326,720
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
(44,841
|
)
|
|
$
|
5,903
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
||||
Interest sensitive and index product benefits
|
97,671
|
|
|
282,825
|
|
||
Amortization of deferred sales inducements
|
27,479
|
|
|
10,953
|
|
||
Annuity product charges
|
(36,505
|
)
|
|
(28,682
|
)
|
||
Change in fair value of embedded derivatives
|
265,857
|
|
|
51,213
|
|
||
Increase in traditional life and accident and health insurance reserves
|
(858
|
)
|
|
(868
|
)
|
||
Policy acquisition costs deferred
|
(156,934
|
)
|
|
(121,822
|
)
|
||
Amortization of deferred policy acquisition costs
|
49,713
|
|
|
14,286
|
|
||
Provision for depreciation and other amortization
|
875
|
|
|
1,267
|
|
||
Amortization of discounts and premiums on investments
|
(3,103
|
)
|
|
(1,428
|
)
|
||
Realized gains/losses on investments and net OTTI losses recognized in operations
|
3,007
|
|
|
(4,747
|
)
|
||
Change in fair value of derivatives
|
73,657
|
|
|
30,636
|
|
||
Deferred income taxes
|
(45,276
|
)
|
|
(22,541
|
)
|
||
Share-based compensation
|
2,234
|
|
|
1,687
|
|
||
Change in accrued investment income
|
(31,229
|
)
|
|
(31,682
|
)
|
||
Change in income taxes recoverable/payable
|
20,573
|
|
|
22,542
|
|
||
Change in other assets
|
(1,164
|
)
|
|
(918
|
)
|
||
Change in other policy funds and contract claims
|
(12,544
|
)
|
|
(14,171
|
)
|
||
Change in collateral held for derivatives
|
(26,754
|
)
|
|
(326,248
|
)
|
||
Change in other liabilities
|
(38,041
|
)
|
|
(7,113
|
)
|
||
Other
|
(2,205
|
)
|
|
(1,307
|
)
|
||
Net cash provided by (used in) operating activities
|
141,612
|
|
|
(140,215
|
)
|
||
|
|
|
|
||||
Investing activities
|
|
|
|
||||
Sales, maturities, or repayments of investments:
|
|
|
|
||||
Fixed maturity securities - available for sale
|
581,647
|
|
|
276,734
|
|
||
Mortgage loans on real estate
|
84,248
|
|
|
109,846
|
|
||
Derivative instruments
|
6,747
|
|
|
214,667
|
|
||
Other investments
|
4,274
|
|
|
7,218
|
|
||
Acquisition of investments:
|
|
|
|
||||
Fixed maturity securities - available for sale
|
(1,383,082
|
)
|
|
(1,434,934
|
)
|
||
Mortgage loans on real estate
|
(118,009
|
)
|
|
(104,793
|
)
|
||
Derivative instruments
|
(130,608
|
)
|
|
(124,948
|
)
|
||
Other investments
|
(1,046
|
)
|
|
(3,385
|
)
|
||
Purchases of property, furniture and equipment
|
(244
|
)
|
|
(295
|
)
|
||
Net cash used in investing activities
|
(956,073
|
)
|
|
(1,059,890
|
)
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
Financing activities
|
|
|
|
||||
Receipts credited to annuity and single premium universal life policyholder account balances
|
$
|
2,089,739
|
|
|
$
|
1,307,792
|
|
Coinsurance deposits
|
(378,412
|
)
|
|
(33,061
|
)
|
||
Return of annuity policyholder account balances
|
(581,260
|
)
|
|
(492,242
|
)
|
||
Proceeds from amounts due under repurchase agreements
|
—
|
|
|
15,075
|
|
||
Excess tax benefits realized from share-based compensation plans
|
440
|
|
|
2,828
|
|
||
Proceeds from issuance of common stock
|
3,740
|
|
|
4,089
|
|
||
Change in checks in excess of cash balance
|
(10,358
|
)
|
|
(12,126
|
)
|
||
Net cash provided by financing activities
|
1,123,889
|
|
|
792,355
|
|
||
Increase (decrease) in cash and cash equivalents
|
309,428
|
|
|
(407,750
|
)
|
||
Cash and cash equivalents at beginning of period
|
397,749
|
|
|
701,514
|
|
||
Cash and cash equivalents at end of period
|
$
|
707,177
|
|
|
$
|
293,764
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information
|
|
|
|
||||
Cash paid during period for:
|
|
|
|
||||
Interest expense
|
$
|
16,278
|
|
|
$
|
16,580
|
|
Income taxes
|
200
|
|
|
114
|
|
||
Non-cash operating activity:
|
|
|
|
||||
Deferral of sales inducements
|
107,673
|
|
|
93,591
|
|
||
Non-cash financing activities:
|
|
|
|
||||
Common stock issued to settle warrants that have expired
|
80
|
|
|
—
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Available for sale
|
$
|
38,410,000
|
|
|
$
|
38,410,000
|
|
|
$
|
36,421,839
|
|
|
$
|
36,421,839
|
|
Held for investment
|
76,672
|
|
|
67,672
|
|
|
76,622
|
|
|
65,377
|
|
||||
Equity securities, available for sale
|
7,813
|
|
|
7,813
|
|
|
7,828
|
|
|
7,828
|
|
||||
Mortgage loans on real estate
|
2,471,435
|
|
|
2,504,371
|
|
|
2,435,257
|
|
|
2,471,864
|
|
||||
Derivative instruments
|
387,469
|
|
|
387,469
|
|
|
337,256
|
|
|
337,256
|
|
||||
Other investments
|
285,200
|
|
|
288,303
|
|
|
285,044
|
|
|
290,075
|
|
||||
Cash and cash equivalents
|
707,177
|
|
|
707,177
|
|
|
397,749
|
|
|
397,749
|
|
||||
Coinsurance deposits
|
3,586,871
|
|
|
3,220,784
|
|
|
3,187,470
|
|
|
2,860,882
|
|
||||
Interest rate caps
|
740
|
|
|
740
|
|
|
1,410
|
|
|
1,410
|
|
||||
Counterparty collateral
|
85,477
|
|
|
85,477
|
|
|
82,312
|
|
|
82,312
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Policy benefit reserves
|
47,113,312
|
|
|
39,941,007
|
|
|
45,151,460
|
|
|
38,435,515
|
|
||||
Single premium immediate annuity (SPIA) benefit reserves
|
313,559
|
|
|
325,251
|
|
|
324,264
|
|
|
336,066
|
|
||||
Notes payable
|
393,482
|
|
|
411,252
|
|
|
393,227
|
|
|
417,752
|
|
||||
Subordinated debentures
|
241,550
|
|
|
212,638
|
|
|
241,452
|
|
|
216,933
|
|
||||
Interest rate swap
|
5,375
|
|
|
5,375
|
|
|
3,139
|
|
|
3,139
|
|
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)
|
||||||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
473,402
|
|
|
$
|
441,625
|
|
|
$
|
31,777
|
|
|
$
|
—
|
|
United States Government sponsored agencies
|
1,566,287
|
|
|
—
|
|
|
1,566,287
|
|
|
—
|
|
||||
United States municipalities, states and territories
|
3,883,737
|
|
|
—
|
|
|
3,883,737
|
|
|
—
|
|
||||
Foreign government obligations
|
221,861
|
|
|
—
|
|
|
221,861
|
|
|
—
|
|
||||
Corporate securities
|
25,168,468
|
|
|
9
|
|
|
25,168,459
|
|
|
—
|
|
||||
Residential mortgage backed securities
|
1,432,353
|
|
|
—
|
|
|
1,432,353
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
4,503,261
|
|
|
—
|
|
|
4,503,261
|
|
|
—
|
|
||||
Other asset backed securities
|
1,160,631
|
|
|
—
|
|
|
1,160,631
|
|
|
—
|
|
||||
Equity securities, available for sale: finance, insurance and real estate
|
7,813
|
|
|
—
|
|
|
7,813
|
|
|
—
|
|
||||
Derivative instruments
|
387,469
|
|
|
—
|
|
|
387,469
|
|
|
—
|
|
||||
Cash and cash equivalents
|
707,177
|
|
|
707,177
|
|
|
—
|
|
|
—
|
|
||||
Interest rate caps
|
740
|
|
|
—
|
|
|
740
|
|
|
—
|
|
||||
Counterparty collateral
|
85,477
|
|
|
—
|
|
|
85,477
|
|
|
—
|
|
||||
|
$
|
39,598,676
|
|
|
$
|
1,148,811
|
|
|
$
|
38,449,865
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
$
|
5,375
|
|
|
$
|
—
|
|
|
$
|
5,375
|
|
|
$
|
—
|
|
Fixed index annuities - embedded derivatives
|
6,254,466
|
|
|
—
|
|
|
—
|
|
|
6,254,466
|
|
||||
|
$
|
6,259,841
|
|
|
$
|
—
|
|
|
$
|
5,375
|
|
|
$
|
6,254,466
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2015
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
471,256
|
|
|
$
|
438,598
|
|
|
$
|
32,658
|
|
|
$
|
—
|
|
United States Government sponsored agencies
|
1,398,611
|
|
|
—
|
|
|
1,398,611
|
|
|
—
|
|
||||
United States municipalities, states and territories
|
3,755,367
|
|
|
—
|
|
|
3,755,367
|
|
|
—
|
|
||||
Foreign government obligations
|
212,565
|
|
|
—
|
|
|
212,565
|
|
|
—
|
|
||||
Corporate securities
|
23,802,394
|
|
|
121
|
|
|
23,802,273
|
|
|
—
|
|
||||
Residential mortgage backed securities
|
1,462,072
|
|
|
—
|
|
|
1,462,072
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
4,174,396
|
|
|
—
|
|
|
4,174,396
|
|
|
—
|
|
||||
Other asset backed securities
|
1,145,178
|
|
|
—
|
|
|
1,145,178
|
|
|
—
|
|
||||
Equity securities, available for sale: finance, insurance and real estate
|
7,828
|
|
|
—
|
|
|
7,828
|
|
|
—
|
|
||||
Derivative instruments
|
337,256
|
|
|
—
|
|
|
337,256
|
|
|
—
|
|
||||
Cash and cash equivalents
|
397,749
|
|
|
397,749
|
|
|
—
|
|
|
—
|
|
||||
Interest rate caps
|
1,410
|
|
|
—
|
|
|
1,410
|
|
|
—
|
|
||||
Counterparty collateral
|
82,312
|
|
|
—
|
|
|
82,312
|
|
|
—
|
|
||||
|
$
|
37,248,394
|
|
|
$
|
836,468
|
|
|
$
|
36,411,926
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
$
|
3,139
|
|
|
$
|
—
|
|
|
$
|
3,139
|
|
|
$
|
—
|
|
Fixed index annuities - embedded derivatives
|
5,983,622
|
|
|
—
|
|
|
—
|
|
|
5,983,622
|
|
||||
|
$
|
5,986,761
|
|
|
$
|
—
|
|
|
$
|
3,139
|
|
|
$
|
5,983,622
|
|
•
|
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)
|
|
Three Months Ended
March 31, 2016 |
|
Year Ended December 31, 2015
|
|
Three Months Ended
March 31, 2016 |
|
Year Ended December 31, 2015
|
1 - 5
|
|
1.77%
|
|
1.58%
|
|
3.29%
|
|
3.08%
|
6 - 10
|
|
6.60%
|
|
8.55%
|
|
3.30%
|
|
3.55%
|
11 - 15
|
|
11.24%
|
|
12.01%
|
|
3.31%
|
|
3.59%
|
16 - 20
|
|
12.03%
|
|
12.99%
|
|
3.17%
|
|
3.22%
|
20+
|
|
11.68%
|
|
12.54%
|
|
3.17%
|
|
3.22%
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Available for sale securities
|
|
|
|
||||
Beginning balance
|
$
|
—
|
|
|
$
|
375
|
|
Principal returned
|
—
|
|
|
(12
|
)
|
||
Amortization of premium/accretion of discount
|
—
|
|
|
(57
|
)
|
||
Total gains (losses) (realized/unrealized):
|
|
|
|
||||
Included in other comprehensive income
|
—
|
|
|
36
|
|
||
Included in operations
|
—
|
|
|
—
|
|
||
Ending balance
|
$
|
—
|
|
|
$
|
342
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Fixed index annuities - embedded derivatives
|
|
|
|
||||
Beginning balance
|
$
|
5,983,622
|
|
|
$
|
5,574,653
|
|
Premiums less benefits
|
91,129
|
|
|
360,395
|
|
||
Change in fair value, net
|
179,715
|
|
|
(69,877
|
)
|
||
Ending balance
|
$
|
6,254,466
|
|
|
$
|
5,865,171
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
469,957
|
|
|
$
|
3,505
|
|
|
$
|
(60
|
)
|
|
$
|
473,402
|
|
United States Government sponsored agencies
|
1,519,674
|
|
|
46,980
|
|
|
(367
|
)
|
|
1,566,287
|
|
||||
United States municipalities, states and territories
|
3,448,482
|
|
|
437,336
|
|
|
(2,081
|
)
|
|
3,883,737
|
|
||||
Foreign government obligations
|
210,964
|
|
|
18,429
|
|
|
(7,532
|
)
|
|
221,861
|
|
||||
Corporate securities
|
24,113,794
|
|
|
1,490,814
|
|
|
(436,140
|
)
|
|
25,168,468
|
|
||||
Residential mortgage backed securities
|
1,313,775
|
|
|
120,977
|
|
|
(2,399
|
)
|
|
1,432,353
|
|
||||
Commercial mortgage backed securities
|
4,472,852
|
|
|
102,466
|
|
|
(72,057
|
)
|
|
4,503,261
|
|
||||
Other asset backed securities
|
1,147,288
|
|
|
34,010
|
|
|
(20,667
|
)
|
|
1,160,631
|
|
||||
|
$
|
36,696,786
|
|
|
$
|
2,254,517
|
|
|
$
|
(541,303
|
)
|
|
$
|
38,410,000
|
|
Held for investment:
|
|
|
|
|
|
|
|
||||||||
Corporate security
|
$
|
76,672
|
|
|
$
|
—
|
|
|
$
|
(9,000
|
)
|
|
$
|
67,672
|
|
|
|
|
|
|
|
|
|
||||||||
Equity securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
Finance, insurance, and real estate
|
$
|
7,517
|
|
|
$
|
296
|
|
|
$
|
—
|
|
|
$
|
7,813
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2015
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
470,567
|
|
|
$
|
988
|
|
|
$
|
(299
|
)
|
|
$
|
471,256
|
|
United States Government sponsored agencies
|
1,386,219
|
|
|
26,801
|
|
|
(14,409
|
)
|
|
1,398,611
|
|
||||
United States municipalities, states and territories
|
3,422,667
|
|
|
341,328
|
|
|
(8,628
|
)
|
|
3,755,367
|
|
||||
Foreign government obligations
|
210,953
|
|
|
12,547
|
|
|
(10,935
|
)
|
|
212,565
|
|
||||
Corporate securities
|
23,597,530
|
|
|
887,288
|
|
|
(682,424
|
)
|
|
23,802,394
|
|
||||
Residential mortgage backed securities
|
1,366,985
|
|
|
98,576
|
|
|
(3,489
|
)
|
|
1,462,072
|
|
||||
Commercial mortgage backed securities
|
4,238,265
|
|
|
41,412
|
|
|
(105,281
|
)
|
|
4,174,396
|
|
||||
Other asset backed securities
|
1,130,524
|
|
|
34,534
|
|
|
(19,880
|
)
|
|
1,145,178
|
|
||||
|
$
|
35,823,710
|
|
|
$
|
1,443,474
|
|
|
$
|
(845,345
|
)
|
|
$
|
36,421,839
|
|
Held for investment:
|
|
|
|
|
|
|
|
||||||||
Corporate security
|
$
|
76,622
|
|
|
$
|
—
|
|
|
$
|
(11,245
|
)
|
|
$
|
65,377
|
|
|
|
|
|
|
|
|
|
||||||||
Equity securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
Finance, insurance, and real estate
|
$
|
7,515
|
|
|
$
|
313
|
|
|
$
|
—
|
|
|
$
|
7,828
|
|
|
Available for sale
|
|
Held for investment
|
||||||||||||
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Due in one year or less
|
$
|
166,640
|
|
|
$
|
170,202
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
|
2,643,302
|
|
|
2,774,423
|
|
|
—
|
|
|
—
|
|
||||
Due after five years through ten years
|
10,835,215
|
|
|
11,043,464
|
|
|
—
|
|
|
—
|
|
||||
Due after ten years through twenty years
|
8,715,797
|
|
|
9,407,493
|
|
|
—
|
|
|
—
|
|
||||
Due after twenty years
|
7,401,917
|
|
|
7,918,173
|
|
|
76,672
|
|
|
67,672
|
|
||||
|
29,762,871
|
|
|
31,313,755
|
|
|
76,672
|
|
|
67,672
|
|
||||
Residential mortgage backed securities
|
1,313,775
|
|
|
1,432,353
|
|
|
—
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
4,472,852
|
|
|
4,503,261
|
|
|
—
|
|
|
—
|
|
||||
Other asset backed securities
|
1,147,288
|
|
|
1,160,631
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
36,696,786
|
|
|
$
|
38,410,000
|
|
|
$
|
76,672
|
|
|
$
|
67,672
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
|
(Dollars in thousands)
|
||||||
Net unrealized gains on available for sale fixed maturity securities and equity securities
|
$
|
1,713,510
|
|
|
$
|
598,442
|
|
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements
|
(932,610
|
)
|
|
(322,859
|
)
|
||
Deferred income tax valuation allowance reversal
|
22,534
|
|
|
22,534
|
|
||
Deferred income tax expense
|
(273,315
|
)
|
|
(96,454
|
)
|
||
Net unrealized gains reported as accumulated other comprehensive income
|
$
|
530,119
|
|
|
$
|
201,663
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government full faith and credit
|
$
|
6,803
|
|
|
$
|
(60
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,803
|
|
|
$
|
(60
|
)
|
United States Government sponsored agencies
|
89,633
|
|
|
(367
|
)
|
|
—
|
|
|
—
|
|
|
89,633
|
|
|
(367
|
)
|
||||||
United States municipalities, states and territories
|
72,441
|
|
|
(946
|
)
|
|
21,519
|
|
|
(1,135
|
)
|
|
93,960
|
|
|
(2,081
|
)
|
||||||
Foreign government obligations
|
19,523
|
|
|
(116
|
)
|
|
17,200
|
|
|
(7,416
|
)
|
|
36,723
|
|
|
(7,532
|
)
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
763,808
|
|
|
(25,577
|
)
|
|
205,317
|
|
|
(18,958
|
)
|
|
969,125
|
|
|
(44,535
|
)
|
||||||
Manufacturing, construction and mining
|
1,597,989
|
|
|
(120,533
|
)
|
|
616,441
|
|
|
(140,715
|
)
|
|
2,214,430
|
|
|
(261,248
|
)
|
||||||
Utilities and related sectors
|
969,160
|
|
|
(57,648
|
)
|
|
294,026
|
|
|
(38,246
|
)
|
|
1,263,186
|
|
|
(95,894
|
)
|
||||||
Wholesale/retail trade
|
231,211
|
|
|
(6,500
|
)
|
|
54,985
|
|
|
(6,543
|
)
|
|
286,196
|
|
|
(13,043
|
)
|
||||||
Services, media and other
|
429,239
|
|
|
(12,617
|
)
|
|
120,737
|
|
|
(8,803
|
)
|
|
549,976
|
|
|
(21,420
|
)
|
||||||
Residential mortgage backed securities
|
61,677
|
|
|
(2,372
|
)
|
|
1,307
|
|
|
(27
|
)
|
|
62,984
|
|
|
(2,399
|
)
|
||||||
Commercial mortgage backed securities
|
1,613,984
|
|
|
(64,626
|
)
|
|
93,864
|
|
|
(7,431
|
)
|
|
1,707,848
|
|
|
(72,057
|
)
|
||||||
Other asset backed securities
|
424,447
|
|
|
(11,702
|
)
|
|
51,617
|
|
|
(8,965
|
)
|
|
476,064
|
|
|
(20,667
|
)
|
||||||
|
$
|
6,279,915
|
|
|
$
|
(303,064
|
)
|
|
$
|
1,477,013
|
|
|
$
|
(238,239
|
)
|
|
$
|
7,756,928
|
|
|
$
|
(541,303
|
)
|
Held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate security:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance
|
$
|
67,672
|
|
|
$
|
(9,000
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
67,672
|
|
|
$
|
(9,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government full faith and credit
|
$
|
37,730
|
|
|
$
|
(299
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
37,730
|
|
|
$
|
(299
|
)
|
United States Government sponsored agencies
|
957,053
|
|
|
(14,409
|
)
|
|
—
|
|
|
—
|
|
|
957,053
|
|
|
(14,409
|
)
|
||||||
United States municipalities, states and territories
|
261,823
|
|
|
(8,474
|
)
|
|
2,846
|
|
|
(154
|
)
|
|
264,669
|
|
|
(8,628
|
)
|
||||||
Foreign government obligations
|
42,966
|
|
|
(1,762
|
)
|
|
15,463
|
|
|
(9,173
|
)
|
|
58,429
|
|
|
(10,935
|
)
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
2,077,223
|
|
|
(59,607
|
)
|
|
49,912
|
|
|
(14,855
|
)
|
|
2,127,135
|
|
|
(74,462
|
)
|
||||||
Manufacturing, construction and mining
|
3,517,967
|
|
|
(246,456
|
)
|
|
376,229
|
|
|
(131,003
|
)
|
|
3,894,196
|
|
|
(377,459
|
)
|
||||||
Utilities and related sectors
|
2,240,652
|
|
|
(138,940
|
)
|
|
97,184
|
|
|
(22,565
|
)
|
|
2,337,836
|
|
|
(161,505
|
)
|
||||||
Wholesale/retail trade
|
473,050
|
|
|
(17,863
|
)
|
|
38,682
|
|
|
(8,125
|
)
|
|
511,732
|
|
|
(25,988
|
)
|
||||||
Services, media and other
|
1,037,011
|
|
|
(39,937
|
)
|
|
32,050
|
|
|
(3,073
|
)
|
|
1,069,061
|
|
|
(43,010
|
)
|
||||||
Residential mortgage backed securities
|
162,770
|
|
|
(2,958
|
)
|
|
6,438
|
|
|
(531
|
)
|
|
169,208
|
|
|
(3,489
|
)
|
||||||
Commercial mortgage backed securities
|
2,679,510
|
|
|
(105,002
|
)
|
|
11,495
|
|
|
(279
|
)
|
|
2,691,005
|
|
|
(105,281
|
)
|
||||||
Other asset backed securities
|
457,055
|
|
|
(10,581
|
)
|
|
46,657
|
|
|
(9,299
|
)
|
|
503,712
|
|
|
(19,880
|
)
|
||||||
|
$
|
13,944,810
|
|
|
$
|
(646,288
|
)
|
|
$
|
676,956
|
|
|
$
|
(199,057
|
)
|
|
$
|
14,621,766
|
|
|
$
|
(845,345
|
)
|
Held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate security:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance
|
$
|
65,377
|
|
|
$
|
(11,245
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
65,377
|
|
|
$
|
(11,245
|
)
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Fixed maturity securities held for investment carried at amortized cost
|
$
|
2,245
|
|
|
$
|
7,099
|
|
Investments carried at fair value:
|
|
|
|
||||
Fixed maturity securities, available for sale
|
$
|
1,115,085
|
|
|
$
|
520,166
|
|
Equity securities, available for sale
|
(17
|
)
|
|
42
|
|
||
|
1,115,068
|
|
|
520,208
|
|
||
Adjustment for effect on other balance sheet accounts:
|
|
|
|
||||
Deferred policy acquisition costs and deferred sales inducements
|
(609,751
|
)
|
|
(255,076
|
)
|
||
Deferred income tax asset/liability
|
(176,861
|
)
|
|
(92,795
|
)
|
||
|
(786,612
|
)
|
|
(347,871
|
)
|
||
Change in net unrealized gains on investments carried at fair value
|
$
|
328,456
|
|
|
$
|
172,337
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Available for sale fixed maturity securities:
|
|
|
|
||||
Gross realized gains
|
$
|
1,487
|
|
|
$
|
2,288
|
|
Gross realized losses
|
(1,231
|
)
|
|
(289
|
)
|
||
|
256
|
|
|
1,999
|
|
||
Other investments:
|
|
|
|
||||
Gain on sale of real estate
|
131
|
|
|
838
|
|
||
Loss on sale of real estate
|
(92
|
)
|
|
(382
|
)
|
||
Impairment losses on real estate
|
—
|
|
|
(629
|
)
|
||
|
39
|
|
|
(173
|
)
|
||
Mortgage loans on real estate:
|
|
|
|
||||
Decrease (increase) in allowance for credit losses
|
(948
|
)
|
|
1,798
|
|
||
Recovery of specific allowance
|
3,340
|
|
|
1,255
|
|
||
|
2,392
|
|
|
3,053
|
|
||
|
$
|
2,687
|
|
|
$
|
4,879
|
|
•
|
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;
|
•
|
our assessment in the case of equity securities including perpetual preferred stocks with credit deterioration that the security cannot recover to cost in a reasonable period of time;
|
•
|
our intent and ability to retain equity securities for a period of time sufficient to allow for recovery;
|
•
|
consideration of rating agency actions; and
|
•
|
changes in estimated cash flows of mortgage and asset backed securities.
|
|
|
|
|
Discount Rate
|
|
Default Rate
|
|
Loss Severity
|
||||||||||||
Sector
|
|
Vintage
|
|
Min
|
|
Max
|
|
Min
|
|
Max
|
|
Min
|
|
Max
|
||||||
Three months ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Prime
|
|
2006
|
|
7.3
|
%
|
|
7.3
|
%
|
|
13
|
%
|
|
13
|
%
|
|
50
|
%
|
|
50
|
%
|
|
|
2007
|
|
6.2
|
%
|
|
6.4
|
%
|
|
18
|
%
|
|
31
|
%
|
|
50
|
%
|
|
55
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Three months ended March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Prime
|
|
2006
|
|
6.5
|
%
|
|
6.5
|
%
|
|
14
|
%
|
|
14
|
%
|
|
40
|
%
|
|
40
|
%
|
|
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 March 31, 2016
|
|
|
|
|
|
|
|
||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
||||||
Energy
|
2
|
|
$
|
(642
|
)
|
|
$
|
—
|
|
|
$
|
(642
|
)
|
Telecommunications
|
1
|
|
(4,462
|
)
|
|
562
|
|
|
(3,900
|
)
|
|||
Utilities
|
1
|
|
(136
|
)
|
|
—
|
|
|
(136
|
)
|
|||
Residential mortgage backed securities
|
4
|
|
—
|
|
|
(238
|
)
|
|
(238
|
)
|
|||
Commercial mortgage backed securities
|
3
|
|
(778
|
)
|
|
—
|
|
|
(778
|
)
|
|||
|
11
|
|
$
|
(6,018
|
)
|
|
$
|
324
|
|
|
$
|
(5,694
|
)
|
|
|
|
|
|
|
|
|
||||||
Three months ended March 31, 2015
|
|
|
|
|
|
|
|
||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
||||||
Residential mortgage backed securities
|
1
|
|
$
|
(132
|
)
|
|
$
|
—
|
|
|
$
|
(132
|
)
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Cumulative credit loss at beginning of period
|
$
|
(145,824
|
)
|
|
$
|
(127,050
|
)
|
Credit losses on securities for which OTTI has not previously been recognized
|
(5,456
|
)
|
|
(132
|
)
|
||
Additional credit losses on securities for which OTTI has previously been recognized
|
(238
|
)
|
|
—
|
|
||
Accumulated losses on securities that were disposed of during the period
|
—
|
|
|
—
|
|
||
Cumulative credit loss at end of period
|
$
|
(151,518
|
)
|
|
$
|
(127,182
|
)
|
|
Amortized Cost
|
|
OTTI
Recognized in
Other
Comprehensive
Income
|
|
Change in Fair
Value Since
OTTI was
Recognized
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
Corporate securities
|
$
|
8,592
|
|
|
$
|
(3,537
|
)
|
|
$
|
2,080
|
|
|
$
|
7,135
|
|
Residential mortgage backed securities
|
443,158
|
|
|
(170,486
|
)
|
|
196,000
|
|
|
468,672
|
|
||||
Other asset backed securities
|
8,335
|
|
|
(5,125
|
)
|
|
(1,321
|
)
|
|
1,889
|
|
||||
|
$
|
460,085
|
|
|
$
|
(179,148
|
)
|
|
$
|
196,759
|
|
|
$
|
477,696
|
|
December 31, 2015
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
Corporate securities
|
$
|
6,396
|
|
|
$
|
(2,975
|
)
|
|
$
|
9
|
|
|
$
|
3,430
|
|
Residential mortgage backed securities
|
466,871
|
|
|
(170,724
|
)
|
|
199,149
|
|
|
495,296
|
|
||||
Other asset backed securities
|
8,154
|
|
|
(5,125
|
)
|
|
(553
|
)
|
|
2,476
|
|
||||
|
$
|
481,421
|
|
|
$
|
(178,824
|
)
|
|
$
|
198,605
|
|
|
$
|
501,202
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
|
(Dollars in thousands)
|
||||||
Principal outstanding
|
$
|
2,483,782
|
|
|
$
|
2,449,909
|
|
Loan loss allowance
|
(11,750
|
)
|
|
(14,142
|
)
|
||
Deferred prepayment fees
|
(597
|
)
|
|
(510
|
)
|
||
Carrying value
|
$
|
2,471,435
|
|
|
$
|
2,435,257
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||
|
Principal
|
|
Percent
|
|
Principal
|
|
Percent
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Geographic distribution
|
|
|
|
|
|
|
|
||||||
East
|
$
|
697,469
|
|
|
28.1
|
%
|
|
$
|
698,113
|
|
|
28.5
|
%
|
Middle Atlantic
|
158,337
|
|
|
6.4
|
%
|
|
160,261
|
|
|
6.6
|
%
|
||
Mountain
|
243,453
|
|
|
9.8
|
%
|
|
252,442
|
|
|
10.3
|
%
|
||
New England
|
13,053
|
|
|
0.5
|
%
|
|
13,161
|
|
|
0.5
|
%
|
||
Pacific
|
382,616
|
|
|
15.4
|
%
|
|
355,268
|
|
|
14.5
|
%
|
||
South Atlantic
|
470,729
|
|
|
18.9
|
%
|
|
456,227
|
|
|
18.6
|
%
|
||
West North Central
|
324,748
|
|
|
13.1
|
%
|
|
313,120
|
|
|
12.8
|
%
|
||
West South Central
|
193,377
|
|
|
7.8
|
%
|
|
201,317
|
|
|
8.2
|
%
|
||
|
$
|
2,483,782
|
|
|
100.0
|
%
|
|
$
|
2,449,909
|
|
|
100.0
|
%
|
Property type distribution
|
|
|
|
|
|
|
|
||||||
Office
|
$
|
399,139
|
|
|
16.1
|
%
|
|
$
|
396,154
|
|
|
16.2
|
%
|
Medical Office
|
76,686
|
|
|
3.1
|
%
|
|
77,438
|
|
|
3.2
|
%
|
||
Retail
|
773,741
|
|
|
31.1
|
%
|
|
790,158
|
|
|
32.2
|
%
|
||
Industrial/Warehouse
|
698,385
|
|
|
28.1
|
%
|
|
686,400
|
|
|
28.0
|
%
|
||
Hotel
|
3,308
|
|
|
0.1
|
%
|
|
3,361
|
|
|
0.1
|
%
|
||
Apartment
|
362,222
|
|
|
14.6
|
%
|
|
352,971
|
|
|
14.4
|
%
|
||
Mixed use/other
|
170,301
|
|
|
6.9
|
%
|
|
143,427
|
|
|
5.9
|
%
|
||
|
$
|
2,483,782
|
|
|
100.0
|
%
|
|
$
|
2,449,909
|
|
|
100.0
|
%
|
|
Three Months Ended
March 31, 2016 |
|
Three Months Ended
March 31, 2015 |
||||||||||||
|
Specific
Allowance
|
|
General Allowance
|
|
Specific
Allowance
|
|
General Allowance
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Beginning allowance balance
|
$
|
(7,842
|
)
|
|
$
|
(6,300
|
)
|
|
$
|
(12,333
|
)
|
|
$
|
(10,300
|
)
|
Charge-offs
|
—
|
|
|
—
|
|
|
128
|
|
|
—
|
|
||||
Recoveries
|
3,340
|
|
|
—
|
|
|
1,255
|
|
|
—
|
|
||||
Change in provision for credit losses
|
(1,248
|
)
|
|
300
|
|
|
(1,502
|
)
|
|
3,300
|
|
||||
Ending allowance balance
|
$
|
(5,750
|
)
|
|
$
|
(6,000
|
)
|
|
$
|
(12,452
|
)
|
|
$
|
(7,000
|
)
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
|
(Dollars in thousands)
|
||||||
Individually evaluated for impairment
|
$
|
19,055
|
|
|
$
|
21,277
|
|
Collectively evaluated for impairment
|
2,464,727
|
|
|
2,428,632
|
|
||
Total loans evaluated for impairment
|
$
|
2,483,782
|
|
|
$
|
2,449,909
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Real estate owned at beginning of period
|
$
|
6,485
|
|
|
$
|
20,238
|
|
Real estate acquired in satisfaction of mortgage loans
|
—
|
|
|
—
|
|
||
Sales
|
(1,106
|
)
|
|
(4,899
|
)
|
||
Impairments
|
—
|
|
|
(629
|
)
|
||
Depreciation
|
(23
|
)
|
|
(99
|
)
|
||
Real estate owned at end of period
|
$
|
5,356
|
|
|
$
|
14,611
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
March 31, 2016
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,477,349
|
|
|
$
|
6,433
|
|
|
$
|
2,483,782
|
|
December 31, 2015
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,449,909
|
|
|
$
|
—
|
|
|
$
|
2,449,909
|
|
|
Recorded
Investment
|
|
Unpaid Principal Balance
|
|
Related
Allowance
|
||||||
|
(Dollars in thousands)
|
||||||||||
March 31, 2016
|
|
|
|
|
|
||||||
Mortgage loans with an allowance
|
$
|
13,305
|
|
|
$
|
19,055
|
|
|
$
|
(5,750
|
)
|
Mortgage loans with no related allowance
|
1,678
|
|
|
1,678
|
|
|
—
|
|
|||
|
$
|
14,983
|
|
|
$
|
20,733
|
|
|
$
|
(5,750
|
)
|
December 31, 2015
|
|
|
|
|
|
||||||
Mortgage loans with an allowance
|
$
|
13,435
|
|
|
$
|
21,277
|
|
|
$
|
(7,842
|
)
|
Mortgage loans with no related allowance
|
8,859
|
|
|
8,859
|
|
|
—
|
|
|||
|
$
|
22,294
|
|
|
$
|
30,136
|
|
|
$
|
(7,842
|
)
|
|
Average Recorded Investment
|
|
Interest Income Recognized
|
||||
|
(Dollars in thousands)
|
||||||
Three months ended March 31, 2016
|
|
|
|
||||
Mortgage loans with an allowance
|
$
|
13,999
|
|
|
$
|
264
|
|
Mortgage loans with no related allowance
|
1,709
|
|
|
26
|
|
||
|
$
|
15,708
|
|
|
$
|
290
|
|
Three months ended March 31, 2015
|
|
|
|
||||
Mortgage loans with an allowance
|
$
|
19,158
|
|
|
$
|
451
|
|
Mortgage loans with no related allowance
|
13,107
|
|
|
159
|
|
||
|
$
|
32,265
|
|
|
$
|
610
|
|
•
|
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)
|
||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
|
||||||
South Atlantic
|
|
5
|
|
$
|
9,963
|
|
|
$
|
(2,992
|
)
|
|
$
|
6,971
|
|
East North Central
|
|
1
|
|
2,081
|
|
|
(467
|
)
|
|
1,614
|
|
|||
|
|
6
|
|
$
|
12,044
|
|
|
$
|
(3,459
|
)
|
|
$
|
8,585
|
|
December 31, 2015
|
|
|
|
|
|
|
|
|
||||||
South Atlantic
|
|
6
|
|
$
|
11,155
|
|
|
$
|
(2,992
|
)
|
|
$
|
8,163
|
|
East North Central
|
|
2
|
|
3,306
|
|
|
(467
|
)
|
|
2,839
|
|
|||
West North Central
|
|
1
|
|
5,913
|
|
|
—
|
|
|
5,913
|
|
|||
|
|
9
|
|
$
|
20,374
|
|
|
$
|
(3,459
|
)
|
|
$
|
16,915
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
|
(Dollars in thousands)
|
||||||
Assets
|
|
|
|
||||
Derivative instruments
|
|
|
|
||||
Call options
|
$
|
387,469
|
|
|
$
|
337,256
|
|
Other assets
|
|
|
|
||||
Interest rate caps
|
740
|
|
|
1,410
|
|
||
|
$
|
388,209
|
|
|
$
|
338,666
|
|
Liabilities
|
|
|
|
||||
Policy benefit reserves - annuity products
|
|
|
|
||||
Fixed index annuities - embedded derivatives
|
$
|
6,254,466
|
|
|
$
|
5,983,622
|
|
Other liabilities
|
|
|
|
||||
Interest rate swap
|
5,375
|
|
|
3,139
|
|
||
|
$
|
6,259,841
|
|
|
$
|
5,986,761
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Change in fair value of derivatives:
|
|
|
|
||||
Call options
|
$
|
(70,751
|
)
|
|
$
|
(29,220
|
)
|
2015 notes hedges
|
—
|
|
|
567
|
|
||
Interest rate swap
|
(2,644
|
)
|
|
(1,761
|
)
|
||
Interest rate caps
|
(670
|
)
|
|
(686
|
)
|
||
|
$
|
(74,065
|
)
|
|
$
|
(31,100
|
)
|
Change in fair value of embedded derivatives:
|
|
|
|
||||
Fixed index annuities—embedded derivatives
|
$
|
179,715
|
|
|
$
|
(69,877
|
)
|
Other changes in difference between policy benefit reserves computed using derivative accounting vs. long-duration contracts accounting
|
86,142
|
|
|
120,523
|
|
||
2015 notes embedded conversion derivative
|
—
|
|
|
567
|
|
||
|
$
|
265,857
|
|
|
$
|
51,213
|
|
|
|
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||||
Counterparty
|
|
Credit Rating
(S&P)
|
|
Credit Rating (Moody's)
|
|
Notional
Amount
|
|
Fair Value
|
|
Notional
Amount
|
|
Fair Value
|
||||||||
|
|
|
|
|
|
(Dollars in thousands)
|
||||||||||||||
Bank of America
|
|
A
|
|
A1
|
|
$
|
6,697,638
|
|
|
$
|
78,296
|
|
|
$
|
6,257,861
|
|
|
$
|
67,662
|
|
Barclays
|
|
A-
|
|
A2
|
|
2,290,633
|
|
|
37,769
|
|
|
2,463,768
|
|
|
35,273
|
|
||||
BNP Paribas
|
|
A
|
|
A1
|
|
1,351,337
|
|
|
20,456
|
|
|
1,520,710
|
|
|
16,944
|
|
||||
Citibank, N.A.
|
|
A
|
|
A1
|
|
3,749,452
|
|
|
23,432
|
|
|
3,786,498
|
|
|
23,587
|
|
||||
Credit Suisse
|
|
A
|
|
A2
|
|
1,610,605
|
|
|
25,342
|
|
|
1,278,492
|
|
|
12,508
|
|
||||
Deutsche Bank
|
|
BBB+
|
|
Baa1
|
|
1,042,549
|
|
|
6,063
|
|
|
1,349,002
|
|
|
10,704
|
|
||||
J.P. Morgan
|
|
A+
|
|
Aa3
|
|
1,087,115
|
|
|
15,110
|
|
|
838,982
|
|
|
5,283
|
|
||||
Morgan Stanley
|
|
A
|
|
A1
|
|
3,272,374
|
|
|
23,861
|
|
|
3,465,457
|
|
|
33,171
|
|
||||
Royal Bank of Canada
|
|
AA-
|
|
Aa3
|
|
2,949,467
|
|
|
50,617
|
|
|
2,820,410
|
|
|
48,654
|
|
||||
SunTrust
|
|
A-
|
|
Baa1
|
|
1,342,568
|
|
|
26,269
|
|
|
1,308,434
|
|
|
20,028
|
|
||||
Wells Fargo
|
|
AA-
|
|
Aa2
|
|
4,481,969
|
|
|
80,254
|
|
|
4,187,955
|
|
|
63,442
|
|
||||
|
|
|
|
|
|
$
|
29,875,707
|
|
|
$
|
387,469
|
|
|
$
|
29,277,569
|
|
|
$
|
337,256
|
|
|
|
Notional
|
|
|
|
Pay
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
|||||||
Maturity Date
|
|
Amount
|
|
Receive Rate
|
|
Rate
|
|
Counterparty
|
|
Fair Value
|
|
Fair Value
|
|||||||
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|||||||||
March 15, 2021
|
|
$
|
85,500
|
|
|
LIBOR
|
|
2.415
|
%
|
|
SunTrust
|
|
$
|
(5,375
|
)
|
|
$
|
(3,139
|
)
|
|
|
Notional
|
|
|
|
Cap
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
|||||||
Maturity Date
|
|
Amount
|
|
Floating Rate
|
|
Rate
|
|
Counterparty
|
|
Fair Value
|
|
Fair Value
|
|||||||
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|||||||||
July 7, 2021
|
|
$
|
40,000
|
|
|
LIBOR
|
|
2.50
|
%
|
|
SunTrust
|
|
$
|
370
|
|
|
$
|
708
|
|
July 8, 2021
|
|
12,000
|
|
|
LIBOR
|
|
2.50
|
%
|
|
SunTrust
|
|
111
|
|
|
212
|
|
|||
July 29, 2021
|
|
27,000
|
|
|
LIBOR
|
|
2.50
|
%
|
|
SunTrust
|
|
259
|
|
|
490
|
|
|||
|
|
$
|
79,000
|
|
|
|
|
|
|
|
|
$
|
740
|
|
|
$
|
1,410
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands, except per share data)
|
||||||
Numerator:
|
|
|
|
||||
Net income (loss) - numerator for earnings (loss) per common share
|
$
|
(44,841
|
)
|
|
$
|
5,903
|
|
|
|
|
|
||||
Denominator:
|
|
|
|
||||
Weighted average common shares outstanding (1)
|
82,128,911
|
|
|
77,041,704
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
2015 warrants
|
60,878
|
|
|
806,485
|
|
||
Stock options and deferred compensation agreements
|
492,567
|
|
|
1,159,334
|
|
||
Restricted stock and restricted stock units
|
279,139
|
|
|
110,511
|
|
||
Denominator for earnings (loss) per common share - assuming dilution
|
82,961,495
|
|
|
79,118,034
|
|
||
|
|
|
|
||||
Earnings (loss) per common share
|
$
|
(0.55
|
)
|
|
$
|
0.08
|
|
Earnings (loss) per common share - assuming dilution
|
$
|
(0.55
|
)
|
|
$
|
0.07
|
|
(1)
|
Weighted average common shares outstanding include shares vested under the NMO Deferred Compensation Plan.
|
Period
|
|
Number of
Shares
|
|
Range of
Exercise Prices
|
||
|
|
|
|
Minimum
|
|
Maximum
|
Three months ended March 31, 2016
|
|
1,061,541
|
|
$24.79
|
|
$24.79
|
Three months ended March 31, 2015
|
|
—
|
|
$—
|
|
$—
|
•
|
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.
|
|
Three Months Ended
March 31, |
||
|
2016
|
|
2015
|
Average yield on invested assets
|
4.58%
|
|
4.74%
|
Aggregate cost of money
|
1.93%
|
|
1.97%
|
Aggregate investment spread
|
2.65%
|
|
2.77%
|
|
|
|
|
Impact of:
|
|
|
|
Investment yield - additional prepayment income
|
0.08%
|
|
0.01%
|
Cost of money benefit of over hedging
|
—%
|
|
0.07%
|
|
|
Three Months Ended
March 31, |
||||||
Product Type
|
|
2016
|
|
2015
|
||||
|
|
(Dollars in thousands)
|
||||||
Fixed index annuities
|
|
$
|
1,688,002
|
|
|
$
|
1,227,240
|
|
Annual reset fixed rate annuities
|
|
16,705
|
|
|
11,050
|
|
||
Multi-year fixed rate annuities
|
|
385,032
|
|
|
69,502
|
|
||
Single premium immediate annuities
|
|
5,314
|
|
|
8,532
|
|
||
Total before coinsurance ceded
|
|
2,095,053
|
|
|
1,316,324
|
|
||
Coinsurance ceded
|
|
460,986
|
|
|
104,994
|
|
||
Net after coinsurance ceded
|
|
$
|
1,634,067
|
|
|
$
|
1,211,330
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Reconciliation of net income (loss) to operating income:
|
|
|
|
||||
Net income (loss)
|
$
|
(44,841
|
)
|
|
$
|
5,903
|
|
Adjustments to arrive at operating income:
|
|
|
|
||||
Net realized (gains) losses and net OTTI losses on investments, net of offsets
|
745
|
|
|
(1,819
|
)
|
||
Change in fair value of derivatives and embedded derivatives - index annuities, net of offsets
|
63,477
|
|
|
43,657
|
|
||
Change in fair value of derivatives and embedded derivatives - debt, net of income taxes
|
1,617
|
|
|
1,077
|
|
||
Operating income
|
$
|
20,998
|
|
|
$
|
48,818
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Surrender charges
|
$
|
14,565
|
|
|
$
|
11,554
|
|
Lifetime income benefit riders (LIBR) fees
|
21,940
|
|
|
17,128
|
|
||
|
$
|
36,505
|
|
|
$
|
28,682
|
|
|
|
|
|
||||
Withdrawals from annuity policies subject to surrender charges
|
$
|
114,762
|
|
|
$
|
92,993
|
|
Average surrender charge collected on withdrawals subject to surrender charges
|
12.7
|
%
|
|
12.4
|
%
|
||
|
|
|
|
||||
Fund values on policies subject to LIBR fees
|
$
|
3,411,608
|
|
|
$
|
2,881,932
|
|
Weighted average per policy LIBR fee
|
0.64
|
%
|
|
0.59
|
%
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Call options:
|
|
|
|
||||
Gain (loss) on option expiration
|
$
|
(109,640
|
)
|
|
$
|
105,354
|
|
Change in unrealized gains/losses
|
38,889
|
|
|
(134,574
|
)
|
||
2015 notes hedges
|
—
|
|
|
567
|
|
||
Interest rate swap
|
(2,644
|
)
|
|
(1,761
|
)
|
||
Interest rate caps
|
(670
|
)
|
|
(686
|
)
|
||
|
$
|
(74,065
|
)
|
|
$
|
(31,100
|
)
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Available for sale fixed maturity securities:
|
|
|
|
||||
Gross realized gains
|
$
|
1,487
|
|
|
$
|
2,288
|
|
Gross realized losses
|
(1,231
|
)
|
|
(289
|
)
|
||
|
256
|
|
|
1,999
|
|
||
Other investments:
|
|
|
|
||||
Gain on sale of real estate
|
131
|
|
|
838
|
|
||
Loss on sale of real estate
|
(92
|
)
|
|
(382
|
)
|
||
Impairment losses on real estate
|
—
|
|
|
(629
|
)
|
||
|
39
|
|
|
(173
|
)
|
||
Mortgage loans on real estate:
|
|
|
|
||||
Decrease (increase) in allowance for credit losses
|
(948
|
)
|
|
1,798
|
|
||
Recovery of specific allowance
|
3,340
|
|
|
1,255
|
|
||
|
2,392
|
|
|
3,053
|
|
||
|
$
|
2,687
|
|
|
$
|
4,879
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Index credits on index policies
|
$
|
6,531
|
|
|
$
|
197,603
|
|
Interest credited (including changes in minimum guaranteed interest for fixed index annuities)
|
64,512
|
|
|
65,194
|
|
||
Lifetime income benefit riders
|
26,628
|
|
|
20,028
|
|
||
|
$
|
97,671
|
|
|
$
|
282,825
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Amortization of deferred sales inducements before gross profit adjustments
|
$
|
75,481
|
|
|
$
|
49,639
|
|
Gross profit adjustments:
|
|
|
|
||||
Fair value accounting for derivatives and embedded derivatives
|
(47,166
|
)
|
|
(39,531
|
)
|
||
Net realized gains (losses) on investments, net OTTI losses recognized in operations and changes in litigation liabilities
|
(836
|
)
|
|
845
|
|
||
Amortization of deferred sales inducements after gross profit adjustments
|
$
|
27,479
|
|
|
$
|
10,953
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
|
|
|
|
||||
Fixed index annuities - embedded derivatives
|
$
|
179,715
|
|
|
$
|
(69,877
|
)
|
Other changes in difference between policy benefit reserves computed using derivative accounting vs. long-duration contracts accounting
|
86,142
|
|
|
120,523
|
|
||
2015 notes embedded conversion derivative
|
—
|
|
|
567
|
|
||
|
$
|
265,857
|
|
|
$
|
51,213
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Amortization of deferred policy acquisition costs before gross profit adjustments
|
$
|
109,598
|
|
|
$
|
70,786
|
|
Gross profit adjustments:
|
|
|
|
||||
Fair value accounting for derivatives and embedded derivatives
|
(58,869
|
)
|
|
(57,581
|
)
|
||
Net realized gains (losses) on investments, net OTTI losses recognized in operations and changes in litigation liabilities
|
(1,016
|
)
|
|
1,081
|
|
||
Amortization of deferred policy acquisition costs after gross profit adjustments
|
$
|
49,713
|
|
|
$
|
14,286
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Salary and benefits
|
$
|
14,074
|
|
|
$
|
10,309
|
|
Risk charges
|
6,776
|
|
|
4,832
|
|
||
Other
|
5,980
|
|
|
5,981
|
|
||
Total other operating costs and expenses
|
$
|
26,830
|
|
|
$
|
21,122
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||
|
Carrying
Amount
|
|
Percent
|
|
Carrying
Amount
|
|
Percent
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||
United States Government full faith and credit
|
$
|
473,402
|
|
|
1.2
|
%
|
|
$
|
471,256
|
|
|
1.3
|
%
|
United States Government sponsored agencies
|
1,566,287
|
|
|
3.8
|
%
|
|
1,398,611
|
|
|
3.5
|
%
|
||
United States municipalities, states and territories
|
3,883,737
|
|
|
9.3
|
%
|
|
3,755,367
|
|
|
9.5
|
%
|
||
Foreign government obligations
|
221,861
|
|
|
0.5
|
%
|
|
212,565
|
|
|
0.5
|
%
|
||
Corporate securities
|
25,245,140
|
|
|
60.6
|
%
|
|
23,879,016
|
|
|
60.3
|
%
|
||
Residential mortgage backed securities
|
1,432,353
|
|
|
3.5
|
%
|
|
1,462,072
|
|
|
3.7
|
%
|
||
Commercial mortgage backed securities
|
4,503,261
|
|
|
10.8
|
%
|
|
4,174,396
|
|
|
10.5
|
%
|
||
Other asset backed securities
|
1,160,631
|
|
|
2.8
|
%
|
|
1,145,178
|
|
|
2.9
|
%
|
||
Total fixed maturity securities
|
38,486,672
|
|
|
92.5
|
%
|
|
36,498,461
|
|
|
92.2
|
%
|
||
Equity securities
|
7,813
|
|
|
—
|
%
|
|
7,828
|
|
|
—
|
%
|
||
Mortgage loans on real estate
|
2,471,435
|
|
|
5.9
|
%
|
|
2,435,257
|
|
|
6.2
|
%
|
||
Derivative instruments
|
387,469
|
|
|
0.9
|
%
|
|
337,256
|
|
|
0.9
|
%
|
||
Other investments
|
290,556
|
|
|
0.7
|
%
|
|
291,530
|
|
|
0.7
|
%
|
||
|
$
|
41,643,945
|
|
|
100.0
|
%
|
|
$
|
39,570,332
|
|
|
100.0
|
%
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||
Rating Agency Rating
|
|
Carrying
Amount
|
|
Percent of
Fixed Maturity
Securities
|
|
Carrying
Amount
|
|
Percent of
Fixed Maturity
Securities
|
||||||
|
|
(Dollars in thousands)
|
||||||||||||
Aaa/Aa/A
|
|
$
|
24,978,026
|
|
|
64.9
|
%
|
|
$
|
23,724,648
|
|
|
65.0
|
%
|
Baa
|
|
12,038,516
|
|
|
31.3
|
%
|
|
11,491,609
|
|
|
31.5
|
%
|
||
Total investment grade
|
|
37,016,542
|
|
|
96.2
|
%
|
|
35,216,257
|
|
|
96.5
|
%
|
||
Ba
|
|
838,831
|
|
|
2.2
|
%
|
|
657,760
|
|
|
1.8
|
%
|
||
B
|
|
99,856
|
|
|
0.3
|
%
|
|
68,712
|
|
|
0.2
|
%
|
||
Caa and lower
|
|
373,398
|
|
|
1.0
|
%
|
|
388,908
|
|
|
1.1
|
%
|
||
In or near default
|
|
158,045
|
|
|
0.3
|
%
|
|
166,824
|
|
|
0.4
|
%
|
||
Total below investment grade
|
|
1,470,130
|
|
|
3.8
|
%
|
|
1,282,204
|
|
|
3.5
|
%
|
||
|
|
$
|
38,486,672
|
|
|
100.0
|
%
|
|
$
|
36,498,461
|
|
|
100.0
|
%
|
NAIC Designation
|
|
NRSRO Equivalent Rating
|
1
|
|
Aaa/Aa/A
|
2
|
|
Baa
|
3
|
|
Ba
|
4
|
|
B
|
5
|
|
Caa
|
6
|
|
Ca and lower
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||||||||
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
|
|
$
|
23,648,794
|
|
|
$
|
25,264,168
|
|
|
$
|
25,264,168
|
|
|
65.6
|
%
|
|
$
|
23,363,259
|
|
|
$
|
24,207,801
|
|
|
$
|
24,207,801
|
|
|
66.3
|
%
|
2
|
|
11,955,752
|
|
|
12,223,107
|
|
|
12,223,107
|
|
|
31.8
|
%
|
|
11,709,730
|
|
|
11,589,325
|
|
|
11,589,325
|
|
|
31.8
|
%
|
||||||
3
|
|
1,023,746
|
|
|
894,557
|
|
|
903,557
|
|
|
2.4
|
%
|
|
758,531
|
|
|
643,293
|
|
|
654,538
|
|
|
1.8
|
%
|
||||||
4
|
|
128,238
|
|
|
86,816
|
|
|
86,816
|
|
|
0.2
|
%
|
|
60,480
|
|
|
44,312
|
|
|
44,312
|
|
|
0.1
|
%
|
||||||
5
|
|
2,100
|
|
|
1,537
|
|
|
1,537
|
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
||||||
6
|
|
14,828
|
|
|
7,487
|
|
|
7,487
|
|
|
—
|
%
|
|
8,332
|
|
|
2,485
|
|
|
2,485
|
|
|
—
|
%
|
||||||
|
|
$
|
36,773,458
|
|
|
$
|
38,477,672
|
|
|
$
|
38,486,672
|
|
|
100.0
|
%
|
|
$
|
35,900,332
|
|
|
$
|
36,487,216
|
|
|
$
|
36,498,461
|
|
|
100.0
|
%
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Unrealized
Losses
|
|
Fair Value
|
|||||||
|
|
|
(Dollars in thousands)
|
|||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
United States Government full faith and credit
|
1
|
|
|
$
|
6,863
|
|
|
$
|
(60
|
)
|
|
$
|
6,803
|
|
United States Government sponsored agencies
|
3
|
|
|
90,000
|
|
|
(367
|
)
|
|
89,633
|
|
|||
United States municipalities, states and territories
|
26
|
|
|
96,041
|
|
|
(2,081
|
)
|
|
93,960
|
|
|||
Foreign government obligations
|
5
|
|
|
44,255
|
|
|
(7,532
|
)
|
|
36,723
|
|
|||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Finance, insurance and real estate
|
71
|
|
|
1,013,660
|
|
|
(44,535
|
)
|
|
969,125
|
|
|||
Manufacturing, construction and mining
|
207
|
|
|
2,475,678
|
|
|
(261,248
|
)
|
|
2,214,430
|
|
|||
Utilities and related sectors
|
133
|
|
|
1,359,080
|
|
|
(95,894
|
)
|
|
1,263,186
|
|
|||
Wholesale/retail trade
|
23
|
|
|
299,239
|
|
|
(13,043
|
)
|
|
286,196
|
|
|||
Services, media and other
|
53
|
|
|
571,396
|
|
|
(21,420
|
)
|
|
549,976
|
|
|||
Residential mortgage backed securities
|
18
|
|
|
65,383
|
|
|
(2,399
|
)
|
|
62,984
|
|
|||
Commercial mortgage backed securities
|
146
|
|
|
1,779,905
|
|
|
(72,057
|
)
|
|
1,707,848
|
|
|||
Other asset backed securities
|
43
|
|
|
496,731
|
|
|
(20,667
|
)
|
|
476,064
|
|
|||
|
729
|
|
|
$
|
8,298,231
|
|
|
$
|
(541,303
|
)
|
|
$
|
7,756,928
|
|
Fixed maturity securities, held for investment:
|
|
|
|
|
|
|
|
|||||||
Corporate security:
|
|
|
|
|
|
|
|
|||||||
Insurance
|
1
|
|
|
$
|
76,672
|
|
|
$
|
(9,000
|
)
|
|
$
|
67,672
|
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2015
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
United States Government full faith and credit
|
4
|
|
|
$
|
38,029
|
|
|
$
|
(299
|
)
|
|
$
|
37,730
|
|
United States Government sponsored agencies
|
21
|
|
|
971,462
|
|
|
(14,409
|
)
|
|
957,053
|
|
|||
United States municipalities, states and territories
|
76
|
|
|
273,297
|
|
|
(8,628
|
)
|
|
264,669
|
|
|||
Foreign government obligations
|
6
|
|
|
69,364
|
|
|
(10,935
|
)
|
|
58,429
|
|
|||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Finance, insurance and real estate
|
145
|
|
|
2,201,597
|
|
|
(74,462
|
)
|
|
2,127,135
|
|
|||
Manufacturing, construction and mining
|
334
|
|
|
4,271,655
|
|
|
(377,459
|
)
|
|
3,894,196
|
|
|||
Utilities and related sectors
|
216
|
|
|
2,499,341
|
|
|
(161,505
|
)
|
|
2,337,836
|
|
|||
Wholesale/retail trade
|
43
|
|
|
537,720
|
|
|
(25,988
|
)
|
|
511,732
|
|
|||
Services, media and other
|
101
|
|
|
1,112,071
|
|
|
(43,010
|
)
|
|
1,069,061
|
|
|||
Residential mortgage backed securities
|
34
|
|
|
172,697
|
|
|
(3,489
|
)
|
|
169,208
|
|
|||
Commercial mortgage backed securities
|
222
|
|
|
2,796,286
|
|
|
(105,281
|
)
|
|
2,691,005
|
|
|||
Other asset backed securities
|
43
|
|
|
523,592
|
|
|
(19,880
|
)
|
|
503,712
|
|
|||
|
1,245
|
|
|
$
|
15,467,111
|
|
|
$
|
(845,345
|
)
|
|
$
|
14,621,766
|
|
Fixed maturity securities, held for investment:
|
|
|
|
|
|
|
|
|||||||
Corporate security:
|
|
|
|
|
|
|
|
|||||||
Insurance
|
1
|
|
|
$
|
76,622
|
|
|
$
|
(11,245
|
)
|
|
$
|
65,377
|
|
NAIC Designation
|
|
Carrying Value of
Securities with
Gross Unrealized
Losses
|
|
Percent of
Total
|
|
Gross
Unrealized Losses |
|
Percent of
Total
|
||||||
|
|
(Dollars in thousands)
|
||||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
|
||||||
1
|
|
$
|
3,474,713
|
|
|
44.4
|
%
|
|
$
|
(129,958
|
)
|
|
23.6
|
%
|
2
|
|
3,577,786
|
|
|
45.7
|
%
|
|
(237,396
|
)
|
|
43.1
|
%
|
||
3
|
|
685,708
|
|
|
8.7
|
%
|
|
(133,462
|
)
|
|
24.3
|
%
|
||
4
|
|
86,816
|
|
|
1.1
|
%
|
|
(41,422
|
)
|
|
7.5
|
%
|
||
5
|
|
1,538
|
|
|
—
|
%
|
|
(563
|
)
|
|
0.1
|
%
|
||
6
|
|
7,039
|
|
|
0.1
|
%
|
|
(7,502
|
)
|
|
1.4
|
%
|
||
|
|
$
|
7,833,600
|
|
|
100.0
|
%
|
|
$
|
(550,303
|
)
|
|
100.0
|
%
|
December 31, 2015
|
|
|
|
|
|
|
|
|
||||||
1
|
|
$
|
8,278,102
|
|
|
56.3
|
%
|
|
$
|
(280,209
|
)
|
|
32.7
|
%
|
2
|
|
5,813,570
|
|
|
39.6
|
%
|
|
(436,543
|
)
|
|
51.0
|
%
|
||
3
|
|
560,199
|
|
|
3.8
|
%
|
|
(117,814
|
)
|
|
13.7
|
%
|
||
4
|
|
44,041
|
|
|
0.3
|
%
|
|
(16,168
|
)
|
|
1.9
|
%
|
||
5
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
||
6
|
|
2,476
|
|
|
—
|
%
|
|
(5,856
|
)
|
|
0.7
|
%
|
||
|
|
$
|
14,698,388
|
|
|
100.0
|
%
|
|
$
|
(856,590
|
)
|
|
100.0
|
%
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|||||||
|
|
|
(Dollars in thousands)
|
|||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
185
|
|
|
$
|
2,304,180
|
|
|
$
|
2,249,932
|
|
|
$
|
(54,248
|
)
|
Six months or more and less than twelve months
|
331
|
|
|
3,882,211
|
|
|
3,677,925
|
|
|
(204,286
|
)
|
|||
Twelve months or greater
|
93
|
|
|
1,272,802
|
|
|
1,155,282
|
|
|
(117,520
|
)
|
|||
Total investment grade
|
609
|
|
|
7,459,193
|
|
|
7,083,139
|
|
|
(376,054
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
33
|
|
|
128,298
|
|
|
123,514
|
|
|
(4,784
|
)
|
|||
Six months or more and less than twelve months
|
50
|
|
|
344,962
|
|
|
296,216
|
|
|
(48,746
|
)
|
|||
Twelve months or greater
|
38
|
|
|
442,450
|
|
|
321,731
|
|
|
(120,719
|
)
|
|||
Total below investment grade
|
121
|
|
|
915,710
|
|
|
741,461
|
|
|
(174,249
|
)
|
|||
|
730
|
|
|
$
|
8,374,903
|
|
|
$
|
7,824,600
|
|
|
$
|
(550,303
|
)
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2015
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
588
|
|
|
$
|
7,395,125
|
|
|
$
|
7,193,059
|
|
|
$
|
(202,066
|
)
|
Six months or more and less than twelve months
|
484
|
|
|
6,799,113
|
|
|
6,388,844
|
|
|
(410,269
|
)
|
|||
Twelve months or greater
|
44
|
|
|
592,600
|
|
|
484,646
|
|
|
(107,954
|
)
|
|||
Total investment grade
|
1,116
|
|
|
14,786,838
|
|
|
14,066,549
|
|
|
(720,289
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
87
|
|
|
297,879
|
|
|
279,947
|
|
|
(17,932
|
)
|
|||
Six months or more and less than twelve months
|
15
|
|
|
175,603
|
|
|
148,337
|
|
|
(27,266
|
)
|
|||
Twelve months or greater
|
28
|
|
|
283,413
|
|
|
192,310
|
|
|
(91,103
|
)
|
|||
Total below investment grade
|
130
|
|
|
756,895
|
|
|
620,594
|
|
|
(136,301
|
)
|
|||
|
1,246
|
|
|
$
|
15,543,733
|
|
|
$
|
14,687,143
|
|
|
$
|
(856,590
|
)
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|||||||
|
|
|
(Dollars in thousands)
|
|||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
31
|
|
|
$
|
304,946
|
|
|
$
|
244,151
|
|
|
$
|
(60,795
|
)
|
Six months or more and less than twelve months
|
9
|
|
|
90,367
|
|
|
67,660
|
|
|
(22,707
|
)
|
|||
Twelve months or greater
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total investment grade
|
40
|
|
|
395,313
|
|
|
311,811
|
|
|
(83,502
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
27
|
|
|
252,893
|
|
|
195,563
|
|
|
(57,330
|
)
|
|||
Six months or more and less than twelve months
|
10
|
|
|
113,114
|
|
|
70,289
|
|
|
(42,825
|
)
|
|||
Twelve months or greater
|
5
|
|
|
67,183
|
|
|
35,072
|
|
|
(32,111
|
)
|
|||
Total below investment grade
|
42
|
|
|
433,190
|
|
|
300,924
|
|
|
(132,266
|
)
|
|||
|
82
|
|
|
$
|
828,503
|
|
|
$
|
612,735
|
|
|
$
|
(215,768
|
)
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2015
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
37
|
|
|
$
|
460,894
|
|
|
$
|
339,047
|
|
|
$
|
(121,847
|
)
|
Six months or more and less than twelve months
|
13
|
|
|
122,794
|
|
|
82,149
|
|
|
(40,645
|
)
|
|||
Twelve months or greater
|
1
|
|
|
2,856
|
|
|
1,999
|
|
|
(857
|
)
|
|||
Total investment grade
|
51
|
|
|
586,544
|
|
|
423,195
|
|
|
(163,349
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
13
|
|
|
73,412
|
|
|
44,976
|
|
|
(28,436
|
)
|
|||
Six months or more and less than twelve months
|
13
|
|
|
145,886
|
|
|
88,308
|
|
|
(57,578
|
)
|
|||
Twelve months or greater
|
3
|
|
|
30,930
|
|
|
14,213
|
|
|
(16,717
|
)
|
|||
Total below investment grade
|
29
|
|
|
250,228
|
|
|
147,497
|
|
|
(102,731
|
)
|
|||
|
80
|
|
|
$
|
836,772
|
|
|
$
|
570,692
|
|
|
$
|
(266,080
|
)
|
|
Available for sale
|
|
Held for investment
|
||||||||||||
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
March 31, 2016
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
|
264,083
|
|
|
238,463
|
|
|
—
|
|
|
—
|
|
||||
Due after five years through ten years
|
2,870,290
|
|
|
2,709,761
|
|
|
—
|
|
|
—
|
|
||||
Due after ten years through twenty years
|
1,160,679
|
|
|
1,095,193
|
|
|
—
|
|
|
—
|
|
||||
Due after twenty years
|
1,661,160
|
|
|
1,466,615
|
|
|
76,672
|
|
|
67,672
|
|
||||
|
5,956,212
|
|
|
5,510,032
|
|
|
76,672
|
|
|
67,672
|
|
||||
Residential mortgage backed securities
|
65,383
|
|
|
62,984
|
|
|
—
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
1,779,905
|
|
|
1,707,848
|
|
|
—
|
|
|
—
|
|
||||
Other asset backed securities
|
496,731
|
|
|
476,064
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
8,298,231
|
|
|
$
|
7,756,928
|
|
|
$
|
76,672
|
|
|
$
|
67,672
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2015
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
|
257,994
|
|
|
247,957
|
|
|
—
|
|
|
—
|
|
||||
Due after five years through ten years
|
6,111,139
|
|
|
5,802,168
|
|
|
—
|
|
|
—
|
|
||||
Due after ten years through twenty years
|
2,816,752
|
|
|
2,693,742
|
|
|
—
|
|
|
—
|
|
||||
Due after twenty years
|
2,788,651
|
|
|
2,513,974
|
|
|
76,622
|
|
|
65,377
|
|
||||
|
11,974,536
|
|
|
11,257,841
|
|
|
76,622
|
|
|
65,377
|
|
||||
Residential mortgage backed securities
|
172,697
|
|
|
169,208
|
|
|
—
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
2,796,286
|
|
|
2,691,005
|
|
|
—
|
|
|
—
|
|
||||
Other asset backed securities
|
523,592
|
|
|
503,712
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
15,467,111
|
|
|
$
|
14,621,766
|
|
|
$
|
76,622
|
|
|
$
|
65,377
|
|
|
|
March 31, 2016
|
||||||||||||
Sector and Subsector
|
|
Amortized
Cost
|
|
Fair Value
|
|
Unrealized Gain (Loss)
|
|
Average Credit Rating
|
||||||
|
|
(Dollars in thousands)
|
|
|
||||||||||
Energy
|
|
|
|
|
|
|
|
|
||||||
Independent
|
|
$
|
499,826
|
|
|
$
|
453,307
|
|
|
$
|
(46,519
|
)
|
|
Baa
|
Integrated
|
|
491,548
|
|
|
490,397
|
|
|
(1,151
|
)
|
|
A
|
|||
Oil field services
|
|
405,265
|
|
|
349,100
|
|
|
(56,165
|
)
|
|
Baa
|
|||
Refining
|
|
104,656
|
|
|
103,499
|
|
|
(1,157
|
)
|
|
Baa
|
|||
Midstream
|
|
754,709
|
|
|
705,376
|
|
|
(49,333
|
)
|
|
Baa
|
|||
Government owned no guarantee
|
|
284,224
|
|
|
292,638
|
|
|
8,414
|
|
|
A
|
|||
Metals & Mining
|
|
562,019
|
|
|
506,579
|
|
|
(55,440
|
)
|
|
Baa
|
|||
Total Energy and Metals & Mining
|
|
$
|
3,102,247
|
|
|
$
|
2,900,896
|
|
|
$
|
(201,351
|
)
|
|
Baa
|
|
|
Amortized Cost at March 31, 2016
|
||||||||||||||||||||||||||||||
|
|
Energy
|
|
|
|
|
||||||||||||||||||||||||||
NRSRO Rating
|
|
Independent
|
|
Integrated
|
|
Oil field services
|
|
Refining
|
|
Midstream
|
|
Government Owned No Guarantee
|
|
Metals & Mining
|
|
Total
|
||||||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||||
Aaa
|
|
$
|
—
|
|
|
$
|
59,947
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
59,947
|
|
||
Aa
|
|
—
|
|
|
168,245
|
|
|
28,286
|
|
|
—
|
|
|
—
|
|
|
19,910
|
|
|
—
|
|
|
216,441
|
|
||||||||
A
|
|
89,462
|
|
|
78,831
|
|
|
107,536
|
|
|
12,110
|
|
|
90,885
|
|
|
214,438
|
|
|
76,590
|
|
|
669,852
|
|
||||||||
Baa
|
|
364,126
|
|
|
149,300
|
|
|
176,212
|
|
|
92,546
|
|
|
629,792
|
|
|
25,260
|
|
|
287,934
|
|
|
1,725,170
|
|
||||||||
Ba
|
|
32,195
|
|
|
35,225
|
|
|
93,231
|
|
|
—
|
|
|
34,032
|
|
|
—
|
|
|
129,862
|
|
|
324,545
|
|
||||||||
B
|
|
14,043
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,616
|
|
|
61,141
|
|
|
99,800
|
|
||||||||
Below B
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,492
|
|
|
6,492
|
|
||||||||
|
|
$
|
499,826
|
|
|
$
|
491,548
|
|
|
$
|
405,265
|
|
|
$
|
104,656
|
|
|
$
|
754,709
|
|
|
$
|
284,224
|
|
|
$
|
562,019
|
|
|
$
|
3,102,247
|
|
|
|
Fair Value at March 31, 2016
|
||||||||||||||||||||||||||||||
|
|
Energy
|
|
|
|
|
||||||||||||||||||||||||||
NRSRO Rating
|
|
Independent
|
|
Integrated
|
|
Oil field services
|
|
Refining
|
|
Midstream
|
|
Government Owned No Guarantee
|
|
Metals & Mining
|
|
Total
|
||||||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||||
Aaa
|
|
$
|
—
|
|
|
$
|
63,710
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
63,710
|
|
Aa
|
|
—
|
|
|
173,482
|
|
|
28,476
|
|
|
—
|
|
|
—
|
|
|
21,913
|
|
|
—
|
|
|
223,871
|
|
||||||||
A
|
|
91,078
|
|
|
79,032
|
|
|
113,354
|
|
|
11,267
|
|
|
92,924
|
|
|
228,483
|
|
|
74,871
|
|
|
691,009
|
|
||||||||
Baa
|
|
326,874
|
|
|
143,433
|
|
|
147,831
|
|
|
92,232
|
|
|
589,309
|
|
|
25,042
|
|
|
273,015
|
|
|
1,597,736
|
|
||||||||
Ba
|
|
26,045
|
|
|
30,740
|
|
|
59,439
|
|
|
—
|
|
|
23,143
|
|
|
—
|
|
|
112,418
|
|
|
251,785
|
|
||||||||
B
|
|
9,310
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,200
|
|
|
40,686
|
|
|
67,196
|
|
||||||||
Below B
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,589
|
|
|
5,589
|
|
||||||||
|
|
$
|
453,307
|
|
|
$
|
490,397
|
|
|
$
|
349,100
|
|
|
$
|
103,499
|
|
|
$
|
705,376
|
|
|
$
|
292,638
|
|
|
$
|
506,579
|
|
|
$
|
2,900,896
|
|
|
March 31, 2016
|
||||||||
|
Amortized Cost
|
|
Carrying
Amount/Fair Value
|
|
Percent
of Total
Carrying
Amount
|
||||
|
(Dollars in thousands)
|
|
|
||||||
GIIPS (1)
|
$
|
211,028
|
|
|
$
|
234,045
|
|
|
0.6%
|
Asia/Pacific
|
393,151
|
|
|
417,890
|
|
|
1.1%
|
||
Non-GIIPS Europe
|
2,883,992
|
|
|
3,009,441
|
|
|
7.8%
|
||
Latin America
|
259,974
|
|
|
233,829
|
|
|
0.6%
|
||
Non-U.S. North America
|
1,216,676
|
|
|
1,187,942
|
|
|
3.1%
|
||
Australia & New Zealand
|
661,605
|
|
|
673,452
|
|
|
1.7%
|
||
Other
|
998,137
|
|
|
1,029,779
|
|
|
2.7%
|
||
|
$
|
6,624,563
|
|
|
$
|
6,786,378
|
|
|
17.6%
|
(1)
|
Greece, Ireland, Italy, Portugal and Spain continue to cause credit risk as economic conditions in these countries continue to be volatile, especially within the financial and banking sectors. 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.
|
|
March 31, 2016
|
||||||
|
Amortized Cost
|
|
Carrying Amount/
Fair Value
|
||||
|
(Dollars in thousands)
|
||||||
GIIPS (1)
|
$
|
28,765
|
|
|
$
|
29,806
|
|
Asia/Pacific
|
11,000
|
|
|
7,902
|
|
||
Non-GIIPS Europe
|
78,016
|
|
|
68,048
|
|
||
Latin America
|
66,926
|
|
|
45,327
|
|
||
Non-U.S. North America
|
119,002
|
|
|
91,354
|
|
||
|
$
|
303,709
|
|
|
$
|
242,437
|
|
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)
|
|
|
|
|
||||||||||
Investment grade
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Financials
|
|
1
|
|
$
|
20,000
|
|
|
$
|
(3,102
|
)
|
|
$
|
16,898
|
|
|
55
|
|
—
|
Other asset backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Financials
|
|
1
|
|
2,507
|
|
|
(752
|
)
|
|
1,755
|
|
|
60
|
|
11
|
|||
|
|
2
|
|
$
|
22,507
|
|
|
$
|
(3,854
|
)
|
|
$
|
18,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Below investment grade
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Energy
|
|
4
|
|
$
|
45,067
|
|
|
$
|
(17,706
|
)
|
|
$
|
27,361
|
|
|
19 - 35
|
|
0 - 15
|
Materials
|
|
6
|
|
39,274
|
|
|
(8,550
|
)
|
|
30,724
|
|
|
9 - 38
|
|
0 - 5
|
|||
Industrials
|
|
1
|
|
4,980
|
|
|
(2,755
|
)
|
|
2,225
|
|
|
17
|
|
8
|
|||
Telecommunications
|
|
1
|
|
2,100
|
|
|
(562
|
)
|
|
1,538
|
|
|
21
|
|
9
|
|||
Other asset backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Financials
|
|
1
|
|
8,335
|
|
|
(6,446
|
)
|
|
1,889
|
|
|
34
|
|
15
|
|||
|
|
13
|
|
$
|
99,756
|
|
|
$
|
(36,019
|
)
|
|
$
|
63,737
|
|
|
|
|
|
|
|
15
|
|
$
|
122,263
|
|
|
$
|
(39,873
|
)
|
|
$
|
82,390
|
|
|
|
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||
|
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
|
$
|
1,771,671
|
|
|
71.3
|
%
|
|
$
|
1,772,226
|
|
|
72.3
|
%
|
Greater than or equal to 1.2 and less than 1.5
|
461,300
|
|
|
18.6
|
%
|
|
414,482
|
|
|
16.9
|
%
|
||
Greater than or equal to 1.0 and less than 1.2
|
148,560
|
|
|
6.0
|
%
|
|
141,799
|
|
|
5.8
|
%
|
||
Less than 1.0
|
102,251
|
|
|
4.1
|
%
|
|
121,402
|
|
|
5.0
|
%
|
||
|
$
|
2,483,782
|
|
|
100.0
|
%
|
|
$
|
2,449,909
|
|
|
100.0
|
%
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
|
(Dollars in thousands)
|
||||||
Impaired mortgage loans with an allowance
|
$
|
19,055
|
|
|
$
|
21,277
|
|
Impaired mortgage loans with no related allowance
|
1,678
|
|
|
8,859
|
|
||
Allowance for probable loan losses
|
(5,750
|
)
|
|
(7,842
|
)
|
||
Net carrying value of impaired mortgage loans
|
$
|
14,983
|
|
|
$
|
22,294
|
|
|
Three Months Ended
March 31, |
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Annual index credits to policyholders on their anniversaries
|
$
|
6,531
|
|
|
$
|
197,603
|
|
Proceeds received at expiration of options related to such credits
|
6,742
|
|
|
202,582
|
|
Exhibit No.
|
|
Description
|
|
Method of Filing
|
10.1
|
|
Form of First Amendment to the Performance Restricted Stock Unit Award Agreement
|
|
Filed herewith
|
10.2
|
|
Form of Restricted Stock Cancellation Agreement
|
|
Filed herewith
|
10.3
|
|
Amended and Restated Retirement Benefit Agreement, dated as of April 4, 2016, between American Equity Investment Life Holding Company and David J. Noble
|
|
Filed herewith
|
10.4
|
|
American Equity Investment Life Holding Company 2016 Employee Incentive Plan
|
|
Incorporated by reference to the Appendix A to the Company's proxy statement on Form DEF 14A filed with the SEC on April 18, 2016
|
10.5
|
|
Amended and Restated American Equity Investment Life Holding Company 2014 Independent Insurance Agent Restricted Stock and Restricted Stock Unit Plan, as amended
|
|
Incorporated by reference to the Appendix B to the Company's proxy statement on Form DEF 14A filed with the SEC on April 18, 2016
|
12.1
|
|
Ratio of Earnings to Fixed Charges
|
|
Filed herewith
|
31.1
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith
|
31.2
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith
|
32.1
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith
|
32.2
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
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:
|
May 10, 2016
|
|
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 - Controller
|
|
|
|
|
|
(Principal Accounting Officer)
|
|
|
AMERICAN EQUITY INVESTMENT
LIFE HOLDING COMPANY
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Name:
|
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
GRANTEE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
Date:
|
|
|
|
|
|
|
Agreed and Acknowledged:
|
|
|
|
|
|
A
merican Equity Investment Life Holding Company
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
John M. Matovina
|
|
Title:
|
Chief Executive Officer and President
|
|
|
|
(a)
|
Termination for Cause
. The Company shall have the right to terminate Executive’s employment at any time for Cause by giving Executive written notice of the effective date of termination (which effective date may be the date of such notice).
|
(i)
|
For purposes of this Agreement only, the term “
Cause
” shall mean Executive’s:
|
(1)
|
willful failure to materially perform his duties with the Company or to follow the specific instructions of the Board of Directors of the Company (the “
Board
”), other than any such failure resulting from his incapacity due to physical or mental illness,
|
(2)
|
willful engagement in conduct that is materially injurious to the Company, monetarily or otherwise,
|
(3)
|
conviction of (or plea of
nolo
contendere
to) any felony, fraud or embezzlement, or
|
(4)
|
willful and material breach of the terms of this Agreement.
|
(ii)
|
If the Company terminates Executive’s employment for Cause, the Company shall have no further obligations and Executive shall have no further rights hereunder.
|
(iii)
|
Notwithstanding the foregoing, the Company may not terminate Executive’s employment for Cause unless (x) a determination that Cause exists is made and approved by a majority of the Board (excluding Executive), (y) Executive is given at least 15 days written notice of the Board meeting called to make such determination and an opportunity to cure during such notice period, and (z) Executive and his legal counsel are given the opportunity to address such meeting.
|
(b)
|
Termination by Reason of Retirement
. In light of Executive’s age and years of service with the Company, any termination of Executive’s employment with the Company, other than a termination for Cause for purposes of this Agreement, will be by reason of
“Retirement.”
|
(a)
|
Retirement Benefit
. If Executive’s employment is terminated by reason of Retirement on July 1, 2016, then Executive shall receive a benefit payable in 60 monthly installments of $67,083.33 for the period described below (the “
Retirement Benefit
”). Executive’s Retirement Benefit shall commence on the earlier of (i) the six-month anniversary of the date of Executive’s Retirement and (ii) as soon as practicable after his death, but in no event later than 60 days, with a lump sum cash payment equal to seven monthly installments (or, in the event of Executive’s death prior to January 1, 2017, such lesser number of monthly installments to equal the number of months that elapsed since July 1, 2016) and thereafter the monthly installment shall be paid on the first day of each successive month until such time as 60 monthly installments have been paid; provided, however, that if Executive dies before all 60 monthly installments have been paid, then payments shall be made to the David J. Noble Revocable Trust created on January 16, 2012 (the “
Noble Trust
”) monthly following his death and the Noble Trust shall continue to receive such monthly payments until the earliest to occur of (a) the 24-month anniversary of the Executive’s death and (b) such time as all 60 monthly installments of the Retirement Benefit have been paid.
|
(b)
|
Death Benefit
. If Executive’s employment is terminated by reason of his death, then the Noble Trust shall be entitled to receive a monthly payment of $67,083.33 until the 24-month anniversary of Executive’s death.
|
(c)
|
Health Benefits
. If Executive’s employment is terminated for any reason other than for Cause, Executive shall be eligible to participate for Executive’s lifetime in the Company’s health benefit programs, if any, on terms no less favorable than those available to senior executive officers of the Company; provided, however, that nothing in this Section 3(c) shall limit the Company’s right to amend or terminate at any time such benefits applicable to such senior executive officers of the Company.
|
(d)
|
Office Space
. During Executive’s lifetime (including at any time after Executive’s Retirement but not following a termination for Cause), Executive shall be provided the use of his current office space (or, at Executive’s request, comparable office space located elsewhere) and secretarial services.
|
(e)
|
Use of Company Aircraft
. During Executive’s lifetime (including at any time after Executive’s Retirement but not following a termination for Cause), Executive shall have the use of the Company’s aircraft for his personal use for up to ____hours per year at no expense to him (other than applicable income taxes and the employee portion of employment taxes or self-employment taxes, as may be appropriate, in respect of such use, which taxes shall be payable by Executive); provided, however, that such use shall be reasonably coordinated with the use by the Company for its needs.
|
(a)
|
Covenant Not to Compete
. Executive agrees that commencing on the Effective Date and continuing until the second anniversary of Executive’s termination of employment with the Company (such period being referred to herein as the “
Restricted Period
”), Executive shall not, directly or indirectly, engage in the Business for his own account, or own or invest in (except through ownership of securities of the Company or less than 5% of the securities of another publicly traded company), manage, join, operate or control, or participate in the ownership, management, operation or control of, or serve as a director, member, officer, employee, partner, consultant or otherwise with, or permit his name to be used by or in connection with, any profit or non-profit business or organization other than the Company engaged in the Business (“
Competitor
”) anywhere in Iowa, Illinois, Minnesota, Missouri and Wisconsin.
|
(b)
|
No Solicitation of Policyholders, Employees or Agents
. During the Restricted Period, Executive shall not, directly or indirectly,
|
(i)
|
solicit, divert or attempt to influence any person, firm, corporation or other entity who is or was a policyholder of the Company to terminate or decrease the amount of Business such policyholder has placed or may place with the Company
;
|
(ii)
|
solicit or recruit any employee of the Company, unless the employment of such employee with the Company has been terminated other than by an inducement of employment otherwise prohibited hereunder; and
|
(iii)
|
solicit, divert or attempt to influence any person, firm, corporation or other entity who is or was an agent of the Company to terminate or decrease the amount of Business such person or entity conducts with the Company.
|
(c)
|
Confidential Information
. Executive acknowledges that he occupies a position of trust and confidence with the Company. During the Restricted Period, Executive shall not, except as may be required to perform his duties hereunder or as required by applicable law or as authorized by the Board, and except for information which is or becomes publicly available other than as a result of a breach by Executive of the provisions hereof, disclose to others or use for his own account, whether directly or indirectly, any Confidential Information. Executive acknowledges that such Confidential Information is specialized, unique in nature and of great value to the Company, and that such information gives the Company a competitive advantage. As used herein, the term “
Confidential Information
” shall mean information about the Company and its products, policyholders, and agents and national marketing organizations that is not publicly disclosed by the Company and that was learned by Executive in the course of his employment, including (without limitation) proprietary knowledge, trade secrets, inventions, ideas, processes, source and object codes, computer programs, data, know-how, improvements, discoveries, designs, techniques, market and investment research, marketing or business plans and strategies, budgets and unpublished financial information, licenses, prices and costs, quoting policies and procedures, formulae, information and suppliers, policyholder and agent lists, information regarding the skills and compensation of Company employees and agents, and all papers, resumes, and records (including computer records) or documents containing Confidential Information.
|
(d)
|
Severability of Provisions
. In the event that the provisions of this Section 4 should ever be adjudicated by a court of competent jurisdiction to exceed the time or geographic or other limitations permitted by applicable law, then such provisions shall be deemed reformed to the maximum time or geographic or other limitations permitted by applicable law, as determined by such court in such action. Without limiting the foregoing, the covenants contained herein shall be construed as separate covenants, covering their respective subject matters, with respect to (i) each place in which the Company now transacts any Business and (ii) each Business conducted by the Company. Each breach of the covenants set forth herein shall give rise to a separate and independent cause of action.
|
(e)
|
Injunctive Relief
. Executive acknowledges that (i) the provisions of Sections 4(a), (b) and (c) are reasonable and necessary to protect the legitimate interests of the Company, and (ii) any violation of Sections 4 (a), (b) or (c) will result in irreparable injury to the Company, the exact amount of which will be difficult to ascertain, and that the remedies at law for any such violation would not be reasonable or adequate compensation to the Company for such a violation. Accordingly, Executive agrees that if he violates the provisions of Sections 4(a), (b) or (c), in addition to any other remedy which may be available at law or in equity, the Company shall be entitled to specific performance and injunctive relief without the necessity of proving actual damages or posting a bond.
|
(f)
|
Enforceability in All Jurisdictions
. The parties intend to and hereby confer jurisdiction to enforce each and every one of the covenants in this Agreement upon the courts of any jurisdiction within the geographic scope of such restrictive covenants. If the courts of any one or more of such jurisdictions hold the restrictive covenants unenforceable by reason of the breadth of such scope or otherwise, it is the intention of the parties that such determination shall not bar or in any way affect any party’s right to the relief provided above in the courts of any other jurisdiction within the geographic scope of such restrictive covenants.
|
(a)
|
Executive and the Company each represent and warrant to the other that he or it has the authorization, power and right to deliver, execute, and fully perform his or its obligations under this Agreement in accordance with its terms.
|
(b)
|
This Agreement supersedes all prior and existing negotiations and agreements between the parties concerning the subject matter of this Agreement, and this Agreement can only be changed or modified pursuant to a written instrument duly executed by each of the parties hereto. This Agreement does not supersede or affect any other written agreements between the Executive and the Company or any plans, policies or practices covering the Executive.
|
(c)
|
If any provision of this Agreement or any portion thereof is declared invalid, illegal, or incapable of being enforced by any court of competent jurisdiction, the remainder of such provisions and all of the remaining provisions of this Agreement shall continue in full force and effect.
|
(d)
|
This Agreement shall be governed by and construed in accordance with the internal laws of the State of Iowa, except to the extent governed by federal law.
|
(e)
|
All amounts payable hereunder shall be subject to such withholding taxes and deductions as may be required by law. Executive shall be responsible for all income taxes and the employee portion of all employment taxes or self-employment taxes, as may be appropriate, payable in respect of the benefits provided under this Agreement, and the Company may withhold from the Retirement Benefit the amount required to satisfy any applicable tax withholding obligation (whether in respect of the Retirement Benefit or otherwise). To the extent any such withholding obligation arises after the expiration of the Retirement Benefit payments, Executive from time to time shall deliver to the Company, in a form and manner acceptable to the Company, cash or other payment (as determined by the Company) in an amount equal to the applicable withholding obligation.
|
(f)
|
No funds or assets of the Company will be segregated or physically set aside with respect to this Agreement. Executive will not have any interest in any specific asset of the Company as a result of this Agreement. Any right to receive benefits under this Agreement will be the right only of an unsecured general creditor of the Company.
|
(g)
|
The Company shall assign this Agreement to any successor (whether by merger, consolidation, purchase or otherwise) to all or substantially all of the stock, assets or business of the Company and this Agreement shall be binding upon and inure to the benefit of such successors and assigns. Except as expressly provided herein, Executive may not sell, transfer, assign, or pledge any of his rights or interests pursuant to this Agreement.
|
(h)
|
Any rights of Executive hereunder shall be in addition to any rights Executive may otherwise have under benefit plans, agreements, or arrangements of the Company to which he is a party or in which he is a participant, including, but not limited to, any Company-sponsored employee benefit plans. Provisions of this Agreement shall not in any way abrogate Executive’s rights under such other plans, agreements, or arrangements.
|
(i)
|
For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed to American Equity Investment Life Holding Company, 6000 Westown Parkway, West Des Moines, Iowa 50266 Attn: Board of Directors, and to Executive, c/o American Equity Investment Life Holding Company, 6000 Westown Parkway, West Des Moines, Iowa 50266, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
|
(j)
|
All references to the masculine gender shall be deemed to include the feminine gender.
|
(k)
|
This Agreement is intended to comply with and be administered in compliance with Section 409A of the Internal Revenue Code of 1986, as amended (“
Section 409A
”). Notwithstanding anything contained herein to the contrary, to the extent required to avoid accelerated taxation and/or tax penalties under Section 409A, Executive shall not be considered to have terminated employment for purposes of Section 3 of this Agreement unless Executive would be considered to have incurred a separation from service within the meaning of Section 409A. Each amount to be paid under this Agreement shall be construed as a separate identified payment for purposes of Section 409A.
|
Executive
|
|
|
|
|
|
By
|
/s/ David J. Noble
|
|
|
David J. Noble
|
|
|
|
|
|
|
|
American Equity Investment Life Holding Company
|
|
|
|
|
|
By
|
/s/ John Matovina
|
|
|
John Matovina
|
|
|
Chief Executive Officer and President
|
|
|
Three Months Ended
|
|
Year Ended December 31,
|
||||||||||||||||||||
|
March 31, 2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
Consolidated income (loss) before income taxes
|
$
|
(69,103
|
)
|
|
$
|
337,314
|
|
|
$
|
196,064
|
|
|
$
|
389,332
|
|
|
$
|
85,989
|
|
|
$
|
132,914
|
|
Interest sensitive and index product benefits and amortization of deferred sales inducements
|
125,150
|
|
|
1,177,443
|
|
|
1,605,119
|
|
|
1,525,980
|
|
|
895,636
|
|
|
846,878
|
|
||||||
Interest expense on notes payable
|
6,880
|
|
|
28,849
|
|
|
36,370
|
|
|
38,870
|
|
|
28,479
|
|
|
31,633
|
|
||||||
Interest expense on subordinated debentures
|
3,168
|
|
|
12,239
|
|
|
12,122
|
|
|
12,088
|
|
|
13,458
|
|
|
13,977
|
|
||||||
Interest expense on amounts due under repurchase agreements and other interest expense
|
—
|
|
|
2
|
|
|
18
|
|
|
139
|
|
|
—
|
|
|
30
|
|
||||||
Interest portion of rental expense
|
229
|
|
|
902
|
|
|
847
|
|
|
797
|
|
|
697
|
|
|
665
|
|
||||||
Consolidated earnings
|
$
|
66,324
|
|
|
$
|
1,556,749
|
|
|
$
|
1,850,540
|
|
|
$
|
1,967,206
|
|
|
$
|
1,024,259
|
|
|
$
|
1,026,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest sensitive and index product benefits and amortization of deferred sales inducements
|
$
|
125,150
|
|
|
$
|
1,177,443
|
|
|
$
|
1,605,119
|
|
|
$
|
1,525,980
|
|
|
$
|
895,636
|
|
|
$
|
846,878
|
|
Interest expense on notes payable
|
6,880
|
|
|
28,849
|
|
|
36,370
|
|
|
38,870
|
|
|
28,479
|
|
|
31,633
|
|
||||||
Interest expense on subordinated debentures
|
3,168
|
|
|
12,239
|
|
|
12,122
|
|
|
12,088
|
|
|
13,458
|
|
|
13,977
|
|
||||||
Interest expense on amounts due under repurchase agreements and other interest expense
|
—
|
|
|
2
|
|
|
18
|
|
|
139
|
|
|
—
|
|
|
30
|
|
||||||
Interest portion of rental expense
|
229
|
|
|
902
|
|
|
847
|
|
|
797
|
|
|
697
|
|
|
665
|
|
||||||
Combined fixed charges
|
$
|
135,427
|
|
|
$
|
1,219,435
|
|
|
$
|
1,654,476
|
|
|
$
|
1,577,874
|
|
|
$
|
938,270
|
|
|
$
|
893,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of consolidated earnings to fixed charges
|
0.5
|
|
|
1.3
|
|
|
1.1
|
|
|
1.2
|
|
|
1.1
|
|
|
1.1
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of consolidated earnings to fixed charges, both excluding interest sensitive and index product benefits and amortization of deferred sales inducements
|
(5.7
|
)
|
|
9.0
|
|
|
5.0
|
|
|
8.5
|
|
|
3.0
|
|
|
3.9
|
|
1.
|
I have reviewed this
quarterly
report on Form
10-Q
of American Equity Investment Life Holding Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
May 10, 2016
|
By:
|
|
/s/ JOHN M. MATOVINA
|
|
|
|
|
John M. Matovina, Chief Executive Officer and President
(Principal Executive Officer)
|
1.
|
I have reviewed this
quarterly
report on Form
10-Q
of American Equity Investment Life Holding Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
May 10, 2016
|
By:
|
|
/s/ TED M. JOHNSON
|
|
|
|
|
Ted M. Johnson, Chief Financial Officer and Treasurer
(Principal Financial Officer)
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
May 10, 2016
|
By:
|
|
/s/ JOHN M. MATOVINA
|
|
|
|
|
John M. Matovina, Chief Executive Officer and President
(Principal Executive Officer)
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
May 10, 2016
|
By:
|
|
/s/ TED M. JOHNSON
|
|
|
|
|
Ted M. Johnson, Chief Financial Officer and Treasurer
(Principal Financial Officer)
|