(Mark One)
|
|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the fiscal year ended December 31, 2017
|
|
or
|
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from
to
|
Iowa
(State or other jurisdiction of Incorporation)
|
42-1447959
(I.R.S. Employer Identification No.)
|
6000 Westown Parkway
West Des Moines, Iowa
(Address of principal executive offices)
|
50266
(Zip Code)
|
Registrant's telephone number, including area code:
(515) 221-0002
|
|
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class
|
Name of each exchange on which registered
|
Common stock, par value $1
|
New York Stock Exchange
|
Large accelerated filer
x
|
Accelerated filer
o
|
Non-accelerated filer
o
(Do not check if a smaller
reporting company)
|
Smaller reporting
company
o
|
Emerging growth company
o
|
|
||
|
||
|
||
|
||
|
||
Exhibit 12.1
|
Ratio of Earnings to Fixed Charges
|
|
Exhibit 21.2
|
Subsidiaries of American Equity Investment Life Holding Company
|
|
Exhibit 23.1
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Consent of Independent Registered Public Accounting Firm
|
|
Exhibit 31.1
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Certification
|
|
Exhibit 31.2
|
Certification
|
|
Exhibit 32.1
|
Certification
|
|
Exhibit 32.2
|
Certification
|
|
|
For the Year Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Total industry sales of fixed index annuities
|
$
|
58,235,265
|
|
|
$
|
53,069,850
|
|
|
$
|
46,896,350
|
|
|
$
|
38,646,864
|
|
|
$
|
33,975,442
|
|
Increase from prior year
|
5,165,415
|
|
|
6,173,500
|
|
|
8,249,486
|
|
|
4,671,422
|
|
|
1,588,397
|
|
|||||
Increase from prior year
|
9.7
|
%
|
|
13.2
|
%
|
|
21.3
|
%
|
|
13.7
|
%
|
|
4.9
|
%
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
Product Type
|
|
Deposits
Collected
|
|
Deposits
as a % of
Total
|
|
Deposits
Collected
|
|
Deposits
as a % of
Total
|
|
Deposits
Collected
|
|
Deposits
as a % of
Total
|
|||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||||
Fixed index annuities
|
|
$
|
3,966,839
|
|
|
95
|
%
|
|
5,724,758
|
|
|
80
|
%
|
|
$
|
6,791,689
|
|
|
96
|
%
|
|
Annual reset fixed rate annuities
|
|
74,829
|
|
|
2
|
%
|
|
64,317
|
|
|
1
|
%
|
|
45,182
|
|
|
1
|
%
|
|||
Multi-year fixed rate annuities
|
|
110,596
|
|
|
3
|
%
|
|
1,303,273
|
|
|
18
|
%
|
|
214,356
|
|
|
3
|
%
|
|||
Single premium immediate annuities
|
|
24,946
|
|
|
—
|
%
|
|
35,851
|
|
|
1
|
%
|
|
32,752
|
|
|
—
|
%
|
|||
|
|
$
|
4,177,210
|
|
|
100
|
%
|
|
$
|
7,128,199
|
|
|
100
|
%
|
|
$
|
7,083,979
|
|
|
100
|
%
|
|
|
December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Annuity Surrender Charges:
|
|
|
|
|
|
|
||||||
Average years at issue
|
|
13.4
|
|
13.5
|
|
13.7
|
||||||
Average years remaining
|
|
8.1
|
|
8.6
|
|
9.1
|
||||||
Average surrender charge percentage remaining
|
|
13.0
|
%
|
|
13.8
|
%
|
|
14.3
|
%
|
|||
Annuity Account Value (net of coinsurance)
|
|
$
|
48,400,755
|
|
|
$
|
45,204,015
|
|
|
$
|
41,249,647
|
|
|
Financial Strength Rating
|
|
Outlook Statement
|
A.M. Best Company
|
|
|
|
January 2011 - current
|
A-
|
|
Stable
|
Standard & Poor's
|
|
|
|
August 2015 - current
|
A-
|
|
Stable
|
June 2013 - August 2015
|
BBB+
|
|
Positive
|
October 2011 - June 2013
|
BBB+
|
|
Stable
|
Fitch Ratings
|
|
|
|
May 2013 - Current
|
BBB+
|
|
Stable
|
•
|
grant and revoke licenses to transact business;
|
•
|
regulate and supervise trade practices and market conduct;
|
•
|
establish guaranty associations;
|
•
|
license agents;
|
•
|
approve policy forms;
|
•
|
approve premium rates for some lines of business;
|
•
|
establish reserve requirements;
|
•
|
prescribe the form and content of required financial statements and reports;
|
•
|
determine the reasonableness and adequacy of statutory capital and surplus;
|
•
|
perform financial, market conduct and other examinations;
|
•
|
define acceptable accounting principles for statutory reporting;
|
•
|
regulate the type and amount of permitted investments; and
|
•
|
limit the amount of dividends and surplus note payments that can be paid without obtaining regulatory approval.
|
•
|
insurance company investments;
|
•
|
risk-based capital ("RBC") guidelines, which consist of regulatory targeted surplus levels based on the relationship of statutory capital and surplus, with prescribed adjustments, to the sum of stated percentages of each element of a specified list of company risk exposures;
|
•
|
suitability/best interest standard;
|
•
|
the implementation of non-statutory guidelines and the circumstances under which dividends may be paid;
|
•
|
principles-based reserving;
|
•
|
own risk solvency and enterprise risk management assessment;
|
•
|
cybersecurity assessments;
|
•
|
product approvals;
|
•
|
agent licensing;
|
•
|
underwriting and suitability practices; and
|
•
|
life insurance and annuity sales practices.
|
•
|
our investment portfolio could incur additional other than temporary impairments;
|
•
|
our commercial mortgage loans could experience a greater amount of loss;
|
•
|
due to potential downgrades in our investment portfolio, we could be required to raise additional capital to sustain our current business in force and new sales of our annuity products, which may be difficult in a distressed market. If capital would be available, it may be at terms that are not favorable to us;
|
•
|
we may be required to limit growth in sales of our annuity products; and/or
|
•
|
our liquidity could be negatively affected and we could be forced to limit our operations and our business could suffer, as we need liquidity to pay our policyholder benefits, operating expenses, dividends on our capital stock, and to service our debt obligations.
|
•
|
AIG Companies;
|
•
|
Allianz Life Insurance Company of North America;
|
•
|
Athene USA Corp;
|
•
|
Great American Life Insurance Company;
|
•
|
Midland National Life Insurance Company;
|
•
|
Nationwide; and
|
•
|
Security Benefit Life.
|
•
|
We must present the call options purchased to fund the annual index credits on our fixed index annuity products at fair value. The fair value of the call options is based upon the amount of cash that would be required to settle the call options obtained from the counterparties adjusted for the nonperformance risk of the counterparty. We record the change in fair value of these options as a component of our revenues. The change in fair value of derivatives includes the gains or losses recognized at expiration of the option term or upon early termination and changes in fair value for open positions.
|
•
|
The contractual obligations for future annual index credits are treated as a "series of embedded derivatives" over the expected life of the applicable contracts. Increases or decreases in the fair value of embedded derivatives generally correspond to increases or decreases in equity market performance and changes in the interest rates used to discount the excess of the projected policy contract values over the projected minimum guaranteed contract values. We record the change in fair value of these embedded derivatives as a component of our benefits and expenses in our consolidated statements of operations.
|
|
High
|
|
Low
|
2017
|
|
|
|
First Quarter
|
$28.00
|
|
$21.66
|
Second Quarter
|
$26.65
|
|
$22.23
|
Third Quarter
|
$29.43
|
|
$25.43
|
Fourth Quarter
|
$32.54
|
|
$28.06
|
2016
|
|
|
|
First Quarter
|
$23.65
|
|
$12.65
|
Second Quarter
|
$16.96
|
|
$12.77
|
Third Quarter
|
$18.32
|
|
$13.07
|
Fourth Quarter
|
$23.41
|
|
$15.39
|
Period
|
|
Total Number of
Shares Purchased
|
|
Average Price
Paid Per Share
|
|||
January 1, 2017 - January 31, 2017
|
|
—
|
|
|
$
|
—
|
|
February 1, 2017 - February 28, 2017
|
|
—
|
|
|
$
|
—
|
|
March 1, 2017 - March 31, 2017 (a)
|
|
269
|
|
|
$
|
26.69
|
|
April 1, 2017 - April 30, 2017
|
|
—
|
|
|
$
|
—
|
|
May 1, 2017 - May 31, 2017
|
|
—
|
|
|
$
|
—
|
|
June 1, 2017 - June 30, 2017
|
|
—
|
|
|
$
|
—
|
|
July 1, 2017 - July 31, 2017
|
|
—
|
|
|
$
|
—
|
|
August 1, 2017 - August 31, 2017
|
|
—
|
|
|
$
|
—
|
|
September 1, 2017 - September 30, 2017
|
|
—
|
|
|
$
|
—
|
|
October 1, 2017 - October 31, 2017
|
|
—
|
|
|
$
|
—
|
|
November 1, 2017 - November 30, 2017
|
|
—
|
|
|
$
|
—
|
|
December 1, 2017 - December 31, 2017 (b)
|
|
15,058
|
|
|
$
|
31.00
|
|
Total
|
|
15,327
|
|
|
|
(a)
|
Includes the number of shares of common stock utilized to execute certain stock incentive awards.
|
(b)
|
The shares purchased in December 2017 were purchased from American Equity Life, which held the shares to fund a deferred compensation plan no longer in effect.
|
|
Year ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
(Dollars in thousands, except per share data)
|
||||||||||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||||||
Premiums and other considerations
|
$
|
34,228
|
|
|
$
|
43,767
|
|
|
$
|
36,048
|
|
|
$
|
32,623
|
|
|
$
|
45,347
|
|
Annuity product charges
|
200,494
|
|
|
173,579
|
|
|
136,168
|
|
|
118,990
|
|
|
103,591
|
|
|||||
Net investment income
|
1,991,997
|
|
|
1,849,872
|
|
|
1,692,192
|
|
|
1,531,667
|
|
|
1,383,927
|
|
|||||
Change in fair value of derivatives
|
1,677,871
|
|
|
164,219
|
|
|
(336,146
|
)
|
|
504,825
|
|
|
1,076,015
|
|
|||||
Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses
|
10,509
|
|
|
11,524
|
|
|
10,211
|
|
|
(4,003
|
)
|
|
40,561
|
|
|||||
Net OTTI losses recognized in operations
|
(4,630
|
)
|
|
(22,679
|
)
|
|
(19,536
|
)
|
|
(2,627
|
)
|
|
(6,234
|
)
|
|||||
Total revenues
|
3,891,652
|
|
|
2,220,282
|
|
|
1,518,937
|
|
|
2,168,973
|
|
|
2,610,692
|
|
|||||
Benefits and expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance policy benefits and change in future policy
benefits
|
43,219
|
|
|
52,483
|
|
|
45,458
|
|
|
41,815
|
|
|
53,071
|
|
|||||
Interest sensitive and index product benefits
|
2,023,668
|
|
|
725,472
|
|
|
968,053
|
|
|
1,473,700
|
|
|
1,272,867
|
|
|||||
Change in fair value of embedded derivatives
|
919,735
|
|
|
543,465
|
|
|
(464,698
|
)
|
|
32,321
|
|
|
133,968
|
|
|||||
Amortization of deferred sales inducements and policy acquisition costs
|
432,576
|
|
|
625,178
|
|
|
495,504
|
|
|
294,997
|
|
|
618,581
|
|
|||||
Interest expense on notes and loan payable and subordinated debentures
|
44,492
|
|
|
41,206
|
|
|
41,088
|
|
|
48,492
|
|
|
50,958
|
|
|||||
Other operating costs and expenses
|
111,691
|
|
|
102,231
|
|
|
96,218
|
|
|
81,584
|
|
|
91,915
|
|
|||||
Total benefits and expenses
|
3,575,381
|
|
|
2,090,035
|
|
|
1,181,623
|
|
|
1,972,909
|
|
|
2,221,360
|
|
|||||
Income before income taxes
|
316,271
|
|
|
130,247
|
|
|
337,314
|
|
|
196,064
|
|
|
389,332
|
|
|||||
Income tax expense
|
141,626
|
|
|
47,004
|
|
|
117,484
|
|
|
70,041
|
|
|
136,049
|
|
|||||
Net income
|
$
|
174,645
|
|
|
$
|
83,243
|
|
|
$
|
219,830
|
|
|
$
|
126,023
|
|
|
$
|
253,283
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Per Share Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings per common share
|
$
|
1.96
|
|
|
$
|
0.98
|
|
|
$
|
2.78
|
|
|
$
|
1.69
|
|
|
$
|
3.86
|
|
Earnings per common share - assuming dilution
|
1.93
|
|
|
0.97
|
|
|
2.72
|
|
|
1.58
|
|
|
3.38
|
|
|||||
Dividends declared per common share
|
0.26
|
|
|
0.24
|
|
|
0.22
|
|
|
0.20
|
|
|
0.18
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-GAAP Financial Measures (a):
|
|
|
|
|
|
|
|
|
|
||||||||||
Reconciliation from net income to non-GAAP operating income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
$
|
174,645
|
|
|
$
|
83,243
|
|
|
$
|
219,830
|
|
|
$
|
126,023
|
|
|
$
|
253,283
|
|
Net realized investment (gains) losses, including OTTI
|
(5,093
|
)
|
|
7,188
|
|
|
5,737
|
|
|
4,429
|
|
|
(18,170
|
)
|
|||||
Change in fair value of derivatives and embedded derivatives - fixed index annuities
|
121,846
|
|
|
56,634
|
|
|
(44,055
|
)
|
|
79,053
|
|
|
(153,267
|
)
|
|||||
Change in fair value of derivatives and embedded derivatives - debt
|
(1,224
|
)
|
|
(1,265
|
)
|
|
1,296
|
|
|
104
|
|
|
(2,038
|
)
|
|||||
Extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
12,503
|
|
|
32,515
|
|
|||||
Litigation reserve
|
—
|
|
|
(1,957
|
)
|
|
—
|
|
|
(1,418
|
)
|
|
30
|
|
|||||
Income taxes
|
(5,124
|
)
|
|
(21,499
|
)
|
|
13,012
|
|
|
(30,048
|
)
|
|
51,067
|
|
|||||
Non-GAAP operating income
|
$
|
285,050
|
|
|
$
|
122,344
|
|
|
$
|
195,820
|
|
|
$
|
190,646
|
|
|
$
|
163,420
|
|
Non-GAAP operating income per common share
|
$
|
3.20
|
|
|
$
|
1.44
|
|
|
$
|
2.48
|
|
|
$
|
2.56
|
|
|
$
|
2.49
|
|
Non-GAAP 0perating income per common share - assuming dilution
|
3.16
|
|
|
1.43
|
|
|
2.42
|
|
|
2.39
|
|
|
2.18
|
|
|
As of and for the Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
(Dollars in thousands, except per share data)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total investments
|
$
|
50,300,705
|
|
|
$
|
44,757,568
|
|
|
$
|
39,570,332
|
|
|
$
|
35,981,858
|
|
|
$
|
30,346,654
|
|
Total assets
|
62,030,736
|
|
|
56,053,472
|
|
|
49,029,392
|
|
|
43,976,689
|
|
|
39,605,843
|
|
|||||
Policy benefit reserves
|
56,142,673
|
|
|
51,637,026
|
|
|
45,495,431
|
|
|
39,802,861
|
|
|
35,789,655
|
|
|||||
Notes and loan payable
|
494,093
|
|
|
493,755
|
|
|
393,227
|
|
|
413,805
|
|
|
539,639
|
|
|||||
Subordinated debentures
|
242,565
|
|
|
241,853
|
|
|
241,452
|
|
|
241,072
|
|
|
240,713
|
|
|||||
Accumulated other comprehensive income ("AOCI")
|
724,599
|
|
|
339,966
|
|
|
201,663
|
|
|
721,401
|
|
|
46,196
|
|
|||||
Total stockholders' equity
|
2,850,157
|
|
|
2,291,595
|
|
|
1,944,535
|
|
|
2,139,876
|
|
|
1,384,687
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Life subsidiaries' statutory capital and surplus and asset valuation reserve
|
3,260,328
|
|
|
2,933,193
|
|
|
2,593,472
|
|
|
2,327,335
|
|
|
1,995,658
|
|
|||||
Life subsidiaries' statutory net gain from operations before income taxes and realized capital gains (losses)
|
565,295
|
|
|
144,159
|
|
|
227,865
|
|
|
467,923
|
|
|
305,628
|
|
|||||
Life subsidiaries' statutory net income
|
386,274
|
|
|
80,699
|
|
|
132,723
|
|
|
344,666
|
|
|
205,112
|
|
|||||
Book value per share (b)
|
31.91
|
|
|
26.04
|
|
|
23.83
|
|
|
27.93
|
|
|
19.40
|
|
|||||
Book value per share, excluding AOCI (b)
|
23.79
|
|
|
22.17
|
|
|
21.36
|
|
|
18.52
|
|
|
18.75
|
|
(a)
|
In addition to net income, we have consistently utilized non-GAAP operating income, non-GAAP operating income per common share and non-GAAP operating income per common share—assuming dilution, non-GAAP financial measures commonly used in the life insurance industry, as economic measures to evaluate our financial performance. Non-GAAP operating income equals net income adjusted to eliminate the impact of items that fluctuate from year to year in a manner unrelated to core operations and we believe measures excluding their impact are useful in analyzing operating trends. The most significant adjustments to arrive at non-GAAP operating income eliminate the impact of fair value accounting for our fixed index annuity business and are not economic in nature but rather impact the timing of reported results. In addition, 2017 includes a $35.9 million adjustment to arrive at non-GAAP operating income resulting from the Tax Cuts and Jobs Act of 2017, which was enacted on December 22, 2017 and required a revaluation of our net deferred tax assets from 35% to 21%. We believe the combined presentation and evaluation of non-GAAP operating income together with net income provides information that may enhance an investor's understanding of our underlying results and profitability. The amounts included in the reconciliation of net income to non-GAAP operating income are presented net of related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs.
|
(b)
|
Book value per share and book value per share excluding AOCI, non-GAAP financial measures, are calculated as total stockholders' equity and total stockholders' equity excluding AOCI divided by the total number of shares of common stock outstanding. Since AOCI fluctuates from year to year due to unrealized changes in the fair value of available for sale investments, we believe these non-GAAP financial measures provide useful supplemental information.
|
•
|
general economic conditions and other factors, including prevailing interest rate levels and stock and credit market performance which may affect (among other things) our ability to sell our products, our ability to access capital resources and the costs associated therewith, the fair value of our investments, which could result in impairments and other than temporary impairments, and certain liabilities, and the lapse rate and profitability of policies;
|
•
|
customer response to new products and marketing initiatives;
|
•
|
changes in Federal income tax laws and regulations which may affect the relative income tax advantages of our products;
|
•
|
increasing competition in the sale of annuities;
|
•
|
regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) bank sales and underwriting of insurance products and regulation of the sale, underwriting and pricing of products; and
|
•
|
the risk factors or uncertainties listed from time to time in our filings with the SEC.
|
•
|
the amount of assets under our management,
|
•
|
investment spreads we earn on our policyholder account balances,
|
•
|
our ability to manage our investment portfolio to maximize returns and minimize risks such as interest rate changes and defaults or impairment of investments,
|
•
|
our ability to manage interest rates credited to policyholders and costs of the options purchased to fund the annual index credits on our fixed index annuities,
|
•
|
our ability to manage the costs of acquiring new business (principally commissions paid to agents and distribution partners and bonuses credited to policyholders), and
|
•
|
our ability to manage our operating expenses and
|
•
|
Income taxes.
|
|
Year Ended December 31,
|
||||
|
2017
|
|
2016
|
|
2015
|
Average yield on invested assets
|
4.46%
|
|
4.51%
|
|
4.73%
|
Aggregate cost of money
|
1.74%
|
|
1.90%
|
|
1.96%
|
Aggregate investment spread
|
2.72%
|
|
2.61%
|
|
2.77%
|
|
|
|
|
|
|
Impact of:
|
|
|
|
|
|
Investment yield - additional prepayment income
|
0.08%
|
|
0.06%
|
|
0.08%
|
Cost of money benefit from over-hedging
|
0.06%
|
|
0.01%
|
|
0.04%
|
|
|
Year Ended December 31,
|
||||||||||
Product Type
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Fixed index annuities
|
|
$
|
3,966,839
|
|
|
$
|
5,724,758
|
|
|
$
|
6,791,689
|
|
Annual reset fixed rate annuities
|
|
74,829
|
|
|
64,317
|
|
|
45,182
|
|
|||
Multi-year fixed rate annuities
|
|
110,596
|
|
|
1,303,273
|
|
|
214,356
|
|
|||
Single premium immediate annuities
|
|
24,946
|
|
|
35,851
|
|
|
32,752
|
|
|||
Total before coinsurance ceded
|
|
4,177,210
|
|
|
7,128,199
|
|
|
7,083,979
|
|
|||
Coinsurance ceded
|
|
387,280
|
|
|
1,736,054
|
|
|
471,822
|
|
|||
Net after coinsurance ceded
|
|
$
|
3,789,930
|
|
|
$
|
5,392,145
|
|
|
$
|
6,612,157
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Increase (decrease) in amortization of deferred sales inducements
|
$
|
(34,274
|
)
|
|
$
|
35,760
|
|
|
$
|
(5,612
|
)
|
Increase (decrease) in amortization of deferred policy acquisition costs
|
(48,198
|
)
|
|
48,164
|
|
|
(10,970
|
)
|
|||
Increase in interest sensitive and index product benefits
|
21,608
|
|
|
42,002
|
|
|
18,313
|
|
|||
Increase (decrease) in net income
|
39,196
|
|
|
(81,224
|
)
|
|
(1,117
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Increase (decrease) in amortization of deferred sales inducements
|
$
|
(31,317
|
)
|
|
$
|
36,127
|
|
|
$
|
(478
|
)
|
Increase (decrease) in amortization of deferred policy acquisition costs
|
(43,716
|
)
|
|
47,765
|
|
|
(4,260
|
)
|
|||
Increase in interest sensitive and index product benefits
|
21,608
|
|
|
42,002
|
|
|
18,313
|
|
|||
Increase (decrease) in non-GAAP operating income
|
34,405
|
|
|
(81,202
|
)
|
|
(8,756
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Surrender charges
|
$
|
54,624
|
|
|
$
|
51,577
|
|
|
$
|
46,614
|
|
Lifetime income benefit riders (LIBR) fees
|
145,870
|
|
|
122,002
|
|
|
89,554
|
|
|||
|
$
|
200,494
|
|
|
$
|
173,579
|
|
|
$
|
136,168
|
|
|
|
|
|
|
|
||||||
Withdrawals from annuity policies subject to surrender charges
|
$
|
456,084
|
|
|
$
|
429,090
|
|
|
$
|
373,166
|
|
Average surrender charge collected on withdrawals subject to surrender charges
|
12.0
|
%
|
|
12.0
|
%
|
|
12.5
|
%
|
|||
|
|
|
|
|
|
||||||
Fund values on policies subject to LIBR fees
|
$
|
20,440,431
|
|
|
$
|
17,809,659
|
|
|
$
|
14,296,046
|
|
Weighted average per policy LIBR fee
|
0.71
|
%
|
|
0.69
|
%
|
|
0.63
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Call options:
|
|
|
|
|
|
||||||
Gain (loss) on option expiration
|
$
|
1,062,328
|
|
|
$
|
(282,574
|
)
|
|
$
|
(464,027
|
)
|
Change in unrealized gains/losses
|
615,955
|
|
|
447,603
|
|
|
136,106
|
|
|||
2015 notes hedges
|
—
|
|
|
—
|
|
|
(4,516
|
)
|
|||
Interest rate swap
|
255
|
|
|
(482
|
)
|
|
(2,341
|
)
|
|||
Interest rate caps
|
(667
|
)
|
|
(328
|
)
|
|
(1,368
|
)
|
|||
|
$
|
1,677,871
|
|
|
$
|
164,219
|
|
|
$
|
(336,146
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Index credits on index policies
|
$
|
1,594,722
|
|
|
$
|
267,995
|
|
|
$
|
587,705
|
|
Interest credited (including changes in minimum guaranteed interest for fixed index annuities)
|
257,896
|
|
|
276,032
|
|
|
258,870
|
|
|||
Lifetime income benefit riders
|
171,050
|
|
|
181,445
|
|
|
121,478
|
|
|||
|
$
|
2,023,668
|
|
|
$
|
725,472
|
|
|
$
|
968,053
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Amortization of deferred sales inducements before gross profit adjustments
|
$
|
240,562
|
|
|
$
|
274,309
|
|
|
$
|
209,051
|
|
Gross profit adjustments:
|
|
|
|
|
|
||||||
Fair value accounting for derivatives and embedded derivatives
|
(64,219
|
)
|
|
(21,678
|
)
|
|
1,976
|
|
|||
Net realized gains (losses) on investments, net OTTI losses recognized in operations
and changes in litigation reserves
|
269
|
|
|
(1,465
|
)
|
|
(1,637
|
)
|
|||
Amortization of deferred sales inducements after gross profit adjustments
|
$
|
176,612
|
|
|
$
|
251,166
|
|
|
$
|
209,390
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Fixed index annuities—embedded derivatives
|
$
|
174,154
|
|
|
$
|
145,045
|
|
|
$
|
(825,668
|
)
|
Other changes in difference between policy benefit reserves computed using derivative accounting vs. long-duration contracts accounting
|
745,581
|
|
|
398,420
|
|
|
365,486
|
|
|||
2015 notes embedded conversion derivative
|
—
|
|
|
—
|
|
|
(4,516
|
)
|
|||
|
$
|
919,735
|
|
|
$
|
543,465
|
|
|
$
|
(464,698
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
2027 Notes
|
$
|
13,801
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2021 Notes
|
15,024
|
|
|
27,540
|
|
|
27,465
|
|
|||
Convertible senior notes due 2015
|
—
|
|
|
—
|
|
|
1,384
|
|
|||
Term loan due 2019
|
1,543
|
|
|
708
|
|
|
—
|
|
|||
|
$
|
30,368
|
|
|
$
|
28,248
|
|
|
$
|
28,849
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Amortization of deferred policy acquisition costs before gross profit adjustments
|
$
|
340,191
|
|
|
$
|
387,089
|
|
|
$
|
293,676
|
|
Gross profit adjustments:
|
|
|
|
|
|
||||||
Fair value accounting for derivatives and embedded derivatives
|
(84,744
|
)
|
|
(11,447
|
)
|
|
(5,611
|
)
|
|||
Net realized gains (losses) on investments, net OTTI losses recognized in operations
and changes in litigation reserves
|
517
|
|
|
(1,630
|
)
|
|
(1,951
|
)
|
|||
Amortization of deferred policy acquisition costs after gross profit adjustments
|
$
|
255,964
|
|
|
$
|
374,012
|
|
|
$
|
286,114
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Salary and benefits
|
$
|
58,043
|
|
|
$
|
53,479
|
|
|
$
|
48,328
|
|
Risk charges
|
29,104
|
|
|
28,276
|
|
|
21,950
|
|
|||
Other
|
24,544
|
|
|
20,476
|
|
|
25,940
|
|
|||
Total other operating costs and expenses
|
$
|
111,691
|
|
|
$
|
102,231
|
|
|
$
|
96,218
|
|
|
December 31,
|
||||||||||||
|
2017
|
|
2016
|
||||||||||
|
Carrying
Amount
|
|
Percent
|
|
Carrying
Amount
|
|
Percent
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||
United States Government full faith and credit
|
$
|
11,876
|
|
|
—
|
%
|
|
$
|
11,805
|
|
|
—
|
%
|
United States Government sponsored agencies
|
1,305,017
|
|
|
2.6
|
%
|
|
1,344,787
|
|
|
3.0
|
%
|
||
United States municipalities, states and territories
|
4,166,812
|
|
|
8.3
|
%
|
|
3,926,950
|
|
|
8.8
|
%
|
||
Foreign government obligations
|
239,360
|
|
|
0.5
|
%
|
|
236,341
|
|
|
0.5
|
%
|
||
Corporate securities
|
29,956,012
|
|
|
59.6
|
%
|
|
27,191,243
|
|
|
60.8
|
%
|
||
Residential mortgage backed securities
|
1,105,567
|
|
|
2.2
|
%
|
|
1,254,835
|
|
|
2.8
|
%
|
||
Commercial mortgage backed securities
|
5,544,850
|
|
|
11.0
|
%
|
|
5,365,235
|
|
|
12.0
|
%
|
||
Other asset backed securities
|
3,120,536
|
|
|
6.2
|
%
|
|
1,806,123
|
|
|
4.0
|
%
|
||
Total fixed maturity securities
|
45,450,030
|
|
|
90.4
|
%
|
|
41,137,319
|
|
|
91.9
|
%
|
||
Mortgage loans on real estate
|
2,665,531
|
|
|
5.3
|
%
|
|
2,480,956
|
|
|
5.5
|
%
|
||
Derivative instruments
|
1,568,380
|
|
|
3.1
|
%
|
|
830,519
|
|
|
1.9
|
%
|
||
Other investments
|
616,764
|
|
|
1.2
|
%
|
|
308,774
|
|
|
0.7
|
%
|
||
|
$
|
50,300,705
|
|
|
100.0
|
%
|
|
$
|
44,757,568
|
|
|
100.0
|
%
|
|
|
December 31,
|
||||||||||||
|
|
2017
|
|
2016
|
||||||||||
Rating Agency Rating
|
|
Carrying
Amount
|
|
Percent of Fixed Maturity Securities
|
|
Carrying
Amount
|
|
Percent of Fixed Maturity Securities
|
||||||
|
|
(Dollars in thousands)
|
||||||||||||
Aaa/Aa/A
|
|
$
|
27,909,879
|
|
|
61.4
|
%
|
|
$
|
26,431,700
|
|
|
64.3
|
%
|
Baa
|
|
16,048,610
|
|
|
35.3
|
%
|
|
13,002,964
|
|
|
31.6
|
%
|
||
Total investment grade
|
|
43,958,489
|
|
|
96.7
|
%
|
|
39,434,664
|
|
|
95.9
|
%
|
||
Ba
|
|
1,035,676
|
|
|
2.3
|
%
|
|
1,048,379
|
|
|
2.5
|
%
|
||
B
|
|
130,857
|
|
|
0.3
|
%
|
|
155,619
|
|
|
0.4
|
%
|
||
Caa
|
|
134,586
|
|
|
0.3
|
%
|
|
79,763
|
|
|
0.2
|
%
|
||
Ca and lower
|
|
190,422
|
|
|
0.4
|
%
|
|
418,894
|
|
|
1.0
|
%
|
||
Total below investment grade
|
|
1,491,541
|
|
|
3.3
|
%
|
|
1,702,655
|
|
|
4.1
|
%
|
||
|
|
$
|
45,450,030
|
|
|
100.0
|
%
|
|
$
|
41,137,319
|
|
|
100.0
|
%
|
NAIC Designation
|
|
NRSRO Equivalent Rating
|
1
|
|
Aaa/Aa/A
|
2
|
|
Baa
|
3
|
|
Ba
|
4
|
|
B
|
5
|
|
Caa
|
6
|
|
Ca and lower
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||
NAIC
Designation
|
|
Amortized
Cost
|
|
Fair Value
|
|
Carrying
Amount
|
|
Percentage
of Total
Carrying
Amount
|
|
Amortized
Cost
|
|
Fair Value
|
|
Carrying
Amount
|
|
Percentage
of Total
Carrying
Amount
|
||||||||||||||
|
|
(Dollars in thousands)
|
|
|
|
(Dollars in thousands)
|
|
|
||||||||||||||||||||||
1
|
|
$
|
26,669,427
|
|
|
$
|
28,274,379
|
|
|
$
|
28,274,379
|
|
|
62.2
|
%
|
|
$
|
25,607,268
|
|
|
$
|
26,507,798
|
|
|
$
|
26,507,798
|
|
|
64.5
|
%
|
2
|
|
15,198,551
|
|
|
15,869,219
|
|
|
15,869,219
|
|
|
34.9
|
%
|
|
13,037,592
|
|
|
13,295,648
|
|
|
13,295,648
|
|
|
32.3
|
%
|
||||||
3
|
|
1,161,737
|
|
|
1,157,420
|
|
|
1,158,001
|
|
|
2.5
|
%
|
|
1,201,059
|
|
|
1,155,702
|
|
|
1,163,761
|
|
|
2.8
|
%
|
||||||
4
|
|
134,838
|
|
|
117,542
|
|
|
117,542
|
|
|
0.3
|
%
|
|
154,226
|
|
|
137,188
|
|
|
137,188
|
|
|
0.3
|
%
|
||||||
5
|
|
17,015
|
|
|
20,927
|
|
|
20,927
|
|
|
0.1
|
%
|
|
17,475
|
|
|
24,664
|
|
|
24,664
|
|
|
0.1
|
%
|
||||||
6
|
|
12,232
|
|
|
9,962
|
|
|
9,962
|
|
|
—
|
%
|
|
13,160
|
|
|
8,260
|
|
|
8,260
|
|
|
—
|
%
|
||||||
|
|
$
|
43,193,800
|
|
|
$
|
45,449,449
|
|
|
$
|
45,450,030
|
|
|
100.0
|
%
|
|
$
|
40,030,780
|
|
|
$
|
41,129,260
|
|
|
$
|
41,137,319
|
|
|
100.0
|
%
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Unrealized
Losses
|
|
Fair Value
|
|||||||
|
(Dollars in thousands)
|
|||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
United States Government full faith and credit
|
4
|
|
|
$
|
8,443
|
|
|
$
|
(147
|
)
|
|
$
|
8,296
|
|
United States Government sponsored agencies
|
18
|
|
|
1,035,489
|
|
|
(31,730
|
)
|
|
1,003,759
|
|
|||
United States municipalities, states and territories
|
48
|
|
|
176,831
|
|
|
(3,596
|
)
|
|
173,235
|
|
|||
Foreign government obligations
|
2
|
|
|
64,313
|
|
|
(2,025
|
)
|
|
62,288
|
|
|||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Finance, insurance and real estate
|
92
|
|
|
1,090,077
|
|
|
(33,178
|
)
|
|
1,056,899
|
|
|||
Manufacturing, construction and mining
|
55
|
|
|
468,505
|
|
|
(14,324
|
)
|
|
454,181
|
|
|||
Utilities and related sectors
|
63
|
|
|
657,599
|
|
|
(13,000
|
)
|
|
644,599
|
|
|||
Wholesale/retail trade
|
31
|
|
|
344,196
|
|
|
(12,620
|
)
|
|
331,576
|
|
|||
Services, media and other
|
165
|
|
|
1,693,343
|
|
|
(72,565
|
)
|
|
1,620,778
|
|
|||
Residential mortgage backed securities
|
20
|
|
|
75,159
|
|
|
(2,471
|
)
|
|
72,688
|
|
|||
Commercial mortgage backed securities
|
310
|
|
|
2,473,034
|
|
|
(69,840
|
)
|
|
2,403,194
|
|
|||
Other asset backed securities
|
146
|
|
|
996,531
|
|
|
(13,405
|
)
|
|
983,126
|
|
|||
|
954
|
|
|
$
|
9,083,520
|
|
|
$
|
(268,901
|
)
|
|
$
|
8,814,619
|
|
Fixed maturity securities, held for investment:
|
|
|
|
|
|
|
|
|||||||
Corporate security:
|
|
|
|
|
|
|
|
|||||||
Insurance
|
1
|
|
|
$
|
77,041
|
|
|
$
|
(581
|
)
|
|
$
|
76,460
|
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2016
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
United States Government full faith and credit
|
3
|
|
|
$
|
7,693
|
|
|
$
|
(288
|
)
|
|
$
|
7,405
|
|
United States Government sponsored agencies
|
18
|
|
|
1,042,461
|
|
|
(46,913
|
)
|
|
995,548
|
|
|||
United States municipalities, states and territories
|
113
|
|
|
485,802
|
|
|
(22,393
|
)
|
|
463,409
|
|
|||
Foreign government obligations
|
4
|
|
|
54,626
|
|
|
(5,080
|
)
|
|
49,546
|
|
|||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Finance, insurance and real estate
|
175
|
|
|
2,101,158
|
|
|
(78,144
|
)
|
|
2,023,014
|
|
|||
Manufacturing, construction and mining
|
155
|
|
|
1,568,588
|
|
|
(57,577
|
)
|
|
1,511,011
|
|
|||
Utilities and related sectors
|
137
|
|
|
1,511,082
|
|
|
(50,835
|
)
|
|
1,460,247
|
|
|||
Wholesale/retail trade
|
63
|
|
|
687,650
|
|
|
(20,810
|
)
|
|
666,840
|
|
|||
Services, media and other
|
301
|
|
|
3,417,783
|
|
|
(161,407
|
)
|
|
3,256,376
|
|
|||
Residential mortgage backed securities
|
25
|
|
|
87,169
|
|
|
(3,554
|
)
|
|
83,615
|
|
|||
Commercial mortgage backed securities
|
407
|
|
|
3,266,304
|
|
|
(117,014
|
)
|
|
3,149,290
|
|
|||
Other asset backed securities
|
112
|
|
|
918,403
|
|
|
(20,703
|
)
|
|
897,700
|
|
|||
|
1,513
|
|
|
$
|
15,148,719
|
|
|
$
|
(584,718
|
)
|
|
$
|
14,564,001
|
|
Fixed maturity securities, held for investment:
|
|
|
|
|
|
|
|
|||||||
Corporate security:
|
|
|
|
|
|
|
|
|||||||
Insurance
|
1
|
|
|
$
|
76,825
|
|
|
$
|
(8,059
|
)
|
|
$
|
68,766
|
|
NAIC Designation
|
|
Carrying Value of
Securities with
Gross Unrealized
Losses
|
|
Percent of
Total
|
|
Gross
Unrealized
Losses
|
|
Percent of
Total
|
||||||
|
|
(Dollars in thousands)
|
||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
||||||
1
|
|
$
|
5,433,608
|
|
|
61.1
|
%
|
|
$
|
(158,991
|
)
|
|
59.0
|
%
|
2
|
|
2,809,981
|
|
|
31.6
|
%
|
|
(64,369
|
)
|
|
23.9
|
%
|
||
3
|
|
540,320
|
|
|
6.1
|
%
|
|
(23,166
|
)
|
|
8.6
|
%
|
||
4
|
|
94,004
|
|
|
1.1
|
%
|
|
(17,972
|
)
|
|
6.7
|
%
|
||
5
|
|
11,130
|
|
|
0.1
|
%
|
|
(1,460
|
)
|
|
0.5
|
%
|
||
6
|
|
2,617
|
|
|
—
|
%
|
|
(3,524
|
)
|
|
1.3
|
%
|
||
|
|
$
|
8,891,660
|
|
|
100.0
|
%
|
|
$
|
(269,482
|
)
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
||||||
1
|
|
$
|
8,754,856
|
|
|
59.8
|
%
|
|
$
|
(330,920
|
)
|
|
55.8
|
%
|
2
|
|
5,091,437
|
|
|
34.8
|
%
|
|
(176,557
|
)
|
|
29.8
|
%
|
||
3
|
|
657,549
|
|
|
4.5
|
%
|
|
(60,689
|
)
|
|
10.3
|
%
|
||
4
|
|
119,986
|
|
|
0.8
|
%
|
|
(17,786
|
)
|
|
3.0
|
%
|
||
5
|
|
8,744
|
|
|
0.1
|
%
|
|
(1,920
|
)
|
|
0.3
|
%
|
||
6
|
|
8,254
|
|
|
—
|
%
|
|
(4,905
|
)
|
|
0.8
|
%
|
||
|
|
$
|
14,640,826
|
|
|
100.0
|
%
|
|
$
|
(592,777
|
)
|
|
100.0
|
%
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|||||||
|
|
|
(Dollars in thousands)
|
|||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
409
|
|
|
$
|
3,550,774
|
|
|
$
|
3,520,164
|
|
|
$
|
(30,610
|
)
|
Six months or more and less than twelve months
|
27
|
|
|
257,924
|
|
|
249,690
|
|
|
(8,234
|
)
|
|||
Twelve months or greater
|
430
|
|
|
4,668,838
|
|
|
4,486,239
|
|
|
(182,599
|
)
|
|||
Total investment grade
|
866
|
|
|
8,477,536
|
|
|
8,256,093
|
|
|
(221,443
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
32
|
|
|
201,885
|
|
|
194,821
|
|
|
(7,064
|
)
|
|||
Six months or more and less than twelve months
|
12
|
|
|
36,595
|
|
|
34,619
|
|
|
(1,976
|
)
|
|||
Twelve months or greater
|
45
|
|
|
444,545
|
|
|
405,546
|
|
|
(38,999
|
)
|
|||
Total below investment grade
|
89
|
|
|
683,025
|
|
|
634,986
|
|
|
(48,039
|
)
|
|||
|
955
|
|
|
$
|
9,160,561
|
|
|
$
|
8,891,079
|
|
|
$
|
(269,482
|
)
|
December 31, 2016
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
1,265
|
|
|
$
|
12,767,396
|
|
|
$
|
12,374,177
|
|
|
$
|
(393,219
|
)
|
Six months or more and less than twelve months
|
69
|
|
|
669,022
|
|
|
621,784
|
|
|
(47,238
|
)
|
|||
Twelve months or greater
|
90
|
|
|
970,424
|
|
|
901,674
|
|
|
(68,750
|
)
|
|||
Total investment grade
|
1,424
|
|
|
14,406,842
|
|
|
13,897,635
|
|
|
(509,207
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
15
|
|
|
132,087
|
|
|
126,236
|
|
|
(5,851
|
)
|
|||
Six months or more and less than twelve months
|
10
|
|
|
80,535
|
|
|
72,830
|
|
|
(7,705
|
)
|
|||
Twelve months or greater
|
65
|
|
|
606,080
|
|
|
536,066
|
|
|
(70,014
|
)
|
|||
Total below investment grade
|
90
|
|
|
818,702
|
|
|
735,132
|
|
|
(83,570
|
)
|
|||
|
1,514
|
|
|
$
|
15,225,544
|
|
|
$
|
14,632,767
|
|
|
$
|
(592,777
|
)
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|||||||
|
|
|
(Dollars in thousands)
|
|||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
3
|
|
|
$
|
8,597
|
|
|
$
|
6,931
|
|
|
$
|
(1,666
|
)
|
Six months or more and less than twelve months
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total investment grade
|
3
|
|
|
8,597
|
|
|
6,931
|
|
|
(1,666
|
)
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
1
|
|
|
11,021
|
|
|
8,275
|
|
|
(2,746
|
)
|
|||
Six months or more and less than twelve months
|
1
|
|
|
3,523
|
|
|
2,674
|
|
|
(849
|
)
|
|||
Twelve months or greater
|
4
|
|
|
55,647
|
|
|
37,591
|
|
|
(18,056
|
)
|
|||
Total below investment grade
|
6
|
|
|
70,191
|
|
|
48,540
|
|
|
(21,651
|
)
|
|||
|
9
|
|
|
$
|
78,788
|
|
|
$
|
55,471
|
|
|
$
|
(23,317
|
)
|
December 31, 2016
|
|
|
|
|
|
|
|
|||||||
Investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Six months or more and less than twelve months
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total investment grade
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Below investment grade:
|
|
|
|
|
|
|
|
|||||||
Less than six months
|
1
|
|
|
19,930
|
|
|
15,961
|
|
|
(3,969
|
)
|
|||
Six months or more and less than twelve months
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
10
|
|
|
85,831
|
|
|
58,436
|
|
|
(27,395
|
)
|
|||
Total below investment grade
|
11
|
|
|
105,761
|
|
|
74,397
|
|
|
(31,364
|
)
|
|||
|
11
|
|
|
$
|
105,761
|
|
|
$
|
74,397
|
|
|
$
|
(31,364
|
)
|
|
Available for sale
|
|
Held for investment
|
||||||||||||
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
|
463,667
|
|
|
454,062
|
|
|
—
|
|
|
—
|
|
||||
Due after five years through ten years
|
1,996,166
|
|
|
1,945,474
|
|
|
—
|
|
|
—
|
|
||||
Due after ten years through twenty years
|
1,937,009
|
|
|
1,881,162
|
|
|
—
|
|
|
—
|
|
||||
Due after twenty years
|
1,141,954
|
|
|
1,074,913
|
|
|
77,041
|
|
|
76,460
|
|
||||
|
5,538,796
|
|
|
5,355,611
|
|
|
77,041
|
|
|
76,460
|
|
||||
Residential mortgage backed securities
|
75,159
|
|
|
72,688
|
|
|
—
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
2,473,034
|
|
|
2,403,194
|
|
|
—
|
|
|
—
|
|
||||
Other asset backed securities
|
996,531
|
|
|
983,126
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
9,083,520
|
|
|
$
|
8,814,619
|
|
|
$
|
77,041
|
|
|
$
|
76,460
|
|
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
|
177,550
|
|
|
172,375
|
|
|
—
|
|
|
—
|
|
||||
Due after five years through ten years
|
4,943,504
|
|
|
4,806,216
|
|
|
—
|
|
|
—
|
|
||||
Due after ten years through twenty years
|
2,736,298
|
|
|
2,621,945
|
|
|
—
|
|
|
—
|
|
||||
Due after twenty years
|
3,019,491
|
|
|
2,832,860
|
|
|
76,825
|
|
|
68,766
|
|
||||
|
10,876,843
|
|
|
10,433,396
|
|
|
76,825
|
|
|
68,766
|
|
||||
Residential mortgage backed securities
|
87,169
|
|
|
83,615
|
|
|
—
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
3,266,304
|
|
|
3,149,290
|
|
|
—
|
|
|
—
|
|
||||
Other asset backed securities
|
918,403
|
|
|
897,700
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
15,148,719
|
|
|
$
|
14,564,001
|
|
|
$
|
76,825
|
|
|
$
|
68,766
|
|
|
December 31, 2017
|
|||||||||
|
Amortized
Cost
|
|
Carrying Amount/
Fair Value
|
|
Percent
of Total Carrying Amount |
|||||
|
(Dollars in thousands)
|
|
|
|||||||
GIIPS (1)
|
$
|
265,641
|
|
|
$
|
291,464
|
|
|
0.6
|
%
|
Asia/Pacific
|
433,851
|
|
|
455,671
|
|
|
1.0
|
%
|
||
Non-GIIPS Europe
|
3,146,233
|
|
|
3,298,662
|
|
|
7.3
|
%
|
||
Latin America
|
294,041
|
|
|
310,952
|
|
|
0.7
|
%
|
||
Non-U.S. North America
|
1,348,686
|
|
|
1,428,786
|
|
|
3.2
|
%
|
||
Australia & New Zealand
|
767,307
|
|
|
780,403
|
|
|
1.7
|
%
|
||
Other
|
2,526,985
|
|
|
2,560,051
|
|
|
5.6
|
%
|
||
|
$
|
8,782,744
|
|
|
$
|
9,125,989
|
|
|
20.1
|
%
|
(1)
|
Greece, Ireland, Italy, Portugal and Spain
("GIIPS").
All of our exposure in GIIPS are corporate securities with issuers domiciled in these countries. None of our foreign government obligations were held in any of these countries.
|
|
December 31, 2017
|
||||||
|
Amortized Cost
|
|
Carrying Amount/
Fair Value
|
||||
|
(Dollars in thousands)
|
||||||
GIIPS
|
$
|
19,512
|
|
|
$
|
22,072
|
|
Asia/Pacific
|
11,000
|
|
|
9,663
|
|
||
Non-GIIPS Europe
|
157,501
|
|
|
157,259
|
|
||
Latin America
|
61,594
|
|
|
58,855
|
|
||
Non-U.S. North America
|
89,770
|
|
|
93,825
|
|
||
|
$
|
339,377
|
|
|
$
|
341,674
|
|
General Description
|
|
Number of
Securities
|
|
Amortized
Cost
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Months in
Continuous
Unrealized
Loss Position
|
|
Months
Unrealized
Losses
Greater
Than 20%
|
||||||
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
||||||||||
Below investment grade
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Energy
|
|
4
|
|
$
|
29,055
|
|
|
$
|
(4,966
|
)
|
|
$
|
24,089
|
|
|
7 - 56
|
|
0 - 36
|
Industrials
|
|
1
|
|
2,500
|
|
|
(150
|
)
|
|
2,350
|
|
|
38
|
|
—
|
|||
Materials
|
|
1
|
|
3,990
|
|
|
770
|
|
|
4,760
|
|
|
—
|
|
—
|
|||
Telecommunications
|
|
1
|
|
2,100
|
|
|
480
|
|
|
2,580
|
|
|
—
|
|
—
|
|||
Other asset backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Financials
|
|
2
|
|
6,141
|
|
|
(3,524
|
)
|
|
2,617
|
|
|
55 - 81
|
|
0 - 36
|
|||
|
|
9
|
|
$
|
43,786
|
|
|
$
|
(7,390
|
)
|
|
$
|
36,396
|
|
|
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||
|
Principal Outstanding
|
|
Percent of Total Principal Outstanding
|
|
Principal Outstanding
|
|
Percent of Total Principal Outstanding
|
||||||
|
(Dollars in thousands)
|
|
|
|
(Dollars in thousands)
|
|
|
||||||
Debt Service Coverage Ratio:
|
|
|
|
|
|
|
|
||||||
Greater than or equal to 1.5
|
$
|
1,826,596
|
|
|
68.3
|
%
|
|
$
|
1,781,928
|
|
|
71.5
|
%
|
Greater than or equal to 1.2 and less than 1.5
|
638,299
|
|
|
23.9
|
%
|
|
517,697
|
|
|
20.8
|
%
|
||
Greater than or equal to 1.0 and less than 1.2
|
148,881
|
|
|
5.6
|
%
|
|
122,115
|
|
|
4.9
|
%
|
||
Less than 1.0
|
60,539
|
|
|
2.2
|
%
|
|
68,879
|
|
|
2.8
|
%
|
||
|
$
|
2,674,315
|
|
|
100.0
|
%
|
|
$
|
2,490,619
|
|
|
100.0
|
%
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Impaired mortgage loans with an allowance
|
$
|
5,445
|
|
|
$
|
4,640
|
|
Impaired mortgage loans with no related allowance
|
1,436
|
|
|
1,591
|
|
||
Allowance for probable loan losses
|
(1,418
|
)
|
|
(1,327
|
)
|
||
Net carrying value of impaired mortgage loans
|
$
|
5,463
|
|
|
$
|
4,904
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less Than
1 year
|
|
1–3 Years
|
|
4–5 Years
|
|
After
5 Years
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Annuity and single premium universal life products (1)
|
$
|
59,219,810
|
|
|
$
|
3,683,218
|
|
|
$
|
12,071,486
|
|
|
$
|
8,221,285
|
|
|
$
|
35,243,821
|
|
Notes and loan payable, including interest payments (2)
|
739,197
|
|
|
25,463
|
|
|
50,925
|
|
|
50,309
|
|
|
612,500
|
|
|||||
Subordinated debentures, including interest payments (3)
|
558,297
|
|
|
13,721
|
|
|
27,443
|
|
|
27,443
|
|
|
489,690
|
|
|||||
Operating leases
|
15,374
|
|
|
1,998
|
|
|
4,014
|
|
|
3,517
|
|
|
5,845
|
|
|||||
Mortgage loan funding and other investments
|
121,038
|
|
|
73,177
|
|
|
47,861
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
60,653,716
|
|
|
$
|
3,797,577
|
|
|
$
|
12,201,729
|
|
|
$
|
8,302,554
|
|
|
$
|
36,351,856
|
|
(1)
|
Amounts shown in this table are projected payments through the year 2037 which we are contractually obligated to pay to our annuity policyholders. The payments are derived from actuarial models which assume a level interest rate scenario and incorporate assumptions regarding mortality and persistency, when applicable. These assumptions are based on our historical experience.
|
(2)
|
Period that principal amounts are due is determined by the earliest of the call/put date or the maturity date of each note payable.
|
(3)
|
Amount shown is net of equity investments in the capital trusts due to the contractual right of offset upon repayment of the notes.
|
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.
|
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Priced via third party pricing services
|
$
|
290,645
|
|
|
$
|
45,150,229
|
|
|
$
|
—
|
|
|
$
|
45,440,874
|
|
Priced via independent broker quotations
|
—
|
|
|
34,750
|
|
|
—
|
|
|
34,750
|
|
||||
Priced via other methods
|
—
|
|
|
189,794
|
|
|
—
|
|
|
189,794
|
|
||||
|
$
|
290,645
|
|
|
$
|
45,374,773
|
|
|
$
|
—
|
|
|
$
|
45,665,418
|
|
% of Total
|
0.6
|
%
|
|
99.4
|
%
|
|
—
|
%
|
|
100.0
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Priced via third party pricing services
|
$
|
5,387
|
|
|
$
|
41,016,054
|
|
|
$
|
—
|
|
|
$
|
41,021,441
|
|
Priced via independent broker quotations
|
—
|
|
|
36,436
|
|
|
—
|
|
|
36,436
|
|
||||
Priced via other methods
|
—
|
|
|
10,617
|
|
|
—
|
|
|
10,617
|
|
||||
|
$
|
5,387
|
|
|
$
|
41,063,107
|
|
|
$
|
—
|
|
|
$
|
41,068,494
|
|
% of Total
|
—
|
%
|
|
100.0
|
%
|
|
—
|
%
|
|
100.0
|
%
|
•
|
reported trading prices,
|
•
|
benchmark yields,
|
•
|
broker-dealer quotes,
|
•
|
benchmark securities,
|
•
|
bids and offers,
|
•
|
credit ratings,
|
•
|
relative credit information, and
|
•
|
other reference data.
|
•
|
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.
|
•
|
future taxable income of the necessary character exclusive of reversing temporary differences and carryforwards;
|
•
|
future reversals of existing taxable temporary differences;
|
•
|
taxable capital income in prior carryback years; and
|
•
|
tax planning strategies.
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Annual index credits to policyholders on their anniversaries
|
$
|
1,594,722
|
|
|
$
|
267,995
|
|
|
$
|
587,705
|
|
Proceeds received at expiration of options related to such credits
|
1,623,346
|
|
|
272,277
|
|
|
602,436
|
|
(a)
|
Evaluation of Disclosure Controls and Procedures.
|
(b)
|
Management's Report on Internal Control over Financial Reporting.
|
(c)
|
Changes in Internal Control over Financial Reporting.
|
Exhibit No.
|
|
Description
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
|
|
3.5
|
|
|
3.6
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
|
4.5
|
|
|
4.6
|
|
|
4.7
|
|
|
4.8
|
|
|
4.9
|
|
|
4.10
|
|
|
4.11
|
|
|
4.12
|
|
|
4.13
|
|
|
4.14
|
|
Exhibit No.
|
|
Description
|
4.15
|
|
|
4.16
|
|
|
4.17
|
|
|
4.18
|
|
|
4.19
|
|
|
4.20
|
|
|
4.21
|
|
|
4.22
|
|
|
4.23
|
|
|
4.24
|
|
|
10.1 *
|
|
|
10.2 *
|
|
|
10.3 *
|
|
|
10.4 *
|
|
|
10.5 *
|
|
|
10.6 *
|
|
|
10.7
|
|
|
10.8 *
|
|
|
10.9
|
|
|
10.10 *
|
|
|
10.11
|
|
|
10.12 *
|
|
|
10.13 *
|
|
|
10.14 *
|
|
|
10.15 *
|
|
|
10.16 *
|
|
|
10.17 *
|
|
|
10.18 *
|
|
|
10.19
|
|
|
10.20
|
|
Exhibit No.
|
|
Description
|
10.21
|
|
|
10.22 *
|
|
|
10.23 *
|
|
|
10.24 *
|
|
|
10.25 *
|
|
|
10.26 *
|
|
|
10.27 *
|
|
|
12.1
|
|
|
21.2
|
|
|
23.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
*
|
Denotes management contract or compensatory plan.
|
|
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY
|
||
|
By:
|
|
/s/ JOHN M. MATOVINA
|
|
|
|
John M. Matovina,
Chief Executive Officer and President
|
Signature
|
|
Title (Capacity)
|
|
Date
|
|
|
|
|
|
/s/ JOHN M. MATOVINA
|
|
Chairman of the Board, Chief Executive Officer and President
(Principal Executive Officer)
|
|
February 23, 2018
|
John M. Matovina
|
|
|
|
|
|
|
|
|
|
/s/ TED M. JOHNSON
|
|
Chief Financial Officer and Treasurer
(Principal Financial Officer)
|
|
February 23, 2018
|
Ted M. Johnson
|
|
|
|
|
|
|
|
|
|
/s/ SCOTT A. SAMUELSON
|
|
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
|
February 23, 2018
|
Scott A. Samuelson
|
|
|
|
|
|
|
|
|
|
/s/ JOYCE A. CHAPMAN
|
|
Director
|
|
February 23, 2018
|
Joyce A. Chapman
|
|
|
|
|
|
|
|
|
|
/s/ ALEXANDER M. CLARK
|
|
Director
|
|
February 23, 2018
|
Alexander M. Clark
|
|
|
|
|
|
|
|
|
|
/s/ BRENDA J. CUSHING
|
|
Director
|
|
February 23, 2018
|
Brenda J. Cushing
|
|
|
|
|
|
|
|
|
|
/s/ JAMES M. GERLACH
|
|
Director
|
|
February 23, 2018
|
James M. Gerlach
|
|
|
|
|
|
|
|
|
|
/s/ ROBERT L. HOWE
|
|
Director
|
|
February 23, 2018
|
Robert L. Howe
|
|
|
|
|
|
|
|
|
|
/s/ WILLIAM R. KUNKEL
|
|
Director
|
|
February 23, 2018
|
William R. Kunkel
|
|
|
|
|
|
|
|
|
|
/s/ ALAN D. MATULA
|
|
Director
|
|
February 23, 2018
|
Alan D. Matula
|
|
|
|
|
|
|
|
|
|
/s/ DAVID S. MULCAHY
|
|
Director
|
|
February 23, 2018
|
David S. Mulcahy
|
|
|
|
|
|
|
|
|
|
/s/ GERARD D. NEUGENT
|
|
Director
|
|
February 23, 2018
|
Gerard D. Neugent
|
|
|
|
|
|
|
|
|
|
/s/ DEBRA J. RICHARDSON
|
|
Director
|
|
February 23, 2018
|
Debra J. Richardson
|
|
|
|
|
|
|
|
|
|
/s/ A.J. STRICKLAND, III
|
|
Director
|
|
February 23, 2018
|
A.J. Strickland, III
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Statements:
|
|
Notes to Consolidated Financial Statements
|
|
Schedules:
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Assets
|
|
|
|
||||
Investments:
|
|
|
|
||||
Fixed maturity securities:
|
|
|
|
||||
Available for sale, at fair value (amortized cost: 2017 - $43,116,759; 2016 - $39,953,955)
|
$
|
45,372,989
|
|
|
$
|
41,060,494
|
|
Held for investment, at amortized cost (fair value: 2017 - $76,460; 2016 - $68,766)
|
77,041
|
|
|
76,825
|
|
||
Mortgage loans on real estate
|
2,665,531
|
|
|
2,480,956
|
|
||
Derivative instruments
|
1,568,380
|
|
|
830,519
|
|
||
Other investments
|
616,764
|
|
|
308,774
|
|
||
Total investments
|
50,300,705
|
|
|
44,757,568
|
|
||
|
|
|
|
||||
Cash and cash equivalents
|
1,434,045
|
|
|
791,266
|
|
||
Coinsurance deposits
|
4,858,289
|
|
|
4,639,492
|
|
||
Accrued investment income
|
429,008
|
|
|
397,773
|
|
||
Deferred policy acquisition costs
|
2,714,523
|
|
|
2,905,377
|
|
||
Deferred sales inducements
|
2,001,892
|
|
|
2,208,218
|
|
||
Deferred income taxes
|
38,147
|
|
|
168,578
|
|
||
Income taxes recoverable
|
—
|
|
|
11,474
|
|
||
Other assets
|
254,127
|
|
|
173,726
|
|
||
Total assets
|
$
|
62,030,736
|
|
|
$
|
56,053,472
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Policy benefit reserves
|
$
|
56,142,673
|
|
|
$
|
51,637,026
|
|
Other policy funds and contract claims
|
282,884
|
|
|
298,347
|
|
||
Notes and loan payable
|
494,093
|
|
|
493,755
|
|
||
Subordinated debentures
|
242,565
|
|
|
241,853
|
|
||
Income taxes payable
|
34,285
|
|
|
—
|
|
||
Other liabilities
|
1,984,079
|
|
|
1,090,896
|
|
||
Total liabilities
|
59,180,579
|
|
|
53,761,877
|
|
||
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, par value $1 per share, 2,000,000 shares authorized,
2017 and 2016 - no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $1 per share, 200,000,000 shares authorized; issued and outstanding:
2017 - 89,331,087 shares (excluding 2,064,727 treasury shares);
2016 - 88,001,130 shares (excluding 2,887,082 treasury shares)
|
89,331
|
|
|
88,001
|
|
||
Additional paid-in capital
|
791,446
|
|
|
770,344
|
|
||
Accumulated other comprehensive income
|
724,599
|
|
|
339,966
|
|
||
Retained earnings
|
1,244,781
|
|
|
1,093,284
|
|
||
Total stockholders' equity
|
2,850,157
|
|
|
2,291,595
|
|
||
Total liabilities and stockholders' equity
|
$
|
62,030,736
|
|
|
$
|
56,053,472
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Premiums and other considerations
|
$
|
34,228
|
|
|
$
|
43,767
|
|
|
$
|
36,048
|
|
Annuity product charges
|
200,494
|
|
|
173,579
|
|
|
136,168
|
|
|||
Net investment income
|
1,991,997
|
|
|
1,849,872
|
|
|
1,692,192
|
|
|||
Change in fair value of derivatives
|
1,677,871
|
|
|
164,219
|
|
|
(336,146
|
)
|
|||
Net realized gains on investments, excluding other than temporary impairment ("OTTI") losses
|
10,509
|
|
|
11,524
|
|
|
10,211
|
|
|||
OTTI losses on investments:
|
|
|
|
|
|
||||||
Total OTTI losses
|
(2,758
|
)
|
|
(21,349
|
)
|
|
(25,547
|
)
|
|||
Portion of OTTI losses recognized in (from) other comprehensive income
|
(1,872
|
)
|
|
(1,330
|
)
|
|
6,011
|
|
|||
Net OTTI losses recognized in operations
|
(4,630
|
)
|
|
(22,679
|
)
|
|
(19,536
|
)
|
|||
Loss on extinguishment of debt
|
(18,817
|
)
|
|
—
|
|
|
—
|
|
|||
Total revenues
|
3,891,652
|
|
|
2,220,282
|
|
|
1,518,937
|
|
|||
|
|
|
|
|
|
||||||
Benefits and expenses:
|
|
|
|
|
|
||||||
Insurance policy benefits and change in future policy benefits
|
43,219
|
|
|
52,483
|
|
|
45,458
|
|
|||
Interest sensitive and index product benefits
|
2,023,668
|
|
|
725,472
|
|
|
968,053
|
|
|||
Amortization of deferred sales inducements
|
176,612
|
|
|
251,166
|
|
|
209,390
|
|
|||
Change in fair value of embedded derivatives
|
919,735
|
|
|
543,465
|
|
|
(464,698
|
)
|
|||
Interest expense on notes and loan payable
|
30,368
|
|
|
28,248
|
|
|
28,849
|
|
|||
Interest expense on subordinated debentures
|
14,124
|
|
|
12,958
|
|
|
12,239
|
|
|||
Amortization of deferred policy acquisition costs
|
255,964
|
|
|
374,012
|
|
|
286,114
|
|
|||
Other operating costs and expenses
|
111,691
|
|
|
102,231
|
|
|
96,218
|
|
|||
Total benefits and expenses
|
3,575,381
|
|
|
2,090,035
|
|
|
1,181,623
|
|
|||
Income before income taxes
|
316,271
|
|
|
130,247
|
|
|
337,314
|
|
|||
Income tax expense
|
141,626
|
|
|
47,004
|
|
|
117,484
|
|
|||
Net income
|
$
|
174,645
|
|
|
$
|
83,243
|
|
|
$
|
219,830
|
|
|
|
|
|
|
|
||||||
Earnings per common share
|
$
|
1.96
|
|
|
$
|
0.98
|
|
|
$
|
2.78
|
|
Earnings per common share - assuming dilution
|
$
|
1.93
|
|
|
$
|
0.97
|
|
|
$
|
2.72
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding (in thousands):
|
|
|
|
|
|
||||||
Earnings per common share
|
88,982
|
|
|
84,793
|
|
|
78,937
|
|
|||
Earnings per common share - assuming dilution
|
90,311
|
|
|
85,605
|
|
|
80,961
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net income
|
$
|
174,645
|
|
|
$
|
83,243
|
|
|
$
|
219,830
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Change in net unrealized investment gains/losses (1)
|
556,384
|
|
|
207,994
|
|
|
(797,374
|
)
|
|||
Noncredit component of OTTI losses (1)
|
915
|
|
|
556
|
|
|
(2,927
|
)
|
|||
Reclassification of unrealized investment gains/losses to net income (1)
|
4,496
|
|
|
4,224
|
|
|
703
|
|
|||
Other comprehensive income (loss) before income tax
|
561,795
|
|
|
212,774
|
|
|
(799,598
|
)
|
|||
Income tax effect related to other comprehensive income (loss)
|
(177,162
|
)
|
|
(74,471
|
)
|
|
279,860
|
|
|||
Other comprehensive income (loss)
|
384,633
|
|
|
138,303
|
|
|
(519,738
|
)
|
|||
Comprehensive income (loss)
|
$
|
559,278
|
|
|
$
|
221,546
|
|
|
$
|
(299,908
|
)
|
(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, 2014
|
$
|
76,062
|
|
|
$
|
513,218
|
|
|
$
|
721,401
|
|
|
$
|
829,195
|
|
|
$
|
2,139,876
|
|
Net income for the year
|
—
|
|
|
—
|
|
|
—
|
|
|
219,830
|
|
|
219,830
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
(519,738
|
)
|
|
—
|
|
|
(519,738
|
)
|
|||||
Share-based compensation, including excess income tax benefits
|
—
|
|
|
9,976
|
|
|
—
|
|
|
—
|
|
|
9,976
|
|
|||||
Issuance of common stock via public offering
|
4,300
|
|
|
100,179
|
|
|
—
|
|
|
—
|
|
|
104,479
|
|
|||||
Issuance of 944,504 shares of common stock under compensation plans, including excess income tax benefits
|
944
|
|
|
7,042
|
|
|
—
|
|
|
—
|
|
|
7,986
|
|
|||||
Issuance of 47,868 shares of common stock to settle warrants that have reached their expiration
|
48
|
|
|
(48
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Dividends on common stock ($0.22 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,874
|
)
|
|
(17,874
|
)
|
|||||
Balance at December 31, 2015
|
81,354
|
|
|
630,367
|
|
|
201,663
|
|
|
1,031,151
|
|
|
1,944,535
|
|
|||||
Net income for the year
|
—
|
|
|
—
|
|
|
—
|
|
|
83,243
|
|
|
83,243
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
138,303
|
|
|
—
|
|
|
138,303
|
|
|||||
Share-based compensation, including excess income tax benefits
|
—
|
|
|
7,218
|
|
|
—
|
|
|
—
|
|
|
7,218
|
|
|||||
Issuance of common stock via settlement of forward sale agreements
|
5,590
|
|
|
129,072
|
|
|
—
|
|
|
—
|
|
|
134,662
|
|
|||||
Issuance of 964,053 shares of common stock under compensation plans, including excess income tax benefits
|
964
|
|
|
3,781
|
|
|
—
|
|
|
—
|
|
|
4,745
|
|
|||||
Issuance of 92,998 shares of common stock to settle warrants that have reached their expiration
|
93
|
|
|
(94
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Dividends on common stock ($0.24 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,110
|
)
|
|
(21,110
|
)
|
|||||
Balance at December 31, 2016
|
88,001
|
|
|
770,344
|
|
|
339,966
|
|
|
1,093,284
|
|
|
2,291,595
|
|
|||||
Net income for the year
|
—
|
|
|
—
|
|
|
—
|
|
|
174,645
|
|
|
174,645
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
384,633
|
|
|
—
|
|
|
384,633
|
|
|||||
Share-based compensation
|
—
|
|
|
6,464
|
|
|
—
|
|
|
—
|
|
|
6,464
|
|
|||||
Issuance of 1,329,957 shares of common stock under compensation plans
|
1,330
|
|
|
14,638
|
|
|
—
|
|
|
—
|
|
|
15,968
|
|
|||||
Dividends on common stock ($0.26 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,148
|
)
|
|
(23,148
|
)
|
|||||
Balance at December 31, 2017
|
$
|
89,331
|
|
|
$
|
791,446
|
|
|
$
|
724,599
|
|
|
$
|
1,244,781
|
|
|
$
|
2,850,157
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
174,645
|
|
|
$
|
83,243
|
|
|
$
|
219,830
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Interest sensitive and index product benefits
|
2,023,668
|
|
|
725,472
|
|
|
968,053
|
|
|||
Amortization of deferred sales inducements
|
176,612
|
|
|
251,166
|
|
|
209,390
|
|
|||
Annuity product charges
|
(200,494
|
)
|
|
(173,579
|
)
|
|
(136,168
|
)
|
|||
Change in fair value of embedded derivatives
|
919,735
|
|
|
543,465
|
|
|
(464,698
|
)
|
|||
Increase in traditional life and accident and health insurance reserves
|
(33
|
)
|
|
12,724
|
|
|
5,097
|
|
|||
Policy acquisition costs deferred
|
(406,641
|
)
|
|
(543,325
|
)
|
|
(657,639
|
)
|
|||
Amortization of deferred policy acquisition costs
|
255,964
|
|
|
374,012
|
|
|
286,114
|
|
|||
Provision for depreciation and other amortization
|
3,948
|
|
|
3,879
|
|
|
4,610
|
|
|||
Amortization of discounts and premiums on investments
|
15,431
|
|
|
1,070
|
|
|
(8,464
|
)
|
|||
Loss on extinguishment of debt
|
18,817
|
|
|
—
|
|
|
—
|
|
|||
Realized gains (losses) on investments and net OTTI losses recognized in operations
|
(5,879
|
)
|
|
11,155
|
|
|
9,325
|
|
|||
Change in fair value of derivatives
|
(1,678,956
|
)
|
|
(165,727
|
)
|
|
334,300
|
|
|||
Deferred income taxes (benefits)
|
(46,730
|
)
|
|
(10,408
|
)
|
|
41,916
|
|
|||
Share-based compensation
|
6,464
|
|
|
6,692
|
|
|
7,373
|
|
|||
Change in accrued investment income
|
(31,235
|
)
|
|
(35,669
|
)
|
|
(35,545
|
)
|
|||
Change in income taxes recoverable/payable
|
45,759
|
|
|
18,125
|
|
|
(20,027
|
)
|
|||
Change in other assets
|
448
|
|
|
1,812
|
|
|
71
|
|
|||
Change in other policy funds and contract claims
|
(23,101
|
)
|
|
(34,411
|
)
|
|
(49,092
|
)
|
|||
Change in collateral held for derivatives
|
772,181
|
|
|
414,655
|
|
|
(269,474
|
)
|
|||
Change in other liabilities
|
(84,416
|
)
|
|
(55,940
|
)
|
|
75,794
|
|
|||
Other
|
(13,794
|
)
|
|
(14,089
|
)
|
|
(15,962
|
)
|
|||
Net cash provided by operating activities
|
1,922,393
|
|
|
1,414,322
|
|
|
504,804
|
|
|||
|
|
|
|
|
|
||||||
Investing activities
|
|
|
|
|
|
||||||
Sales, maturities, or repayments of investments:
|
|
|
|
|
|
||||||
Fixed maturity securities - available for sale
|
1,911,991
|
|
|
2,746,510
|
|
|
1,612,121
|
|
|||
Mortgage loans on real estate
|
351,255
|
|
|
383,763
|
|
|
468,102
|
|
|||
Derivative instruments
|
1,697,948
|
|
|
284,470
|
|
|
640,467
|
|
|||
Other investments
|
10,571
|
|
|
14,045
|
|
|
16,792
|
|
|||
Acquisitions of investments:
|
|
|
|
|
|
||||||
Fixed maturity securities - available for sale
|
(5,026,640
|
)
|
|
(6,883,895
|
)
|
|
(7,256,137
|
)
|
|||
Mortgage loans on real estate
|
(535,249
|
)
|
|
(428,833
|
)
|
|
(455,286
|
)
|
|||
Derivative instruments
|
(691,428
|
)
|
|
(602,349
|
)
|
|
(588,859
|
)
|
|||
Other investments
|
(305,575
|
)
|
|
(11,559
|
)
|
|
(13,092
|
)
|
|||
Purchases of property, furniture and equipment
|
(4,809
|
)
|
|
(1,197
|
)
|
|
(1,313
|
)
|
|||
Net cash used in investing activities
|
(2,591,936
|
)
|
|
(4,499,045
|
)
|
|
(5,577,205
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Financing activities
|
|
|
|
|
|
||||||
Receipts credited to annuity policyholder account balances
|
$
|
4,152,264
|
|
|
$
|
7,092,348
|
|
|
$
|
7,051,227
|
|
Coinsurance deposits
|
(6,597
|
)
|
|
(1,317,555
|
)
|
|
(80,777
|
)
|
|||
Return of annuity policyholder account balances
|
(2,809,486
|
)
|
|
(2,535,669
|
)
|
|
(2,271,950
|
)
|
|||
Financing fees incurred and deferred
|
(5,817
|
)
|
|
(1,456
|
)
|
|
—
|
|
|||
Proceeds from issuance of notes payable
|
499,650
|
|
|
—
|
|
|
—
|
|
|||
Repayment of notes payable
|
(413,252
|
)
|
|
—
|
|
|
(48,152
|
)
|
|||
Repayment of loan payable
|
(100,000
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of loan payable
|
—
|
|
|
100,000
|
|
|
—
|
|
|||
Net proceeds from settlement of notes hedges and warrants
|
—
|
|
|
—
|
|
|
25,775
|
|
|||
Acquisition of common stock
|
—
|
|
|
—
|
|
|
(16
|
)
|
|||
Excess tax benefits realized from share-based compensation plans
|
—
|
|
|
527
|
|
|
3,649
|
|
|||
Proceeds from issuance of common stock
|
14,028
|
|
|
139,654
|
|
|
112,481
|
|
|||
Change in checks in excess of cash balance
|
4,680
|
|
|
21,501
|
|
|
(5,727
|
)
|
|||
Dividends paid
|
(23,148
|
)
|
|
(21,110
|
)
|
|
(17,874
|
)
|
|||
Net cash provided by financing activities
|
1,312,322
|
|
|
3,478,240
|
|
|
4,768,636
|
|
|||
Increase (decrease) in cash and cash equivalents
|
642,779
|
|
|
393,517
|
|
|
(303,765
|
)
|
|||
Cash and cash equivalents at beginning of year
|
791,266
|
|
|
397,749
|
|
|
701,514
|
|
|||
Cash and cash equivalents at end of year
|
$
|
1,434,045
|
|
|
$
|
791,266
|
|
|
$
|
397,749
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest expense
|
$
|
55,445
|
|
|
$
|
39,647
|
|
|
$
|
39,118
|
|
Income taxes
|
142,627
|
|
|
39,066
|
|
|
91,887
|
|
|||
Non-cash operating activity:
|
|
|
|
|
|
||||||
Deferral of sales inducements
|
216,172
|
|
|
353,966
|
|
|
486,924
|
|
|||
Non-cash investing activity:
|
|
|
|
|
|
||||||
Mortgage loan on real estate sold
|
—
|
|
|
—
|
|
|
4,879
|
|
|||
Non-cash financing activity:
|
|
|
|
|
|
||||||
Common stock issued to settle warrants that have expired
|
—
|
|
|
93
|
|
|
48
|
|
|
|
Year Ended December 31,
|
||||||||||
Product Type
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Fixed index annuities
|
|
$
|
3,668,121
|
|
|
$
|
5,035,818
|
|
|
$
|
6,491,981
|
|
Annual reset fixed rate annuities
|
|
74,572
|
|
|
63,582
|
|
|
44,715
|
|
|||
Multi-year fixed rate annuities
|
|
22,291
|
|
|
256,894
|
|
|
42,709
|
|
|||
Single premium immediate annuities (SPIA)
|
|
24,946
|
|
|
35,851
|
|
|
32,752
|
|
|||
|
|
$
|
3,789,930
|
|
|
$
|
5,392,145
|
|
|
$
|
6,612,157
|
|
|
December 31,
|
||||||||||||||
|
2017
|
|
2016
|
||||||||||||
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Available for sale
|
$
|
45,372,989
|
|
|
$
|
45,372,989
|
|
|
$
|
41,060,494
|
|
|
$
|
41,060,494
|
|
Held for investment
|
77,041
|
|
|
76,460
|
|
|
76,825
|
|
|
68,766
|
|
||||
Mortgage loans on real estate
|
2,665,531
|
|
|
2,670,037
|
|
|
2,480,956
|
|
|
2,522,035
|
|
||||
Derivative instruments
|
1,568,380
|
|
|
1,568,380
|
|
|
830,519
|
|
|
830,519
|
|
||||
Other investments
|
616,764
|
|
|
605,894
|
|
|
308,774
|
|
|
300,918
|
|
||||
Cash and cash equivalents
|
1,434,045
|
|
|
1,434,045
|
|
|
791,266
|
|
|
791,266
|
|
||||
Coinsurance deposits
|
4,858,289
|
|
|
4,347,990
|
|
|
4,639,492
|
|
|
4,150,792
|
|
||||
Interest rate caps
|
415
|
|
|
415
|
|
|
1,082
|
|
|
1,082
|
|
||||
Counterparty collateral
|
186,108
|
|
|
186,108
|
|
|
145,693
|
|
|
145,693
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Policy benefit reserves
|
55,786,011
|
|
|
46,344,931
|
|
|
51,280,331
|
|
|
43,104,183
|
|
||||
Single premium immediate annuity (SPIA) benefit reserves
|
282,563
|
|
|
292,153
|
|
|
297,724
|
|
|
308,028
|
|
||||
Notes and loan payable
|
494,093
|
|
|
521,800
|
|
|
493,755
|
|
|
519,440
|
|
||||
Subordinated debentures
|
242,565
|
|
|
244,117
|
|
|
241,853
|
|
|
225,106
|
|
||||
Interest rate swap
|
789
|
|
|
789
|
|
|
2,113
|
|
|
2,113
|
|
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)
|
||||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
11,876
|
|
|
$
|
5,640
|
|
|
$
|
6,236
|
|
|
$
|
—
|
|
United States Government sponsored agencies
|
1,305,017
|
|
|
—
|
|
|
1,305,017
|
|
|
—
|
|
||||
United States municipalities, states and territories
|
4,166,812
|
|
|
—
|
|
|
4,166,812
|
|
|
—
|
|
||||
Foreign government obligations
|
239,360
|
|
|
—
|
|
|
239,360
|
|
|
—
|
|
||||
Corporate securities
|
29,878,971
|
|
|
5
|
|
|
29,878,966
|
|
|
—
|
|
||||
Residential mortgage backed securities
|
1,105,567
|
|
|
—
|
|
|
1,105,567
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
5,544,850
|
|
|
—
|
|
|
5,544,850
|
|
|
—
|
|
||||
Other asset backed securities
|
3,120,536
|
|
|
—
|
|
|
3,120,536
|
|
|
—
|
|
||||
Other investments: equity securities, available for sale
|
292,429
|
|
|
285,000
|
|
|
7,429
|
|
|
—
|
|
||||
Derivative instruments
|
1,568,380
|
|
|
—
|
|
|
1,568,380
|
|
|
—
|
|
||||
Cash and cash equivalents
|
1,434,045
|
|
|
1,434,045
|
|
|
—
|
|
|
—
|
|
||||
Interest rate caps
|
415
|
|
|
—
|
|
|
415
|
|
|
—
|
|
||||
Counterparty collateral
|
186,108
|
|
|
—
|
|
|
186,108
|
|
|
—
|
|
||||
|
$
|
48,854,366
|
|
|
$
|
1,724,690
|
|
|
$
|
47,129,676
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
$
|
789
|
|
|
$
|
—
|
|
|
$
|
789
|
|
|
$
|
—
|
|
Fixed index annuities - embedded derivatives, net
|
8,790,427
|
|
|
—
|
|
|
—
|
|
|
8,790,427
|
|
||||
|
$
|
8,791,216
|
|
|
$
|
—
|
|
|
$
|
789
|
|
|
$
|
8,790,427
|
|
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
11,805
|
|
|
$
|
5,381
|
|
|
$
|
6,424
|
|
|
$
|
—
|
|
United States Government sponsored agencies
|
1,344,787
|
|
|
—
|
|
|
1,344,787
|
|
|
—
|
|
||||
United States municipalities, states and territories
|
3,926,950
|
|
|
—
|
|
|
3,926,950
|
|
|
—
|
|
||||
Foreign government obligations
|
236,341
|
|
|
—
|
|
|
236,341
|
|
|
—
|
|
||||
Corporate securities
|
27,114,418
|
|
|
6
|
|
|
27,114,412
|
|
|
—
|
|
||||
Residential mortgage backed securities
|
1,254,835
|
|
|
—
|
|
|
1,254,835
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
5,365,235
|
|
|
—
|
|
|
5,365,235
|
|
|
—
|
|
||||
Other asset backed securities
|
1,806,123
|
|
|
—
|
|
|
1,806,123
|
|
|
—
|
|
||||
Other investments: equity securities, available for sale
|
8,000
|
|
|
—
|
|
|
8,000
|
|
|
—
|
|
||||
Derivative instruments
|
830,519
|
|
|
—
|
|
|
830,519
|
|
|
—
|
|
||||
Cash and cash equivalents
|
791,266
|
|
|
791,266
|
|
|
—
|
|
|
—
|
|
||||
Interest rate caps
|
1,082
|
|
|
—
|
|
|
1,082
|
|
|
—
|
|
||||
Counterparty collateral
|
145,693
|
|
|
—
|
|
|
145,693
|
|
|
—
|
|
||||
|
$
|
42,837,054
|
|
|
$
|
796,653
|
|
|
$
|
42,040,401
|
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Interest rate swap
|
$
|
2,113
|
|
|
$
|
—
|
|
|
$
|
2,113
|
|
|
$
|
—
|
|
Fixed index annuities - embedded derivatives
|
6,563,288
|
|
|
—
|
|
|
—
|
|
|
6,563,288
|
|
||||
|
$
|
6,565,401
|
|
|
$
|
—
|
|
|
$
|
2,113
|
|
|
$
|
6,563,288
|
|
•
|
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)
|
|
December 31, 2017
|
|
December 31, 2016
|
|
December 31, 2017
|
|
December 31, 2016
|
1 - 5
|
|
1.83%
|
|
1.76%
|
|
3.32%
|
|
3.30%
|
6 - 10
|
|
7.01%
|
|
6.58%
|
|
3.32%
|
|
3.30%
|
11 - 15
|
|
11.31%
|
|
11.25%
|
|
3.34%
|
|
3.32%
|
16 - 20
|
|
11.96%
|
|
12.04%
|
|
3.20%
|
|
3.18%
|
20+
|
|
11.62%
|
|
11.68%
|
|
3.20%
|
|
3.18%
|
|
Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Fixed index annuities - embedded derivatives
|
|
|
|
||||
Beginning balance
|
$
|
6,563,288
|
|
|
$
|
5,983,622
|
|
Premiums less benefits
|
2,052,985
|
|
|
434,621
|
|
||
Change in fair value, net
|
174,154
|
|
|
145,045
|
|
||
Ending balance
|
$
|
8,790,427
|
|
|
$
|
6,563,288
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
11,861
|
|
|
$
|
162
|
|
|
$
|
(147
|
)
|
|
$
|
11,876
|
|
United States Government sponsored agencies
|
1,308,290
|
|
|
28,457
|
|
|
(31,730
|
)
|
|
1,305,017
|
|
||||
United States municipalities, states and territories
|
3,804,360
|
|
|
366,048
|
|
|
(3,596
|
)
|
|
4,166,812
|
|
||||
Foreign government obligations
|
228,214
|
|
|
13,171
|
|
|
(2,025
|
)
|
|
239,360
|
|
||||
Corporate securities
|
28,127,653
|
|
|
1,897,005
|
|
|
(145,687
|
)
|
|
29,878,971
|
|
||||
Residential mortgage backed securities
|
1,028,484
|
|
|
79,554
|
|
|
(2,471
|
)
|
|
1,105,567
|
|
||||
Commercial mortgage backed securities
|
5,531,922
|
|
|
82,768
|
|
|
(69,840
|
)
|
|
5,544,850
|
|
||||
Other asset backed securities
|
3,075,975
|
|
|
57,966
|
|
|
(13,405
|
)
|
|
3,120,536
|
|
||||
|
$
|
43,116,759
|
|
|
$
|
2,525,131
|
|
|
$
|
(268,901
|
)
|
|
$
|
45,372,989
|
|
Held for investment:
|
|
|
|
|
|
|
|
||||||||
Corporate security
|
$
|
77,041
|
|
|
$
|
—
|
|
|
$
|
(581
|
)
|
|
$
|
76,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other investments: equity securities, available for sale
|
$
|
292,429
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
292,429
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
||||||||
Available for sale:
|
|
|
|
|
|
|
|
||||||||
United States Government full faith and credit
|
$
|
11,864
|
|
|
$
|
229
|
|
|
$
|
(288
|
)
|
|
$
|
11,805
|
|
United States Government sponsored agencies
|
1,368,340
|
|
|
23,360
|
|
|
(46,913
|
)
|
|
1,344,787
|
|
||||
United States municipalities, states and territories
|
3,626,395
|
|
|
322,948
|
|
|
(22,393
|
)
|
|
3,926,950
|
|
||||
Foreign government obligations
|
229,589
|
|
|
11,832
|
|
|
(5,080
|
)
|
|
236,341
|
|
||||
Corporate securities
|
26,333,213
|
|
|
1,149,978
|
|
|
(368,773
|
)
|
|
27,114,418
|
|
||||
Residential mortgage backed securities
|
1,166,944
|
|
|
91,445
|
|
|
(3,554
|
)
|
|
1,254,835
|
|
||||
Commercial mortgage backed securities
|
5,422,255
|
|
|
59,994
|
|
|
(117,014
|
)
|
|
5,365,235
|
|
||||
Other asset backed securities
|
1,795,355
|
|
|
31,471
|
|
|
(20,703
|
)
|
|
1,806,123
|
|
||||
|
$
|
39,953,955
|
|
|
$
|
1,691,257
|
|
|
$
|
(584,718
|
)
|
|
$
|
41,060,494
|
|
Held for investment:
|
|
|
|
|
|
|
|
||||||||
Corporate security
|
$
|
76,825
|
|
|
$
|
—
|
|
|
$
|
(8,059
|
)
|
|
$
|
68,766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other investments: equity securities, available for sale
|
$
|
7,521
|
|
|
$
|
479
|
|
|
$
|
—
|
|
|
$
|
8,000
|
|
|
Available for sale
|
|
Held for investment
|
||||||||||||
|
Amortized
Cost
|
|
Fair Value
|
|
Amortized
Cost
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Due in one year or less
|
$
|
197,449
|
|
|
$
|
201,079
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Due after one year through five years
|
4,958,029
|
|
|
5,114,727
|
|
|
—
|
|
|
—
|
|
||||
Due after five years through ten years
|
10,556,868
|
|
|
10,827,764
|
|
|
—
|
|
|
—
|
|
||||
Due after ten years through twenty years
|
9,214,395
|
|
|
10,080,377
|
|
|
—
|
|
|
—
|
|
||||
Due after twenty years
|
8,553,637
|
|
|
9,378,089
|
|
|
77,041
|
|
|
76,460
|
|
||||
|
33,480,378
|
|
|
35,602,036
|
|
|
77,041
|
|
|
76,460
|
|
||||
Residential mortgage backed securities
|
1,028,484
|
|
|
1,105,567
|
|
|
—
|
|
|
—
|
|
||||
Commercial mortgage backed securities
|
5,531,922
|
|
|
5,544,850
|
|
|
—
|
|
|
—
|
|
||||
Other asset backed securities
|
3,075,975
|
|
|
3,120,536
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
43,116,759
|
|
|
$
|
45,372,989
|
|
|
$
|
77,041
|
|
|
$
|
76,460
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Net unrealized gains on available for sale fixed maturity securities and equity securities
|
$
|
2,256,230
|
|
|
$
|
1,107,018
|
|
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements
|
(1,206,078
|
)
|
|
(618,661
|
)
|
||
Deferred income tax valuation allowance reversal
|
22,534
|
|
|
22,534
|
|
||
Deferred income tax expense (a)
|
(348,087
|
)
|
|
(170,925
|
)
|
||
Net unrealized gains reported as accumulated other comprehensive income
|
$
|
724,599
|
|
|
$
|
339,966
|
|
(a)
|
Includes
$128 million
related to the impact of Tax Reform that we expect to reclassify between accumulated other comprehensive income and retained earnings within our consolidated balance sheet during the first quarter of 2018. For more information regarding the timing of reclassification, see Note 1 to our audited consolidated financial statements.
|
|
|
December 31,
|
||||||||||||||
|
|
2017
|
|
2016
|
||||||||||||
NAIC
Designation
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
1
|
|
$
|
26,669,427
|
|
|
$
|
28,274,379
|
|
|
$
|
25,607,268
|
|
|
$
|
26,507,798
|
|
2
|
|
15,198,551
|
|
|
15,869,219
|
|
|
13,037,592
|
|
|
13,295,648
|
|
||||
3
|
|
1,161,737
|
|
|
1,157,420
|
|
|
1,201,059
|
|
|
1,155,702
|
|
||||
4
|
|
134,838
|
|
|
117,542
|
|
|
154,226
|
|
|
137,188
|
|
||||
5
|
|
17,015
|
|
|
20,927
|
|
|
17,475
|
|
|
24,664
|
|
||||
6
|
|
12,232
|
|
|
9,962
|
|
|
13,160
|
|
|
8,260
|
|
||||
|
|
$
|
43,193,800
|
|
|
$
|
45,449,449
|
|
|
$
|
40,030,780
|
|
|
$
|
41,129,260
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
|
Fair Value
|
|
Unrealized
Losses
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government full faith and credit
|
$
|
1,565
|
|
|
$
|
(10
|
)
|
|
$
|
6,731
|
|
|
$
|
(137
|
)
|
|
$
|
8,296
|
|
|
$
|
(147
|
)
|
United States Government sponsored agencies
|
44,794
|
|
|
(180
|
)
|
|
958,965
|
|
|
(31,550
|
)
|
|
1,003,759
|
|
|
(31,730
|
)
|
||||||
United States municipalities, states and territories
|
44,736
|
|
|
(128
|
)
|
|
128,499
|
|
|
(3,468
|
)
|
|
173,235
|
|
|
(3,596
|
)
|
||||||
Foreign government obligations
|
49,663
|
|
|
(337
|
)
|
|
12,625
|
|
|
(1,688
|
)
|
|
62,288
|
|
|
(2,025
|
)
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
456,244
|
|
|
(5,135
|
)
|
|
600,655
|
|
|
(28,043
|
)
|
|
1,056,899
|
|
|
(33,178
|
)
|
||||||
Manufacturing, construction and mining
|
222,985
|
|
|
(3,475
|
)
|
|
231,196
|
|
|
(10,849
|
)
|
|
454,181
|
|
|
(14,324
|
)
|
||||||
Utilities and related sectors
|
395,183
|
|
|
(4,099
|
)
|
|
249,416
|
|
|
(8,901
|
)
|
|
644,599
|
|
|
(13,000
|
)
|
||||||
Wholesale/retail trade
|
152,941
|
|
|
(1,249
|
)
|
|
178,635
|
|
|
(11,371
|
)
|
|
331,576
|
|
|
(12,620
|
)
|
||||||
Services, media and other
|
729,124
|
|
|
(19,000
|
)
|
|
891,654
|
|
|
(53,565
|
)
|
|
1,620,778
|
|
|
(72,565
|
)
|
||||||
Residential mortgage backed securities
|
39,771
|
|
|
(387
|
)
|
|
32,917
|
|
|
(2,084
|
)
|
|
72,688
|
|
|
(2,471
|
)
|
||||||
Commercial mortgage backed securities
|
1,096,757
|
|
|
(10,385
|
)
|
|
1,306,437
|
|
|
(59,455
|
)
|
|
2,403,194
|
|
|
(69,840
|
)
|
||||||
Other asset backed securities
|
765,531
|
|
|
(3,499
|
)
|
|
217,595
|
|
|
(9,906
|
)
|
|
983,126
|
|
|
(13,405
|
)
|
||||||
|
$
|
3,999,294
|
|
|
$
|
(47,884
|
)
|
|
$
|
4,815,325
|
|
|
$
|
(221,017
|
)
|
|
$
|
8,814,619
|
|
|
$
|
(268,901
|
)
|
Held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate security:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
76,460
|
|
|
$
|
(581
|
)
|
|
$
|
76,460
|
|
|
$
|
(581
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
United States Government full faith and credit
|
$
|
7,405
|
|
|
$
|
(288
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,405
|
|
|
$
|
(288
|
)
|
United States Government sponsored agencies
|
995,548
|
|
|
(46,913
|
)
|
|
—
|
|
|
—
|
|
|
995,548
|
|
|
(46,913
|
)
|
||||||
United States municipalities, states and territories
|
463,409
|
|
|
(22,393
|
)
|
|
—
|
|
|
—
|
|
|
463,409
|
|
|
(22,393
|
)
|
||||||
Foreign government obligations
|
29,158
|
|
|
(913
|
)
|
|
20,388
|
|
|
(4,167
|
)
|
|
49,546
|
|
|
(5,080
|
)
|
||||||
Corporate securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finance, insurance and real estate
|
1,940,107
|
|
|
(70,421
|
)
|
|
82,907
|
|
|
(7,723
|
)
|
|
2,023,014
|
|
|
(78,144
|
)
|
||||||
Manufacturing, construction and mining
|
1,199,420
|
|
|
(34,304
|
)
|
|
311,591
|
|
|
(23,273
|
)
|
|
1,511,011
|
|
|
(57,577
|
)
|
||||||
Utilities and related sectors
|
1,401,650
|
|
|
(45,015
|
)
|
|
58,597
|
|
|
(5,820
|
)
|
|
1,460,247
|
|
|
(50,835
|
)
|
||||||
Wholesale/retail trade
|
637,121
|
|
|
(18,880
|
)
|
|
29,719
|
|
|
(1,930
|
)
|
|
666,840
|
|
|
(20,810
|
)
|
||||||
Services, media and other
|
2,539,519
|
|
|
(82,196
|
)
|
|
716,857
|
|
|
(79,211
|
)
|
|
3,256,376
|
|
|
(161,407
|
)
|
||||||
Residential mortgage backed securities
|
81,762
|
|
|
(3,463
|
)
|
|
1,853
|
|
|
(91
|
)
|
|
83,615
|
|
|
(3,554
|
)
|
||||||
Commercial mortgage backed securities
|
3,148,395
|
|
|
(116,938
|
)
|
|
895
|
|
|
(76
|
)
|
|
3,149,290
|
|
|
(117,014
|
)
|
||||||
Other asset backed securities
|
751,533
|
|
|
(12,289
|
)
|
|
146,167
|
|
|
(8,414
|
)
|
|
897,700
|
|
|
(20,703
|
)
|
||||||
|
$
|
13,195,027
|
|
|
$
|
(454,013
|
)
|
|
$
|
1,368,974
|
|
|
$
|
(130,705
|
)
|
|
$
|
14,564,001
|
|
|
$
|
(584,718
|
)
|
Held for investment:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Corporate security:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
68,766
|
|
|
$
|
(8,059
|
)
|
|
$
|
68,766
|
|
|
$
|
(8,059
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Fixed maturity securities held for investment carried at amortized cost
|
$
|
7,478
|
|
|
$
|
3,186
|
|
|
$
|
(10,651
|
)
|
Investments carried at fair value:
|
|
|
|
|
|
||||||
Fixed maturity securities, available for sale
|
$
|
1,149,691
|
|
|
$
|
508,410
|
|
|
$
|
(1,642,027
|
)
|
Equity securities, available for sale
|
(479
|
)
|
|
166
|
|
|
17
|
|
|||
|
1,149,212
|
|
|
508,576
|
|
|
(1,642,010
|
)
|
|||
Adjustment for effect on other balance sheet accounts:
|
|
|
|
|
|
||||||
Deferred policy acquisition costs and deferred sales inducements
|
(587,417
|
)
|
|
(295,802
|
)
|
|
842,412
|
|
|||
Deferred income tax asset/liability
|
(177,162
|
)
|
|
(74,471
|
)
|
|
279,860
|
|
|||
|
(764,579
|
)
|
|
(370,273
|
)
|
|
1,122,272
|
|
|||
Change in net unrealized gains on investments carried at fair value
|
$
|
384,633
|
|
|
$
|
138,303
|
|
|
$
|
(519,738
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Fixed maturity securities
|
$
|
1,876,542
|
|
|
$
|
1,729,176
|
|
|
$
|
1,566,409
|
|
Equity securities
|
764
|
|
|
531
|
|
|
441
|
|
|||
Mortgage loans on real estate
|
122,680
|
|
|
122,985
|
|
|
131,892
|
|
|||
Cash and cash equivalents
|
2,562
|
|
|
3,201
|
|
|
601
|
|
|||
Other
|
4,073
|
|
|
5,499
|
|
|
4,858
|
|
|||
|
2,006,621
|
|
|
1,861,392
|
|
|
1,704,201
|
|
|||
Less investment expenses
|
(14,624
|
)
|
|
(11,520
|
)
|
|
(12,009
|
)
|
|||
Net investment income
|
$
|
1,991,997
|
|
|
$
|
1,849,872
|
|
|
$
|
1,692,192
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Available for sale fixed maturity securities:
|
|
|
|
|
|
||||||
Gross realized gains
|
$
|
18,254
|
|
|
$
|
14,132
|
|
|
$
|
7,230
|
|
Gross realized losses
|
(9,058
|
)
|
|
(4,036
|
)
|
|
(5,787
|
)
|
|||
|
9,196
|
|
|
10,096
|
|
|
1,443
|
|
|||
Available for sale equity securities:
|
|
|
|
|
|
||||||
Gross realized gains
|
348
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Other investments:
|
|
|
|
|
|
||||||
Gain on sale of real estate
|
56
|
|
|
884
|
|
|
4,194
|
|
|||
Loss on sale of real estate
|
—
|
|
|
(93
|
)
|
|
(575
|
)
|
|||
Impairment losses on real estate
|
—
|
|
|
—
|
|
|
(1,297
|
)
|
|||
|
56
|
|
|
791
|
|
|
2,322
|
|
|||
Mortgage loans on real estate:
|
|
|
|
|
|
||||||
Decrease (increase) in allowance for credit losses
|
278
|
|
|
(4,846
|
)
|
|
1,018
|
|
|||
Recovery of specific allowance
|
631
|
|
|
5,483
|
|
|
5,428
|
|
|||
|
909
|
|
|
637
|
|
|
6,446
|
|
|||
|
$
|
10,509
|
|
|
$
|
11,524
|
|
|
$
|
10,211
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Fixed maturity securities, available for sale
|
$
|
8,680
|
|
|
$
|
1,651
|
|
•
|
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
|
||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Prime
|
|
2005
|
|
7.0
|
%
|
|
7.7
|
%
|
|
8
|
%
|
|
22
|
%
|
|
40
|
%
|
|
50
|
%
|
|
|
2006
|
|
7.3
|
%
|
|
7.3
|
%
|
|
14
|
%
|
|
14
|
%
|
|
40
|
%
|
|
40
|
%
|
|
|
2007
|
|
6.2
|
%
|
|
6.7
|
%
|
|
15
|
%
|
|
27
|
%
|
|
50
|
%
|
|
60
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Prime
|
|
2005
|
|
7.7
|
%
|
|
7.7
|
%
|
|
8
|
%
|
|
14
|
%
|
|
50
|
%
|
|
50
|
%
|
|
|
2006
|
|
6.5
|
%
|
|
7.3
|
%
|
|
12
|
%
|
|
13
|
%
|
|
40
|
%
|
|
50
|
%
|
|
|
2007
|
|
6.2
|
%
|
|
6.4
|
%
|
|
18
|
%
|
|
31
|
%
|
|
50
|
%
|
|
55
|
%
|
Alt-A
|
|
2005
|
|
7.4
|
%
|
|
7.4
|
%
|
|
11
|
%
|
|
11
|
%
|
|
60
|
%
|
|
60
|
%
|
|
Number
of Securities
|
|
Total
OTTI Losses
|
|
Portion of
OTTI Losses
Recognized in (from)
Other
Comprehensive
Income
|
|
Net OTTI
Losses
Recognized
in Operations
|
|||||||
|
|
|
(Dollars in thousands)
|
|||||||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Industrial
|
1
|
|
|
$
|
(2,485
|
)
|
|
$
|
—
|
|
|
$
|
(2,485
|
)
|
Residential mortgage backed securities
|
8
|
|
|
(273
|
)
|
|
(1,585
|
)
|
|
(1,858
|
)
|
|||
Other asset backed securities
|
1
|
|
|
—
|
|
|
(287
|
)
|
|
(287
|
)
|
|||
|
10
|
|
|
$
|
(2,758
|
)
|
|
$
|
(1,872
|
)
|
|
$
|
(4,630
|
)
|
|
|
|
|
|
|
|
|
|||||||
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Energy
|
2
|
|
|
$
|
(642
|
)
|
|
$
|
—
|
|
|
$
|
(642
|
)
|
Materials
|
1
|
|
|
(4,554
|
)
|
|
1,575
|
|
|
(2,979
|
)
|
|||
Telecommunications
|
1
|
|
|
(4,462
|
)
|
|
562
|
|
|
(3,900
|
)
|
|||
Utilities
|
2
|
|
|
(6,961
|
)
|
|
798
|
|
|
(6,163
|
)
|
|||
Residential mortgage backed securities
|
9
|
|
|
—
|
|
|
(783
|
)
|
|
(783
|
)
|
|||
Commercial mortgage backed securities
|
5
|
|
|
(1,540
|
)
|
|
—
|
|
|
(1,540
|
)
|
|||
Other asset backed securities
|
2
|
|
|
(3,190
|
)
|
|
(3,482
|
)
|
|
(6,672
|
)
|
|||
|
22
|
|
|
$
|
(21,349
|
)
|
|
$
|
(1,330
|
)
|
|
$
|
(22,679
|
)
|
|
|
|
|
|
|
|
|
|||||||
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Industrial
|
2
|
|
|
$
|
(15,414
|
)
|
|
$
|
2,975
|
|
|
$
|
(12,439
|
)
|
Residential mortgage backed securities
|
11
|
|
|
(133
|
)
|
|
(2,089
|
)
|
|
(2,222
|
)
|
|||
Other asset backed securities
|
1
|
|
|
(10,000
|
)
|
|
5,125
|
|
|
(4,875
|
)
|
|||
|
14
|
|
|
$
|
(25,547
|
)
|
|
$
|
6,011
|
|
|
$
|
(19,536
|
)
|
|
Year Ended December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Cumulative credit loss at beginning of year
|
$
|
(166,375
|
)
|
|
$
|
(145,824
|
)
|
Credit losses on securities for which OTTI has not previously been recognized
|
(2,758
|
)
|
|
(18,414
|
)
|
||
Additional credit losses on securities for which OTTI has previously been recognized
|
(1,872
|
)
|
|
(4,265
|
)
|
||
Accumulated losses on securities that were disposed of during the period
|
13,939
|
|
|
2,128
|
|
||
Cumulative credit loss at end of year
|
$
|
(157,066
|
)
|
|
$
|
(166,375
|
)
|
|
Amortized Cost
|
|
OTTI Recognized in Other Comprehensive Income
|
|
Change in Fair Value Since OTTI was Recognized
|
|
Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
Corporate securities
|
$
|
13,015
|
|
|
$
|
(4,263
|
)
|
|
$
|
10,739
|
|
|
$
|
19,491
|
|
Residential mortgage backed securities
|
297,582
|
|
|
(168,355
|
)
|
|
201,620
|
|
|
330,847
|
|
||||
Other asset backed securities
|
4,567
|
|
|
(1,356
|
)
|
|
(1,875
|
)
|
|
1,336
|
|
||||
|
$
|
315,164
|
|
|
$
|
(173,974
|
)
|
|
$
|
210,484
|
|
|
$
|
351,674
|
|
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
||||||||
Corporate securities
|
$
|
17,549
|
|
|
$
|
(5,910
|
)
|
|
$
|
13,566
|
|
|
$
|
25,205
|
|
Residential mortgage backed securities
|
368,862
|
|
|
(169,941
|
)
|
|
205,854
|
|
|
404,775
|
|
||||
Commercial mortgage backed securities
|
6,596
|
|
|
—
|
|
|
(107
|
)
|
|
6,489
|
|
||||
Other asset backed securities
|
6,683
|
|
|
(1,643
|
)
|
|
(1,566
|
)
|
|
3,474
|
|
||||
|
$
|
399,690
|
|
|
$
|
(177,494
|
)
|
|
$
|
217,747
|
|
|
$
|
439,943
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Principal outstanding
|
$
|
2,674,315
|
|
|
$
|
2,490,619
|
|
Loan loss allowance
|
(7,518
|
)
|
|
(8,427
|
)
|
||
Deferred prepayment fees
|
(1,266
|
)
|
|
(1,236
|
)
|
||
Carrying value
|
$
|
2,665,531
|
|
|
$
|
2,480,956
|
|
|
December 31,
|
||||||||||||
|
2017
|
|
2016
|
||||||||||
|
Principal
|
|
Percent
|
|
Principal
|
|
Percent
|
||||||
|
(Dollars in thousands)
|
||||||||||||
Geographic distribution
|
|
|
|
|
|
|
|
||||||
East
|
$
|
548,067
|
|
|
20.5
|
%
|
|
$
|
635,434
|
|
|
25.5
|
%
|
Middle Atlantic
|
163,485
|
|
|
6.1
|
%
|
|
151,640
|
|
|
6.1
|
%
|
||
Mountain
|
308,486
|
|
|
11.5
|
%
|
|
235,932
|
|
|
9.5
|
%
|
||
New England
|
12,265
|
|
|
0.5
|
%
|
|
12,724
|
|
|
0.5
|
%
|
||
Pacific
|
466,030
|
|
|
17.4
|
%
|
|
385,683
|
|
|
15.5
|
%
|
||
South Atlantic
|
609,736
|
|
|
22.8
|
%
|
|
519,065
|
|
|
20.8
|
%
|
||
West North Central
|
324,808
|
|
|
12.2
|
%
|
|
325,447
|
|
|
13.1
|
%
|
||
West South Central
|
241,438
|
|
|
9.0
|
%
|
|
224,694
|
|
|
9.0
|
%
|
||
|
$
|
2,674,315
|
|
|
100.0
|
%
|
|
$
|
2,490,619
|
|
|
100.0
|
%
|
Property type distribution
|
|
|
|
|
|
|
|
||||||
Office
|
$
|
283,926
|
|
|
10.6
|
%
|
|
$
|
308,578
|
|
|
12.4
|
%
|
Medical Office
|
34,338
|
|
|
1.3
|
%
|
|
50,780
|
|
|
2.1
|
%
|
||
Retail
|
1,040,028
|
|
|
38.9
|
%
|
|
886,942
|
|
|
35.6
|
%
|
||
Industrial/Warehouse
|
677,770
|
|
|
25.3
|
%
|
|
700,644
|
|
|
28.1
|
%
|
||
Apartment
|
462,897
|
|
|
17.3
|
%
|
|
375,837
|
|
|
15.1
|
%
|
||
Mixed use/other
|
175,356
|
|
|
6.6
|
%
|
|
167,838
|
|
|
6.7
|
%
|
||
|
$
|
2,674,315
|
|
|
100.0
|
%
|
|
$
|
2,490,619
|
|
|
100.0
|
%
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||
|
Specific
Allowance
|
|
General
Allowance
|
|
Specific
Allowance
|
|
General
Allowance
|
|
Specific
Allowance
|
|
General
Allowance
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
Beginning allowance balance
|
$
|
(1,327
|
)
|
|
$
|
(7,100
|
)
|
|
$
|
(7,842
|
)
|
|
$
|
(6,300
|
)
|
|
$
|
(12,333
|
)
|
|
$
|
(10,300
|
)
|
Charge-offs
|
—
|
|
|
—
|
|
|
5,078
|
|
|
—
|
|
|
2,045
|
|
|
—
|
|
||||||
Recoveries
|
631
|
|
|
—
|
|
|
5,483
|
|
|
—
|
|
|
5,428
|
|
|
—
|
|
||||||
Change in provision for credit losses
|
(722
|
)
|
|
1,000
|
|
|
(4,046
|
)
|
|
(800
|
)
|
|
(2,982
|
)
|
|
4,000
|
|
||||||
Ending allowance balance
|
$
|
(1,418
|
)
|
|
$
|
(6,100
|
)
|
|
$
|
(1,327
|
)
|
|
$
|
(7,100
|
)
|
|
$
|
(7,842
|
)
|
|
$
|
(6,300
|
)
|
|
December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Individually evaluated for impairment
|
$
|
5,445
|
|
|
$
|
4,640
|
|
|
$
|
21,277
|
|
Collectively evaluated for impairment
|
2,668,870
|
|
|
2,485,979
|
|
|
2,428,632
|
|
|||
Total loans evaluated for impairment
|
$
|
2,674,315
|
|
|
$
|
2,490,619
|
|
|
$
|
2,449,909
|
|
|
Year Ended December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(Dollars in thousands)
|
||||||
Real estate owned at beginning of period
|
$
|
6,485
|
|
|
$
|
20,238
|
|
Additions
|
—
|
|
|
121
|
|
||
Sales
|
(6,444
|
)
|
|
(12,322
|
)
|
||
Impairments
|
—
|
|
|
(1,297
|
)
|
||
Depreciation
|
(41
|
)
|
|
(255
|
)
|
||
Real estate owned at end of period
|
$
|
—
|
|
|
$
|
6,485
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Credit Exposure - By Payment Activity
|
|
|
|
||||
Performing
|
$
|
2,670,657
|
|
|
$
|
2,489,028
|
|
In workout
|
1,436
|
|
|
1,591
|
|
||
Collateral dependent
|
2,222
|
|
|
—
|
|
||
|
$
|
2,674,315
|
|
|
$
|
2,490,619
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
December 31, 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,672,093
|
|
|
$
|
2,222
|
|
|
$
|
2,674,315
|
|
December 31, 2016
|
$
|
2,737
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,737
|
|
|
$
|
2,487,882
|
|
|
$
|
—
|
|
|
$
|
2,490,619
|
|
|
Recorded Investment
|
|
Unpaid Principal Balance
|
|
Related
Allowance
|
||||||
|
(Dollars in thousands)
|
||||||||||
December 31, 2017
|
|
|
|
|
|
||||||
Mortgage loans with an allowance
|
$
|
4,027
|
|
|
$
|
5,445
|
|
|
$
|
(1,418
|
)
|
Mortgage loans with no related allowance
|
1,436
|
|
|
1,436
|
|
|
—
|
|
|||
|
$
|
5,463
|
|
|
$
|
6,881
|
|
|
$
|
(1,418
|
)
|
December 31, 2016
|
|
|
|
|
|
||||||
Mortgage loans with an allowance
|
$
|
3,313
|
|
|
$
|
4,640
|
|
|
$
|
(1,327
|
)
|
Mortgage loans with no related allowance
|
1,591
|
|
|
1,591
|
|
|
—
|
|
|||
|
$
|
4,904
|
|
|
$
|
6,231
|
|
|
$
|
(1,327
|
)
|
|
Average Recorded Investment
|
|
Interest Income Recognized
|
||||
|
(Dollars in thousands)
|
||||||
December 31, 2017
|
|
|
|
||||
Mortgage loans with an allowance
|
$
|
4,464
|
|
|
$
|
221
|
|
Mortgage loans with no related allowance
|
1,513
|
|
|
91
|
|
||
|
$
|
5,977
|
|
|
$
|
312
|
|
December 31, 2016
|
|
|
|
||||
Mortgage loans with an allowance
|
$
|
3,398
|
|
|
$
|
301
|
|
Mortgage loans with no related allowance
|
1,665
|
|
|
73
|
|
||
|
$
|
5,063
|
|
|
$
|
374
|
|
December 31, 2015
|
|
|
|
||||
Mortgage loans with an allowance
|
$
|
13,893
|
|
|
$
|
1,117
|
|
Mortgage loans with no related allowance
|
8,930
|
|
|
584
|
|
||
|
$
|
22,823
|
|
|
$
|
1,701
|
|
•
|
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)
|
||||||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
||||||
South Atlantic
|
|
1
|
|
$
|
2,947
|
|
|
$
|
—
|
|
|
$
|
2,947
|
|
East North Central
|
|
1
|
|
1,933
|
|
|
(467
|
)
|
|
1,466
|
|
|||
|
|
2
|
|
$
|
4,880
|
|
|
$
|
(467
|
)
|
|
$
|
4,413
|
|
|
|
|
|
|
|
|
|
|
||||||
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
||||||
South Atlantic
|
|
1
|
|
$
|
3,004
|
|
|
$
|
—
|
|
|
$
|
3,004
|
|
East North Central
|
|
1
|
|
2,020
|
|
|
(467
|
)
|
|
1,553
|
|
|||
|
|
2
|
|
$
|
5,024
|
|
|
$
|
(467
|
)
|
|
$
|
4,557
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Assets
|
|
|
|
||||
Derivative instruments
|
|
|
|
||||
Call options
|
$
|
1,568,380
|
|
|
$
|
830,519
|
|
Other assets
|
|
|
|
||||
Interest rate caps
|
415
|
|
|
1,082
|
|
||
|
$
|
1,568,795
|
|
|
$
|
831,601
|
|
Liabilities
|
|
|
|
||||
Policy benefit reserves - annuity products
|
|
|
|
||||
Fixed index annuities - embedded derivatives, net
|
$
|
8,790,427
|
|
|
$
|
6,563,288
|
|
Other liabilities
|
|
|
|
||||
Interest rate swap
|
789
|
|
|
2,113
|
|
||
|
$
|
8,791,216
|
|
|
$
|
6,565,401
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Change in fair value of derivatives:
|
|
|
|
|
|
||||||
Call options
|
$
|
1,678,283
|
|
|
$
|
165,029
|
|
|
$
|
(327,921
|
)
|
2015 notes hedges
|
—
|
|
|
—
|
|
|
(4,516
|
)
|
|||
Interest rate swap
|
255
|
|
|
(482
|
)
|
|
(2,341
|
)
|
|||
Interest rate caps
|
(667
|
)
|
|
(328
|
)
|
|
(1,368
|
)
|
|||
|
$
|
1,677,871
|
|
|
$
|
164,219
|
|
|
$
|
(336,146
|
)
|
Change in fair value of embedded derivatives:
|
|
|
|
|
|
||||||
Fixed index annuities - embedded derivatives (see Note 2)
|
$
|
174,154
|
|
|
$
|
145,045
|
|
|
$
|
(825,668
|
)
|
Other changes in difference between policy benefit reserves computed using derivative accounting vs. long-duration contracts accounting
|
745,581
|
|
|
398,420
|
|
|
365,486
|
|
|||
2015 notes embedded conversion derivative (see Note 9)
|
—
|
|
|
—
|
|
|
(4,516
|
)
|
|||
|
$
|
919,735
|
|
|
$
|
543,465
|
|
|
$
|
(464,698
|
)
|
|
|
|
|
|
|
December 31,
|
||||||||||||||
|
|
|
|
|
|
2017
|
|
2016
|
||||||||||||
Counterparty
|
|
Credit Rating (S&P)
|
|
Credit Rating (Moody's)
|
|
Notional
Amount
|
|
Fair Value
|
|
Notional
Amount
|
|
Fair Value
|
||||||||
|
|
|
|
|
|
(Dollars in thousands)
|
||||||||||||||
Bank of America
|
|
A+
|
|
Aa3
|
|
$
|
4,645,366
|
|
|
$
|
237,955
|
|
|
$
|
5,958,884
|
|
|
$
|
178,477
|
|
Barclays
|
|
A
|
|
A1
|
|
4,135,537
|
|
|
154,127
|
|
|
3,441,832
|
|
|
89,721
|
|
||||
BNP Paribas
|
|
A
|
|
Aa3
|
|
1,411,989
|
|
|
73,650
|
|
|
1,199,265
|
|
|
19,598
|
|
||||
Canadian Imperial Bank of Commerce
|
|
A+
|
|
A1
|
|
2,808,030
|
|
|
84,268
|
|
|
—
|
|
|
—
|
|
||||
Citibank, N.A.
|
|
A+
|
|
A1
|
|
4,104,666
|
|
|
219,900
|
|
|
4,038,528
|
|
|
97,094
|
|
||||
Credit Suisse
|
|
A
|
|
A1
|
|
3,538,855
|
|
|
137,384
|
|
|
2,130,710
|
|
|
44,242
|
|
||||
Deutsche Bank
|
|
A-
|
|
Baa2
|
|
—
|
|
|
—
|
|
|
25,935
|
|
|
892
|
|
||||
J.P. Morgan
|
|
A+
|
|
Aa3
|
|
1,753,649
|
|
|
109,689
|
|
|
1,785,583
|
|
|
19,645
|
|
||||
Morgan Stanley
|
|
A+
|
|
A1
|
|
3,408,179
|
|
|
184,323
|
|
|
2,543,421
|
|
|
64,425
|
|
||||
Royal Bank of Canada
|
|
AA-
|
|
A1
|
|
3,027,469
|
|
|
104,141
|
|
|
3,384,310
|
|
|
103,510
|
|
||||
SunTrust
|
|
A-
|
|
Baa1
|
|
2,331,168
|
|
|
90,399
|
|
|
2,375,418
|
|
|
72,990
|
|
||||
Wells Fargo
|
|
AA-
|
|
Aa2
|
|
4,036,255
|
|
|
162,781
|
|
|
3,850,842
|
|
|
130,545
|
|
||||
Exchange traded
|
|
|
|
|
|
296,840
|
|
|
9,763
|
|
|
313,354
|
|
|
9,380
|
|
||||
|
|
|
|
|
|
$
|
35,498,003
|
|
|
$
|
1,568,380
|
|
|
$
|
31,048,082
|
|
|
$
|
830,519
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
||||||||
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
||||||
Maturity Date
|
|
Notional
Amount
|
|
Receive Rate
|
|
Pay Rate
|
|
Counterparty
|
|
Fair Value
|
|
Fair Value
|
||||||
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
||||||||
March 15, 2021
|
|
$
|
85,500
|
|
|
LIBOR
|
|
2.415%
|
|
SunTrust
|
|
$
|
(789
|
)
|
|
$
|
(2,113
|
)
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
||||||||
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
||||||
Maturity Date
|
|
Notional Amount
|
|
Floating Rate
|
|
Cap Rate
|
|
Counterparty
|
|
Fair Value
|
|
Fair Value
|
||||||
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
||||||||
July 7, 2021
|
|
$
|
40,000
|
|
|
LIBOR
|
|
2.50%
|
|
SunTrust
|
|
$
|
207
|
|
|
$
|
542
|
|
July 8, 2021
|
|
12,000
|
|
|
LIBOR
|
|
2.50%
|
|
SunTrust
|
|
62
|
|
|
163
|
|
|||
July 29, 2021
|
|
27,000
|
|
|
LIBOR
|
|
2.50%
|
|
SunTrust
|
|
146
|
|
|
377
|
|
|||
|
|
$
|
79,000
|
|
|
|
|
|
|
|
|
$
|
415
|
|
|
$
|
1,082
|
|
|
December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Balance at beginning of year
|
$
|
2,905,377
|
|
|
$
|
2,905,136
|
|
|
$
|
2,058,556
|
|
Costs deferred during the year:
|
|
|
|
|
|
||||||
Commissions
|
401,124
|
|
|
538,863
|
|
|
651,094
|
|
|||
Policy issue costs
|
5,517
|
|
|
4,462
|
|
|
6,545
|
|
|||
Amortization
|
(255,964
|
)
|
|
(374,012
|
)
|
|
(286,114
|
)
|
|||
Effect of net unrealized gains/losses
|
(341,531
|
)
|
|
(169,072
|
)
|
|
475,055
|
|
|||
Balance at end of year
|
$
|
2,714,523
|
|
|
$
|
2,905,377
|
|
|
$
|
2,905,136
|
|
|
December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Balance at beginning of year
|
$
|
2,208,218
|
|
|
$
|
2,232,148
|
|
|
$
|
1,587,257
|
|
Costs deferred during the year
|
216,172
|
|
|
353,966
|
|
|
486,924
|
|
|||
Amortization
|
(176,612
|
)
|
|
(251,166
|
)
|
|
(209,390
|
)
|
|||
Effect of net unrealized gains/losses
|
(245,886
|
)
|
|
(126,730
|
)
|
|
367,357
|
|
|||
Balance at end of year
|
$
|
2,001,892
|
|
|
$
|
2,208,218
|
|
|
$
|
2,232,148
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Consolidated Statements of Operations
|
|
|
|
|
|
||||||
Annuity product charges
|
$
|
6,458
|
|
|
$
|
5,366
|
|
|
$
|
5,427
|
|
Change in fair value of derivatives
|
94,382
|
|
|
18,446
|
|
|
(14,360
|
)
|
|||
|
$
|
100,840
|
|
|
$
|
23,812
|
|
|
$
|
(8,933
|
)
|
|
|
|
|
|
|
||||||
Interest sensitive and index product benefits
|
$
|
177,332
|
|
|
$
|
93,487
|
|
|
$
|
88,923
|
|
Change in fair value of embedded derivatives
|
35,561
|
|
|
23,848
|
|
|
(22,616
|
)
|
|||
Other operating costs and expenses
|
19,877
|
|
|
24,039
|
|
|
9,922
|
|
|||
|
$
|
232,770
|
|
|
$
|
141,374
|
|
|
$
|
76,229
|
|
Consolidated Statements of Cash Flows
|
|
|
|
|
|
||||||
Annuity deposits
|
$
|
(387,280
|
)
|
|
$
|
(1,736,054
|
)
|
|
$
|
(471,822
|
)
|
Cash payments to policyholders
|
380,683
|
|
|
418,499
|
|
|
391,045
|
|
|||
|
$
|
(6,597
|
)
|
|
$
|
(1,317,555
|
)
|
|
$
|
(80,777
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Consolidated statements of operations:
|
|
|
|
|
|
||||||
Current income taxes
|
$
|
188,356
|
|
|
$
|
57,412
|
|
|
$
|
75,568
|
|
Deferred income taxes (benefits)
|
(46,730
|
)
|
|
(10,408
|
)
|
|
41,916
|
|
|||
Total income tax expense included in consolidated statements of operations
|
141,626
|
|
|
47,004
|
|
|
117,484
|
|
|||
Stockholders' equity:
|
|
|
|
|
|
||||||
Expense (benefit) relating to:
|
|
|
|
|
|
||||||
Change in net unrealized investment losses
|
177,162
|
|
|
74,471
|
|
|
(279,860
|
)
|
|||
Share-based compensation
|
—
|
|
|
(527
|
)
|
|
(3,649
|
)
|
|||
Total income tax expense (benefit) included in consolidated financial statements
|
$
|
318,788
|
|
|
$
|
120,948
|
|
|
$
|
(166,025
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
Income before income taxes
|
$
|
316,271
|
|
|
$
|
130,247
|
|
|
$
|
337,314
|
|
|
|
|
|
|
|
||||||
Income tax expense on income before income taxes
|
$
|
110,695
|
|
|
$
|
45,586
|
|
|
$
|
118,060
|
|
Tax effect of:
|
|
|
|
|
|
||||||
State income taxes
|
1,961
|
|
|
2,559
|
|
|
2,924
|
|
|||
Tax exempt net investment income
|
(4,288
|
)
|
|
(2,167
|
)
|
|
(3,834
|
)
|
|||
Impact of Tax Reform
|
35,932
|
|
|
—
|
|
|
—
|
|
|||
Other
|
(2,674
|
)
|
|
1,026
|
|
|
334
|
|
|||
Income tax expense
|
$
|
141,626
|
|
|
$
|
47,004
|
|
|
$
|
117,484
|
|
Effective tax rate
|
44.8
|
%
|
|
36.1
|
%
|
|
34.8
|
%
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Deferred income tax assets:
|
|
|
|
||||
Policy benefit reserves
|
$
|
1,842,049
|
|
|
$
|
2,354,786
|
|
Other than temporary impairments
|
11,262
|
|
|
15,681
|
|
||
Amounts due reinsurer
|
6,852
|
|
|
1,321
|
|
||
Other policyholder funds
|
3,724
|
|
|
6,474
|
|
||
Deferred compensation
|
3,827
|
|
|
7,963
|
|
||
Share-based compensation
|
3,383
|
|
|
5,407
|
|
||
State net operating loss carryforwards
|
3,196
|
|
|
3,745
|
|
||
Other
|
10,253
|
|
|
11,367
|
|
||
Gross deferred tax assets
|
1,884,546
|
|
|
2,406,744
|
|
||
Deferred income tax liabilities:
|
|
|
|
||||
Deferred policy acquisition costs and deferred sales inducements
|
(1,212,509
|
)
|
|
(1,951,333
|
)
|
||
Net unrealized gains on available for sale fixed maturity and equity securities
|
(220,533
|
)
|
|
(170,925
|
)
|
||
Derivative instruments
|
(179,776
|
)
|
|
(75,405
|
)
|
||
Policy benefit reserves
|
(197,233
|
)
|
|
—
|
|
||
Investment income items
|
(34,849
|
)
|
|
(39,118
|
)
|
||
Other
|
(1,499
|
)
|
|
(1,385
|
)
|
||
Gross deferred tax liabilities
|
(1,846,399
|
)
|
|
(2,238,166
|
)
|
||
Net deferred income tax asset
|
$
|
38,147
|
|
|
$
|
168,578
|
|
|
|
|
|
||||
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Senior notes due 2027
|
|
|
|
||||
Principal
|
$
|
500,000
|
|
|
$
|
—
|
|
Unamortized debt issue costs
|
(5,572
|
)
|
|
—
|
|
||
Unamortized discount
|
(335
|
)
|
|
—
|
|
||
Senior notes due 2021
|
|
|
|
||||
Principal
|
—
|
|
|
400,000
|
|
||
Unamortized debt issue costs
|
—
|
|
|
(5,733
|
)
|
||
Term loan due 2019
|
|
|
|
||||
Principal
|
—
|
|
|
100,000
|
|
||
Unamortized debt issue costs
|
—
|
|
|
(512
|
)
|
||
|
$
|
494,093
|
|
|
$
|
493,755
|
|
|
December 31,
|
|
|
|
|
|
||||||
|
2017
|
|
2016
|
|
Interest Rate
|
|
Due Date
|
|||||
|
(Dollars in thousands)
|
|
|
|
|
|
||||||
American Equity Capital Trust II
|
$
|
77,298
|
|
|
$
|
77,061
|
|
|
5%
|
|
June 1, 2047
|
|
American Equity Capital Trust III
|
27,840
|
|
|
27,840
|
|
|
*LIBOR +
|
3.90%
|
|
April 29, 2034
|
||
American Equity Capital Trust IV
|
12,372
|
|
|
12,372
|
|
|
*LIBOR +
|
4.00%
|
|
January 8, 2034
|
||
American Equity Capital Trust VII
|
10,830
|
|
|
10,830
|
|
|
*LIBOR +
|
3.75%
|
|
December 14, 2034
|
||
American Equity Capital Trust VIII
|
20,620
|
|
|
20,620
|
|
|
*LIBOR +
|
3.75%
|
|
December 15, 2034
|
||
American Equity Capital Trust IX
|
15,470
|
|
|
15,470
|
|
|
*LIBOR +
|
3.65%
|
|
June 15, 2035
|
||
American Equity Capital Trust X
|
20,620
|
|
|
20,620
|
|
|
*LIBOR +
|
3.65%
|
|
September 15, 2035
|
||
American Equity Capital Trust XI
|
20,620
|
|
|
20,620
|
|
|
*LIBOR +
|
3.65%
|
|
December 15, 2035
|
||
American Equity Capital Trust XII
|
41,238
|
|
|
41,238
|
|
|
*LIBOR +
|
3.50%
|
|
April 7, 2036
|
||
|
246,908
|
|
|
246,671
|
|
|
|
|
|
|
||
Unamortized debt issue costs
|
(4,343
|
)
|
|
(4,818
|
)
|
|
|
|
|
|
||
|
$
|
242,565
|
|
|
$
|
241,853
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
ESOP
|
$
|
1,474
|
|
|
$
|
2,522
|
|
|
$
|
2,604
|
|
Employee Incentive Plans
|
2,155
|
|
|
1,207
|
|
|
1,911
|
|
|||
Director Equity and Incentive Plan and Stock Option Plan
|
812
|
|
|
685
|
|
|
613
|
|
|||
|
$
|
4,441
|
|
|
$
|
4,414
|
|
|
$
|
5,128
|
|
|
Number of
Shares
|
|
Weighted-Average
Exercise Price
per Share
|
|
Total
Exercise
Price
|
|||||
|
(Dollars in thousands, except per share data)
|
|||||||||
Outstanding at January 1, 2015
|
4,044,175
|
|
|
$
|
15.02
|
|
|
$
|
60,760
|
|
Granted
|
—
|
|
|
—
|
|
|
—
|
|
||
Canceled
|
(47,300
|
)
|
|
10.54
|
|
|
(499
|
)
|
||
Exercised
|
(552,884
|
)
|
|
14.51
|
|
|
(8,021
|
)
|
||
Outstanding at December 31, 2015
|
3,443,991
|
|
|
15.17
|
|
|
52,240
|
|
||
Granted
|
—
|
|
|
—
|
|
|
—
|
|
||
Canceled
|
(24,700
|
)
|
|
14.83
|
|
|
(366
|
)
|
||
Exercised
|
(500,345
|
)
|
|
9.97
|
|
|
(4,989
|
)
|
||
Outstanding at December 31, 2016
|
2,918,946
|
|
|
16.06
|
|
|
46,885
|
|
||
Granted
|
—
|
|
|
—
|
|
|
—
|
|
||
Canceled
|
(57,200
|
)
|
|
13.66
|
|
|
(781
|
)
|
||
Exercised
|
(881,481
|
)
|
|
15.90
|
|
|
(14,020
|
)
|
||
Outstanding at December 31, 2017
|
1,980,265
|
|
|
16.20
|
|
|
$
|
32,084
|
|
|
Stock Options Outstanding and Vested
|
|||||||
Range of Exercise Prices
|
Number of
Awards
|
|
Remaining
Life (yrs)
|
|
Weighted-Average
Exercise Price
Per Share
|
|||
$5.07 - $8.02
|
182,500
|
|
|
1.36
|
|
$
|
6.85
|
|
$9.27 - $11.35
|
575,055
|
|
|
1.75
|
|
10.15
|
|
|
$12.04 - $24.79
|
1,222,710
|
|
|
2.53
|
|
20.44
|
|
|
$5.07 - $24.79
|
1,980,265
|
|
|
2.20
|
|
16.20
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands)
|
||||||||||
American Equity Life
|
$
|
375,900
|
|
|
$
|
75,035
|
|
|
$
|
131,452
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
American Equity Life
|
$
|
3,005,654
|
|
|
$
|
2,726,664
|
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Total adjusted capital
|
$
|
3,260,328
|
|
|
$
|
2,933,193
|
|
Company Action Level RBC
|
861,419
|
|
|
857,321
|
|
||
Ratio of adjusted capital to Company Action Level RBC
|
378
|
%
|
|
342
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
|
(Dollars in thousands, except per share data)
|
||||||||||
Numerator:
|
|
|
|
|
|
||||||
Net income—numerator for earnings per common share
|
$
|
174,645
|
|
|
$
|
83,243
|
|
|
$
|
219,830
|
|
|
|
|
|
|
|
||||||
Denominator
:
|
|
|
|
|
|
||||||
Weighted average common shares outstanding (1)
|
88,982,442
|
|
|
84,793,151
|
|
|
78,936,828
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
||||||
Equity forward sale agreements
|
—
|
|
|
—
|
|
|
67,575
|
|
|||
2015 warrants
|
—
|
|
|
15,136
|
|
|
759,723
|
|
|||
Stock options and deferred compensation agreements
|
945,612
|
|
|
456,236
|
|
|
1,040,922
|
|
|||
Restricted stock and restricted stock units
|
382,954
|
|
|
340,646
|
|
|
155,520
|
|
|||
Denominator for earnings per common share—assuming dilution
|
90,311,008
|
|
|
85,605,169
|
|
|
80,960,568
|
|
|||
|
|
|
|
|
|
||||||
Earnings per common share
|
$
|
1.96
|
|
|
$
|
0.98
|
|
|
$
|
2.78
|
|
Earnings per common share - assuming dilution
|
$
|
1.93
|
|
|
$
|
0.97
|
|
|
$
|
2.72
|
|
(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
|
Year ended December 31, 2017
|
|
—
|
|
$—
|
|
$—
|
Year ended December 31, 2016
|
|
1,054,091
|
|
$24.79
|
|
$24.79
|
Year ended December 31, 2015
|
|
1,061,541
|
|
$24.79
|
|
$24.79
|
|
Quarter Ended
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
|
(Dollars in thousands, except per share data)
|
||||||||||||||
2017
|
|
|
|
|
|
|
|
||||||||
Premiums and product charges
|
$
|
52,974
|
|
|
$
|
56,323
|
|
|
$
|
60,500
|
|
|
$
|
64,925
|
|
Net investment income
|
485,597
|
|
|
493,489
|
|
|
500,202
|
|
|
512,709
|
|
||||
Change in fair value of derivatives
|
386,533
|
|
|
266,820
|
|
|
362,525
|
|
|
661,993
|
|
||||
Net realized gains on investments, excluding OTTI losses
|
2,338
|
|
|
3,873
|
|
|
1,579
|
|
|
2,719
|
|
||||
Net OTTI losses recognized in operations
|
(141
|
)
|
|
(949
|
)
|
|
(464
|
)
|
|
(3,076
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
(428
|
)
|
|
(18,389
|
)
|
|
—
|
|
||||
Total revenues
|
927,301
|
|
|
819,128
|
|
|
905,953
|
|
|
1,239,270
|
|
||||
Net income
|
53,939
|
|
|
26,946
|
|
|
56,957
|
|
|
36,803
|
|
||||
Earnings per common share
|
0.61
|
|
|
0.30
|
|
|
0.64
|
|
|
0.41
|
|
||||
Earnings per common share - assuming dilution
|
0.60
|
|
|
0.30
|
|
|
0.63
|
|
|
0.41
|
|
||||
|
|
|
|
|
|
|
|
||||||||
2016
|
|
|
|
|
|
|
|
||||||||
Premiums and product charges
|
$
|
43,850
|
|
|
$
|
52,582
|
|
|
$
|
60,406
|
|
|
$
|
60,508
|
|
Net investment income
|
450,826
|
|
|
459,830
|
|
|
463,583
|
|
|
475,633
|
|
||||
Change in fair value of derivatives
|
(74,065
|
)
|
|
39,099
|
|
|
103,794
|
|
|
95,391
|
|
||||
Net realized gains on investments, excluding OTTI losses
|
2,687
|
|
|
2,737
|
|
|
5,256
|
|
|
844
|
|
||||
Net OTTI losses recognized in operations
|
(5,694
|
)
|
|
(4,446
|
)
|
|
(2,979
|
)
|
|
(9,560
|
)
|
||||
Total revenues
|
417,604
|
|
|
549,802
|
|
|
630,060
|
|
|
622,816
|
|
||||
Net income (loss)
|
(44,841
|
)
|
|
14,708
|
|
|
(7,420
|
)
|
|
120,796
|
|
||||
Earnings (loss) per common share
|
(0.55
|
)
|
|
0.18
|
|
|
(0.09
|
)
|
|
1.37
|
|
||||
Earnings (loss) per common share - assuming dilution
|
(0.55
|
)
|
|
0.18
|
|
|
(0.09
|
)
|
|
1.35
|
|
|
Quarter Ended
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
2017
|
$
|
7,069
|
|
|
$
|
37,075
|
|
|
$
|
30,806
|
|
|
$
|
3,518
|
|
2016
|
62,822
|
|
|
34,215
|
|
|
6,054
|
|
|
(66,618
|
)
|
Column A
|
|
Column B
|
|
Column C
|
|
Column D
|
||||||
Type of Investment
|
|
Amortized
Cost (1)
|
|
Fair
Value
|
|
Amount at
which shown
in the balance
sheet
|
||||||
|
|
(Dollars in thousands)
|
||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
||||||
Available for sale:
|
|
|
|
|
|
|
||||||
United States Government full faith and credit
|
|
$
|
11,861
|
|
|
$
|
11,876
|
|
|
$
|
11,876
|
|
United States Government sponsored agencies
|
|
1,308,290
|
|
|
1,305,017
|
|
|
1,305,017
|
|
|||
United States municipalities, states and territories
|
|
3,804,360
|
|
|
4,166,812
|
|
|
4,166,812
|
|
|||
Foreign government obligations
|
|
228,214
|
|
|
239,360
|
|
|
239,360
|
|
|||
Corporate securities
|
|
28,127,653
|
|
|
29,878,971
|
|
|
29,878,971
|
|
|||
Residential mortgage backed securities
|
|
1,028,484
|
|
|
1,105,567
|
|
|
1,105,567
|
|
|||
Commercial mortgage backed securities
|
|
5,531,922
|
|
|
5,544,850
|
|
|
5,544,850
|
|
|||
Other asset backed securities
|
|
3,075,975
|
|
|
3,120,536
|
|
|
3,120,536
|
|
|||
|
|
43,116,759
|
|
|
45,372,989
|
|
|
45,372,989
|
|
|||
Held for investment:
|
|
|
|
|
|
|
||||||
Corporate security
|
|
77,041
|
|
|
76,460
|
|
|
77,041
|
|
|||
Total fixed maturity securities
|
|
43,193,800
|
|
|
45,449,449
|
|
|
45,450,030
|
|
|||
Mortgage loans on real estate
|
|
2,665,531
|
|
|
2,670,037
|
|
|
2,665,531
|
|
|||
Derivative instruments
|
|
373,244
|
|
|
1,568,380
|
|
|
1,568,380
|
|
|||
Other investments
|
|
616,764
|
|
|
|
|
616,764
|
|
||||
Total investments
|
|
$
|
46,849,339
|
|
|
|
|
$
|
50,300,705
|
|
(1)
|
On the basis of cost adjusted for other than temporary impairments, repayments and amortization of premiums and accrual of discounts for fixed maturity securities and short-term investments, original cost for derivative instruments and unpaid principal balance less allowance for credit losses for mortgage loans.
|
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
22,486
|
|
|
$
|
36,394
|
|
Equity securities of subsidiary trusts
|
7,429
|
|
|
7,422
|
|
||
Receivable from subsidiaries
|
166
|
|
|
182
|
|
||
Deferred income taxes
|
7,945
|
|
|
9,528
|
|
||
Federal income tax recoverable, including amount from subsidiaries
|
1,059
|
|
|
—
|
|
||
Other assets
|
1,566
|
|
|
2,540
|
|
||
|
40,651
|
|
|
56,066
|
|
||
Investment in and advances to subsidiaries
|
3,550,405
|
|
|
2,992,217
|
|
||
Total assets
|
$
|
3,591,056
|
|
|
$
|
3,048,283
|
|
|
|
|
|
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Notes and loan payable
|
$
|
494,093
|
|
|
$
|
493,755
|
|
Subordinated debentures payable to subsidiary trusts
|
242,565
|
|
|
241,853
|
|
||
Federal income tax payable
|
—
|
|
|
3,614
|
|
||
Other liabilities
|
4,241
|
|
|
17,466
|
|
||
Total liabilities
|
740,899
|
|
|
756,688
|
|
||
Stockholders' equity:
|
|
|
|
||||
Common stock
|
89,331
|
|
|
88,001
|
|
||
Additional paid-in capital
|
791,446
|
|
|
770,344
|
|
||
Accumulated other comprehensive income
|
724,599
|
|
|
339,966
|
|
||
Retained earnings
|
1,244,781
|
|
|
1,093,284
|
|
||
Total stockholders' equity
|
2,850,157
|
|
|
2,291,595
|
|
||
Total liabilities and stockholders' equity
|
$
|
3,591,056
|
|
|
$
|
3,048,283
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Net investment income
|
$
|
492
|
|
|
$
|
78
|
|
|
$
|
62
|
|
Dividends from subsidiary trusts
|
410
|
|
|
384
|
|
|
363
|
|
|||
Investment advisory fees
|
83,941
|
|
|
75,706
|
|
|
65,957
|
|
|||
Surplus note interest from subsidiary
|
4,080
|
|
|
4,080
|
|
|
4,080
|
|
|||
Change in fair value of derivatives
|
(412
|
)
|
|
(810
|
)
|
|
(8,225
|
)
|
|||
Loss on extinguishment of debt
|
(18,817
|
)
|
|
—
|
|
|
—
|
|
|||
Total revenues
|
69,694
|
|
|
79,438
|
|
|
62,237
|
|
|||
|
|
|
|
|
|
||||||
Expenses:
|
|
|
|
|
|
||||||
Change in fair value of embedded derivatives
|
—
|
|
|
—
|
|
|
(4,516
|
)
|
|||
Interest expense on notes and loan payable
|
30,368
|
|
|
28,248
|
|
|
28,849
|
|
|||
Interest expense on subordinated debentures issued to subsidiary trusts
|
14,124
|
|
|
12,958
|
|
|
12,239
|
|
|||
Other operating costs and expenses
|
9,234
|
|
|
8,551
|
|
|
8,195
|
|
|||
Total expenses
|
53,726
|
|
|
49,757
|
|
|
44,767
|
|
|||
Income before income taxes and equity in undistributed income of subsidiaries
|
15,968
|
|
|
29,681
|
|
|
17,470
|
|
|||
Income tax expense
|
6,895
|
|
|
12,073
|
|
|
7,338
|
|
|||
Income before equity in undistributed income of subsidiaries
|
9,073
|
|
|
17,608
|
|
|
10,132
|
|
|||
Equity in undistributed income of subsidiaries
|
165,572
|
|
|
65,635
|
|
|
209,698
|
|
|||
Net income
|
$
|
174,645
|
|
|
$
|
83,243
|
|
|
$
|
219,830
|
|
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
174,645
|
|
|
$
|
83,243
|
|
|
$
|
219,830
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Change in fair value of 2015 notes embedded conversion derivative
|
—
|
|
|
—
|
|
|
(4,516
|
)
|
|||
Provision for depreciation and amortization
|
1,610
|
|
|
1,946
|
|
|
1,613
|
|
|||
Accrual of discount on equity security
|
(7
|
)
|
|
(7
|
)
|
|
(6
|
)
|
|||
Equity in undistributed income of subsidiaries
|
(165,572
|
)
|
|
(65,635
|
)
|
|
(209,698
|
)
|
|||
Accrual of discount on contingent convertible notes
|
—
|
|
|
—
|
|
|
698
|
|
|||
Change in fair value of derivatives
|
(657
|
)
|
|
(698
|
)
|
|
6,377
|
|
|||
Loss on extinguishment of debt
|
18,817
|
|
|
—
|
|
|
—
|
|
|||
Accrual of discount on debenture issued to subsidiary trust
|
236
|
|
|
221
|
|
|
207
|
|
|||
Share-based compensation
|
951
|
|
|
818
|
|
|
1,026
|
|
|||
Deferred income taxes
|
1,583
|
|
|
2,117
|
|
|
8,967
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Receivable from subsidiaries
|
16
|
|
|
(125
|
)
|
|
93
|
|
|||
Federal income tax recoverable/payable
|
(4,673
|
)
|
|
11,361
|
|
|
2,683
|
|
|||
Other assets
|
158
|
|
|
(326
|
)
|
|
(4
|
)
|
|||
Other liabilities
|
(12,427
|
)
|
|
2,546
|
|
|
(1,664
|
)
|
|||
Net cash provided by operating activities
|
14,680
|
|
|
35,461
|
|
|
25,606
|
|
|||
|
|
|
|
|
|
||||||
Investing activities
|
|
|
|
|
|
||||||
Capital contributions to subsidiaries
|
$
|
—
|
|
|
$
|
(255,000
|
)
|
|
$
|
(120,000
|
)
|
Purchases of property, plant and equipment
|
(45
|
)
|
|
(54
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
(45
|
)
|
|
(255,054
|
)
|
|
(120,000
|
)
|
|||
|
|
|
|
|
|
||||||
Financing activities
|
|
|
|
|
|
||||||
Financing fees incurred and deferred
|
$
|
(5,817
|
)
|
|
$
|
(1,456
|
)
|
|
$
|
—
|
|
Repayment of notes payable
|
(413,252
|
)
|
|
—
|
|
|
(48,152
|
)
|
|||
Repayment of loan payable
|
(100,000
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of notes payable
|
499,650
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of loan payable
|
—
|
|
|
100,000
|
|
|
—
|
|
|||
Proceeds from issuance of common stock
|
14,028
|
|
|
139,654
|
|
|
112,481
|
|
|||
Net proceeds from settlement of notes hedges and warrants
|
—
|
|
|
—
|
|
|
25,775
|
|
|||
Dividends paid
|
(23,152
|
)
|
|
(21,114
|
)
|
|
(17,946
|
)
|
|||
Net cash provided by (used in) financing activities
|
(28,543
|
)
|
|
217,084
|
|
|
72,158
|
|
|||
Decrease in cash and cash equivalents
|
(13,908
|
)
|
|
(2,509
|
)
|
|
(22,236
|
)
|
|||
Cash and cash equivalents at beginning of year
|
36,394
|
|
|
38,903
|
|
|
61,139
|
|
|||
Cash and cash equivalents at end of year
|
$
|
22,486
|
|
|
$
|
36,394
|
|
|
$
|
38,903
|
|
|
|
|
|
|
|
||||||
Supplemental disclosures of cash flow information
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest on notes and loan payable
|
$
|
40,537
|
|
|
$
|
27,164
|
|
|
$
|
27,283
|
|
Interest on subordinated debentures
|
14,573
|
|
|
12,454
|
|
|
11,833
|
|
|||
Non-cash financing activity:
|
|
|
|
|
|
||||||
Common stock issued to settle warrants that have expired
|
—
|
|
|
93
|
|
|
48
|
|
Column A
|
|
Column B
|
|
Column C
|
|
Column D
|
|
Column E
|
||||||||
|
|
Deferred policy
acquisition
costs
|
|
Future policy
benefits,
losses, claims
and loss
expenses
|
|
Unearned
premiums
|
|
Other policy
claims and
benefits
payable
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
As of December 31, 2017:
Life insurance
|
|
$
|
2,714,523
|
|
|
$
|
56,142,673
|
|
|
$
|
—
|
|
|
$
|
282,884
|
|
As of December 31, 2016:
Life insurance |
|
$
|
2,905,377
|
|
|
$
|
51,637,026
|
|
|
$
|
—
|
|
|
$
|
298,347
|
|
As of December 31, 2015:
Life insurance |
|
$
|
2,905,136
|
|
|
$
|
45,495,431
|
|
|
$
|
—
|
|
|
$
|
324,850
|
|
Column A
|
|
Column F
|
|
Column G
|
|
Column H
|
|
Column I
|
|
Column J
|
||||||||||
|
|
Premium
revenue
|
|
Net
investment
income
|
|
Benefits,
claims,
losses and
settlement
expenses
|
|
Amortization
of deferred
policy
acquisition
costs
|
|
Other
operating
expenses
|
||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||
For the year ended December 31, 2017:
Life insurance
|
|
$
|
234,722
|
|
|
$
|
1,991,997
|
|
|
$
|
3,163,234
|
|
|
$
|
255,964
|
|
|
$
|
156,183
|
|
For the year ended December 31, 2016:
Life insurance |
|
$
|
217,346
|
|
|
$
|
1,849,872
|
|
|
$
|
1,572,586
|
|
|
$
|
374,012
|
|
|
$
|
143,437
|
|
For the year ended December 31, 2015:
Life insurance |
|
$
|
172,216
|
|
|
$
|
1,692,192
|
|
|
$
|
758,203
|
|
|
$
|
286,114
|
|
|
$
|
137,306
|
|
Column A
|
|
Column B
|
|
Column C
|
|
Column D
|
|
Column E
|
|
Column F
|
|||||||||
|
|
Gross amount
|
|
Ceded to
other
companies
|
|
Assumed
from
other
companies
|
|
Net amount
|
|
Percent of
amount
assumed
to net
|
|||||||||
|
|
(Dollars in thousands)
|
|||||||||||||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance in force, at end of year
|
|
$
|
1,942,129
|
|
|
$
|
9,378
|
|
|
$
|
57,965
|
|
|
$
|
1,990,716
|
|
|
2.91
|
%
|
Insurance premiums and other considerations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Annuity product charges
|
|
$
|
206,952
|
|
|
$
|
6,458
|
|
|
$
|
—
|
|
|
$
|
200,494
|
|
|
—
|
|
Traditional life, accident and health insurance, and life contingent immediate annuity premiums
|
|
33,938
|
|
|
215
|
|
|
505
|
|
|
34,228
|
|
|
1.48
|
%
|
||||
|
|
$
|
240,890
|
|
|
$
|
6,673
|
|
|
$
|
505
|
|
|
$
|
234,722
|
|
|
0.22
|
%
|
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance in force, at end of year
|
|
$
|
1,996,446
|
|
|
$
|
10,045
|
|
|
$
|
57,849
|
|
|
$
|
2,044,250
|
|
|
2.83
|
%
|
Insurance premiums and other considerations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Annuity product charges
|
|
$
|
178,945
|
|
|
$
|
5,366
|
|
|
$
|
—
|
|
|
$
|
173,579
|
|
|
—
|
|
Traditional life, accident and health insurance, and life contingent immediate annuity premiums
|
|
43,521
|
|
|
251
|
|
|
497
|
|
|
43,767
|
|
|
1.14
|
%
|
||||
|
|
$
|
222,466
|
|
|
$
|
5,617
|
|
|
$
|
497
|
|
|
$
|
217,346
|
|
|
0.23
|
%
|
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Life insurance in force, at end of year
|
|
$
|
2,036,690
|
|
|
$
|
10,677
|
|
|
$
|
56,882
|
|
|
$
|
2,082,895
|
|
|
2.73
|
%
|
Insurance premiums and other considerations:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Annuity product charges
|
|
$
|
141,595
|
|
|
$
|
5,427
|
|
|
$
|
—
|
|
|
$
|
136,168
|
|
|
—
|
|
Traditional life, accident and health insurance, and life contingent immediate annuity premiums
|
|
35,715
|
|
|
256
|
|
|
589
|
|
|
36,048
|
|
|
1.63
|
%
|
||||
|
|
$
|
177,310
|
|
|
$
|
5,683
|
|
|
$
|
589
|
|
|
$
|
172,216
|
|
|
0.34
|
%
|
|
Balance
January 1,
|
|
Charged to Costs
and Expenses
|
|
Translation
Adjustment
|
|
Write-offs/
Payments/Other
|
|
Balance
December 31,
|
||||||||||
|
(Dollars in thousands
|
||||||||||||||||||
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Valuation allowance on mortgage loans
|
$
|
(8,427
|
)
|
|
$
|
278
|
|
|
$
|
—
|
|
|
$
|
631
|
|
|
$
|
(7,518
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
||||||||||
Valuation allowance on mortgage loans
|
$
|
(14,142
|
)
|
|
$
|
(4,846
|
)
|
|
$
|
—
|
|
|
$
|
10,561
|
|
|
$
|
(8,427
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
||||||||||
Valuation allowance on mortgage loans
|
$
|
(22,633
|
)
|
|
$
|
1,018
|
|
|
$
|
—
|
|
|
$
|
7,473
|
|
|
$
|
(14,142
|
)
|
1.
|
Continued Employment Agreement
. The Company agrees to continue to employ the Employee and the Employee agrees to serve the Company in such capacity as the Chairman and the Employee shall mutually agree until terminated by either party on at least 90 days prior written notice to the other.
|
2.
|
Best Efforts
. During the term of his employment, the Employee shall devote all of his time, attention skill and efforts to the performance of his duties for the Company.
|
3.
|
Salary
. The Company shall pay the Employee such salary payable monthly as the Chairman may from time to time determine together with deferred compensation payable as provided in paragraph 5 below, unless forfeited by the occurrence of any of the events of forfeiture specified in paragraph 7, below.
|
4.
|
Deferred Compensation
.
|
(a)
|
The Company shall credit to a book reserve (the "Deferred Compensation Account") established for this purpose, a marketing incentive bonus calculated in accordance with the formula set forth on Exhibit A attached hereto.
|
(b)
|
All compensation deferred pursuant to this Agreement shall be payable in shares of Common Stock, par value $1 per share, of American Equity Investment Life Holding Company (hereinafter referred to as "Stock"), the issuance and delivery of which shall be deferred pursuant to Section 3 below. In the sole discretion of the Company, the fair value of the Stock at the time of distribution under paragraph 5 below may be paid in cash.
|
(c)
|
The parties agree and acknowledge that the fair value of the Stock during 1998 is $16.00 per share, and that the number of shares of Stock earned by Employee as deferred bonus compensation shall be equal to the full amount of the 1998 marketing incentive bonus divided by $16.00.
|
(d)
|
The Employee has the status of a general unsecured creditor of the Company with respect to Employee's right to receive deferred compensation hereunder and this Agreement constitutes a mere promise by the Company to deliver Stock in the future. The Stock shall consist of authorized but unissued shares and the Company's promise to deliver the Stock shall remain unfunded until and only to the extent the Stock is issued to Employee or his nominee.
|
(e)
|
Title to and beneficial ownership of any Stock or other assets, whether cash or investments which the Company may earmark to pay the contingent deferred compensation hereunder, shall at all times remain in the Company and the Employee and his/her designated beneficiary shall not have any property interest whatsoever in any specific assets of the Company.
|
5.
|
Payment of Deferred Compensation Benefits
. The benefits to be paid as deferred compensation (unless they are forfeited by the occurrence of any of the events of forfeiture specified in paragraph 7, below) are as follows:
|
(a)
|
Within sixty (60) days after the occurrence of the earliest of the events described in paragraph (b) below (hereinafter referred to as a "
Trigger Event
"), the Company deliver the Stock (or, at the Company's option, the fair value of the Stock may be paid in cash) to Employee.
|
(i)
|
The termination of Employee's employment by Company for any reason, with or without cause, voluntarily or involuntarily, or due to Employee's death, disability or retirement.
|
(ii)
|
A "change of control" of Company. For purposes of this Plan, a "change in control" shall be deemed to have occurred on such date if:
|
1.
|
Any person, organization or association of persons or organizations acting in concert, excluding affiliates of the Company itself, shall acquire more than twenty percent (20%) of the outstanding voting stock of the Company in whole or in part by means of an offer made publicly to the holders of all or substantially all of the outstanding shares of any one or more classes of the voting securities of the Company to acquire such shares for cash, other properly or a combination thereof; or
|
2.
|
Any person, organization or association of persons or organizations acting in concert shall succeed in electing two or more directors in any one election in opposition to those proposed by management; or
|
3.
|
The Company transfers all or substantially all of its operating properties and assets to another person, organization or association of persons or organizations, excluding affiliates of the Company itself; or
|
4.
|
The Company shall consolidate with or merge into any person, firm or corporation unless the Company or an affiliate of Company shall be the continuing corporation or the successor corporation.
|
(iii)
|
The adoption of a written resolution by the Board of Directors of the Company declaring a Trigger Event with respect to Employee.
|
(c)
|
If the Employee should die before the balance of the Deferred Compensation Account has been paid in full to Employee, then the unpaid balance will be paid to Employee's beneficiary as designated below. If no such beneficiary shall have been designated, or if no designated beneficiary shall survive the Employee, the Employee's benefits under this Agreement will be paid in a lump sum to the Employee's estate in the event of Employee's death.
|
6.
|
No Fiduciary Relationship
. Nothing contained in this Agreement and no action taken pursuant to the provisions of this Agreement shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and the Employee, his/her designated beneficiary or any other person. Any funds which may be invested under the provisions of this Agreement shall continue for all purposes to be a part of the general funds of the Company and no person other than the Company shall by virtue of the provisions of this Agreement have any interest in such funds. To the extent that any person acquires a right to receive payments from the Company under this agreement, such right shall be no greater than the right of any unsecured general creditor of the Company.
|
7.
|
Forfeiture of Benefits
. Notwithstanding anything herein contained to the contrary, no payment of any then unpaid installments of deferred compensation shall be made and all rights under the Agreement of the Employee, his designated beneficiary, executors of administrators, or any other person, to receive payments thereof shall be forfeited if either or both of the following events shall occur:
|
(a)
|
The Employee shall engage in any activity or conduct which in the opinion of the Board is inimical to the best interests of the Company.
|
(b)
|
After the Employee ceases to be employed by the Company he shall fail or refuse to provide advice and counsel to the Company when reasonably requested to do so.
|
8.
|
Nontransferability of Rights
. The rights of the Employee or any other person to the payment of deferred compensation or other benefits under this Agreement shall not be assigned, transferred, pledged or encumbered except by will or by the laws of descent and distribution.
|
9.
|
Miscellaneous
.
|
(a)
|
Nothing contained herein shall be construed as conferring upon the Employee the right to continue in the employ of the Company as an executive or in any other capacity.
|
(b)
|
Any deferred compensation payable under this Agreement shall be deemed salary or other compensation to the Employee for the purpose of computing benefits to which he may be entitled under any pension plan or other arrangement of the Company for the benefit of its employees.
|
(c)
|
The Board shall have full power and authority to interpret, construe, and administer this Agreement and the Board's interpretations and construction thereof, and actions thereunder, including any valuation of the Deferred Compensation Account, or the amount or recipient of the payment to be made therefrom, shall be binding and conclusive on all persons for all purposes. No member of the Board shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Agreement unless attributable to his own willful misconduct or lack of good faith.
|
(d)
|
This agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and the Employee and his heirs, executors, administrators, and legal representatives.
|
(e)
|
This Agreement shall be construed in accordance with and governed by the law of the State of Iowa.
|
AMERICAN EQUITY INVESTMENT LIFE
|
|
|
|
INSURANCE COMPANY
|
|
|
|
|
|
|
|
By:
|
/s/ D.J. NOBLE
|
|
/s/ RON GRENSTEINER
|
|
D.J. Noble, Chairman, President and CEO
|
|
Ron Grensteiner
|
1998 Marketing Bonus
|
|
$24,000
|
|
Divided By:
|
16
|
|
|
Number of Shares
|
1,500
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
||||||||||||||||||
Consolidated income before income taxes
|
$
|
316,271
|
|
|
$
|
130,247
|
|
|
$
|
337,314
|
|
|
$
|
196,064
|
|
|
$
|
389,332
|
|
Interest sensitive and index product benefits and amortization of deferred sales inducements
|
2,200,280
|
|
|
976,638
|
|
|
1,177,443
|
|
|
1,605,119
|
|
|
1,525,980
|
|
|||||
Interest expense on notes and loan payable
|
30,368
|
|
|
28,248
|
|
|
28,849
|
|
|
36,370
|
|
|
38,870
|
|
|||||
Interest expense on subordinated debentures
|
14,124
|
|
|
12,958
|
|
|
12,239
|
|
|
12,122
|
|
|
12,088
|
|
|||||
Interest expense on amounts due under repurchase agreements and other interest expense
|
334
|
|
|
30
|
|
|
2
|
|
|
18
|
|
|
139
|
|
|||||
Interest portion of rental expense
|
967
|
|
|
920
|
|
|
902
|
|
|
896
|
|
|
843
|
|
|||||
Consolidated earnings
|
$
|
2,562,344
|
|
|
$
|
1,149,041
|
|
|
$
|
1,556,749
|
|
|
$
|
1,850,589
|
|
|
$
|
1,967,252
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest sensitive and index product benefits and amortization of deferred sales inducements
|
$
|
2,200,280
|
|
|
$
|
976,638
|
|
|
$
|
1,177,443
|
|
|
$
|
1,605,119
|
|
|
$
|
1,525,980
|
|
Interest expense on notes and loan payable
|
30,368
|
|
|
28,248
|
|
|
28,849
|
|
|
36,370
|
|
|
38,870
|
|
|||||
Interest expense on subordinated debentures
|
14,124
|
|
|
12,958
|
|
|
12,239
|
|
|
12,122
|
|
|
12,088
|
|
|||||
Interest expense on amounts due under repurchase agreements and other interest expense
|
334
|
|
|
30
|
|
|
2
|
|
|
18
|
|
|
139
|
|
|||||
Interest portion of rental expense
|
967
|
|
|
920
|
|
|
902
|
|
|
896
|
|
|
843
|
|
|||||
Combined fixed charges
|
$
|
2,246,073
|
|
|
$
|
1,018,794
|
|
|
$
|
1,219,435
|
|
|
$
|
1,654,525
|
|
|
$
|
1,577,920
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of consolidated earnings to fixed charges
|
1.1
|
|
|
1.1
|
|
|
1.3
|
|
|
1.1
|
|
|
1.2
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of consolidated earnings to fixed charges, both excluding interest sensitive and index product benefits and amortization of deferred sales inducements
|
7.9
|
|
|
4.1
|
|
|
9.0
|
|
|
5.0
|
|
|
8.5
|
|
|
State of Incorporation
|
Insurance Subsidiaries:
|
|
American Equity Investment Life Insurance Company
|
Iowa
|
American Equity Investment Life Insurance Company of New York
|
New York
|
Eagle Life Insurance Company
|
Iowa
|
Noninsurance Subsidiaries:
|
|
American Equity Investment Service Company
|
Iowa
|
American Equity Properties, L.C.
|
Iowa
|
American Equity Capital, Inc.
|
Iowa
|
American Equity Capital Trust II
|
Delaware
|
American Equity Capital Trust III
|
Delaware
|
American Equity Capital Trust IV
|
Delaware
|
American Equity Capital Trust VII
|
Delaware
|
American Equity Capital Trust VIII
|
Delaware
|
American Equity Capital Trust IX
|
Delaware
|
American Equity Capital Trust X
|
Delaware
|
American Equity Capital Trust XI
|
Delaware
|
American Equity Capital Trust XII
|
Delaware
|
AERL, L.C.
|
Iowa
|
American Equity Advisors, Inc.
|
Iowa
|
1.
|
I have reviewed this
annual
report on Form
10-K
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:
|
February 23, 2018
|
By:
|
|
/s/ JOHN M. MATOVINA
|
|
|
|
|
John M. Matovina, Chief Executive Officer and President
(Principal Executive Officer)
|
1.
|
I have reviewed this
annual
report on Form
10-K
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:
|
February 23, 2018
|
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:
|
February 23, 2018
|
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:
|
February 23, 2018
|
By:
|
|
/s/ TED M. JOHNSON
|
|
|
|
|
Ted M. Johnson, Chief Financial Officer and Treasurer
(Principal Financial Officer)
|