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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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46-3489149
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1001 Fleet Street, 6th Floor
Baltimore, MD
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21202
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(Address of principal executive offices)
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(Zip Code)
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Large Accelerated Filer
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¨
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Accelerated Filer
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¨
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Non-accelerated Filer
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x
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(Do not check if a smaller reporting company)
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Smaller reporting company
|
¨
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Page
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PART I. FINANCIAL INFORMATION
|
|
|
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PART II. OTHER INFORMATION
|
|
|
|
|
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Item 1.
|
Financial Statements
|
|
December 31,
2013 |
|
September 30,
2013 |
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Investments:
|
|
|
|
||||
Fixed maturities securities, available-for-sale, at fair value
|
$
|
16,327,617
|
|
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$
|
15,541,526
|
|
Equity securities, available-for-sale, at fair value
|
286,922
|
|
|
271,075
|
|
||
Derivative investments
|
294,531
|
|
|
221,758
|
|
||
Other invested assets
|
316,552
|
|
|
188,180
|
|
||
Total investments
|
17,225,622
|
|
|
16,222,539
|
|
||
Related party loans and investments
|
96,442
|
|
|
119,044
|
|
||
Cash and cash equivalents
|
759,471
|
|
|
1,204,334
|
|
||
Accrued investment income
|
157,785
|
|
|
159,287
|
|
||
Reinsurance recoverable
|
3,723,693
|
|
|
3,728,632
|
|
||
Intangibles, net
|
601,444
|
|
|
563,758
|
|
||
Deferred tax assets
|
225,908
|
|
|
226,351
|
|
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Other assets
|
155,292
|
|
|
205,230
|
|
||
Total assets
|
$
|
22,945,657
|
|
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$
|
22,429,175
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDER'S EQUITY
|
|
|
|
||||
|
|
|
|
||||
Contractholder funds
|
$
|
15,519,722
|
|
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$
|
15,248,216
|
|
Future policy benefits
|
3,545,881
|
|
|
3,556,808
|
|
||
Funds withheld for reinsurance liabilities
|
1,381,238
|
|
|
1,407,713
|
|
||
Liability for policy and contract claims
|
60,331
|
|
|
51,456
|
|
||
Long-term debt
|
300,000
|
|
|
300,000
|
|
||
Other liabilities
|
806,662
|
|
|
700,097
|
|
||
Total liabilities
|
21,613,834
|
|
|
21,264,290
|
|
||
|
|
|
|
||||
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|
|
|
||||
Shareholder's equity:
|
|
|
|
||||
Common stock ($.01 par value, 500,000,000 shares authorized, 58,270,822 issued and outstanding at December 31, 2013; 47,000,000 shares issued and outstanding at September 30, 2013)
|
583
|
|
|
—
|
|
||
Additional paid-in capital
|
700,528
|
|
|
527,124
|
|
||
Retained earnings
|
524,572
|
|
|
524,871
|
|
||
Accumulated other comprehensive income
|
106,140
|
|
|
112,890
|
|
||
Total shareholder's equity
|
1,331,823
|
|
|
1,164,885
|
|
||
Total liabilities and shareholder's equity
|
$
|
22,945,657
|
|
|
$
|
22,429,175
|
|
|
|
|
|
|
|||||||
|
Three months ended
|
||||||
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December 31,
2013 |
|
December 31,
2012 |
||||
|
(Unaudited)
|
||||||
Revenues:
|
|
|
|
||||
Premiums
|
$
|
13,705
|
|
|
$
|
13,796
|
|
Net investment income
|
183,437
|
|
|
170,298
|
|
||
Net investment gains
|
123,417
|
|
|
146,475
|
|
||
Insurance and investment product fees and other
|
15,552
|
|
|
13,729
|
|
||
Total revenues
|
336,111
|
|
|
344,298
|
|
||
Benefits and expenses:
|
|
|
|
||||
Benefits and other changes in policy reserves
|
216,856
|
|
|
83,644
|
|
||
Acquisition and operating expenses, net of deferrals
|
26,004
|
|
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26,914
|
|
||
Amortization of intangibles
|
22,892
|
|
|
69,511
|
|
||
Total benefits and expenses
|
265,752
|
|
|
180,069
|
|
||
Operating income
|
70,359
|
|
|
164,229
|
|
||
Interest expense
|
(5,624
|
)
|
|
(34
|
)
|
||
Other income
|
—
|
|
|
225
|
|
||
Income before income taxes
|
64,735
|
|
|
164,420
|
|
||
Income tax expense
|
22,041
|
|
|
53,815
|
|
||
Net income
|
$
|
42,694
|
|
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$
|
110,605
|
|
|
|
|
|
||||
Net income per common share:
|
|
|
|
||||
|
|
|
|
||||
Basic
|
$
|
0.87
|
|
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$
|
2.35
|
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Diluted
|
$
|
0.87
|
|
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$
|
2.35
|
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Weighted average common shares used in computing net income per common share:
|
|
|
|
||||
Basic
|
49,142,208
|
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47,000,000
|
|
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Diluted
|
49,263,675
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|
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47,000,000
|
|
||
|
|
|
|
||||
Supplemental disclosures:
|
|
|
|
||||
Total other-than-temporary impairments
|
$
|
(34
|
)
|
|
$
|
(509
|
)
|
Less non-credit portion of other-than-temporary impairments included in other comprehensive income
|
—
|
|
|
—
|
|
||
Net other-than-temporary impairments
|
(34
|
)
|
|
(509
|
)
|
||
Gains (losses) on derivative instruments
|
111,538
|
|
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(25,568
|
)
|
||
Other realized investment gains
|
11,913
|
|
|
172,552
|
|
||
Total net investment gains
|
$
|
123,417
|
|
|
$
|
146,475
|
|
|
|
Three months ended
|
||||||
|
|
December 31,
2013 |
|
December 31,
2012 |
||||
|
|
(Unaudited)
|
||||||
Net income
|
|
$
|
42,694
|
|
|
$
|
110,605
|
|
|
|
|
|
|
||||
Other comprehensive income
|
|
|
|
|
||||
Unrealized investment (losses) gains:
|
|
|
|
|
||||
Changes in unrealized investment (losses) gains before reclassification adjustment
|
|
(10,275
|
)
|
|
126,252
|
|
||
Net reclassification adjustment for (gains) included in net investment gains
|
|
(8,134
|
)
|
|
(172,043
|
)
|
||
Changes in unrealized investment (losses) after reclassification adjustment
|
|
(18,409
|
)
|
|
(45,791
|
)
|
||
Adjustments to intangible assets
|
|
8,026
|
|
|
27,961
|
|
||
Changes in deferred income tax asset/liability
|
|
3,633
|
|
|
6,241
|
|
||
Net change to derive comprehensive income (loss) for the period
|
|
(6,750
|
)
|
|
(11,589
|
)
|
||
|
|
|
|
|
||||
Comprehensive income, net of tax
|
|
$
|
35,944
|
|
|
$
|
99,016
|
|
(in thousands)
|
|
Common Stock
|
|
Additional Paid-in Capital/Contributed Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Shareholder’s Equity
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance, September 30, 2012
|
|
$
|
—
|
|
|
$
|
415,576
|
|
|
$
|
440,723
|
|
|
$
|
434,482
|
|
|
$
|
1,290,781
|
|
Capital contributions from Harbinger Group Inc.
|
|
—
|
|
|
111,711
|
|
|
—
|
|
|
—
|
|
|
111,711
|
|
|||||
Dividends
|
|
—
|
|
|
—
|
|
|
(93,654
|
)
|
|
—
|
|
|
(93,654
|
)
|
|||||
Distributions to Harbinger Group Inc. and subsidiaries
|
|
—
|
|
|
—
|
|
|
(169,859
|
)
|
|
—
|
|
|
(169,859
|
)
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
347,661
|
|
|
—
|
|
|
347,661
|
|
|||||
Unrealized investment losses, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(321,592
|
)
|
|
(321,592
|
)
|
|||||
Stock compensation
|
|
—
|
|
|
(163
|
)
|
|
—
|
|
|
—
|
|
|
(163
|
)
|
|||||
Balance, September 30, 2013
|
|
$
|
—
|
|
|
$
|
527,124
|
|
|
$
|
524,871
|
|
|
$
|
112,890
|
|
|
$
|
1,164,885
|
|
Dividends
|
|
—
|
|
|
—
|
|
|
(42,993
|
)
|
|
—
|
|
|
(42,993
|
)
|
|||||
Issuance of common stock
|
|
583
|
|
|
(583
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Proceeds from issuance of common stock, net of transaction fees
|
|
—
|
|
|
172,996
|
|
|
—
|
|
|
—
|
|
|
172,996
|
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
42,694
|
|
|
—
|
|
|
42,694
|
|
|||||
Unrealized investment losses, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,750
|
)
|
|
(6,750
|
)
|
|||||
Stock compensation
|
|
—
|
|
|
991
|
|
|
—
|
|
|
—
|
|
|
991
|
|
|||||
Balance, December 31, 2013
|
|
$
|
583
|
|
|
$
|
700,528
|
|
|
$
|
524,572
|
|
|
$
|
106,140
|
|
|
$
|
1,331,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
||||||
|
December 31,
2013 |
|
December 31,
2012 |
||||
|
(Unaudited)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
42,694
|
|
|
$
|
110,605
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation of properties
|
1,102
|
|
|
908
|
|
||
Amortization of intangibles
|
22,892
|
|
|
69,511
|
|
||
Stock-based compensation
|
7,139
|
|
|
897
|
|
||
Amortization of debt issuance costs
|
843
|
|
|
—
|
|
||
Deferred income taxes
|
4,079
|
|
|
122,033
|
|
||
Interest credited/index credits and other changes to contractholder account balances
|
178,298
|
|
|
55,936
|
|
||
Amortization of fixed maturity discounts and premiums
|
(14,845
|
)
|
|
13,235
|
|
||
Net recognized (gains) on investments and derivatives
|
(123,417
|
)
|
|
(146,475
|
)
|
||
Charges assessed to contractholders for mortality and administration
|
(9,577
|
)
|
|
(6,778
|
)
|
||
Deferred policy acquisition costs
|
(52,550
|
)
|
|
(35,698
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|||
Accrued investment income
|
1,502
|
|
|
38,573
|
|
||
Reinsurance recoverable
|
(17,748
|
)
|
|
(21,936
|
)
|
||
Future policy benefits
|
(10,927
|
)
|
|
(22,518
|
)
|
||
Funds withheld from reinsurers
|
(39,924
|
)
|
|
(672
|
)
|
||
Collateral (returned) posted
|
2,739
|
|
|
—
|
|
||
Liability for policy and contract claims
|
8,875
|
|
|
8,574
|
|
||
Other operating
|
36,868
|
|
|
(113,986
|
)
|
||
Net cash provided by operating activities
|
38,043
|
|
|
72,209
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Proceeds from investments sold, matured or repaid:
|
|
|
|
||||
Fixed maturities
|
1,663,700
|
|
|
2,913,381
|
|
||
Equity securities
|
42,249
|
|
|
21
|
|
||
Derivatives instruments and other invested assets
|
102,702
|
|
|
49,495
|
|
||
Cost of investments acquired:
|
|
|
|
||||
Fixed maturities
|
(2,535,337
|
)
|
|
(3,379,147
|
)
|
||
Equity securities
|
(63,154
|
)
|
|
(15,965
|
)
|
||
Derivatives instruments and other invested assets
|
(167,943
|
)
|
|
(45,335
|
)
|
||
Related party loans and investments
|
22,602
|
|
|
(35,666
|
)
|
||
Capital expenditures
|
(2,960
|
)
|
|
(1,348
|
)
|
||
Net cash (used in) investing activities
|
(938,141
|
)
|
|
(514,564
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Capital funding
|
—
|
|
|
(1,184
|
)
|
||
Proceeds from issuance of common stock, net of transaction fees
|
175,854
|
|
|
—
|
|
||
Dividends paid
|
(42,993
|
)
|
|
(20,000
|
)
|
||
Contractholder account deposits
|
772,257
|
|
|
491,480
|
|
||
Contractholder account withdrawals
|
(449,883
|
)
|
|
(475,558
|
)
|
||
Net cash provided by (used in) financing activities
|
455,235
|
|
|
(5,262
|
)
|
||
Change in cash & cash equivalents
|
(444,863
|
)
|
|
(447,617
|
)
|
||
Cash and cash equivalents at beginning of period
|
1,204,334
|
|
|
1,054,589
|
|
||
Cash and cash equivalents at end of period
|
$
|
759,471
|
|
|
$
|
606,972
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Interest paid
|
$
|
9,775
|
|
|
$
|
—
|
|
Income taxes paid
|
$
|
—
|
|
|
$
|
1,683
|
|
|
December 31, 2013
|
||||||||||||||||||
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Carrying Value
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Available-for sale securities
|
|
|
|
|
|
|
|
|
|
||||||||||
Asset-backed securities
|
$
|
1,830,206
|
|
|
$
|
20,737
|
|
|
$
|
(8,165
|
)
|
|
$
|
1,842,778
|
|
|
$
|
1,842,778
|
|
Commercial mortgage-backed securities
|
422,575
|
|
|
25,236
|
|
|
(3,182
|
)
|
|
444,629
|
|
|
444,629
|
|
|||||
Corporates
|
9,963,806
|
|
|
272,090
|
|
|
(189,278
|
)
|
|
10,046,618
|
|
|
10,046,618
|
|
|||||
Equities
|
293,940
|
|
|
6,810
|
|
|
(13,828
|
)
|
|
286,922
|
|
|
286,922
|
|
|||||
Hybrids
|
400,547
|
|
|
20,755
|
|
|
(3,228
|
)
|
|
418,074
|
|
|
418,074
|
|
|||||
Municipals
|
1,121,207
|
|
|
45,199
|
|
|
(44,980
|
)
|
|
1,121,426
|
|
|
1,121,426
|
|
|||||
Agency residential mortgage-backed securities
|
88,948
|
|
|
2,192
|
|
|
(91
|
)
|
|
91,049
|
|
|
91,049
|
|
|||||
Non-agency residential mortgage-backed securities
|
1,564,094
|
|
|
99,209
|
|
|
(11,276
|
)
|
|
1,652,027
|
|
|
1,652,027
|
|
|||||
U.S. Government
|
711,453
|
|
|
5,796
|
|
|
(6,233
|
)
|
|
711,016
|
|
|
711,016
|
|
|||||
Total available-for-sale securities
|
16,396,776
|
|
|
498,024
|
|
|
(280,261
|
)
|
|
16,614,539
|
|
|
16,614,539
|
|
|||||
Derivative investments
|
148,310
|
|
|
147,034
|
|
|
(813
|
)
|
|
294,531
|
|
|
294,531
|
|
|||||
Other invested assets
|
316,552
|
|
|
—
|
|
|
—
|
|
|
316,552
|
|
|
316,552
|
|
|||||
Total investments
|
$
|
16,861,638
|
|
|
$
|
645,058
|
|
|
$
|
(281,074
|
)
|
|
$
|
17,225,622
|
|
|
$
|
17,225,622
|
|
|
September 30, 2013
|
||||||||||||||||||
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Carrying Value
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Available-for-sale securities
|
|
|
|
|
|
|
|
|
|
||||||||||
Asset-backed securities
|
$
|
1,745,241
|
|
|
$
|
24,529
|
|
|
$
|
(5,176
|
)
|
|
$
|
1,764,594
|
|
|
$
|
1,764,594
|
|
Commercial mortgage-backed securities
|
431,265
|
|
|
24,660
|
|
|
(1,596
|
)
|
|
454,329
|
|
|
454,329
|
|
|||||
Corporates
|
9,314,661
|
|
|
288,702
|
|
|
(185,054
|
)
|
|
9,418,309
|
|
|
9,418,309
|
|
|||||
Equities
|
274,647
|
|
|
6,683
|
|
|
(10,255
|
)
|
|
271,075
|
|
|
271,075
|
|
|||||
Hybrids
|
412,640
|
|
|
19,481
|
|
|
(3,304
|
)
|
|
428,817
|
|
|
428,817
|
|
|||||
Municipals
|
998,832
|
|
|
49,013
|
|
|
(40,835
|
)
|
|
1,007,010
|
|
|
1,007,010
|
|
|||||
Agency residential mortgage-backed securities
|
96,452
|
|
|
2,397
|
|
|
(252
|
)
|
|
98,597
|
|
|
98,597
|
|
|||||
Non-agency residential mortgage-backed securities
|
1,304,007
|
|
|
77,410
|
|
|
(13,394
|
)
|
|
1,368,023
|
|
|
1,368,023
|
|
|||||
U.S. Government
|
998,530
|
|
|
7,174
|
|
|
(3,857
|
)
|
|
1,001,847
|
|
|
1,001,847
|
|
|||||
Total available-for-sale securities
|
15,576,275
|
|
|
500,049
|
|
|
(263,723
|
)
|
|
15,812,601
|
|
|
15,812,601
|
|
|||||
Derivatives Instruments
|
141,664
|
|
|
88,461
|
|
|
(8,367
|
)
|
|
221,758
|
|
|
221,758
|
|
|||||
Other invested assets
|
188,180
|
|
|
—
|
|
|
—
|
|
|
188,180
|
|
|
188,180
|
|
|||||
Total investments
|
$
|
15,906,119
|
|
|
$
|
588,510
|
|
|
$
|
(272,090
|
)
|
|
$
|
16,222,539
|
|
|
$
|
16,222,539
|
|
|
December 31, 2013
|
||||||
|
Amortized Cost
|
|
Fair Value
|
||||
Corporates, Non-structured Hybrids, Municipal and U.S. Government securities:
|
|
|
|
||||
Due in one year or less
|
$
|
345,545
|
|
|
$
|
348,092
|
|
Due after one year through five years
|
3,059,155
|
|
|
3,133,238
|
|
||
Due after five years through ten years
|
3,315,121
|
|
|
3,332,054
|
|
||
Due after ten years
|
5,444,439
|
|
|
5,448,255
|
|
||
Subtotal
|
12,164,260
|
|
|
12,261,639
|
|
||
Other securities which provide for periodic payments:
|
|
|
|
||||
Asset-backed securities
|
1,830,206
|
|
|
1,842,778
|
|
||
Commercial-mortgage-backed securities
|
422,575
|
|
|
444,629
|
|
||
Structured hybrids
|
32,753
|
|
|
35,495
|
|
||
Agency residential mortgage-backed securities
|
88,948
|
|
|
91,049
|
|
||
Non-agency residential mortgage-backed securities
|
1,564,094
|
|
|
1,652,027
|
|
||
Total fixed maturity available-for-sale securities
|
$
|
16,102,836
|
|
|
$
|
16,327,617
|
|
|
December 31, 2013
|
||||||||||||||||||||||
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Gross Unrealized
Losses
|
|
Fair Value
|
|
Gross Unrealized
Losses
|
|
Fair Value
|
|
Gross Unrealized
Losses
|
||||||||||||
Available-for-sale securities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset-backed securities
|
$
|
496,893
|
|
|
$
|
(6,931
|
)
|
|
$
|
127,497
|
|
|
$
|
(1,234
|
)
|
|
$
|
624,390
|
|
|
$
|
(8,165
|
)
|
Commercial-mortgage-backed securities
|
29,419
|
|
|
(507
|
)
|
|
5,926
|
|
|
(2,675
|
)
|
|
35,345
|
|
|
(3,182
|
)
|
||||||
Corporates
|
3,355,410
|
|
|
(162,999
|
)
|
|
477,879
|
|
|
(26,279
|
)
|
|
3,833,289
|
|
|
(189,278
|
)
|
||||||
Equities
|
131,677
|
|
|
(13,772
|
)
|
|
6,909
|
|
|
(56
|
)
|
|
138,586
|
|
|
(13,828
|
)
|
||||||
Hybrids
|
106,254
|
|
|
(3,119
|
)
|
|
8,256
|
|
|
(109
|
)
|
|
114,510
|
|
|
(3,228
|
)
|
||||||
Municipals
|
478,220
|
|
|
(28,368
|
)
|
|
168,055
|
|
|
(16,612
|
)
|
|
646,275
|
|
|
(44,980
|
)
|
||||||
Agency residential mortgage-backed securities
|
11,871
|
|
|
(78
|
)
|
|
526
|
|
|
(13
|
)
|
|
12,397
|
|
|
(91
|
)
|
||||||
Non-agency residential mortgage-backed securities
|
354,502
|
|
|
(10,554
|
)
|
|
55,235
|
|
|
(722
|
)
|
|
409,737
|
|
|
(11,276
|
)
|
||||||
U.S. Government
|
337,957
|
|
|
(6,233
|
)
|
|
—
|
|
|
—
|
|
|
337,957
|
|
|
(6,233
|
)
|
||||||
Total available-for-sale securities
|
$
|
5,302,203
|
|
|
$
|
(232,561
|
)
|
|
$
|
850,283
|
|
|
$
|
(47,700
|
)
|
|
$
|
6,152,486
|
|
|
$
|
(280,261
|
)
|
Total number of available-for-sale securities in an unrealized loss position less than twelve months
|
|
|
|
|
|
|
|
|
|
|
634
|
|
|||||||||||
Total number of available-for-sale securities in an unrealized loss position twelve months or longer
|
|
|
|
|
|
|
|
|
|
|
109
|
|
|||||||||||
Total number of available-for-sale securities in an unrealized loss position
|
|
|
|
|
|
|
|
|
|
|
743
|
|
|
September 30, 2013
|
||||||||||||||||||||||
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Gross Unrealized
Losses
|
|
Fair Value
|
|
Gross Unrealized
Losses
|
|
Fair Value
|
|
Gross Unrealized
Losses
|
||||||||||||
Available-for-sale securities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset-backed securities
|
$
|
329,319
|
|
|
$
|
(4,496
|
)
|
|
$
|
81,483
|
|
|
$
|
(680
|
)
|
|
$
|
410,802
|
|
|
$
|
(5,176
|
)
|
Commercial-mortgage-backed securities
|
26,575
|
|
|
(525
|
)
|
|
4,860
|
|
|
(1,071
|
)
|
|
31,435
|
|
|
(1,596
|
)
|
||||||
Corporates
|
3,457,206
|
|
|
(174,989
|
)
|
|
185,956
|
|
|
(10,065
|
)
|
|
3,643,162
|
|
|
(185,054
|
)
|
||||||
Equities
|
118,609
|
|
|
(9,120
|
)
|
|
32,240
|
|
|
(1,135
|
)
|
|
150,849
|
|
|
(10,255
|
)
|
||||||
Hybrids
|
52,027
|
|
|
(3,304
|
)
|
|
—
|
|
|
—
|
|
|
52,027
|
|
|
(3,304
|
)
|
||||||
Municipals
|
333,278
|
|
|
(27,359
|
)
|
|
144,365
|
|
|
(13,476
|
)
|
|
477,643
|
|
|
(40,835
|
)
|
||||||
Agency residential mortgage-backed securities
|
9,791
|
|
|
(117
|
)
|
|
1,148
|
|
|
(135
|
)
|
|
10,939
|
|
|
(252
|
)
|
||||||
Non-agency residential mortgage-backed securities
|
325,170
|
|
|
(12,224
|
)
|
|
69,910
|
|
|
(1,170
|
)
|
|
395,080
|
|
|
(13,394
|
)
|
||||||
U.S government
|
753,899
|
|
|
(3,857
|
)
|
|
—
|
|
|
—
|
|
|
753,899
|
|
|
(3,857
|
)
|
||||||
Total available-for-sale securities
|
$
|
5,405,874
|
|
|
$
|
(235,991
|
)
|
|
$
|
519,962
|
|
|
$
|
(27,732
|
)
|
|
$
|
5,925,836
|
|
|
$
|
(263,723
|
)
|
Total number of available-for-sale securities in an unrealized loss position less than twelve months
|
|
|
|
|
|
|
|
|
|
|
588
|
|
|||||||||||
Total number of available-for-sale securities in an unrealized loss position twelve months or longer
|
|
|
|
|
|
|
|
|
|
|
78
|
|
|||||||||||
Total number of available-for-sale securities in an unrealized loss position
|
|
|
|
|
|
|
|
|
|
|
666
|
|
|
Three months ended December 31,
|
||||||
|
2013
|
|
2012
|
||||
Beginning balance
|
$
|
2,681
|
|
|
$
|
2,681
|
|
Increases attributable to credit losses on securities:
|
|
|
|
||||
Other-than-temporary impairment was previously recognized
|
—
|
|
|
—
|
|
||
Other-than-temporary impairment was not previously recognized
|
—
|
|
|
—
|
|
||
Ending balance
|
$
|
2,681
|
|
|
$
|
2,681
|
|
|
Three months ended December 31,
|
||||||
|
2013
|
|
2012
|
||||
OTTI recognized in net income:
|
|
|
|
||||
Non-agency residential mortgage-backed securities
|
$
|
34
|
|
|
$
|
509
|
|
Total OTTI
|
$
|
34
|
|
|
$
|
509
|
|
|
Three months ended December 31,
|
||||||
|
2013
|
|
2012
|
||||
Fixed maturity available-for-sale securities
|
$
|
175,286
|
|
|
$
|
165,415
|
|
Equity available-for-sale securities
|
4,390
|
|
|
5,351
|
|
||
Related party loans
|
1,877
|
|
|
2,183
|
|
||
Policy loans
|
168
|
|
|
266
|
|
||
Invested cash and short-term investments
|
74
|
|
|
835
|
|
||
Other investments
|
5,194
|
|
|
346
|
|
||
Gross investment income
|
186,989
|
|
|
174,396
|
|
||
Investment expense
|
(3,552
|
)
|
|
(4,098
|
)
|
||
Net investment income
|
$
|
183,437
|
|
|
$
|
170,298
|
|
|
Three months ended December 31,
|
||||||
|
2013
|
|
2012
|
||||
Net realized gains on fixed maturity available-for-sale securities
|
$
|
13,564
|
|
|
$
|
172,033
|
|
Realized (losses) on equity securities
|
(1,613
|
)
|
|
—
|
|
||
Net realized gains on securities
|
11,951
|
|
|
172,033
|
|
||
Realized gains on certain derivative instruments
|
54,880
|
|
|
15,717
|
|
||
Unrealized gains (losses) on certain derivative instruments
|
60,972
|
|
|
(41,285
|
)
|
||
Change in fair value of reinsurance related embedded derivative
|
(4,314
|
)
|
|
—
|
|
||
Realized gains (losses) on derivatives and reinsurance related embedded derivative
|
111,538
|
|
|
(25,568
|
)
|
||
Realized (losses) gains on other invested assets
|
(72
|
)
|
|
10
|
|
||
Net investment gains
|
$
|
123,417
|
|
|
$
|
146,475
|
|
|
December 31, 2013
|
|
September 30, 2013
|
||||
Assets:
|
|
|
|
||||
Derivative investments:
|
|
|
|
||||
Call options
|
$
|
294,094
|
|
|
$
|
221,758
|
|
Futures contracts
|
437
|
|
|
—
|
|
||
Other Assets:
|
|
|
|
||||
Reinsurance related embedded derivative
|
113,710
|
|
|
118,025
|
|
||
|
$
|
408,241
|
|
|
$
|
339,783
|
|
Liabilities:
|
|
|
|
||||
Contractholder funds:
|
|
|
|
||||
FIA embedded derivative
|
$
|
1,644,724
|
|
|
$
|
1,544,447
|
|
Funds withheld for reinsurance liabilities:
|
|
|
|
||||
Call options payable to FSRCI
|
28,328
|
|
|
22,833
|
|
||
Other liabilities:
|
|
|
|
||||
Futures contracts
|
—
|
|
|
1,028
|
|
||
|
$
|
1,673,052
|
|
|
$
|
1,568,308
|
|
|
Three months ended
|
||||||
|
December 31, 2013
|
|
December 31, 2012
|
||||
Revenues:
|
|
|
|
||||
Net investment gains (losses):
|
|
|
|
||||
Call options
|
$
|
102,742
|
|
|
$
|
(20,889
|
)
|
Futures contracts
|
13,110
|
|
|
(4,679
|
)
|
||
Reinsurance related embedded derivative
|
(4,314
|
)
|
|
—
|
|
||
|
$
|
111,538
|
|
|
$
|
(25,568
|
)
|
Benefits and other changes in policy reserves:
|
|
|
|
||||
FIA embedded derivatives
|
$
|
100,277
|
|
|
$
|
(33,754
|
)
|
|
|
|
|
December 31, 2013
|
|
September 30, 2013
|
||||||||||||||||||||||||||||
Counterparty
|
|
Credit Rating
(Moody's/S&P) (a)
|
|
Notional
Amount
|
|
Fair Value
|
|
Collateral
|
|
Net Credit Risk
|
|
Notional
Amount
|
|
Fair Value
|
|
Collateral
|
|
Net Credit Risk
|
||||||||||||||||
Merrill Lynch
|
|
NA/A
|
|
$
|
2,157,932
|
|
|
$
|
99,627
|
|
|
$
|
45,103
|
|
|
$
|
54,524
|
|
|
$
|
2,037,781
|
|
|
$
|
70,695
|
|
|
$
|
—
|
|
|
$
|
70,695
|
|
Deutsche Bank
|
|
A2/A
|
|
1,706,800
|
|
|
70,379
|
|
|
—
|
|
|
70,379
|
|
|
1,620,404
|
|
|
51,667
|
|
|
23,000
|
|
|
28,667
|
|
||||||||
Morgan Stanley
|
|
A3/A
|
|
2,379,038
|
|
|
103,087
|
|
|
74,739
|
|
|
28,348
|
|
|
2,264,136
|
|
|
75,729
|
|
|
49,000
|
|
|
26,729
|
|
||||||||
Royal Bank of Scotland
|
|
A3/A
|
|
245,300
|
|
|
16,899
|
|
|
—
|
|
|
16,899
|
|
|
364,300
|
|
|
20,313
|
|
|
—
|
|
|
20,313
|
|
||||||||
Barclay's Bank
|
|
A2/A
|
|
117,835
|
|
|
4,102
|
|
|
—
|
|
|
4,102
|
|
|
120,789
|
|
|
3,354
|
|
|
—
|
|
|
3,354
|
|
||||||||
|
|
|
|
$
|
6,606,905
|
|
|
$
|
294,094
|
|
|
$
|
119,842
|
|
|
$
|
174,252
|
|
|
$
|
6,407,410
|
|
|
$
|
221,758
|
|
|
$
|
72,000
|
|
|
$
|
149,758
|
|
|
December 31, 2013
|
||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair Value
|
|
Carrying Amount
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
759,471
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
759,471
|
|
|
$
|
759,471
|
|
Fixed maturity securities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
||||||||||
Asset-backed securities
|
—
|
|
|
1,591,978
|
|
|
250,800
|
|
|
1,842,778
|
|
|
1,842,778
|
|
|||||
Commercial mortgage-backed securities
|
—
|
|
|
438,653
|
|
|
5,976
|
|
|
444,629
|
|
|
444,629
|
|
|||||
Corporates
|
—
|
|
|
9,439,479
|
|
|
607,139
|
|
|
10,046,618
|
|
|
10,046,618
|
|
|||||
Hybrids
|
—
|
|
|
418,074
|
|
|
—
|
|
|
418,074
|
|
|
418,074
|
|
|||||
Municipals
|
—
|
|
|
1,087,052
|
|
|
34,374
|
|
|
1,121,426
|
|
|
1,121,426
|
|
|||||
Agency residential mortgage-backed securities
|
—
|
|
|
91,049
|
|
|
—
|
|
|
91,049
|
|
|
91,049
|
|
|||||
Non-agency residential mortgage-backed securities
|
—
|
|
|
1,652,027
|
|
|
—
|
|
|
1,652,027
|
|
|
1,652,027
|
|
|||||
U.S. Government
|
502,531
|
|
|
208,485
|
|
|
—
|
|
|
711,016
|
|
|
711,016
|
|
|||||
Equity securities available-for-sale
|
—
|
|
|
286,922
|
|
|
—
|
|
|
286,922
|
|
|
286,922
|
|
|||||
Derivative financial instruments
|
—
|
|
|
294,531
|
|
|
—
|
|
|
294,531
|
|
|
294,531
|
|
|||||
Reinsurance related embedded derivative
|
—
|
|
|
113,710
|
|
|
—
|
|
|
113,710
|
|
|
113,710
|
|
|||||
Related party loans
|
—
|
|
|
—
|
|
|
96,442
|
|
|
96,442
|
|
|
96,442
|
|
|||||
Other invested assets
|
—
|
|
|
—
|
|
|
316,552
|
|
|
316,552
|
|
|
316,552
|
|
|||||
Total financial assets at fair value
|
$
|
1,262,002
|
|
|
$
|
15,621,960
|
|
|
$
|
1,311,283
|
|
|
$
|
18,195,245
|
|
|
$
|
18,195,245
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivatives:
|
|
|
|
|
|
|
|
|
|
||||||||||
FIA embedded derivatives, included in contractor funds
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,644,724
|
|
|
$
|
1,644,724
|
|
|
$
|
1,644,724
|
|
Investment contracts, included in contractholder funds
|
—
|
|
|
—
|
|
|
12,513,803
|
|
|
12,513,803
|
|
|
13,874,998
|
|
|||||
Call options payable for FSRCI, included in funds withheld for reinsurance liabilities
|
—
|
|
|
28,328
|
|
|
—
|
|
|
28,328
|
|
|
28,328
|
|
|||||
Debt
|
—
|
|
|
300,000
|
|
|
—
|
|
|
300,000
|
|
|
300,000
|
|
|||||
Total financial liabilities at fair value
|
$
|
—
|
|
|
$
|
328,328
|
|
|
$
|
14,158,527
|
|
|
$
|
14,486,855
|
|
|
$
|
15,848,050
|
|
|
September 30, 2013
|
||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair Value
|
|
Carrying Amount
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
1,204,334
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,204,334
|
|
|
$
|
1,204,334
|
|
Fixed maturity securities, available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Asset-backed securities
|
—
|
|
|
1,518,066
|
|
|
246,528
|
|
|
1,764,594
|
|
|
1,764,594
|
|
|||||
Commercial mortgage-backed securities
|
—
|
|
|
448,694
|
|
|
5,635
|
|
|
454,329
|
|
|
454,329
|
|
|||||
Corporates
|
—
|
|
|
8,957,196
|
|
|
461,113
|
|
|
9,418,309
|
|
|
9,418,309
|
|
|||||
Hybrids
|
—
|
|
|
428,817
|
|
|
—
|
|
|
428,817
|
|
|
428,817
|
|
|||||
Municipals
|
—
|
|
|
1,007,010
|
|
|
—
|
|
|
1,007,010
|
|
|
1,007,010
|
|
|||||
Agency residential mortgage-backed securities
|
—
|
|
|
98,597
|
|
|
—
|
|
|
98,597
|
|
|
98,597
|
|
|||||
Non-agency residential mortgage-backed securities
|
—
|
|
|
1,368,023
|
|
|
—
|
|
|
1,368,023
|
|
|
1,368,023
|
|
|||||
U.S. Government
|
790,926
|
|
|
210,921
|
|
|
—
|
|
|
1,001,847
|
|
|
1,001,847
|
|
|||||
Equity securities available-for-sale
|
—
|
|
|
271,075
|
|
|
—
|
|
|
271,075
|
|
|
271,075
|
|
|||||
Derivative financial instruments
|
—
|
|
|
221,758
|
|
|
—
|
|
|
221,758
|
|
|
221,758
|
|
|||||
Reinsurance related embedded derivative
|
—
|
|
|
118,025
|
|
|
—
|
|
|
118,025
|
|
|
118,025
|
|
|||||
Related party loans
|
—
|
|
|
—
|
|
|
119,044
|
|
|
119,044
|
|
|
119,044
|
|
|||||
Other invested assets
|
—
|
|
|
—
|
|
|
188,180
|
|
|
188,180
|
|
|
188,180
|
|
|||||
Total financial assets at fair value
|
$
|
1,995,260
|
|
|
$
|
14,648,182
|
|
|
$
|
1,020,500
|
|
|
$
|
17,663,942
|
|
|
$
|
17,663,942
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Derivatives:
|
|
|
|
|
|
|
|
|
|
||||||||||
FIA embedded derivatives, included in contractholder funds
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,544,447
|
|
|
$
|
1,544,447
|
|
|
$
|
1,544,447
|
|
Derivative instruments: futures contracts
|
—
|
|
|
1,028
|
|
|
—
|
|
|
1,028
|
|
|
1,028
|
|
|||||
Investment contracts, included in contractholder funds
|
—
|
|
|
—
|
|
|
12,378,645
|
|
|
12,378,645
|
|
|
13,703,769
|
|
|||||
Call options payable for FSRCI, included in funds withheld for reinsurance liabilities
|
—
|
|
|
22,833
|
|
|
—
|
|
|
22,833
|
|
|
22,833
|
|
|||||
Debt
|
—
|
|
|
300,000
|
|
|
—
|
|
|
300,000
|
|
|
300,000
|
|
|||||
Total financial liabilities at fair value
|
$
|
—
|
|
|
$
|
323,861
|
|
|
$
|
13,923,092
|
|
|
$
|
14,246,953
|
|
|
$
|
15,572,077
|
|
|
|
Fair Value at
|
|
|
|
|
|
Range (Weighted average)
|
||
|
|
December 31,
2013 |
|
Valuation Technique
|
|
Unobservable Input(s)
|
|
December 31,
2013 |
||
Assets
|
|
|
|
|
|
|
|
|
||
Asset-backed securities
|
|
$
|
250,800
|
|
|
Broker-quoted
|
|
Offered quotes
|
|
98.00% - 106.98% (100.61%)
|
Corporates
|
|
540,918
|
|
|
Broker-quoted
|
|
Offered quotes
|
|
0.00% - 115.00% (91.54%)
|
|
Corporates
|
|
66,221
|
|
|
Market Pricing
|
|
Quoted prices
|
|
91.38%-131.62% (98.72%)
|
|
Municipal
|
|
34,374
|
|
|
Broker-quoted
|
|
Offered quotes
|
|
98.21%
|
|
Commercial mortgage-backed securities
|
|
5,976
|
|
|
Broker-quoted
|
|
Offered quotes
|
|
101.64%
|
|
Other invested assets
|
|
199,636
|
|
|
Market Pricing
|
|
Offered quotes
|
|
100.00%
|
|
Total
|
|
$
|
1,097,925
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||
Derivatives:
|
|
|
|
|
|
|
|
|
||
FIA embedded derivatives, included in contractholder funds
|
|
$
|
1,644,724
|
|
|
Discounted cash flow
|
|
Market value of option
|
|
0% - 43.28% (4.78%)
|
|
|
|
|
|
|
SWAP rates
|
|
1.79% - 3.09% (2.45%)
|
||
|
|
|
|
|
|
Mortality multiplier
|
|
80%
|
||
|
|
|
|
|
|
Surrender rates
|
|
0.50% - 75% (7%)
|
||
|
|
|
|
|
|
Non-performance spread
|
|
0.25%
|
||
Total liabilities at fair value
|
|
$
|
1,644,724
|
|
|
|
|
|
|
|
|
|
Fair Value at
|
|
|
|
|
|
Range (Weighted average)
|
||
|
|
September 30,
2013 |
|
Valuation Technique
|
|
Unobservable Input(s)
|
|
September 30, 2013
|
||
Assets
|
|
|
|
|
|
|
|
|
||
Asset-backed securities
|
|
$
|
246,528
|
|
|
Broker-quoted
|
|
Offered quotes
|
|
100.00% - 107.25% (100.91%)
|
Corporates
|
|
404,508
|
|
|
Broker-quoted
|
|
Offered quotes
|
|
0.00% - 113.00% (90.45%)
|
|
Corporates
|
|
56,605
|
|
|
Market Pricing
|
|
Quoted prices
|
|
90.06% - 130.92% (97.19%)
|
|
Commercial mortgage-backed securities
|
|
5,635
|
|
|
Broker-quoted
|
|
Offered quotes
|
|
95.50%
|
|
Other invested assets
|
|
157,000
|
|
|
Market Pricing
|
|
Offered quotes
|
|
100.00%
|
|
Total
|
|
$
|
870,276
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||
Derivatives:
|
|
|
|
|
|
|
|
|
||
FIA embedded derivatives, included in contractholder funds
|
|
$
|
1,544,447
|
|
|
Discounted cash flow
|
|
Market value of option
|
|
0% - 38.24% (3.82%)
|
|
|
|
|
|
|
SWAP rates
|
|
1.54% - 2.77% (2.16%)
|
||
|
|
|
|
|
|
Mortality multiplier
|
|
80%
|
||
|
|
|
|
|
|
Surrender rates
|
|
0.50% - 75% (7%)
|
||
|
|
|
|
|
|
Non-performance spread
|
|
0.25%
|
||
Total liabilities at fair value
|
|
$
|
1,544,447
|
|
|
|
|
|
|
|
|
Three months ended December 31, 2013
|
||||||||||||||||||||||
|
Balance at Beginning
of Period
|
|
Total Gains (Losses)
|
|
Net Purchases, Sales, & Settlements
|
|
Net transfer In (Out) of
Level 3 (a)
|
|
Balance at End of
Period
|
||||||||||||||
|
|
Included in
Earnings
|
|
Included in
AOCI
|
|
|
|
||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset-backed securities
|
$
|
246,528
|
|
|
$
|
—
|
|
|
$
|
(747
|
)
|
|
$
|
5,019
|
|
|
$
|
—
|
|
|
$
|
250,800
|
|
Commercial mortgage-backed securities
|
5,635
|
|
|
—
|
|
|
363
|
|
|
(22
|
)
|
|
—
|
|
|
5,976
|
|
||||||
Corporates
|
461,113
|
|
|
(27
|
)
|
|
(6,098
|
)
|
|
152,151
|
|
|
—
|
|
|
607,139
|
|
||||||
Municipals
|
—
|
|
|
—
|
|
|
(626
|
)
|
|
35,000
|
|
|
—
|
|
|
34,374
|
|
||||||
Other invested assets
|
157,000
|
|
|
—
|
|
|
—
|
|
|
42,636
|
|
|
—
|
|
|
199,636
|
|
||||||
Total assets at Level 3 fair value
|
$
|
870,276
|
|
|
$
|
(27
|
)
|
|
$
|
(7,108
|
)
|
|
$
|
234,784
|
|
|
$
|
—
|
|
|
$
|
1,097,925
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
FIA embedded derivatives, included in contractholder funds
|
$
|
1,544,447
|
|
|
$
|
100,277
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,644,724
|
|
Total liabilities at Level 3 fair value
|
$
|
1,544,447
|
|
|
$
|
100,277
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,644,724
|
|
(a)
|
There were no net transfers in and/or out of Level 3 during the
three months ended December 31, 2013
.
|
|
Three months ended December 31, 2012
|
||||||||||||||||||||||
|
Balance at Beginning
of Period |
|
Total Gains (Losses)
|
|
Net Purchases, Sales, & Settlements
|
|
Net transfer In (Out) of
Level 3 (a) |
|
Balance at End of
Period |
||||||||||||||
|
|
Included in
Earnings |
|
Included in
AOCI |
|
|
|
||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset-backed securities
|
$
|
15,855
|
|
|
$
|
—
|
|
|
$
|
(43
|
)
|
|
$
|
(18
|
)
|
|
$
|
(10,500
|
)
|
|
$
|
5,294
|
|
Commercial mortgage-backed securities
|
5,023
|
|
|
—
|
|
|
81
|
|
|
1,006
|
|
|
—
|
|
|
6,110
|
|
||||||
Corporates
|
135,296
|
|
|
(180
|
)
|
|
(1,964
|
)
|
|
122,890
|
|
|
80
|
|
|
256,122
|
|
||||||
Hybrids
|
8,873
|
|
|
—
|
|
|
(175
|
)
|
|
—
|
|
|
(3,723
|
)
|
|
4,975
|
|
||||||
Related party investments
|
32,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32,000
|
|
||||||
Total assets at Level 3 fair value
|
$
|
197,047
|
|
|
$
|
(180
|
)
|
|
$
|
(2,101
|
)
|
|
$
|
123,878
|
|
|
$
|
(14,143
|
)
|
|
$
|
304,501
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed indexed annuities
|
$
|
1,550,805
|
|
|
$
|
(33,754
|
)
|
|
|
|
|
|
|
|
$
|
1,517,051
|
|
||||||
AFS embedded derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total liabilities at Level 3 fair value
|
$
|
1,550,805
|
|
|
$
|
(33,754
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,517,051
|
|
(a)
|
The net transfers in and out of Level 3 during the
three months ended December 31, 2012
were exclusively to or from Level 2.
|
|
Three months ended December 31, 2013
|
||||||||||||||
|
Purchases
|
|
Sales
|
|
Settlements
|
|
Net Purchases, Sales, & Settlements
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Asset-backed securities
|
$
|
5,038
|
|
|
$
|
—
|
|
|
$
|
(19
|
)
|
|
$
|
5,019
|
|
Commercial mortgage-backed securities
|
—
|
|
|
—
|
|
|
(22
|
)
|
|
(22
|
)
|
||||
Corporates
|
152,684
|
|
|
—
|
|
|
(533
|
)
|
|
152,151
|
|
||||
Municipal
|
35,000
|
|
|
—
|
|
|
—
|
|
|
35,000
|
|
||||
Other invested assets
|
77,755
|
|
|
—
|
|
|
(35,119
|
)
|
|
42,636
|
|
||||
Total assets at fair value
|
$
|
270,477
|
|
|
$
|
—
|
|
|
$
|
(35,693
|
)
|
|
$
|
234,784
|
|
|
Three months ended December 30, 2012
|
||||||||||||||
|
Purchases
|
|
Sales
|
|
Settlements
|
|
Net Purchases, Sales, & Settlements
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Asset-backed securities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(18
|
)
|
|
$
|
(18
|
)
|
Commercial mortgage-backed securities
|
1,026
|
|
|
—
|
|
|
(20
|
)
|
|
1,006
|
|
||||
Corporates
|
133,175
|
|
|
(9,561
|
)
|
|
(724
|
)
|
|
122,890
|
|
||||
Total assets at fair value
|
$
|
134,201
|
|
|
$
|
(9,561
|
)
|
|
$
|
(762
|
)
|
|
$
|
123,878
|
|
|
|
VOBA
|
|
DAC
|
|
Total
|
||||||
Balance at September 30, 2012
|
|
$
|
104,320
|
|
|
$
|
169,223
|
|
|
$
|
273,543
|
|
Deferrals
|
|
—
|
|
|
35,697
|
|
|
35,697
|
|
|||
Less: Amortization related to:
|
|
|
|
|
|
|
||||||
Unlocking
|
|
9,310
|
|
|
2,100
|
|
|
11,410
|
|
|||
Interest
|
|
5,347
|
|
|
2,327
|
|
|
7,674
|
|
|||
Other amortization
|
|
(73,536
|
)
|
|
(15,059
|
)
|
|
(88,595
|
)
|
|||
Add: Adjustment for unrealized investment gains/losses
|
|
31,173
|
|
|
(3,212
|
)
|
|
27,961
|
|
|||
Balance at December 31, 2012
|
|
$
|
76,614
|
|
|
$
|
191,076
|
|
|
$
|
267,690
|
|
|
|
VOBA
|
|
DAC
|
|
Total
|
||||||
Balance at September 30, 2013
|
|
$
|
225,289
|
|
|
$
|
338,469
|
|
|
$
|
563,758
|
|
Deferrals
|
|
—
|
|
|
52,552
|
|
|
52,552
|
|
|||
Less: Amortization related to:
|
|
|
|
|
|
|
||||||
Unlocking
|
|
11,656
|
|
|
3,427
|
|
|
15,083
|
|
|||
Interest
|
|
3,686
|
|
|
3,339
|
|
|
7,025
|
|
|||
Other amortization
|
|
(29,218
|
)
|
|
(15,782
|
)
|
|
(45,000
|
)
|
|||
Add: Adjustment for unrealized investment gains/losses
|
|
1,741
|
|
|
6,285
|
|
|
8,026
|
|
|||
Balance at December 31, 2013
|
|
$
|
213,154
|
|
|
$
|
388,290
|
|
|
$
|
601,444
|
|
|
|
Three months ended
|
||||||
|
|
December 31, 2013
|
|
December 31, 2012
|
||||
FGL Plans
|
|
|
|
|
||||
Stock options
|
|
$
|
11
|
|
|
$
|
—
|
|
Restricted shares
|
|
32
|
|
|
—
|
|
||
Performance restricted stock units
|
|
148
|
|
|
—
|
|
||
Unrestricted shares
|
|
991
|
|
|
—
|
|
||
|
|
1,182
|
|
|
—
|
|
||
FGLH Plans
|
|
|
|
|
||||
Stock Incentive Plan - stock options
|
|
2,765
|
|
|
690
|
|
||
2011 DEP
|
|
261
|
|
|
207
|
|
||
Amended and Restated Stock Incentive Plan - stock options
|
|
2,290
|
|
|
—
|
|
||
Amended and Restated Stock Incentive Plan - restricted stock units
|
|
719
|
|
|
—
|
|
||
2012 DEP
|
|
113
|
|
|
—
|
|
||
Total stock compensation expense
|
|
7,330
|
|
|
897
|
|
||
Related tax benefit
|
|
2,566
|
|
|
314
|
|
||
Net stock compensation expense
|
|
$
|
4,764
|
|
|
$
|
583
|
|
|
|
Unrecognized Compensation Expense
|
|
Weighted Average Recognition Period in Years
|
||
FGL Plans
|
|
|
|
|
||
Stock options
|
|
$
|
620
|
|
|
3
|
Restricted shares
|
|
1,793
|
|
|
3
|
|
Performance restricted stock units
|
|
7,824
|
|
|
2.8
|
|
Unrestricted shares
|
|
—
|
|
|
N/A
|
|
|
|
10,237
|
|
|
|
|
FGLH Plans
|
|
|
|
|
||
Stock Incentive Plan
|
|
1,960
|
|
|
0.7
|
|
2011 DEP
|
|
277
|
|
|
0.2
|
|
Amended and Restated Stock Incentive Plan - stock options
|
|
2,784
|
|
|
1.8
|
|
Amended and Restated Stock Incentive Plan - restricted stock units
|
|
2,091
|
|
|
2
|
|
2012 DEP
|
|
1,082
|
|
|
2.2
|
|
|
|
8,194
|
|
|
0
|
|
Total unrecognized stock compensation expense
|
|
$
|
18,431
|
|
|
2.3
|
Stock Option Awards
|
|
Options
|
|
Weighted Average Exercise Price
|
|
Weighted
Average Grant
Date Fair Value
|
|||||
Stock options outstanding at September 30, 2013
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Granted
|
|
191
|
|
|
17.00
|
|
|
3.30
|
|
||
Forfeited or expired
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Stock options outstanding at December 31, 2013
|
|
191
|
|
|
17.00
|
|
|
3.30
|
|
||
Exercisable at December 31, 2013
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Vested or expected to vest at December 31, 2013
|
|
191
|
|
|
17.00
|
|
|
3.30
|
|
|
2013
|
Risk-free interest rate
|
1.4%
|
Assumed dividend yield
|
1.5%
|
Expected option term
|
4.5 years
|
Volatility
|
25%
|
Restricted Stock Awards
|
|
Shares
|
|
Average Grant
Date Fair Value
|
|||
Restricted shares outstanding at September 30, 2013
|
|
—
|
|
|
$
|
—
|
|
Granted
|
|
107
|
|
|
17.00
|
|
|
Forfeited or expired
|
|
—
|
|
|
—
|
|
|
Restricted shares outstanding at December 31, 2013
|
|
107
|
|
|
17.00
|
|
|
Exercisable at December 31, 2013
|
|
—
|
|
|
—
|
|
|
Vested or expected to vest at December 31, 2013
|
|
107
|
|
|
17.00
|
|
|
|
FGLH
|
|||||
Stock Option Awards
|
|
Options
|
|
Weighted Average Exercise Price (a)
|
|||
Stock options outstanding at September 30, 2013
|
|
335
|
|
|
$
|
44.23
|
|
Granted
|
|
—
|
|
|
—
|
|
|
Exercised
|
|
(28
|
)
|
|
41.79
|
|
|
Forfeited or expired
|
|
(1
|
)
|
|
45.55
|
|
|
Stock options outstanding at December 31, 2013
|
|
306
|
|
|
44.44
|
|
|
Exercisable at December 31, 2013
|
|
129
|
|
|
42.56
|
|
|
Vested or expected to vest at December 31, 2013
|
|
296
|
|
|
44.40
|
|
(a)
|
The exercise price is based on the value of FGLH’s common stock, not the value of the Company’s common stock. The fair value of FGLH stock at December 31, 2013 is
$83.67
.
|
Restricted Stock Awards
|
|
Shares
|
|
Average Grant
Date Fair Value (a)
|
|||
Restricted shares outstanding at September 30, 2013
|
|
46
|
|
|
$
|
49.60
|
|
Granted
|
|
—
|
|
|
—
|
|
|
Exercised
|
|
(15
|
)
|
|
49.45
|
|
|
Forfeited or expired
|
|
—
|
|
|
—
|
|
|
Restricted shares outstanding at December 31, 2013
|
|
31
|
|
|
49.68
|
|
|
Exercisable at December 31, 2013
|
|
—
|
|
|
—
|
|
|
Restricted stock vested or expected to vest at December 31, 2013
|
|
28
|
|
|
49.58
|
|
(a)
|
Fair value is based on the value of FGLH’s common stock, not the value of the Company’s common stock.
|
|
Three months ended
|
||||||||||||||
|
December 31, 2013
|
|
December 31, 2012
|
||||||||||||
|
Net Premiums Earned
|
|
Net Benefits Incurred
|
|
Net Premiums Earned
|
|
Net Benefits Incurred
|
||||||||
Direct
|
$
|
67,753
|
|
|
$
|
296,480
|
|
|
$
|
72,448
|
|
|
$
|
139,560
|
|
Assumed
|
9,271
|
|
|
6,086
|
|
|
12,097
|
|
|
6,559
|
|
||||
Ceded
|
(63,319
|
)
|
|
(85,710
|
)
|
|
(70,749
|
)
|
|
(62,475
|
)
|
||||
Net
|
$
|
13,705
|
|
|
$
|
216,856
|
|
|
$
|
13,796
|
|
|
$
|
83,644
|
|
Revenues:
|
|
Three months ended December 31, 2013
|
||
Premiums
|
|
$
|
232
|
|
Net investment income
|
|
15,154
|
|
|
Net investment gains
|
|
7,848
|
|
|
Insurance and investment product fees
|
|
1,310
|
|
|
Total Revenues
|
|
24,544
|
|
|
|
|
|
||
Benefits and expenses:
|
|
|
||
Benefits and other changes in policy reserves
|
|
(18,605
|
)
|
|
Acquisition & operating expenses, net of deferrals
|
|
(2,559
|
)
|
|
Amortization of intangibles
|
|
—
|
|
|
Total benefits and expenses
|
|
(21,164
|
)
|
|
|
|
|
||
Operating income
|
|
$
|
3,380
|
|
|
|
|
|
December 31, 2013
|
|||||||||||
Type
|
|
Balance Sheet Classification
|
|
Asset carrying value
|
|
Accrued Investment Income
|
|
Total carrying value
|
|
||||||
Salus collateralized loan obligation (“CLO”)
|
|
Fixed Maturities, available for sale
|
|
$
|
241,019
|
|
|
$
|
635
|
|
|
$
|
241,654
|
|
|
Salus 2013 participations
|
|
Other Invested Assets
|
|
199,636
|
|
|
1,517
|
|
|
201,153
|
|
|
|||
HGI energy loan
|
|
Related Party Loans, including accrued investment income
|
|
70,000
|
|
|
—
|
|
|
70,000
|
|
|
|||
Salus 2012 participations
|
|
Related Party Loans, including accrued investment income
|
|
5,944
|
|
|
83
|
|
|
6,027
|
|
|
|||
Salus promissory note
|
|
Related Party Loans, including accrued investment income
|
|
20,000
|
|
|
368
|
|
|
20,368
|
|
|
|||
Salus revolver
|
|
Related Party Loans, including accrued investment income
|
|
—
|
|
|
46
|
|
|
46
|
|
|
|
|
|
|
September 30, 2013
|
|||||||||||
Type
|
|
Balance Sheet Classification
|
|
Asset carrying value
|
|
Accrued Investment Income
|
|
Total carrying value
|
|
||||||
Salus collateralized loan obligation (“CLO”)
|
|
Fixed Maturities, available for sale
|
|
$
|
241,482
|
|
|
$
|
427
|
|
|
$
|
241,909
|
|
|
Salus 2013 participations
|
|
Other Invested Assets
|
|
157,000
|
|
|
1,517
|
|
|
158,517
|
|
|
|||
HGI energy loan
|
|
Related Party Loans, including accrued investment income
|
|
70,000
|
|
|
1,575
|
|
|
71,575
|
|
|
|||
Salus 2012 participations
|
|
Related Party Loans, including accrued investment income
|
|
27,287
|
|
|
124
|
|
|
27,411
|
|
|
|||
Salus promissory note
|
|
Related Party Loans, including accrued investment income
|
|
20,000
|
|
|
12
|
|
|
20,012
|
|
|
|||
Salus revolver
|
|
Related Party Loans, including accrued investment income
|
|
—
|
|
|
46
|
|
|
46
|
|
|
|
|
|
|
Three months ended December 31,
|
|
||||||
|
|
|
|
2013
|
|
2012
|
|
||||
Type
|
|
Investment Income Classification
|
|
Net investment income
|
|
Net investment income
|
|
||||
Salus collateralized loan obligation (“CLO”)
|
|
Fixed Maturities
|
|
$
|
2,829
|
|
|
$
|
—
|
|
|
Salus 2013 participations
|
|
Other Invested Assets
|
|
4,367
|
|
|
—
|
|
|
||
HGI energy loan
|
|
Related Party Loans
|
|
1,575
|
|
|
—
|
|
|
||
Salus 2012 participations
|
|
Related Party Loans
|
|
261
|
|
|
1,803
|
|
|
||
Salus promissory note
|
|
Related Party Loans
|
|
353
|
|
|
353
|
|
|
||
Salus revolver
|
|
Related Party Loans
|
|
139
|
|
|
27
|
|
|
|
Three months ended December 31,
|
||||||
|
2013
|
|
2012
|
||||
Net income attributable to common shares - basic and diluted
|
$
|
42,694
|
|
|
$
|
110,605
|
|
|
|
|
|
||||
Weighted-average common shares outstanding - basic
|
49,142
|
|
|
47,000
|
|
||
Dilutive effect of unvested restricted stock and unvested performance restricted stock
|
119
|
|
|
—
|
|
||
Dilutive effect of stock options
|
3
|
|
|
—
|
|
||
Weighted-average shares outstanding - diluted
|
49,264
|
|
|
47,000
|
|
||
|
|
|
|
||||
Net income per common share:
|
|
|
|
||||
Basic
|
$
|
0.87
|
|
|
$
|
2.35
|
|
Diluted
|
$
|
0.87
|
|
|
$
|
2.35
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Annuity Sales
|
IUL Sales
|
||||||||||
(in millions)
|
Fiscal 2013
|
Fiscal 2014
|
Fiscal 2013
|
Fiscal 2014
|
||||||||
Q1
|
$
|
247.3
|
|
$
|
540.6
|
|
$
|
5.5
|
|
$
|
5.0
|
|
|
Fiscal Quarter
|
|
|
||||||||
|
2014
|
|
2013
|
|
Increase / (Decrease)
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Premiums
|
$
|
13.7
|
|
|
$
|
13.8
|
|
|
$
|
(0.1
|
)
|
Net investment income
|
183.4
|
|
|
170.3
|
|
|
13.1
|
|
|||
Net investment gains
|
123.4
|
|
|
146.5
|
|
|
(23.1
|
)
|
|||
Insurance and investment product fees and other
|
15.6
|
|
|
13.7
|
|
|
1.9
|
|
|||
Total revenues
|
336.1
|
|
|
344.3
|
|
|
(8.2
|
)
|
|||
Benefits and other changes in policy reserves
|
216.9
|
|
|
83.6
|
|
|
133.3
|
|
|||
Acquisition and operating expenses, net of deferrals
|
26.0
|
|
|
27.0
|
|
|
(1.0
|
)
|
|||
Amortization of intangibles
|
22.9
|
|
|
69.5
|
|
|
(46.6
|
)
|
|||
Total benefits and expenses
|
265.8
|
|
|
180.1
|
|
|
85.7
|
|
|||
Operating Income
|
70.3
|
|
|
164.2
|
|
|
(93.9
|
)
|
|||
Interest expense
|
(5.6
|
)
|
|
—
|
|
|
(5.6
|
)
|
|||
Gain on contingent purchase price reduction
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other income
|
—
|
|
|
0.2
|
|
|
(0.2
|
)
|
|||
Income before income taxes
|
64.7
|
|
|
164.4
|
|
|
(99.7
|
)
|
|||
Income tax expense
|
(22.0
|
)
|
|
(53.8
|
)
|
|
31.8
|
|
|||
Net income
|
$
|
42.7
|
|
|
$
|
110.6
|
|
|
$
|
(67.9
|
)
|
|
Fiscal Quarter
|
||||||
(in $ millions)
|
2014
|
|
2013
|
||||
Q1
|
$
|
1,262.0
|
|
|
$
|
2,564.4
|
|
|
Fiscal Quarter
|
||||
|
2014
|
|
2013
|
||
Average yield on invested assets
|
4.8
|
%
|
|
4.3
|
%
|
Less: Interest credited and option cost
|
3.2
|
%
|
|
3.2
|
%
|
Net investment spread
|
1.6
|
%
|
|
1.1
|
%
|
|
Fiscal Quarter
|
|
Increase / (Decrease)
|
||||||||
|
2014
|
|
2013
|
|
2014 compared to 2013
|
||||||
Call options:
|
|
|
|
|
|
||||||
Gain (loss) on option expiration
|
$
|
47
|
|
|
$
|
22.9
|
|
|
$
|
24.1
|
|
Change in unrealized gain (loss)
|
55.8
|
|
|
(43.8
|
)
|
|
99.6
|
|
|||
Futures contracts:
|
|
|
|
|
|
||||||
Gain (loss) on futures contracts expiration
|
13.1
|
|
|
(7.2
|
)
|
|
20.3
|
|
|||
Change in unrealized gain (loss)
|
—
|
|
|
2.5
|
|
|
(2.5
|
)
|
|||
|
$
|
115.9
|
|
|
$
|
(25.6
|
)
|
|
$
|
141.5
|
|
|
Fiscal Quarter
|
||||
|
2014
|
|
2013
|
||
S&P 500 Index:
|
|
|
|
||
Point-to-point strategy
|
5.2
|
%
|
|
4.9
|
%
|
Monthly average strategy
|
5.4
|
%
|
|
5.0
|
%
|
Monthly point-to-point strategy
|
8.4
|
%
|
|
2.9
|
%
|
3 Year high water mark
|
18.8
|
%
|
|
18.7
|
%
|
|
|
Fiscal Quarter
|
|
Increase / (Decrease)
|
|
||||||||
|
|
2014
|
|
2013
|
|
2014 compared to 2013
|
|
||||||
FIA market value option liability
|
|
$
|
74.5
|
|
|
$
|
(68.1
|
)
|
|
$
|
142.6
|
|
|
FIA present value future credits & guarantee liability change
|
|
(47.7
|
)
|
|
(18.6
|
)
|
|
(29.1
|
)
|
|
|||
Index credits, interest credited & bonuses
|
|
149.3
|
|
|
133.2
|
|
|
16.1
|
|
|
|||
Annuity Payments
|
|
52.6
|
|
|
59.9
|
|
|
(7.3
|
)
|
|
|||
Other policy benefits and reserve movements
|
|
(11.8
|
)
|
|
(22.8
|
)
|
|
11.0
|
|
|
|||
Total benefits and other changes in policy reserves
|
|
$
|
216.9
|
|
|
$
|
83.6
|
|
|
$
|
133.3
|
|
|
|
|
Fiscal Quarter
|
||||||
Reconciliation to income before income taxes:
|
|
2014
|
|
2013
|
||||
Income before taxes
|
|
$
|
64.7
|
|
|
$
|
164.4
|
|
Interest expense and other
|
|
5.6
|
|
|
(0.2
|
)
|
||
Operating income (loss)
|
|
70.3
|
|
|
164.2
|
|
||
Effect of investment (gains) losses, net of offsets
|
|
(9.8
|
)
|
|
(125.7
|
)
|
||
Effect of change in FIA embedded derivative discount rate, net of offsets
|
|
(20.4
|
)
|
|
(6.6
|
)
|
||
Effects of transaction-related reinsurance
|
|
4.0
|
|
|
—
|
|
||
Pretax AOI
|
|
$
|
44.1
|
|
|
$
|
31.9
|
|
|
|
|
|
|
||||
AAUM
|
|
$
|
15,588.4
|
|
|
$
|
16,349.3
|
|
Return on AAUM
|
|
0.3
|
%
|
|
0.2
|
%
|
(dollars in millions)
|
|
December 31, 2013
|
|
September 30, 2013
|
||||||||||
Asset Class
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
Corporates
|
|
$
|
10,046.6
|
|
|
58.3
|
%
|
|
$
|
9,418.3
|
|
|
58.1
|
%
|
ABS
|
|
1,842.8
|
|
|
10.7
|
%
|
|
1,764.6
|
|
|
10.9
|
%
|
||
Non-agency RMBS
|
|
1,652.0
|
|
|
9.6
|
%
|
|
1,368.0
|
|
|
8.4
|
%
|
||
Municipals
|
|
1,121.4
|
|
|
6.5
|
%
|
|
1,007.0
|
|
|
6.2
|
%
|
||
U.S. Government
|
|
711.0
|
|
|
4.1
|
%
|
|
1,001.8
|
|
|
6.2
|
%
|
||
Other (primarily derivatives, policy loans and CML)
|
|
611.2
|
|
|
3.6
|
%
|
|
410.0
|
|
|
2.5
|
%
|
||
Commercial mortgage-backed securities
|
|
444.6
|
|
|
2.6
|
%
|
|
454.3
|
|
|
2.8
|
%
|
||
Hybrids
|
|
418.1
|
|
|
2.4
|
%
|
|
428.8
|
|
|
2.6
|
%
|
||
Equities
(a)
|
|
286.9
|
|
|
1.7
|
%
|
|
271.1
|
|
|
1.7
|
%
|
||
Agency RMBS
|
|
91.0
|
|
|
0.5
|
%
|
|
98.6
|
|
|
0.6
|
%
|
||
Total investments
|
|
$
|
17,225.6
|
|
|
100.0
|
%
|
|
$
|
16,222.5
|
|
|
100.0
|
%
|
(dollars in millions)
|
|
December 31, 2013
|
|
September 30, 2013
|
||||||||||
Rating
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
AAA
|
|
$
|
1,683.1
|
|
|
10.3
|
%
|
|
$
|
1,924.3
|
|
|
12.4
|
%
|
AA
|
|
2,390.6
|
|
|
14.7
|
%
|
|
2,423.1
|
|
|
15.6
|
%
|
||
A
|
|
4,039.4
|
|
|
24.7
|
%
|
|
3,791.3
|
|
|
24.4
|
%
|
||
BBB
|
|
5,968.2
|
|
|
36.6
|
%
|
|
5,508.6
|
|
|
35.4
|
%
|
||
BB
(a)
|
|
528.0
|
|
|
3.2
|
%
|
|
468.2
|
|
|
3.0
|
%
|
||
B and below
(b)
|
|
1,718.2
|
|
|
10.5
|
%
|
|
1,426.0
|
|
|
9.2
|
%
|
||
Total
|
|
$
|
16,327.5
|
|
|
100.0
|
%
|
|
$
|
15,541.5
|
|
|
100.0
|
%
|
NAIC Designation
|
|
NRSRO Equivalent Rating
|
1
|
|
AAA/AA/A
|
2
|
|
BBB
|
3
|
|
BB
|
4
|
|
B
|
5
|
|
CCC and lower
|
6
|
|
In or near default
|
(dollars in millions)
|
|
December 31, 2013
|
|||||||||
NAIC Designation
|
|
Amortized Cost
|
|
Fair Value
|
|
Percent of Total Fair Value
|
|||||
1
|
|
$
|
9,614.5
|
|
|
$
|
9,812.0
|
|
|
60.0
|
%
|
2
|
|
5,743.0
|
|
|
5,761.4
|
|
|
35.3
|
%
|
||
3
|
|
399.1
|
|
|
408.1
|
|
|
2.5
|
%
|
||
4
|
|
270.5
|
|
|
271.5
|
|
|
1.7
|
%
|
||
5
|
|
74.8
|
|
|
73.7
|
|
|
0.5
|
%
|
||
6
|
|
0.9
|
|
|
0.9
|
|
|
—
|
%
|
||
|
|
$
|
16,102.8
|
|
|
$
|
16,327.7
|
|
|
100.0
|
%
|
|
|
September 30, 2013
|
|||||||||
NAIC Designation
|
|
Amortized Cost
|
|
Fair Value
|
|
Percent of Total Fair Value
|
|||||
1
|
|
$
|
9,342.0
|
|
|
$
|
9,554.0
|
|
|
61.5
|
%
|
2
|
|
5,362.2
|
|
|
5,379.3
|
|
|
34.6
|
%
|
||
3
|
|
405.0
|
|
|
415.4
|
|
|
2.7
|
%
|
||
4
|
|
132.7
|
|
|
133.0
|
|
|
0.9
|
%
|
||
5
|
|
53.9
|
|
|
53.8
|
|
|
0.3
|
%
|
||
6
|
|
5.9
|
|
|
6.0
|
|
|
—
|
%
|
||
|
|
$
|
15,301.7
|
|
|
$
|
15,541.5
|
|
|
100.0
|
%
|
|
|
December 31, 2013
|
|
September 30, 2013
|
||||||||||||
(in millions)
|
|
Amortized Cost
|
|
Fair Value
|
|
Amortized Cost
|
|
Fair Value
|
||||||||
Corporate, Non-structured Hybrids, Municipal and U.S. Government securities:
|
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
|
$
|
345.5
|
|
|
$
|
348.1
|
|
|
$
|
978.5
|
|
|
$
|
982.4
|
|
Due after one year through five years
|
|
3,059.2
|
|
|
3,133.2
|
|
|
2,739.1
|
|
|
2,805.8
|
|
||||
Due after five years through ten years
|
|
3,315.1
|
|
|
3,332.1
|
|
|
2,972.4
|
|
|
3,000.9
|
|
||||
Due after ten years
|
|
5,444.4
|
|
|
5,448.3
|
|
|
5,007.5
|
|
|
5,037.5
|
|
||||
Subtotal
|
|
$
|
12,164.2
|
|
|
$
|
12,261.7
|
|
|
$
|
11,697.5
|
|
|
$
|
11,826.6
|
|
Other securities which provide for periodic payments:
|
|
|
|
|
|
|
|
|
||||||||
Asset-backed securities
|
|
$
|
1,830.2
|
|
|
$
|
1,842.8
|
|
|
$
|
1,745.2
|
|
|
$
|
1,764.6
|
|
Commercial-mortgage-backed securities
|
|
422.6
|
|
|
444.6
|
|
|
431.3
|
|
|
454.3
|
|
||||
Structured hybrids
|
|
32.8
|
|
|
35.5
|
|
|
27.1
|
|
|
29.4
|
|
||||
Agency residential mortgage-backed securities
|
|
88.9
|
|
|
91.0
|
|
|
96.5
|
|
|
98.6
|
|
||||
Non-agency residential mortgage-backed securities
|
|
1,564.1
|
|
|
1,652.0
|
|
|
1,304.0
|
|
|
1,368.0
|
|
||||
Total fixed maturity available-for-sale securities
|
|
$
|
16,102.8
|
|
|
$
|
16,327.6
|
|
|
$
|
15,301.6
|
|
|
$
|
15,541.5
|
|
|
NAIC Designation
|
|
NRSRO
|
|
Vintage
|
|||||||||
As of December 31, 2013
|
1
|
|
96.8
|
%
|
|
AAA
|
|
3.7
|
%
|
|
2007
|
|
17.8
|
%
|
|
2
|
|
2.4
|
%
|
|
AA
|
|
1.8
|
%
|
|
2006
|
|
31.9
|
%
|
|
3
|
|
0.6
|
%
|
|
A
|
|
7.7
|
%
|
|
2005 and prior
|
|
50.3
|
%
|
|
4
|
|
0.2
|
%
|
|
BBB
|
|
2.6
|
%
|
|
|
|
100.0
|
%
|
|
5
|
|
—
|
%
|
|
BB and below
|
|
84.2
|
%
|
|
|
|
|
|
|
6
|
|
—
|
%
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||
As of September 30, 2013
|
1
|
|
92.5
|
%
|
|
AAA
|
|
4.8
|
%
|
|
2007
|
|
21.8
|
%
|
|
2
|
|
6.0
|
%
|
|
AA
|
|
2.3
|
%
|
|
2006
|
|
23.9
|
%
|
|
3
|
|
0.7
|
%
|
|
A
|
|
8.7
|
%
|
|
2005 and prior
|
|
54.3
|
%
|
|
4
|
|
0.5
|
%
|
|
BBB
|
|
3.9
|
%
|
|
|
|
100.0
|
%
|
|
5
|
|
0.3
|
%
|
|
BB and below
|
|
80.3
|
%
|
|
|
|
|
|
|
6
|
|
—
|
%
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
December 31, 2013
|
|
September 30, 2013
|
||||||||||
Asset Class
|
|
Fair Value
|
|
Percent
|
|
Fair Value
|
|
Percent
|
||||||
ABS CLO
|
|
$
|
1,692.7
|
|
|
91.9
|
%
|
|
$
|
1,569.4
|
|
|
88.9
|
%
|
ABS Car Loan
|
|
11.9
|
|
|
0.6
|
%
|
|
11.7
|
|
|
0.7
|
%
|
||
ABS Home Equity
|
|
8.8
|
|
|
0.5
|
%
|
|
68.1
|
|
|
3.9
|
%
|
||
ABS Other
|
|
121.5
|
|
|
6.6
|
%
|
|
107.3
|
|
|
6.1
|
%
|
||
ABS Utility
|
|
7.9
|
|
|
0.4
|
%
|
|
8.0
|
|
|
0.5
|
%
|
||
Total ABS
|
|
$
|
1,842.8
|
|
|
100.0
|
%
|
|
$
|
1,764.5
|
|
|
100.0
|
%
|
|
December 31, 2013
|
|||||||||||||
(in millions)
|
Number of securities
|
|
Amortized Cost
|
|
Unrealized Losses
|
|
Fair Value
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
United States Government full faith and credit
|
21
|
|
|
$
|
345.1
|
|
|
$
|
(6.2
|
)
|
|
$
|
338.9
|
|
United States Government sponsored agencies
|
14
|
|
|
11.6
|
|
|
(0.1
|
)
|
|
11.5
|
|
|||
United States municipalities, states and territories
|
87
|
|
|
691.3
|
|
|
(45.0
|
)
|
|
646.3
|
|
|||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Finance, insurance and real estate
|
180
|
|
|
1,941.0
|
|
|
(86.9
|
)
|
|
1,854.1
|
|
|||
Manufacturing, construction and mining
|
56
|
|
|
536.8
|
|
|
(31.8
|
)
|
|
505.0
|
|
|||
Utilities and related sectors
|
83
|
|
|
657.1
|
|
|
(23.4
|
)
|
|
633.7
|
|
|||
Wholesale/retail trade
|
45
|
|
|
362.3
|
|
|
(13.9
|
)
|
|
348.4
|
|
|||
Services, media and other
|
51
|
|
|
525.3
|
|
|
(33.2
|
)
|
|
492.1
|
|
|||
Hybrid securities
|
11
|
|
|
117.7
|
|
|
(3.2
|
)
|
|
114.5
|
|
|||
Non-agency RMBS
|
84
|
|
|
421.0
|
|
|
(11.3
|
)
|
|
409.7
|
|
|||
CMBS
|
16
|
|
|
38.5
|
|
|
(3.2
|
)
|
|
35.3
|
|
|||
ABS
|
76
|
|
|
632.6
|
|
|
(8.2
|
)
|
|
624.4
|
|
|||
Equity securities
|
19
|
|
|
152.4
|
|
|
(13.8
|
)
|
|
138.6
|
|
|||
|
743
|
|
|
$
|
6,432.7
|
|
|
$
|
(280.2
|
)
|
|
$
|
6,152.5
|
|
|
September 30, 2013
|
|||||||||||||
(in millions)
|
Number of securities
|
|
Amortized Cost
|
|
Unrealized Losses
|
|
Fair Value
|
|||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
|
|||||||
United States Government full faith and credit
|
18
|
|
|
$
|
758.8
|
|
|
$
|
(3.9
|
)
|
|
$
|
754.9
|
|
United States Government sponsored agencies
|
17
|
|
|
10.1
|
|
|
(0.2
|
)
|
|
9.9
|
|
|||
United States municipalities, states and territories
|
71
|
|
|
518.5
|
|
|
(40.8
|
)
|
|
477.7
|
|
|||
Corporate securities:
|
|
|
|
|
|
|
|
|||||||
Finance, insurance and real estate
|
170
|
|
|
1,867.8
|
|
|
(84.2
|
)
|
|
1,783.6
|
|
|||
Manufacturing, construction and mining
|
48
|
|
|
537.1
|
|
|
(36.0
|
)
|
|
501.1
|
|
|||
Utilities and related sectors
|
73
|
|
|
546.8
|
|
|
(19.2
|
)
|
|
527.6
|
|
|||
Wholesale/retail trade
|
45
|
|
|
362.9
|
|
|
(13.6
|
)
|
|
349.3
|
|
|||
Services, media and other
|
50
|
|
|
513.7
|
|
|
(32.1
|
)
|
|
481.6
|
|
|||
Hybrid securities
|
6
|
|
|
55.3
|
|
|
(3.3
|
)
|
|
52.0
|
|
|||
Non-agency RMBS
|
85
|
|
|
408.5
|
|
|
(13.4
|
)
|
|
395.1
|
|
|||
CMBS
|
10
|
|
|
33.0
|
|
|
(1.6
|
)
|
|
31.4
|
|
|||
ABS
|
56
|
|
|
416.0
|
|
|
(5.2
|
)
|
|
410.8
|
|
|||
Equity securities
|
17
|
|
|
161.1
|
|
|
(10.3
|
)
|
|
150.8
|
|
|||
|
666
|
|
|
$
|
6,189.6
|
|
|
$
|
(263.8
|
)
|
|
$
|
5,925.8
|
|
|
December 31, 2013
|
|
September 30, 2013
|
||||||||||||||||||||||||||
|
Number of securities
|
|
Amortized Cost
|
|
Fair Value
|
|
Gross Unrealized Losses
|
|
Number of securities
|
|
Amortized Cost
|
|
Fair Value
|
|
Gross Unrealized Losses
|
||||||||||||||
Investment grade:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Less than six months
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
9
|
|
|
$
|
78.3
|
|
|
$
|
60.9
|
|
|
$
|
(17.4
|
)
|
Six months or more and less than twelve months
|
11
|
|
|
99.2
|
|
|
77.0
|
|
|
(22.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Twelve months or greater
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
0.6
|
|
|
—
|
|
|
(0.6
|
)
|
||||||
Total investment grade
|
11
|
|
|
99.2
|
|
|
77.0
|
|
|
(22.2
|
)
|
|
10
|
|
|
78.9
|
|
|
60.9
|
|
|
(18.0
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Below investment grade:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Less than six months
|
1
|
|
|
0.4
|
|
|
0.1
|
|
|
(0.3
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Six months or more and less than twelve months
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Twelve months or greater
|
3
|
|
|
2.4
|
|
|
—
|
|
|
(2.4
|
)
|
|
2
|
|
|
0.4
|
|
|
—
|
|
|
(0.4
|
)
|
||||||
Total below investment grade
|
6
|
|
|
2.8
|
|
|
0.1
|
|
|
(2.7
|
)
|
|
4
|
|
|
0.4
|
|
|
—
|
|
|
(0.4
|
)
|
||||||
Total
|
17
|
|
|
$
|
102.0
|
|
|
$
|
77.1
|
|
|
$
|
(24.9
|
)
|
|
14
|
|
|
$
|
79.3
|
|
|
$
|
60.9
|
|
|
$
|
(18.4
|
)
|
|
|
Fiscal Quarter
|
|
Increase / (Decrease)
|
||||||||
Cash provided by (used in):
|
|
2014
|
|
2013
|
|
2014 compared to 2013
|
||||||
|
|
|
|
|
|
|
||||||
Operating activities
|
|
$
|
38.0
|
|
|
$
|
72.2
|
|
|
$
|
(34.2
|
)
|
Investing activities
|
|
(938.1
|
)
|
|
(514.6
|
)
|
|
(423.5
|
)
|
|||
Financing activities
|
|
455.2
|
|
|
(5.3
|
)
|
|
460.5
|
|
|||
Net increase in cash and cash equivalents
|
|
$
|
(444.9
|
)
|
|
$
|
(447.7
|
)
|
|
$
|
2.8
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
•
|
Management of the business has primary responsibility for the day-to-day management of risk.
|
•
|
The risk management function has the primary responsibility to align risk taking with strategic planning through risk tolerance and limit setting.
|
•
|
The internal audit function provides an ongoing independent (i.e. outside of the risk organization) and objective assessment of the effectiveness of internal controls, including financial and operational risk
|
•
|
At-risk limits on sensitivities of earnings and regulatory capital to the capital markets provide the fundamental framework to manage capital markets risks including the risk of asset / liability mismatch;
|
•
|
Duration and convexity mismatch limits;
|
•
|
Credit risk concentration limits; and
|
•
|
Investment and derivative guidelines.
|
•
|
Regulatory Capital Sensitivities: the potential reduction, under a moderate capital markets stress scenario, of the excess of available statutory capital above the minimum required under the NAIC regulatory RBC methodology; and
|
•
|
Earnings Sensitivities: the potential reduction in results of operations under a moderate capital markets stress scenario. Maintaining a consistent level of earnings helps us to finance our operations, support our capital requirements and provide funds to pay dividends to stockholders.
|
•
|
The timing and amount of redemptions and prepayments in our asset portfolio;
|
•
|
Our derivative portfolio;
|
•
|
Death benefits and other claims payable under the terms of our insurance products;
|
•
|
Lapses and surrenders in our insurance products;
|
•
|
Minimum interest guarantees in our insurance products; and
|
•
|
Book value guarantees in our insurance products.
|
|
|
|
|
December 31, 2013
|
|
September 30, 2013
|
||||||||||||||||||||||||||||
Counterparty
|
|
Credit Rating
(Moody's/S&P) (a) |
|
Notional
Amount |
|
Fair Value
|
|
Collateral
|
|
Net Credit Risk
|
|
Notional
Amount |
|
Fair Value
|
|
Collateral
|
|
Net Credit Risk
|
||||||||||||||||
Merrill Lynch
|
|
NA/A
|
|
$
|
2,157.9
|
|
|
$
|
99.6
|
|
|
$
|
45.1
|
|
|
$
|
54.5
|
|
|
$
|
2,037.8
|
|
|
$
|
70.7
|
|
|
$
|
—
|
|
|
$
|
70.7
|
|
Deutsche Bank
|
|
A2/A
|
|
1,706.8
|
|
|
70.4
|
|
|
—
|
|
|
70.4
|
|
|
1,620.4
|
|
|
51.7
|
|
|
23.0
|
|
|
28.7
|
|
||||||||
Morgan Stanley
|
|
A3/A
|
|
2,379.0
|
|
|
103.1
|
|
|
74.7
|
|
|
28.4
|
|
|
2,264.1
|
|
|
75.7
|
|
|
49.0
|
|
|
26.7
|
|
||||||||
Royal Bank of Scotland
|
|
A3/A
|
|
245.3
|
|
|
16.9
|
|
|
—
|
|
|
16.9
|
|
|
364.3
|
|
|
20.3
|
|
|
—
|
|
|
20.3
|
|
||||||||
Barclay's Bank
|
|
A2/A
|
|
117.8
|
|
|
4.1
|
|
|
—
|
|
|
4.1
|
|
|
120.8
|
|
|
3.4
|
|
|
—
|
|
|
3.4
|
|
||||||||
|
|
|
|
$
|
6,606.8
|
|
|
$
|
294.1
|
|
|
$
|
119.8
|
|
|
$
|
174.3
|
|
|
$
|
6,407.4
|
|
|
$
|
221.8
|
|
|
$
|
72.0
|
|
|
$
|
149.8
|
|
Item 4.
|
Controls and Procedures
|
|
•
|
the accuracy of management’s assumptions and estimates;
|
•
|
the accuracy of our assumptions regarding the fair value and future performance of our investments;
|
•
|
our and our insurance subsidiaries’ ability to maintain or improve financial strength ratings;
|
•
|
our and our insurance subsidiaries’ potential need for additional capital to maintain our and their financial strength and credit ratings and meet other requirements and obligations;
|
•
|
the stock of our primary operating subsidiary is subject to the security interest of its former owner;
|
•
|
our ability to manage our business in a highly regulated industry, which is subject to numerous legal restrictions and regulations;
|
•
|
regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) underwriting of insurance products and regulation of the sale, underwriting and pricing of products and minimum capitalization and statutory reserve requirements for insurance companies, or the ability of our insurance subsidiaries to make cash distributions to us (including dividends or payments on surplus notes those subsidiaries issue to us);
|
•
|
the impact of our reinsurers failing to meet or timely meet their assumed obligations, increasing their rates, or becoming subject to adverse developments that could materially adversely impact their ability to provide reinsurance to us at consistent and economical terms;
|
•
|
restrictions on our ability to use captive reinsurers;
|
•
|
being forced to sell investments at a loss to cover policyholder withdrawals;
|
•
|
the impact of interest rate fluctuations;
|
•
|
the availability of credit or other financings and the impact of equity and credit market volatility and disruptions on both our ability to obtain capital and the value and liquidity of our investments;
|
•
|
changes in the federal income tax laws and regulations which may affect the relative income tax advantages of our products;
|
•
|
increases in our valuation allowance against our deferred tax assets, and restrictions on our ability to fully utilize such assets;
|
•
|
being the target or subject of, and our ability to defend ourselves against or respond to, litigation (including class action litigation), enforcement investigations or regulatory scrutiny;
|
•
|
the performance of third parties including distributors, underwriters, actuarial consultants and other service providers;
|
•
|
the loss of key personnel;
|
•
|
interruption or other operational failures in telecommunication, information technology and other operational systems, or a failure to maintain the security, integrity, confidentiality or privacy of sensitive data residing on such systems;
|
•
|
the continued availability of capital required for our insurance subsidiaries to grow;
|
•
|
the impact on our business of new accounting rules or changes to existing accounting rules;
|
•
|
our risk management policies and procedures could leave us exposed to unidentified or unanticipated risk;
|
•
|
general economic conditions and other factors, including prevailing interest and unemployment rate levels and stock and credit market performance which may affect (among other things) our ability to sell our products and the fair value of our investments, which could result in impairments and OTTI, and certain liabilities, and the lapse rate and profitability of policies;
|
•
|
our ability to protect our intellectual property;
|
•
|
difficulties arising from outsourcing relationships;
|
•
|
the impact on our business of man-made catastrophes, pandemics, and malicious and terrorist acts;
|
•
|
our ability to compete in a highly competitive industry and maintain competitive unit costs;
|
•
|
adverse consequences if the independent contractor status of our IMOs is successfully challenged;
|
•
|
our ability to attract and retain national marketing organizations and independent agents;
|
•
|
adverse tax consequences if we generate passive income in excess of operating expenses;
|
•
|
significant operating and financial restrictions, which may prevent us from capitalizing on business opportunities;
|
•
|
the inability of our subsidiaries and affiliates to generate sufficient cash to service all of their obligations;
|
•
|
our subsidiaries’ ability to pay dividends to us;
|
•
|
the ability to maintain or obtain approval of the IID and other regulatory authorities as required for our operations and those of our insurance subsidiaries; and
|
•
|
the other factors discussed in “Risk Factors”, of our Registration Statement on form S-1, as amended (File No. 333-190880).
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
No.
|
|
Description of Exhibits
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of Fidelity & Guaranty Life (incorporated by reference to our Registration Statement on Form S-8, filed on December 13, 2013 (File No. 333-192849)).
|
3.2
|
|
Amended and Restated Bylaws of Fidelity & Guaranty Life (incorporated by reference to our Registration Statement on Form S-8, filed on December 13, 2013 (File No. 333-192849)).
|
4.1
|
|
Reference is made to Exhibits 3.1 and 3.2.
|
4.2
|
|
Form of Common Stock Certificate (incorporated by reference to our Registration Statement on Form S-1/A, filed on December 3, 2013 (File No. 333-192849)).
|
4.3
|
|
Indenture, dated March 27, 2013, among Fidelity & Guaranty Life Holdings, Inc., as issuer, the Subsidiary Guarantors from time to time parties thereto and Wells Fargo Bank, National Association, as trustee, relating to the 6.375% Senior Notes due 2021 (incorporated by reference to our Registration Statement on Form S-1/A, filed on October 17, 2013 (File No. 333-192849)).
|
4.4
|
|
First Supplemental Indenture, dated March 27, 2013, among Fidelity & Guaranty Life Holdings, Inc., as issuer, the Subsidiary Guarantors from named therein and Wells Fargo Bank, National Association, relating to the 6.375% Senior Notes due 2021 (incorporated by reference to our Registration Statement on Form S-1/A, filed on October 17, 2013 (File No. 333-192849)).
|
4.5*
|
|
Registration Rights Agreement, dated December 18, 2013, between Fidelity & Guaranty Life, and Harbinger Group, Inc.
|
10.1
|
|
Employment Agreement, dated January 27, 2014, between Dennis Vigneau and Fidelity & Guaranty Life Business Services, Inc. (incorporated by reference to our Current Report on Form 8-K, filed on January 28, 2014 (File No. 001-36227)).
|
10.2
|
|
Consent to Change in Reporting Structure and Waiver of Good Reason, dated October 30, 2013, between Leland C. Launer, Jr. and Fidelity & Guaranty Life Business Services, Inc. (incorporated by reference to our Registration Statement on Form S-1/A, filed on November 22, 2013 (File No. 333-190880)).
|
10.3
|
|
Amended and Restated Employment Agreement, dated November 14, 2013, between Fidelity & Guaranty Life Business Services, Inc. and John P. O’Shaughnessy (incorporated by reference to our Registration Statement on Form S-1/A, filed on November 22, 2013 (File No. 333-190880)).
|
10.4
|
|
Employment Agreement, dated November 14, 2013, between Fidelity & Guaranty Life Business Services, Inc. and John Phelps (incorporated by reference to our Registration Statement on Form S-1/A, filed on November 22, 2013 (File No. 333-190880)).
|
10.5
|
|
Amended and Restated Employment Agreement, dated November 14, 2013, between Fidelity & Guaranty Life Business Services, Inc. and Rajesh Krishnan (incorporated by reference to our Registration Statement on Form S-1/A, filed on November 22, 2013 (File No. 333-190880)).
|
10.6
|
|
Employment Agreement, dated November 14, 2013, between Fidelity & Guaranty Life Business Services, Inc. and Wendy J.B. Young (incorporated by reference to our Registration Statement on Form S-1/A, filed on November 22, 2013 (File No. 333-190880)).
|
10.7
|
|
Form of Director Indemnification Agreement (incorporated by reference to our Registration Statement on Form S-1/A, filed on November 26, 2013 (File No. 333-190880))
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10.8
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Fidelity & Guaranty Life Employee Incentive Plan (incorporated by reference to our Registration Statement on Form S-1/A, filed on October 17, 2013 (File No. 333-190880))
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10.9
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Fidelity & Guaranty Life 2013 Stock Incentive Plan (incorporated by reference to our Registration Statement on Form S-1/A, filed on December 3, 2013 (File No. 333-190880))
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10.10
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Form of Fidelity & Guaranty Life 2013 Non-Statutory Stock Option Agreement (incorporated by reference to our Registration Statement on Form S-1/A, filed on November 26, 2013 (File No. 333-190880))
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10.11
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Form of Fidelity & Guaranty Life 2013 Restricted Stock Agreement (incorporated by reference to our Registration Statement on Form S-1/A, filed on November 26, 2013 (File No. 333-190880))
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10.12
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Form of Fidelity & Guaranty Life Performance RSU Grant Agreement (incorporated by reference to our Registration Statement on Form S-1/A, filed on November 26, 2013 (File No. 333-190880))
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10.13
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Form of Second Amended and Restated Fidelity & Guaranty Life Holdings, Inc. Stock Incentive Plan (incorporated by reference to our Registration Statement on Form S-1/A, filed on December 3, 2013 (File No. 333-190880))
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10.14
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Form of Amendment No. 1 to the Fidelity & Guaranty Life Holdings, Inc. 2012 Dividend Equivalent Plan (incorporated by reference to our Registration Statement on Form S-1/A, filed on December 3, 2013 (File No. 333-190880))
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10.15
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Form of Amendment No. 1 to the Restricted Stock Agreement (incorporated by reference to our Registration Statement on Form S-1/A, filed on December 3, 2013 (File No. 333-190880))
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10.16
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Form of Amendment No. 2 to the Restricted Stock Agreement between Leland C. Launer, Jr. and Fidelity & Guaranty Life Holdings, Inc. (incorporated by reference to our Registration Statement on Form S-1/A, filed on December 3, 2013 (File No. 333-190880))
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10.17*
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Form of Fidelity & Guaranty Life 2013 Restricted Stock Agreement for Compensation Committee Members
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10.18*
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Form of Fidelity & Guaranty Life 2013 Non-Statutory Stock Option Agreement for Compensation Committee Members
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10.19*
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Form of Fidelity & Guaranty Life 2013 Unrestricted Stock Agreement
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10.20*
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Form of Fidelity & Guaranty Life 2013 Unrestricted Stock Agreement for Compensation Committee Members
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31.1 *
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Certification of Chief Executive Officer, pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2 *
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Certification of Chief Financial Officer, pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1 *
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Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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32.2 *
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Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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101.INS *
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XBRL Instance Document.
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101.SCH *
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XBRL Taxonomy Extension Schema.
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101.CAL *
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XBRL Taxonomy Extension Calculation Linkbase.
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101.DEF *
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XBRL Taxonomy Definition Linkbase.
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101.LAB *
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XBRL Taxonomy Extension Label Linkbase.
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101.PRE *
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XBRL Taxonomy Extension Presentation Linkbase.
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*
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Filed herewith
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FIDELITY & GUARANTY LIFE (Registrant)
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Dated:
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February 7, 2014
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By:
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/s/ WENDY JB YOUNG
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Senior Vice President and Chief Financial Officer
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(on behalf of the Registrant and as Principal Financial Officer)
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Page
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1. Definitions.
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1
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2. Registration on Request.
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3
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3. Registration Procedures.
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7
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4. Indemnification.
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13
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5. Registration Expenses.
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16
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6. Rule 144
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17
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7. Miscellaneous.
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17
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(i)
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if to the Company, to:
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(ii)
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if to a Stockholder, to:
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(v)
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if to any other Stockholder, to the address of such other Stockholder as shown in the stock record book of the Company.
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Total Number of Shares
of Restricted Stock (Common Stock)
Granted Pursuant to this Agreement:
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[[SHARESGRANTED]]
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Total Number of Shares
for the Purchase of Which
Non-Statutory Stock Options have been Granted
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Exercise Price
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[[SHARESGRANTED]]
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$17.00
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Total Number of Shares
of Unrestricted Stock (Common Stock)
Granted Pursuant to this Agreement:
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[[SHARESGRANTED]]
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Total Number of Shares
of Unrestricted Stock (Common Stock)
Granted Pursuant to this Agreement:
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[[SHARESGRANTED]]
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1.
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I have reviewed this quarterly report Form 10-Q for the quarterly period ended December 31, 2013 of Fidelity & Guaranty Life;
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2.
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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;
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3.
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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;
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4.
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The registrant’s other certifying officer(s) 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)) for the registrant and have:
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(a)
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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;
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(b)
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[Paragraph omitted in accordance with Exchange Act Rule 13a-14(a)];
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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/s/ LELAND LAUNER, JR.
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Leland Launer, Jr.
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President and Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q for the quarterly period ended December 31, 2013 of Fidelity & Guaranty Life;
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2.
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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;
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3.
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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;
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4.
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The registrant’s other certifying officer(s) 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)) for the registrant and have:
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(a)
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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;
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(b)
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[Paragraph omitted in accordance with Exchange Act Rule 13a-14(a)];
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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/s/ WENDY JB YOUNG
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Wendy JB Young
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Senior Vice President and Chief Financial Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ LELAND LAUNER, JR.
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Leland Launer, Jr.
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President and Chief Executive Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ WENDY JB YOUNG
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Wendy JB Young
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Senior Vice President and Chief Financial Officer
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