[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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37-0911756
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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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Large accelerated filer
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X
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
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PART I - FINANCIAL INFORMATION
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Page
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Item 1.
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Financial Statements
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Item 2.
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Item 3.
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Item 4.
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Item 1A.
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Item 2.
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Item 5.
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Item 6.
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/s/ KPMG LLP
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KPMG LLP
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Chicago, Illinois
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May 9, 2018
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March 31, 2018
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December 31, 2017
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(Unaudited)
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ASSETS
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||||||||
Investments
|
|
|
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||||
Fixed maturity securities, available for sale, at fair value
(amortized cost 2018, $7,373,552; 2017, $7,302,950)
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$
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7,634,682
|
|
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$
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7,724,075
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Equity securities, at fair value (cost 2017, $116,320)
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131,023
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135,466
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Short-term and other investments
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458,957
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492,807
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Total investments
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8,224,662
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8,352,348
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Cash
|
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23,951
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7,627
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Deferred policy acquisition costs
|
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280,165
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257,826
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Goodwill
|
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47,396
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47,396
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Other assets
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352,804
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381,182
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Separate Account (variable annuity) assets
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2,139,564
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2,151,961
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Total assets
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$
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11,068,542
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$
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11,198,340
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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||||||||
Policy liabilities
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|
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||||
Investment contract and life policy reserves
|
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$
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5,598,678
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$
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5,573,735
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Unpaid claims and claim expenses
|
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358,317
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347,749
|
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Unearned premiums
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254,401
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260,539
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Total policy liabilities
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6,211,396
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6,182,023
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Other policyholder funds
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720,521
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724,261
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Other liabilities
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294,846
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341,053
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Long-term debt
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297,536
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297,469
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Separate Account (variable annuity) liabilities
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2,139,564
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2,151,961
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Total liabilities
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9,663,863
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9,696,767
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Preferred stock, $0.001 par value, authorized
1,000,000 shares; none issued
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—
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—
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Common stock, $0.001 par value, authorized 75,000,000 shares;
issued, 2018, 65,610,067; 2017, 65,439,245
|
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66
|
|
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65
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Additional paid-in capital
|
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466,277
|
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464,246
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Retained earnings
|
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1,254,394
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1,231,177
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Accumulated other comprehensive income (loss), net of taxes:
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Net unrealized investment gains on securities
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178,040
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|
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300,177
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Net funded status of benefit plans
|
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(13,217
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)
|
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(13,217
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)
|
||
Treasury stock, at cost, 2018, 24,721,533 shares;
2017, 24,721,372 shares
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(480,881
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)
|
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(480,875
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)
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||
Total shareholders’ equity
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1,404,679
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1,501,573
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Total liabilities and shareholders’ equity
|
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$
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11,068,542
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$
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11,198,340
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Three Months Ended March 31,
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||||||
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2018
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2017
|
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Revenues
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Insurance premiums and contract charges earned
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$
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202,998
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$
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195,722
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Net investment income
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91,864
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90,711
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Net investment losses
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(1,654
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)
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(242
|
)
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Other income
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|
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2,281
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1,113
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Total revenues
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|
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295,489
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287,304
|
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Benefits, losses and expenses
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Benefits, claims and settlement expenses
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143,562
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144,096
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Interest credited
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50,035
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48,774
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DAC amortization expense
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26,705
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24,886
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Operating expenses
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48,169
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48,756
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Interest expense
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3,172
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2,956
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Total benefits, losses and expenses
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|
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271,643
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|
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269,468
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||
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Income before income taxes
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23,846
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17,836
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Income tax expense
|
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3,691
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|
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2,518
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Net income
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|
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$
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20,155
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|
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$
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15,318
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Net income per share
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|
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Basic
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$
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0.49
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$
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0.37
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Diluted
|
|
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$
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0.48
|
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$
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0.37
|
|
|
|
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|
||||
Weighted average number of shares and equivalent shares
|
|
|
|
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|
||||
Basic
|
|
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41,497
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|
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41,135
|
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||
Diluted
|
|
|
41,653
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|
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41,342
|
|
||
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|
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|
||||
Net investment losses
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|
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|
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|
||||
Total other-than-temporary impairment losses on securities
|
|
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$
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(110
|
)
|
|
$
|
(2,797
|
)
|
Portion of losses recognized in other
comprehensive income
|
|
|
—
|
|
|
—
|
|
||
Net other-than-temporary impairment losses
on securities recognized in earnings
|
|
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(110
|
)
|
|
(2,797
|
)
|
||
Sales and other
|
|
|
2,203
|
|
|
2,484
|
|
||
Change in fair value - equity securities
|
|
|
(5,186
|
)
|
|
—
|
|
||
Change in fair value and gains (losses) realized on settlements -
derivative instruments
|
|
|
1,439
|
|
|
71
|
|
||
Total
|
|
|
$
|
(1,654
|
)
|
|
$
|
(242
|
)
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
|
2018
|
|
2017
|
||||
Comprehensive income
|
|
|
|
|
|
||||
Net income
|
|
|
$
|
20,155
|
|
|
$
|
15,318
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
||||
Change in net unrealized investment gains
(losses) on securities
|
|
|
(107,096
|
)
|
|
22,533
|
|
||
Change in net funded status of benefit plans
|
|
|
—
|
|
|
—
|
|
||
Cumulative effect of change in accounting principle
|
|
|
(15,041
|
)
|
|
—
|
|
||
Other comprehensive income (loss)
|
|
|
(122,137
|
)
|
|
22,533
|
|
||
Total
|
|
|
$
|
(101,982
|
)
|
|
$
|
37,851
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
||||
Common stock, $0.001 par value
|
|
|
|
|
||||
Beginning balance
|
|
$
|
65
|
|
|
$
|
65
|
|
Options exercised, 2018, 56,614 shares; 2017, 33,764 shares
|
|
—
|
|
|
—
|
|
||
Conversion of common stock units, 2018, 11,804 shares;
2017, 15,981 shares
|
|
—
|
|
|
—
|
|
||
Conversion of restricted stock units, 2018, 105,116 shares;
2017, 247,620 shares
|
|
1
|
|
|
—
|
|
||
Ending balance
|
|
66
|
|
|
65
|
|
||
|
|
|
|
|
||||
Additional paid-in capital
|
|
|
|
|
||||
Beginning balance
|
|
464,246
|
|
|
453,479
|
|
||
Options exercised and conversion of common stock
units and restricted stock units
|
|
(125
|
)
|
|
(750
|
)
|
||
Share-based compensation expense
|
|
2,156
|
|
|
2,253
|
|
||
Ending balance
|
|
466,277
|
|
|
454,982
|
|
||
|
|
|
|
|
||||
Retained earnings
|
|
|
|
|
||||
Beginning balance
|
|
1,231,177
|
|
|
1,155,732
|
|
||
Net income
|
|
20,155
|
|
|
15,318
|
|
||
Dividends, 2018, $0.285 per share;
2017, $0.275 per share
|
|
(11,979
|
)
|
|
(11,518
|
)
|
||
Cumulative effect of change in accounting principle
|
|
15,041
|
|
|
—
|
|
||
Ending balance
|
|
1,254,394
|
|
|
1,159,532
|
|
||
|
|
|
|
|
||||
Accumulated other comprehensive income, net of tax
|
|
|
|
|
||||
Beginning balance
|
|
286,960
|
|
|
163,921
|
|
||
Change in net unrealized investment gains (losses) on securities
|
|
(107,096
|
)
|
|
22,533
|
|
||
Change in net funded status of benefit plans
|
|
—
|
|
|
—
|
|
||
Cumulative effect of change in accounting principle
|
|
(15,041
|
)
|
|
—
|
|
||
Ending balance
|
|
164,823
|
|
|
186,454
|
|
||
|
|
|
|
|
||||
Treasury stock, at cost
|
|
|
|
|
||||
Beginning balance, 2018, 24,721,372 shares;
2017, 24,672,932 shares
|
|
(480,875
|
)
|
|
(479,215
|
)
|
||
Acquisition of shares, 2018, 161 shares;
2017, 0 shares
|
|
(6
|
)
|
|
—
|
|
||
Ending balance, 2018, 24,721,533 shares;
2017, 24,672,932 shares
|
|
(480,881
|
)
|
|
(479,215
|
)
|
||
|
|
|
|
|
||||
Shareholders’ equity at end of period
|
|
$
|
1,404,679
|
|
|
$
|
1,321,818
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Cash flows - operating activities
|
|
|
|
|
||||
Premiums collected
|
|
$
|
179,456
|
|
|
$
|
172,588
|
|
Policyholder benefits paid
|
|
(131,090
|
)
|
|
(127,823
|
)
|
||
Policy acquisition and other operating expenses paid
|
|
(72,592
|
)
|
|
(74,763
|
)
|
||
Income taxes paid
|
|
690
|
|
|
11
|
|
||
Investment income collected
|
|
93,426
|
|
|
91,840
|
|
||
Interest expense paid
|
|
(256
|
)
|
|
(63
|
)
|
||
Other
|
|
2,492
|
|
|
11,008
|
|
||
|
|
|
|
|
||||
Net cash provided by operating activities
|
|
72,126
|
|
|
72,798
|
|
||
|
|
|
|
|
||||
Cash flows - investing activities
|
|
|
|
|
|
|
||
Fixed maturity securities
|
|
|
|
|
|
|
||
Purchases
|
|
(308,450
|
)
|
|
(318,629
|
)
|
||
Sales
|
|
89,894
|
|
|
110,872
|
|
||
Maturities, paydowns, calls and redemptions
|
|
151,722
|
|
|
190,068
|
|
||
Equity securities
|
|
|
|
|
||||
Purchases
|
|
(2,208
|
)
|
|
(15,502
|
)
|
||
Sales and repayments
|
|
2,048
|
|
|
5,489
|
|
||
Purchase of other invested assets
|
|
(13,856
|
)
|
|
(24,177
|
)
|
||
Net cash provided by (used in) short-term and other investments
|
|
47,146
|
|
|
(32,406
|
)
|
||
|
|
|
|
|
||||
Net cash used in investing activities
|
|
(33,704
|
)
|
|
(84,285
|
)
|
||
|
|
|
|
|
||||
Cash flows - financing activities
|
|
|
|
|
|
|
||
Dividends paid to shareholders
|
|
(11,638
|
)
|
|
(11,518
|
)
|
||
Acquisition of treasury stock
|
|
(6
|
)
|
|
—
|
|
||
Proceeds from exercise of stock options
|
|
1,136
|
|
|
723
|
|
||
Withholding tax payments on RSUs tendered
|
|
(2,061
|
)
|
|
(2,532
|
)
|
||
Annuity contracts: variable, fixed and FHLB funding agreements
|
|
|
|
|
|
|
||
Deposits
|
|
98,837
|
|
|
117,311
|
|
||
Benefits, withdrawals and net transfers to
Separate Account (variable annuity) assets
|
|
(112,272
|
)
|
|
(99,757
|
)
|
||
Life policy accounts
|
|
|
|
|
|
|||
Deposits
|
|
1,111
|
|
|
1,183
|
|
||
Withdrawals and surrenders
|
|
(1,329
|
)
|
|
(1,066
|
)
|
||
Change in bank overdrafts
|
|
4,124
|
|
|
(2,934
|
)
|
||
|
|
|
|
|
||||
Net cash (used in) provided by financing activities
|
|
(22,098
|
)
|
|
1,410
|
|
||
|
|
|
|
|
||||
Net increase (decrease) in cash
|
|
16,324
|
|
|
(10,077
|
)
|
||
|
|
|
|
|
||||
Cash at beginning of period
|
|
7,627
|
|
|
16,670
|
|
||
|
|
|
|
|
||||
Cash at end of period
|
|
$
|
23,951
|
|
|
$
|
6,593
|
|
($ in thousands)
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
|
|
|
|
||||
Investment contract reserves
|
|
$
|
4,471,733
|
|
|
$
|
4,452,972
|
|
Life policy reserves
|
|
1,126,945
|
|
|
1,120,763
|
|
||
Total
|
|
$
|
5,598,678
|
|
|
$
|
5,573,735
|
|
($ in thousands)
|
|
Net Unrealized Investment Gains and Losses on Securities (1)(2)
|
|
Defined Benefit Plans (1)
|
|
Total (1)
|
||||||
|
|
|
|
|
|
|
||||||
Beginning balance, January 1, 2018
|
|
$
|
300,177
|
|
|
$
|
(13,217
|
)
|
|
$
|
286,960
|
|
Other comprehensive income (loss) before reclassifications
|
|
(109,539
|
)
|
|
—
|
|
|
(109,539
|
)
|
|||
Amounts reclassified from accumulated
other comprehensive income (loss)
|
|
2,443
|
|
|
—
|
|
|
2,443
|
|
|||
Cumulative effect of change in accounting principle (3)
|
|
(15,041
|
)
|
|
—
|
|
|
(15,041
|
)
|
|||
Net current period other comprehensive income (loss)
|
|
(122,137
|
)
|
|
—
|
|
|
(122,137
|
)
|
|||
Ending balance, March 31, 2018
|
|
$
|
178,040
|
|
|
$
|
(13,217
|
)
|
|
$
|
164,823
|
|
|
|
|
|
|
|
|
||||||
Beginning balance, January 1, 2017
|
|
$
|
175,738
|
|
|
$
|
(11,817
|
)
|
|
$
|
163,921
|
|
Other comprehensive income (loss) before reclassifications
|
|
22,330
|
|
|
—
|
|
|
22,330
|
|
|||
Amounts reclassified from accumulated
other comprehensive income (loss)
|
|
203
|
|
|
—
|
|
|
203
|
|
|||
Net current period other comprehensive income (loss)
|
|
22,533
|
|
|
—
|
|
|
22,533
|
|
|||
Ending balance, March 31, 2017
|
|
$
|
198,271
|
|
|
$
|
(11,817
|
)
|
|
$
|
186,454
|
|
(1)
|
All amounts are net of tax.
|
(2)
|
The pretax amounts reclassified from accumulated other comprehensive income (loss), $(3,092) thousand and $(313) thousand, are included in net investment gains and losses and the related income tax expenses, $(649) thousand and $(110) thousand, are included in income tax expense in the Consolidated Statements of Operations for the three month periods ended March 31, 2018 and 2017, respectively.
|
(3)
|
The Company adopted guidance on January 1, 2018 that resulted in reclassifying $15,041 thousand of after tax unrealized gains on equity securities from AOCI to Retained earnings.
|
($ in thousands)
|
|
Amortized
Cost/Cost
|
|
Unrealized
Investment
Gains
|
|
Unrealized
Investment
Losses
|
|
Fair
Value
|
|
OTTI in
AOCI (2)
|
||||||||||
March 31, 2018 (1)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Government and federally
sponsored agency obligations (3):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage-backed securities
|
|
$
|
699,629
|
|
|
$
|
22,930
|
|
|
$
|
11,601
|
|
|
$
|
710,958
|
|
|
$
|
—
|
|
Other, including U.S. Treasury securities
|
|
760,390
|
|
|
18,797
|
|
|
17,220
|
|
|
761,967
|
|
|
—
|
|
|||||
Municipal bonds
|
|
1,721,046
|
|
|
149,774
|
|
|
9,516
|
|
|
1,861,304
|
|
|
—
|
|
|||||
Foreign government bonds
|
|
94,870
|
|
|
4,307
|
|
|
136
|
|
|
99,041
|
|
|
—
|
|
|||||
Corporate bonds
|
|
2,383,394
|
|
|
112,451
|
|
|
14,575
|
|
|
2,481,270
|
|
|
—
|
|
|||||
Other mortgage-backed securities
|
|
1,714,223
|
|
|
16,621
|
|
|
10,702
|
|
|
1,720,142
|
|
|
—
|
|
|||||
Totals
|
|
$
|
7,373,552
|
|
|
$
|
324,880
|
|
|
$
|
63,750
|
|
|
$
|
7,634,682
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Government and federally
sponsored agency obligations (3):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Mortgage-backed securities
|
|
$
|
669,297
|
|
|
$
|
30,460
|
|
|
$
|
3,032
|
|
|
$
|
696,725
|
|
|
$
|
—
|
|
Other, including U.S. Treasury securities
|
|
714,613
|
|
|
26,311
|
|
|
5,516
|
|
|
735,408
|
|
|
—
|
|
|||||
Municipal bonds
|
|
1,711,581
|
|
|
184,107
|
|
|
2,435
|
|
|
1,893,253
|
|
|
—
|
|
|||||
Foreign government bonds
|
|
96,780
|
|
|
5,958
|
|
|
—
|
|
|
102,738
|
|
|
—
|
|
|||||
Corporate bonds
|
|
2,409,426
|
|
|
173,862
|
|
|
4,334
|
|
|
2,578,954
|
|
|
—
|
|
|||||
Other mortgage-backed securities
|
|
1,701,253
|
|
|
22,935
|
|
|
7,191
|
|
|
1,716,997
|
|
|
—
|
|
|||||
Totals
|
|
$
|
7,302,950
|
|
|
$
|
443,633
|
|
|
$
|
22,508
|
|
|
$
|
7,724,075
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity securities (4)
|
|
$
|
116,320
|
|
|
$
|
19,425
|
|
|
$
|
279
|
|
|
$
|
135,466
|
|
|
$
|
—
|
|
(1)
|
Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, available for sale equity securities were reclassified to equity securities at fair value and are excluded from the table above as of March 31, 2018.
|
(2)
|
Related to securities for which an unrealized loss was bifurcated to distinguish the credit-related portion and the portion driven by other market factors. Represents the amount of OTTI losses in AOCI which was not included in earnings; amounts also include net unrealized investment gains and losses on such impaired securities relating to changes in the fair value of those securities subsequent to the impairment measurement date.
|
(3)
|
Fair value includes securities issued by Federal National Mortgage Association (FNMA) of $386,398 thousand and $361,955 thousand; Federal Home Loan Mortgage Corporation (FHLMC) of $396,957 thousand and $400,001 thousand; and Government National Mortgage Association (GNMA) of $98,056 thousand and $104,168 thousand as of March 31, 2018 and December 31, 2017, respectively.
|
(4)
|
Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds.
|
($ in thousands)
|
|
12 Months or Less
|
|
More than 12 Months
|
|
Total
|
||||||||||||||||||
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
March 31, 2018 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government and federally sponsored agency obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
|
$
|
301,927
|
|
|
$
|
8,346
|
|
|
$
|
39,339
|
|
|
$
|
3,255
|
|
|
$
|
341,266
|
|
|
$
|
11,601
|
|
Other
|
|
393,555
|
|
|
9,415
|
|
|
118,166
|
|
|
7,805
|
|
|
511,721
|
|
|
17,220
|
|
||||||
Municipal bonds
|
|
224,400
|
|
|
4,614
|
|
|
76,577
|
|
|
4,902
|
|
|
300,977
|
|
|
9,516
|
|
||||||
Foreign government bonds
|
|
6,390
|
|
|
136
|
|
|
—
|
|
|
—
|
|
|
6,390
|
|
|
136
|
|
||||||
Corporate bonds
|
|
450,467
|
|
|
11,923
|
|
|
37,572
|
|
|
2,652
|
|
|
488,039
|
|
|
14,575
|
|
||||||
Other mortgage-backed securities
|
|
607,571
|
|
|
6,298
|
|
|
146,659
|
|
|
4,404
|
|
|
754,230
|
|
|
10,702
|
|
||||||
Total
|
|
$
|
1,984,310
|
|
|
$
|
40,732
|
|
|
$
|
418,313
|
|
|
$
|
23,018
|
|
|
$
|
2,402,623
|
|
|
$
|
63,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Number of positions with a
gross unrealized loss
|
|
837
|
|
|
|
|
153
|
|
|
|
|
990
|
|
|
|
|||||||||
Fair value as a percentage of total fixed
maturity securities fair value
|
|
25.6
|
%
|
|
|
|
5.4
|
%
|
|
|
|
31.0
|
%
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government and federally sponsored agency obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
|
$
|
134,032
|
|
|
$
|
1,053
|
|
|
$
|
40,606
|
|
|
$
|
1,979
|
|
|
$
|
174,638
|
|
|
$
|
3,032
|
|
Other
|
|
168,634
|
|
|
1,849
|
|
|
122,753
|
|
|
3,667
|
|
|
291,387
|
|
|
5,516
|
|
||||||
Municipal bonds
|
|
29,437
|
|
|
100
|
|
|
79,140
|
|
|
2,335
|
|
|
108,577
|
|
|
2,435
|
|
||||||
Foreign government bonds
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Corporate bonds
|
|
115,113
|
|
|
2,701
|
|
|
36,081
|
|
|
1,633
|
|
|
151,194
|
|
|
4,334
|
|
||||||
Other mortgage-backed securities
|
|
457,166
|
|
|
2,791
|
|
|
168,972
|
|
|
4,400
|
|
|
626,138
|
|
|
7,191
|
|
||||||
Total fixed maturity securities
|
|
904,382
|
|
|
8,494
|
|
|
447,552
|
|
|
14,014
|
|
|
1,351,934
|
|
|
22,508
|
|
||||||
Equity securities (2)
|
|
6,027
|
|
|
249
|
|
|
1,277
|
|
|
30
|
|
|
7,304
|
|
|
279
|
|
||||||
Combined totals
|
|
$
|
910,409
|
|
|
$
|
8,743
|
|
|
$
|
448,829
|
|
|
$
|
14,044
|
|
|
$
|
1,359,238
|
|
|
$
|
22,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Number of positions with a
gross unrealized loss
|
|
354
|
|
|
|
|
158
|
|
|
|
|
512
|
|
|
|
|||||||||
Fair value as a percentage of total fixed
maturity and equity securities fair value
|
|
11.6
|
%
|
|
|
|
5.7
|
%
|
|
|
|
17.3
|
%
|
|
|
(1)
|
Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, available for sale equity securities were reclassified to equity securities at fair value and are excluded from the table above as of March 31, 2018.
|
(2)
|
Includes nonredeemable (perpetual) preferred stocks, common stocks and closed-end funds.
|
($ in thousands)
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Cumulative credit loss (1)
|
|
|
|
|
||||
Beginning of period
|
|
$
|
3,825
|
|
|
$
|
13,703
|
|
New credit losses
|
|
—
|
|
|
—
|
|
||
Increases to previously recognized credit losses
|
|
—
|
|
|
726
|
|
||
Gains (losses) related to securities sold or paid down during the period
|
|
—
|
|
|
(2
|
)
|
||
End of period
|
|
$
|
3,825
|
|
|
$
|
14,427
|
|
(1)
|
The cumulative credit loss amounts exclude OTTI losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis.
|
($ in thousands)
|
|
Percent of Total Fair Value
|
|
March 31, 2018
|
||||||||||
|
|
March 31, 2018
|
|
December 31, 2017
|
|
Fair
Value
|
|
Amortized
Cost
|
||||||
Estimated expected maturity:
|
|
|
|
|
|
|
|
|
||||||
Due in 1 year or less
|
|
4.0
|
%
|
|
3.2
|
%
|
|
$
|
303,914
|
|
|
$
|
299,275
|
|
Due after 1 year through 5 years
|
|
25.4
|
|
|
26.7
|
|
|
1,936,362
|
|
|
1,887,648
|
|
||
Due after 5 years through 10 years
|
|
32.7
|
|
|
32.6
|
|
|
2,498,529
|
|
|
2,457,018
|
|
||
Due after 10 years through 20 years
|
|
24.7
|
|
|
24.2
|
|
|
1,884,116
|
|
|
1,800,969
|
|
||
Due after 20 years
|
|
13.2
|
|
|
13.3
|
|
|
1,011,761
|
|
|
928,642
|
|
||
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
$
|
7,634,682
|
|
|
$
|
7,373,552
|
|
|
|
|
|
|
|
|
|
|
||||||
Average option-adjusted duration, in years
|
|
6.0
|
|
|
5.9
|
|
|
|
|
|
($ in thousands)
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Fixed maturity securities
|
|
|
|
|
||||
Proceeds received
|
|
$
|
89,894
|
|
|
$
|
110,872
|
|
Gross gains realized
|
|
1,670
|
|
|
2,489
|
|
||
Gross losses realized
|
|
(53
|
)
|
|
(881
|
)
|
||
|
|
|
|
|
||||
Equity securities
|
|
|
|
|
||||
Proceeds received
|
|
$
|
2,048
|
|
|
$
|
5,489
|
|
Gross gains realized
|
|
616
|
|
|
1,048
|
|
||
Gross losses realized
|
|
(34
|
)
|
|
(192
|
)
|
($ in thousands)
|
|
Three Months Ended March 31,
|
|||||||
|
|
2018
|
|
2017
|
|||||
|
|
|
|
|
|||||
Impairment write-downs
|
|
$
|
—
|
|
|
$
|
(1,777
|
)
|
|
Change in intent write-downs
|
|
(110
|
)
|
|
(1,020
|
)
|
|||
Net other-than-temporary impairment losses
recognized in earnings
|
|
(110
|
)
|
—
|
|
(2,797
|
)
|
||
Sales and other
|
|
2,203
|
|
|
2,484
|
|
|||
Change in fair value - equity securities (1)
|
|
(5,186
|
)
|
|
—
|
|
|||
Change in fair value and gains (losses) realized on settlements -
derivative instruments
|
|
1,439
|
|
|
71
|
|
|||
Net investment gains (losses)
|
|
$
|
(1,654
|
)
|
—
|
|
$
|
(242
|
)
|
(1)
|
Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, equity securities are reported at fair value with change in fair value recognized in Net investment gains (losses) and are no longer included in impairment write-downs or change in intent write-downs.
|
($ in thousands)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
|
2018
|
|
2017
|
||||
Net unrealized investment gains and losses on securities, net of tax
|
|
|
|
|
|
||||
Beginning of period
|
|
|
$
|
286,176
|
|
|
$
|
202,941
|
|
Change in net unrealized investment gains and losses
|
|
|
(67,285
|
)
|
|
25,193
|
|
||
Reclassification of net investments (gains) losses to net income
|
|
|
2,443
|
|
|
203
|
|
||
Reclassification of unrealized gains on equity securities,
net of tax, to Retained earnings (1)
|
|
|
(15,041
|
)
|
|
—
|
|
||
End of period
|
|
|
$
|
206,293
|
|
|
$
|
228,337
|
|
(1)
|
Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, available for sale equity securities were reclassified to equity securities at fair value and the related unrealized gains were reclassified from AOCI to Retained earnings.
|
($ in thousands)
|
|
|
|
Gross
Amounts
Offset in the
|
|
Net Amounts
of Assets/
Liabilities
Presented
in the
|
|
Gross Amounts Not Offset
in the Consolidated
Balance Sheets
|
|
|
||||||||||||||
|
|
Gross
Amounts
|
|
Consolidated
Balance
Sheets
|
|
Consolidated
Balance
Sheets
|
|
Financial
Instruments
|
|
Cash
Collateral
Received
|
|
Net
Amount
|
||||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Free-standing derivatives
|
|
$
|
12,630
|
|
|
$
|
—
|
|
|
$
|
12,630
|
|
|
$
|
—
|
|
|
$
|
13,174
|
|
|
$
|
(544
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Free-standing derivatives
|
|
$
|
15,550
|
|
|
$
|
—
|
|
|
$
|
15,550
|
|
|
$
|
—
|
|
|
$
|
15,584
|
|
|
$
|
(34
|
)
|
($ in thousands)
|
|
|
|
Fair Value Measurements at
|
||||||||||||||||||
|
|
Carrying
|
|
Fair
|
|
Reporting Date Using
|
||||||||||||||||
|
|
Amount
|
|
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government and federally
sponsored agency obligations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
|
$
|
710,958
|
|
|
$
|
710,958
|
|
|
$
|
—
|
|
|
$
|
707,842
|
|
|
$
|
3,116
|
|
||
Other, including U.S. Treasury securities
|
|
761,967
|
|
|
761,967
|
|
|
13,249
|
|
|
748,718
|
|
|
—
|
|
|||||||
Municipal bonds
|
|
1,861,304
|
|
|
1,861,304
|
|
|
—
|
|
|
1,811,556
|
|
|
49,748
|
|
|||||||
Foreign government bonds
|
|
99,041
|
|
|
99,041
|
|
|
—
|
|
|
99,041
|
|
|
—
|
|
|||||||
Corporate bonds
|
|
2,481,270
|
|
|
2,481,270
|
|
|
13,733
|
|
|
2,388,757
|
|
|
78,780
|
|
|||||||
Other mortgage-backed securities
|
|
1,720,142
|
|
|
1,720,142
|
|
|
—
|
|
|
1,607,924
|
|
|
112,218
|
|
|||||||
Total fixed maturity securities
|
|
7,634,682
|
|
|
7,634,682
|
|
|
26,982
|
|
|
7,363,838
|
|
|
243,862
|
|
|||||||
Equity securities
|
|
131,023
|
|
|
131,023
|
|
|
79,870
|
|
—
|
|
51,147
|
|
—
|
|
6
|
|
|||||
Short-term investments
|
|
22,194
|
|
|
22,194
|
|
|
22,194
|
|
|
—
|
|
|
—
|
|
|||||||
Other investments
|
|
25,130
|
|
|
25,130
|
|
|
—
|
|
|
25,130
|
|
|
—
|
|
|||||||
Totals
|
|
$
|
7,813,029
|
|
|
$
|
7,813,029
|
|
|
$
|
129,046
|
|
|
$
|
7,440,115
|
|
|
$
|
243,868
|
|
||
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment contract and life policy
reserves, embedded derivatives
|
|
$
|
518
|
|
|
$
|
518
|
|
|
$
|
—
|
|
|
$
|
518
|
|
|
$
|
—
|
|
||
Other policyholder funds, embedded derivatives
|
|
78,486
|
|
|
78,486
|
|
|
—
|
|
|
—
|
|
|
78,486
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government and federally
sponsored agency obligations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
|
$
|
696,725
|
|
|
$
|
696,725
|
|
|
$
|
—
|
|
|
$
|
693,375
|
|
|
$
|
3,350
|
|
||
Other, including U.S. Treasury securities
|
|
735,408
|
|
|
735,408
|
|
|
13,393
|
|
|
722,015
|
|
|
—
|
|
|||||||
Municipal bonds
|
|
1,893,253
|
|
|
1,893,253
|
|
|
—
|
|
|
1,843,925
|
|
|
49,328
|
|
|||||||
Foreign government bonds
|
|
102,738
|
|
|
102,738
|
|
|
—
|
|
|
102,738
|
|
|
—
|
|
|||||||
Corporate bonds
|
|
2,578,954
|
|
|
2,578,954
|
|
|
14,345
|
|
|
2,491,630
|
|
|
72,979
|
|
|||||||
Other mortgage-backed securities
|
|
1,716,997
|
|
|
1,716,997
|
|
|
—
|
|
|
1,612,403
|
|
|
104,594
|
|
|||||||
Total fixed maturity securities
|
|
7,724,075
|
|
|
7,724,075
|
|
|
27,738
|
|
|
7,466,086
|
|
|
230,251
|
|
|||||||
Equity securities
|
|
135,466
|
|
|
135,466
|
|
|
82,208
|
|
|
53,252
|
|
|
6
|
|
|||||||
Short-term investments
|
|
62,593
|
|
|
62,593
|
|
|
62,593
|
|
|
—
|
|
|
—
|
|
|||||||
Other investments
|
|
28,050
|
|
|
28,050
|
|
|
—
|
|
|
28,050
|
|
|
—
|
|
|||||||
Totals
|
|
$
|
7,950,184
|
|
|
$
|
7,950,184
|
|
|
$
|
172,539
|
|
|
$
|
7,547,388
|
|
|
$
|
230,257
|
|
||
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Investment contract and life policy
reserves, embedded derivatives
|
|
$
|
594
|
|
|
$
|
594
|
|
|
$
|
—
|
|
|
$
|
594
|
|
|
$
|
—
|
|
||
Other policyholder funds, embedded derivatives
|
|
80,733
|
|
|
80,733
|
|
|
—
|
|
|
—
|
|
|
80,733
|
|
($ in thousands)
|
|
Financial Assets
|
|
Financial
Liabilities(1)
|
||||||||||||||||||||||||||||
|
|
Municipal
Bonds
|
|
Corporate
Bonds
|
|
Other
Mortgage-
Backed
Securities (2)
|
|
Total
Fixed
Maturity
Securities
|
|
Equity
Securities
|
|
Short-term
Investments
|
|
Total
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Beginning balance, January 1, 2018
|
|
$
|
49,328
|
|
|
$
|
72,979
|
|
|
$
|
107,944
|
|
|
$
|
230,251
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
230,257
|
|
|
$
|
80,733
|
|
Transfers into Level 3 (3)
|
|
—
|
|
|
10,778
|
|
|
14,822
|
|
|
25,600
|
|
|
—
|
|
|
—
|
|
|
25,600
|
|
|
—
|
|
||||||||
Transfers out of Level 3 (3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total gains or losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net investment gains (losses) included in net income
related to financial assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||||||
Net (gains) losses included
in net income related
to financial liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,222
|
)
|
||||||||
Net unrealized investment gains
(losses) included in OCI
|
|
443
|
|
|
(887
|
)
|
|
(1,022
|
)
|
|
(1,466
|
)
|
|
—
|
|
|
—
|
|
|
(1,466
|
)
|
|
|
|
||||||||
Purchases
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
||||||||
Issuances
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,332
|
|
||||||||
Sales
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
|
|
||||||||
Settlements
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
||||||||
Paydowns, maturities
and distributions
|
|
(23
|
)
|
|
(4,090
|
)
|
|
(6,410
|
)
|
|
(10,523
|
)
|
|
—
|
|
|
—
|
|
|
(10,523
|
)
|
|
(1,357
|
)
|
||||||||
Ending balance, March 31, 2018
|
|
$
|
49,748
|
|
|
$
|
78,780
|
|
|
$
|
115,334
|
|
|
$
|
243,862
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
243,868
|
|
|
$
|
78,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Beginning balance, January 1, 2017
|
|
$
|
46,497
|
|
|
$
|
60,191
|
|
|
$
|
104,659
|
|
|
$
|
211,347
|
|
|
$
|
6
|
|
|
$
|
751
|
|
|
$
|
212,104
|
|
|
$
|
59,393
|
|
Transfers into Level 3 (3)
|
|
5,214
|
|
|
29,918
|
|
|
15,039
|
|
|
50,171
|
|
|
—
|
|
|
—
|
|
|
50,171
|
|
|
—
|
|
||||||||
Transfers out of Level 3 (3)
|
|
—
|
|
|
(6,110
|
)
|
|
—
|
|
|
(6,110
|
)
|
|
—
|
|
|
(751
|
)
|
|
(6,861
|
)
|
|
—
|
|
||||||||
Total gains or losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net investment gains (losses) included in net income related to financial assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net (gains) losses included
in net income related
to financial liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,308
|
|
||||||||
Net unrealized investment gains
(losses) included in OCI
|
|
1,871
|
|
|
96
|
|
|
(771
|
)
|
|
1,196
|
|
|
—
|
|
|
—
|
|
|
1,196
|
|
|
—
|
|
||||||||
Purchases
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Issuances
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,389
|
|
||||||||
Sales
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Settlements
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Paydowns, maturities
and distributions
|
|
(120
|
)
|
|
(1,600
|
)
|
|
(6,133
|
)
|
|
(7,853
|
)
|
|
—
|
|
|
—
|
|
|
(7,853
|
)
|
|
(829
|
)
|
||||||||
Ending balance, March 31, 2017
|
|
$
|
53,462
|
|
|
$
|
82,495
|
|
|
$
|
112,794
|
|
|
$
|
248,751
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
248,757
|
|
|
$
|
64,261
|
|
(1)
|
Represents embedded derivatives, all related to the Company’s FIA products, reported in Other policyholder funds in the Company’s Consolidated Balance Sheets.
|
(2)
|
Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities.
|
(3)
|
Transfers into and out of Level 3 during the three month periods ended March 31, 2018 and 2017 were attributable to changes in the availability of observable market information for individual fixed maturity securities and short-term investments. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined.
|
($ in thousands)
|
|
|
|
Fair Value Measurements at
|
||||||||||||||||
|
|
Carrying
|
|
Fair
|
|
Reporting Date Using
|
||||||||||||||
|
|
Amount
|
|
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other investments
|
|
$
|
154,211
|
|
|
$
|
158,891
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
158,891
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment contract and life policy reserves,
fixed annuity contracts
|
|
4,471,733
|
|
|
4,373,529
|
|
|
—
|
|
|
—
|
|
|
4,373,529
|
|
|||||
Investment contract and life policy reserves,
account values on life contracts
|
|
83,319
|
|
|
88,968
|
|
|
—
|
|
|
—
|
|
|
88,968
|
|
|||||
Other policyholder funds
|
|
642,035
|
|
|
642,035
|
|
|
—
|
|
|
575,784
|
|
|
66,251
|
|
|||||
Long-term debt
|
|
297,536
|
|
|
306,247
|
|
|
—
|
|
|
306,247
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other investments
|
|
$
|
154,898
|
|
|
$
|
159,575
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
159,575
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment contract and life policy reserves,
fixed annuity contracts
|
|
4,452,972
|
|
|
4,366,334
|
|
|
—
|
|
|
—
|
|
|
4,366,334
|
|
|||||
Investment contract and life policy reserves,
account values on life contracts |
|
82,911
|
|
|
88,620
|
|
|
—
|
|
|
—
|
|
|
88,620
|
|
|||||
Other policyholder funds
|
|
643,528
|
|
|
643,528
|
|
|
—
|
|
|
575,622
|
|
|
67,906
|
|
|||||
Long-term debt
|
|
297,469
|
|
|
311,315
|
|
|
—
|
|
|
311,315
|
|
|
—
|
|
($ in thousands)
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Assets
|
|
|
|
|
|
|
||
Derivative instruments, included in Short-term and other investments
|
|
$
|
12,630
|
|
|
$
|
15,550
|
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
|
|
||
FIA - embedded derivatives, included in Other policyholder funds
|
|
$
|
78,486
|
|
|
$
|
80,733
|
|
IUL - embedded derivatives,
included in Investment contract and life policy reserves
|
|
518
|
|
|
594
|
|
($ in thousands)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
|
2018
|
|
2017
|
||||
Change in fair value of derivatives (1):
|
|
|
|
|
|
||||
Revenues
|
|
|
|
|
|
||||
Net investment gains (losses)
|
|
|
$
|
(849
|
)
|
|
$
|
2,437
|
|
|
|
|
|
|
|
||||
Change in fair value of embedded derivatives:
|
|
|
|
|
|
||||
Revenues
|
|
|
|
|
|
||||
Net investment gains (losses)
|
|
|
$
|
2,288
|
|
|
$
|
(2,366
|
)
|
(1)
|
Includes the gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options.
|
($ in thousands)
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||
|
|
Credit Rating
|
|
Notional
|
|
Fair
|
|
Notional
|
|
Fair
|
||||||||||
Counterparty
|
|
S&P
|
|
Moody's
|
|
Amount
|
|
Value
|
|
Amount
|
|
Value
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Bank of America, N.A.
|
|
A+
|
|
Aa3
|
|
$
|
93,800
|
|
|
$
|
6,017
|
|
|
$
|
85,100
|
|
|
$
|
6,320
|
|
Barclays Bank PLC
|
|
A
|
|
A2
|
|
48,600
|
|
|
902
|
|
|
48,900
|
|
|
1,828
|
|
||||
Citigroup Inc.
|
|
BBB+
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Credit Suisse International
|
|
A
|
|
A1
|
|
21,100
|
|
|
1,469
|
|
|
21,100
|
|
|
1,444
|
|
||||
Societe Generale
|
|
A
|
|
|
|
92,400
|
|
|
4,242
|
|
|
91,700
|
|
|
5,958
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
|
|
|
|
$
|
255,900
|
|
|
$
|
12,630
|
|
|
$
|
246,800
|
|
|
$
|
15,550
|
|
($ in thousands)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
|
2018
|
|
2017
|
||||
Property and Casualty
|
|
|
|
|
|
||||
Beginning gross reserves (1)
|
|
|
$
|
319,182
|
|
|
$
|
307,757
|
|
Less: reinsurance recoverables
|
|
|
57,409
|
|
|
61,199
|
|
||
Net reserves, beginning of period (2)
|
|
|
261,773
|
|
|
246,558
|
|
||
Incurred claims and claim expenses:
|
|
|
|
|
|
||||
Claims occurring in the current period
|
|
|
120,988
|
|
|
123,204
|
|
||
Decrease in estimated reserves for claims occurring in prior periods (3)
|
|
|
(300
|
)
|
|
(1,000
|
)
|
||
Total claims and claim expenses incurred (4)
|
|
|
120,688
|
|
|
122,204
|
|
||
Claims and claim expense payments for claims occurring during:
|
|
|
|
|
|
||||
Current period
|
|
|
47,048
|
|
|
52,380
|
|
||
Prior periods
|
|
|
67,075
|
|
|
62,013
|
|
||
Total claims and claim expense payments
|
|
|
114,123
|
|
|
114,393
|
|
||
Net reserves, end of period (2)
|
|
|
268,338
|
|
|
254,369
|
|
||
Plus: reinsurance recoverables
|
|
|
62,917
|
|
|
61,804
|
|
||
Ending gross reserves (1)
|
|
|
$
|
331,255
|
|
|
$
|
316,173
|
|
(1)
|
Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for Life and Retirement of $27,062 thousand and $23,860 thousand as of March 31, 2018 and 2017, respectively, in addition to Property and Casualty reserves.
|
(2)
|
Reserves net of anticipated reinsurance recoverables.
|
(3)
|
Shows the amounts by which the Company decreased its reserves in each of the periods indicated for claims occurring in previous periods to reflect subsequent information on such claims and changes in their projected final settlement costs.
|
(4)
|
Benefits, claims and settlement expenses as reported in the Consolidated Statements of Operations also include amounts for Life and Retirement of $22,874 thousand and $21,892 thousand for the three month periods ended March 31, 2018 and 2017, respectively, in addition to Property and Casualty amounts.
|
($ in thousands)
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Short-term debt:
|
|
|
|
|
|
|
||
Bank Credit Facility, expires July 30, 2019
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Long-term debt:
|
|
|
|
|
|
|
||
4.50% Senior Notes, due December 1, 2025. Aggregate principal amount of $250,000 thousand less unaccrued discount of $532 thousand and $547 thousand (4.5% imputed rate) and unamortized debt issuance costs of $1,932 thousand and $1,984 thousand
|
|
247,536
|
|
|
247,469
|
|
||
Federal Home Loan Bank borrowing
|
|
50,000
|
|
|
50,000
|
|
||
Total
|
|
$
|
297,536
|
|
|
$
|
297,469
|
|
($ in thousands)
|
|
Gross
Amount
|
|
Ceded to
Other
Companies
|
|
Assumed
from Other
Companies
|
|
Net
Amount
|
||||||||
Three months ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Premiums written and contract deposits (1)
|
|
$
|
288,816
|
|
|
$
|
5,514
|
|
|
$
|
706
|
|
|
$
|
284,008
|
|
Premiums and contract charges earned
|
|
207,737
|
|
|
5,528
|
|
|
789
|
|
|
202,998
|
|
||||
Benefits, claims and settlement expenses
|
|
151,968
|
|
|
9,014
|
|
|
608
|
|
|
143,562
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Three months ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Premiums written and contract deposits (1)
|
|
$
|
301,512
|
|
|
$
|
5,510
|
|
|
$
|
730
|
|
|
$
|
296,732
|
|
Premiums and contract charges earned
|
|
200,455
|
|
|
5,534
|
|
|
801
|
|
|
195,722
|
|
||||
Benefits, claims and settlement expenses
|
|
147,271
|
|
|
3,883
|
|
|
708
|
|
|
144,096
|
|
(1)
|
This measure is not based on accounting principles generally accepted in the U.S. (non-GAAP). An explanation of this non-GAAP measure is contained in the Glossary of Selected Terms included as an exhibit in the Company's reports filed with the SEC.
|
($ in thousands)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
|
2018
|
|
2017
|
||||
Insurance premiums and contract charges earned
|
|
|
|
|
|
||||
Property and Casualty
|
|
|
$
|
165,458
|
|
|
$
|
158,318
|
|
Retirement
|
|
|
8,068
|
|
|
6,601
|
|
||
Life
|
|
|
29,472
|
|
|
30,803
|
|
||
Total
|
|
|
$
|
202,998
|
|
|
$
|
195,722
|
|
|
|
|
|
|
|
||||
Net investment income
|
|
|
|
|
|
||||
Property and Casualty
|
|
|
$
|
9,516
|
|
|
$
|
9,177
|
|
Retirement
|
|
|
64,169
|
|
|
63,442
|
|
||
Life
|
|
|
18,340
|
|
|
18,288
|
|
||
Corporate and Other
|
|
|
36
|
|
|
12
|
|
||
Intersegment eliminations
|
|
|
(197
|
)
|
|
(208
|
)
|
||
Total
|
|
|
$
|
91,864
|
|
|
$
|
90,711
|
|
|
|
|
|
|
|
||||
Net income (loss)
|
|
|
|
|
|
||||
Property and Casualty
|
|
|
$
|
9,722
|
|
|
$
|
2,735
|
|
Retirement
|
|
|
11,421
|
|
|
11,530
|
|
||
Life
|
|
|
3,787
|
|
|
3,885
|
|
||
Corporate and Other
|
|
|
(4,775
|
)
|
|
(2,832
|
)
|
||
Total
|
|
|
$
|
20,155
|
|
|
$
|
15,318
|
|
($ in thousands)
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Assets
|
|
|
|
|
||||
Property and Casualty
|
|
$
|
1,202,791
|
|
|
$
|
1,217,394
|
|
Retirement
|
|
7,969,848
|
|
|
8,063,912
|
|
||
Life
|
|
1,785,912
|
|
|
1,815,732
|
|
||
Corporate and Other
|
|
140,526
|
|
|
143,784
|
|
||
Intersegment eliminations
|
|
(30,535
|
)
|
|
(42,482
|
)
|
||
Total
|
|
$
|
11,068,542
|
|
|
$
|
11,198,340
|
|
($ in millions)
|
|
Three Months Ended March 31,
|
|
Change From Prior Year
|
|||||||||||
|
|
2018
|
|
2017
|
|
Percent
|
|
Amount
|
|||||||
Insurance premiums written and contract deposits
(includes annuity and life contract deposits)
|
|
|
|
|
|
|
|
|
|||||||
Property and Casualty
|
|
$
|
159.4
|
|
|
$
|
152.9
|
|
|
4.3
|
%
|
|
$
|
6.5
|
|
Retirement (annuity)
|
|
98.8
|
|
|
117.3
|
|
|
-15.8
|
%
|
|
(18.5
|
)
|
|||
Life
|
|
25.8
|
|
|
26.5
|
|
|
-2.6
|
%
|
|
(0.7
|
)
|
|||
Total
|
|
$
|
284.0
|
|
|
$
|
296.7
|
|
|
-4.3
|
%
|
|
$
|
(12.7
|
)
|
|
|
|
|
|
|
|
|
|
|||||||
Insurance premiums and contract charges earned
(excludes annuity and life contract deposits)
|
|
|
|
|
|
|
|
|
|||||||
Property and Casualty
|
|
$
|
165.5
|
|
|
$
|
158.3
|
|
|
4.5
|
%
|
|
$
|
7.2
|
|
Retirement (annuity)
|
|
8.0
|
|
|
6.6
|
|
|
21.2
|
%
|
|
1.4
|
|
|||
Life
|
|
29.5
|
|
|
30.8
|
|
|
-4.2
|
%
|
|
(1.3
|
)
|
|||
Total
|
|
$
|
203.0
|
|
|
$
|
195.7
|
|
|
3.7
|
%
|
|
$
|
7.3
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
|
March 31, 2017
|
Property and Casualty
|
|
|
|
|
|
|
Automobile
|
|
474,478
|
|
478,951
|
|
483,683
|
Property and other liability
|
|
215,809
|
|
216,306
|
|
219,017
|
Total
|
|
690,287
|
|
695,257
|
|
702,700
|
Retirement
|
|
223,472
|
|
223,287
|
|
220,284
|
Life
|
|
197,885
|
|
197,889
|
|
197,900
|
($ in millions)
|
|
March 31, 2018
|
|||||||||||||
|
|
Number of
Issuers
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Pretax Net
Unrealized
Investment
Gain (Loss)
|
|||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Corporate bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Banking & Finance
|
|
117
|
|
|
$
|
653.6
|
|
|
$
|
634.3
|
|
|
$
|
19.3
|
|
Insurance
|
|
56
|
|
|
267.2
|
|
|
248.2
|
|
|
19.0
|
|
|||
Energy (1)
|
|
58
|
|
|
203.8
|
|
|
195.7
|
|
|
8.1
|
|
|||
Real Estate
|
|
44
|
|
|
188.6
|
|
|
184.3
|
|
|
4.3
|
|
|||
Technology
|
|
34
|
|
|
172.5
|
|
|
170.4
|
|
|
2.1
|
|
|||
HealthCare, Pharmacy
|
|
49
|
|
|
160.6
|
|
|
155.5
|
|
|
5.1
|
|
|||
Utilities
|
|
40
|
|
|
132.4
|
|
|
117.4
|
|
|
15.0
|
|
|||
Transportation
|
|
36
|
|
|
130.6
|
|
|
127.0
|
|
|
3.6
|
|
|||
Telecommunications
|
|
19
|
|
|
81.7
|
|
|
76.4
|
|
|
5.3
|
|
|||
Natural Gas
|
|
16
|
|
|
73.6
|
|
|
71.3
|
|
|
2.3
|
|
|||
All other corporates (2)
|
|
185
|
|
|
416.8
|
|
|
403.2
|
|
|
13.6
|
|
|||
Total corporate bonds
|
|
654
|
|
|
2,481.4
|
|
|
2,383.7
|
|
|
97.7
|
|
|||
Mortgage-backed securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
U.S. Government and federally sponsored agencies
|
|
236
|
|
|
431.4
|
|
|
416.0
|
|
|
15.4
|
|
|||
Commercial (3)
|
|
141
|
|
|
612.7
|
|
|
621.5
|
|
|
(8.8
|
)
|
|||
Other
|
|
29
|
|
|
84.5
|
|
|
84.4
|
|
|
0.1
|
|
|||
Municipal bonds (4)
|
|
403
|
|
|
1,861.3
|
|
|
1,721.0
|
|
|
140.3
|
|
|||
Government bonds
|
|
|
|
|
|
|
|
|
|||||||
U.S.
|
|
41
|
|
|
762.0
|
|
|
760.4
|
|
|
1.6
|
|
|||
Foreign
|
|
16
|
|
|
99.0
|
|
|
94.8
|
|
|
4.2
|
|
|||
Collateralized loan obligations (5)
|
|
125
|
|
|
646.0
|
|
|
644.1
|
|
|
1.9
|
|
|||
Asset-backed securities
|
|
111
|
|
|
656.4
|
|
|
647.7
|
|
|
8.7
|
|
|||
Total fixed maturity securities
|
|
1,756
|
|
|
$
|
7,634.7
|
|
|
$
|
7,373.6
|
|
|
$
|
261.1
|
|
|
|
|
|
|
|
|
|
|
|||||||
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Non-redeemable preferred stocks
|
|
12
|
|
|
$
|
59.2
|
|
|
|
|
|
||||
Common stocks
|
|
93
|
|
|
52.4
|
|
|
|
|
|
|||||
Closed-end fund
|
|
1
|
|
|
19.4
|
|
|
|
|
|
|||||
Total equity securities
|
|
106
|
|
|
$
|
131.0
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|||||||
Total
|
|
1,862
|
|
|
$
|
7,765.7
|
|
|
|
|
|
(1)
|
At March 31, 2018, the fair value amount included $13.6 million which were non-investment grade.
|
(2)
|
The All other corporates category contains 19 additional industry sectors. Gaming, broadcasting and media, food and beverage, metal and mining and retail represented $269.3 million of fair value at March 31, 2018, with the remaining 14 classification each representing less than $28.6 million.
|
(3)
|
At March 31, 2018, 100% were investment grade, with an overall credit rating of AA, and the positions were well diversified by property type, geography and sponsor.
|
(4)
|
Holdings are geographically diversified, 39.3% are tax-exempt and 77.8% are revenue bonds tied to essential services, such as mass transit, water and sewer. The overall credit quality of the municipal bond portfolio was AA- at March 31, 2018.
|
(5)
|
Based on fair value, 97.1% of the collateralized debt obligation securities were rated investment grade by Standard and Poor’s Corporation (S&P), Moody’s Investors Service, Inc. (Moody’s) and/or Fitch Ratings (Fitch) at March 31, 2018.
|
($ in millions)
|
|
Percent of Portfolio
|
|
|
|
|
||||||||
|
|
Fair Value
|
|
March 31, 2018
|
||||||||||
|
|
December 31, 2017
|
|
March 31, 2018
|
|
Fair
Value
|
|
Amortized
Cost
|
||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||
AAA
|
|
7.4
|
%
|
|
7.8
|
%
|
|
$
|
592.5
|
|
|
$
|
583.2
|
|
AA (2)
|
|
40.4
|
|
|
41.0
|
|
|
3,132.8
|
|
|
3,043.5
|
|
||
A
|
|
23.8
|
|
|
23.4
|
|
|
1,784.5
|
|
|
1,695.8
|
|
||
BBB
|
|
24.8
|
|
|
24.3
|
|
|
1,858.3
|
|
|
1,792.3
|
|
||
BB
|
|
2.2
|
|
|
2.2
|
|
|
170.7
|
|
|
169.6
|
|
||
B
|
|
0.6
|
|
|
0.5
|
|
|
41.1
|
|
|
40.9
|
|
||
CCC or lower
|
|
0.1
|
|
|
0.1
|
|
|
1.1
|
|
|
1.1
|
|
||
Not rated (3)
|
|
0.7
|
|
|
0.7
|
|
|
53.7
|
|
|
47.2
|
|
||
Total fixed maturity securities
|
|
100.0
|
%
|
|
100.0
|
%
|
|
$
|
7,634.7
|
|
|
$
|
7,373.6
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||
AAA
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
AA
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
A
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
BBB
|
|
45.4
|
%
|
|
45.2
|
%
|
|
$
|
59.2
|
|
|
|
||
BB
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
B
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
CCC or lower
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
Not rated
|
|
54.6
|
|
|
54.8
|
|
|
71.8
|
|
|
|
|||
Total equity securities
|
|
100.0
|
%
|
|
100.0
|
%
|
|
$
|
131.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total
|
|
|
|
|
|
|
|
$
|
7,765.7
|
|
|
|
|
(1)
|
Ratings are as assigned primarily by S&P when available, with remaining ratings as assigned on an equivalent basis by Moody’s or Fitch. Ratings for publicly traded securities are determined when the securities are acquired and are updated monthly to reflect any changes in ratings.
|
(2)
|
At March 31, 2018, the AA rated fair value amount included $762.0 million of U.S. Government and federally sponsored agency securities and $619.7 million of mortgage- and asset-backed securities issued by U.S. Government and federally sponsored agencies.
|
(3)
|
This category primarily represents private placement and municipal securities not rated by either S&P, Moody’s or Fitch.
|
($ in millions)
|
|
Three Months Ended March 31,
|
|
Change From Prior Year
|
|||||||||||
|
|
2018
|
|
2017
|
|
Percent
|
|
Amount
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
Property and Casualty
|
|
$
|
120.7
|
|
|
$
|
122.2
|
|
|
-1.2
|
%
|
|
$
|
(1.5
|
)
|
Retirement
|
|
1.9
|
|
|
1.1
|
|
|
72.7
|
%
|
|
0.8
|
|
|||
Life
|
|
21.0
|
|
|
20.8
|
|
|
1.0
|
%
|
|
0.2
|
|
|||
Total
|
|
$
|
143.6
|
|
|
$
|
144.1
|
|
|
-0.3
|
%
|
|
$
|
(0.5
|
)
|
|
|
|
|
|
|
|
|
|
|||||||
Property and Casualty catastrophe losses, included above
|
|
$
|
9.8
|
|
|
$
|
17.2
|
|
|
-43.0
|
%
|
|
$
|
(7.4
|
)
|
($ in millions)
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Incurred claims and claim expenses:
|
|
|
|
|
||||
Claims occurring in the current year
|
|
$
|
121.0
|
|
|
$
|
123.2
|
|
Decrease in estimated reserves for claims occurring in prior years
|
|
(0.3
|
)
|
|
(1.0
|
)
|
||
Total claims and claim expenses incurred
|
|
$
|
120.7
|
|
|
$
|
122.2
|
|
|
|
|
|
|
||||
Property and Casualty loss ratio:
|
|
|
|
|
||||
Total
|
|
72.9
|
%
|
|
77.2
|
%
|
||
Effect of catastrophe losses, included above
|
|
5.9
|
%
|
|
10.8
|
%
|
||
Effect of prior years’ reserve development, included above
|
|
-0.2
|
%
|
|
-0.6
|
%
|
($ in millions)
|
|
Three Months Ended March 31,
|
|
Change From Prior Year
|
|||||||||||
|
|
2018
|
|
2017
|
|
Percent
|
|
Amount
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
Retirement (annuity)
|
|
$
|
38.7
|
|
|
$
|
37.5
|
|
|
3.2
|
%
|
|
$
|
1.2
|
|
Life
|
|
11.3
|
|
|
11.2
|
|
|
0.9
|
%
|
|
0.1
|
|
|||
Total
|
|
$
|
50.0
|
|
|
$
|
48.7
|
|
|
2.7
|
%
|
|
$
|
1.3
|
|
($ in millions)
|
|
March 31, 2018
|
|||||||||||||||
|
|
|
|
|
|
Deferred Annuities at
|
|||||||||||
|
|
Total Deferred Annuities
|
|
Minimum Guaranteed Rate
|
|||||||||||||
|
|
Percent
of Total
|
|
Accumulated
Value (AV)
|
|
Percent of
Total Deferred
Annuities AV
|
|
Percent
of Total
|
|
Accumulated
Value
|
|||||||
Minimum guaranteed interest rates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Less than 2%
|
|
25.3
|
%
|
|
$
|
1,114.2
|
|
|
56.8
|
%
|
|
16.4
|
%
|
|
$
|
632.7
|
|
Equal to 2% but less than 3%
|
|
7.0
|
|
|
306.0
|
|
|
83.0
|
%
|
|
6.5
|
|
|
253.9
|
|
||
Equal to 3% but less than 4%
|
|
14.0
|
|
|
614.3
|
|
|
99.9
|
%
|
|
15.9
|
|
|
613.8
|
|
||
Equal to 4% but less than 5%
|
|
52.5
|
|
|
2,311.1
|
|
|
100.0
|
%
|
|
59.8
|
|
|
2,311.2
|
|
||
5% or higher
|
|
1.2
|
|
|
53.5
|
|
|
100.0
|
%
|
|
1.4
|
|
|
53.5
|
|
||
Total
|
|
100.0
|
%
|
|
$
|
4,399.1
|
|
|
87.9
|
%
|
|
100.0
|
%
|
|
$
|
3,865.1
|
|
($ in millions)
|
|
Three Months Ended March 31,
|
|
Change From Prior Year
|
|||||||||||
|
|
2018
|
|
2017
|
|
Percent
|
|
Amount
|
|||||||
Analysis of net income (loss) by segment:
|
|
|
|
|
|
|
|
|
|||||||
Property and Casualty
|
|
$
|
9.7
|
|
|
$
|
2.7
|
|
|
259.3
|
%
|
|
$
|
7.0
|
|
Retirement
|
|
11.4
|
|
|
11.5
|
|
|
-0.9
|
%
|
|
(0.1
|
)
|
|||
Life
|
|
3.8
|
|
|
3.9
|
|
|
-2.6
|
%
|
|
(0.1
|
)
|
|||
Corporate and Other (1)
|
|
(4.7
|
)
|
|
(2.8
|
)
|
|
-67.9
|
%
|
|
(1.9
|
)
|
|||
Net income
|
|
$
|
20.2
|
|
|
$
|
15.3
|
|
|
32.0
|
%
|
|
$
|
4.9
|
|
|
|
|
|
|
|
|
|
|
|||||||
Effect of catastrophe losses, after tax, included above
|
|
$
|
(7.7
|
)
|
|
$
|
(11.1
|
)
|
|
-30.6
|
%
|
|
$
|
3.4
|
|
Effect of net investment gains
(losses), after tax, included above
|
|
$
|
(1.3
|
)
|
|
$
|
(0.1
|
)
|
|
N.M.
|
|
|
$
|
(1.2
|
)
|
|
|
|
|
|
|
|
|
|
|||||||
Diluted:
|
|
|
|
|
|
|
|
|
|||||||
Net income per share
|
|
$
|
0.48
|
|
|
$
|
0.37
|
|
|
29.7
|
%
|
|
$
|
0.11
|
|
Weighted average number of common and
common equivalent shares (in millions)
|
|
41.7
|
|
|
41.3
|
|
|
1.0
|
%
|
|
0.4
|
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Property and casualty combined ratio:
|
|
|
|
|
|
|
|
|
|||||||
Total
|
|
98.9
|
%
|
|
105.5
|
%
|
|
-
|
|
|
-6.6 pts
|
|
|||
Effect of catastrophe losses, included above
|
|
5.9
|
%
|
|
10.8
|
%
|
|
-
|
|
|
-4.9 pts
|
|
|||
Effect of prior years’ reserve development,included above
|
|
-0.2
|
%
|
|
-0.6
|
%
|
|
-
|
|
|
0.4 pts
|
|
(1)
|
Corporate and Other includes interest expense on corporate debt, net investment gains and losses, corporate debt retirement costs, certain public company expenses and other corporate-level items. The Company does not allocate the impact of corporate-level transactions to the operating segments, consistent with the basis for management’s evaluation of the results of those segments.
|
|
|
Insurance Financial
|
|
|
||||
|
|
Strength Ratings (Outlook)
|
|
Debt Ratings (Outlook)
|
||||
As of April 30, 2018
|
|
|
|
|
||||
S&P
|
|
A
|
|
(stable)
|
|
BBB
|
|
(stable)
|
Moody’s
|
|
|
|
|
|
|
|
|
Horace Mann Life Insurance Company
|
|
A3
|
|
(positive)
|
|
N.A.
|
|
|
HMEC’s Property and Casualty subsidiaries
|
|
A3
|
|
(positive)
|
|
N.A.
|
|
|
HMEC
|
|
N.A.
|
|
|
|
Baa3
|
|
(positive)
|
A.M. Best
|
|
A
|
|
(stable)
|
|
bbb
|
|
(stable)
|
Fitch
|
|
A
|
|
(stable)
|
|
BBB
|
|
(stable)
|
•
|
It could inhibit our ability to sell and service IRAs, resulting in a change and/or a reduction of the types of products we offer for IRAs, and impact our relationship with current clients.
|
•
|
It could require changes in the way that we compensate our agents, thereby impacting our agents' business model.
|
•
|
It could require changes in our distribution model for financial services products and could result in a decrease in the number of our agents.
|
•
|
It could increase our costs of doing IRA business and increase our litigation and regulatory risks.
|
•
|
It could increase the cost and complexity of regulatory compliance for our Retirement segment's products.
|
Period
|
|
Total Number
of Shares
Purchased
|
|
Average Price
Paid Per Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
|
Maximum Number
(or Approximate Dollar
Value) of Shares
That May Yet Be
Purchased Under The
Plans or Programs
|
|||
|
|
|
|
|
|
|
|
|
|||
January 1 - 31
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$27.8 million
|
February 1 - 28
|
|
161
|
|
|
$37.50
|
|
161
|
|
|
$27.8 million
|
|
March 1 - 31
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$27.8 million
|
Total
|
|
161
|
|
|
$37.50
|
|
161
|
|
|
$27.8 million
|
10.2(a)*
|
|
|
|
|
|
10.2(b)*
|
|
|
|
|
|
10.2(c)*
|
|
|
|
|
|
10.2(d)*
|
|
|
|
|
|
10.2(e)*
|
|
|
|
|
|
10.3*
|
|
|
|
|
|
10.3(a)*
|
|
|
|
|
|
10.3(b)*
|
|
|
|
|
|
10.3(c)*
|
|
|
|
|
|
10.3(d)*
|
|
|
|
|
|
10.3(e)*
|
|
|
10.3(f)*
|
|
|
|
|
|
|
|
|
HORACE MANN EDUCATORS CORPORATION
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
May 9, 2018
|
|
/s/ Marita Zuraitis
|
|
|
|
|
|
|
|
Marita Zuraitis
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
May 9, 2018
|
|
/s/ Bret A. Conklin
|
|
|
|
|
|
|
|
Bret A. Conklin
|
|
|
|
Executive Vice President and
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
May 9, 2018
|
|
/s/ Kimberly A. Johnson
|
|
|
|
|
|
|
|
Kimberly A. Johnson
|
|
|
|
Vice President, Controller and
|
|
|
|
Principal Accounting Officer
|
Compensation Element
|
Non-Employee Director Compensation (1)(2)
|
|
Board Chairman Annual Retainer
|
$115,000
|
|
Board Member Annual Retainer
(other than Board Chairman) |
$60,000
|
|
Committee Chairman Annual Retainer
|
$25,000 Audit Committee
$15,000 Compensation Committee
$15,000 Customer Experience & Technology Committee
$15,000 Investment & Finance Committee
$12,000 Nominating & Governance Committee
|
|
Committee Member Annual Retainer
(other than Committee Chairman) |
$10,000 Audit Committee
$ 7,500 all other Committees (3)
|
|
Share-based Compensation
|
Fair value on the date of the respective awards is used to determine the number of Restricted Stock Units (“RSUs”) awarded.
An annual award of $95,000 in RSUs following the Annual Shareholder Meeting. $95,000 in RSUs if joining the Board within 6 months after the prior Annual Shareholder Meeting, $47,500 in RSUs if joining more than 6 months after the prior Annual Shareholder Meeting but before the next Annual Shareholder Meeting.
All awards have a 1 year vesting period.
|
|
Basic Group Term Life Insurance
|
Premium for $10,000 face amount
|
|
Business Travel Accident Insurance
|
Premium for $100,000 coverage
|
(1)
|
Annual retainer fees are paid following the Annual Shareholder Meeting each year. The annual retainer fees are prorated to the extent that a non-employee Director joins the Board after the Annual Shareholder Meeting.
|
(2)
|
Non-employee Directors may elect to defer cash compensation into RSUs.
|
(3)
|
All other Committees except for the Executive Committee which is not paid an Annual Retainer.
|
Named Executive Officer
|
Annualized Salary
|
Marita Zuraitis
President and Chief Executive Officer
|
$900,000
|
Bret A. Conklin
Executive Vice President and Chief Financial Officer
|
$350,000
|
Matthew P. Sharpe
Executive Vice President, Strategy & Business Development
|
$425,000
|
William J. Caldwell
Executive Vice President, Property & Casualty
|
$385,000
|
Donald M. Carley
Senior Vice President, General Counsel, Corporate Secretary, and Chief Compliance Officer
|
$320,000
|
Note: The effective date of entry shall be subject to Section 4.2(a)
|
||
|
|
|
NAME OR TITLE
|
|
EFFECTIVE DATE OF
|
|
|
PARTICIPATION*
|
|
|
|
TIER I PARTICIPANTS
|
||
President and CEO
|
|
May 16, 2013
|
|
|
|
TIER II PARTICIPANTS
|
||
EVP and CFO
|
|
May 23, 2017
|
EVP, Strategy & Business Development
|
|
February 15, 2012
|
EVP, Property & Casualty
|
|
July 1, 2015
|
|
|
|
TIER III PARTICIPANTS
|
||
SVP, General Counsel, Corporate Secretary
|
|
|
and Chief Compliance Officer
|
|
January 30, 2016
|
|
|
|
*Subject to acceptance within 30 days of effective date of participation.
|
NAME OR TITLE
|
|
EFFECTIVE DATE OF
|
|
|
PARTICIPATION*
|
|
|
|
TIER I PARTICIPANTS
|
||
President and CEO
|
|
May 16, 2013
|
|
|
|
TIER II PARTICIPANTS
|
||
EVP and CFO
|
|
May 23, 2017
|
EVP, Strategy & Business Development
|
|
February 15, 2012
|
EVP, Property & Casualty
|
|
July 1, 2015
|
|
|
|
TIER III PARTICIPANTS
|
||
SVP, General Counsel, Corporate Secretary
|
|
January 30, 2016
|
and Chief Compliance Officer
|
|
|
|
|
|
*Subject to acceptance within 30 days of effective date of participation.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Basic:
|
|
|
|
|
||||
|
|
|
|
|
||||
Net income
|
|
$
|
20,155
|
|
|
$
|
15,318
|
|
Weighted average number of common
shares during the period (in thousands)
|
|
41,497
|
|
|
41,135
|
|
||
|
|
|
|
|
||||
Net income per share – basic
|
|
$
|
0.49
|
|
|
$
|
0.37
|
|
|
|
|
|
|
||||
|
|
|
|
|
||||
Diluted:
|
|
|
|
|
||||
|
|
|
|
|
||||
Net income
|
|
$
|
20,155
|
|
|
$
|
15,318
|
|
Weighted average number of common
shares during the period
|
|
41,497
|
|
|
41,135
|
|
||
Weighted average number of common
equivalent shares to reflect the dilutive effect
of common stock equivalent securities:
|
|
|
|
|
||||
Stock options
|
|
115
|
|
|
195
|
|
||
Common stock units related to deferred
compensation for employees
|
|
25
|
|
|
29
|
|
||
Restricted common stock units related
to incentive compensation
|
|
16
|
|
|
(17
|
)
|
||
Total common and common equivalent shares
adjusted to calculate diluted earnings per share
|
|
41,653
|
|
|
41,342
|
|
||
|
|
|
|
|
||||
Net income per share – diluted
|
|
$
|
0.48
|
|
|
$
|
0.37
|
|
/s/ KPMG LLP
|
|
KPMG LLP
|
|
|
|
Chicago, Illinois
|
|
May 9, 2018
|
|
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 that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
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.
|
/s/ Marita Zuraitis
|
|
|
Marita Zuraitis, Chief Executive Officer
|
|
|
Horace Mann Educators Corporation
|
|
|
|
|
|
Date:
|
May 9, 2018
|
|
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 that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
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.
|
/s/ Bret A. Conklin
|
|
|
Bret A. Conklin, Chief Financial Officer
|
|
|
Horace Mann Educators Corporation
|
|
|
|
|
|
Date:
|
May 9, 2018
|
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Marita Zuraitis
|
|
|
Marita Zuraitis
|
|
|
Chief Executive Officer
|
|
|
|
|
|
Date:
|
May 9, 2018
|
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Bret A. Conklin
|
|
|
Bret A. Conklin
|
|
|
Chief Financial Officer
|
|
|
|
|
|
Date:
|
May 9, 2018
|
|
•
|
Pretax core earnings - Pretax net income (loss) excluding pretax impact of net investment gains (losses), discontinued operations, and cumulative effect of changes in accounting principles when applicable. Net income is the most comparable GAAP measure.
|
•
|
Segment core earnings - Determined in the same manner as core earnings on a consolidated basis. Management uses segment core earnings to analyze each segment's performance and as a tool in making business decisions. Financial statement users also consider core earnings when analyzing the results and trends of insurance companies.
|
•
|
Net income return on equity excluding net unrealized investment gains and losses on securities and the effect of a change in tax laws and tax rates at enactment date - The ratio of (1) trailing 12 month net income excluding the effect of a change in tax laws and tax rates at enactment date to (2) 5 quarter average shareholders' equity excluding net unrealized investment gains and losses on securities and the effect of a change in tax laws and tax rates at enactment date. Net income return on equity is the most comparable GAAP measure.
|
•
|
Core return on equity - The ratio of (1) trailing 12 month core earnings to (2) 5 quarter average shareholders' equity excluding the effect of a change in tax laws and tax rates at enactment date. Net income return on equity is the most comparable GAAP measure.
|
•
|
Core return on equity excluding net unrealized investment gains and losses on securities - The ratio of (1) trailing 12 month core earnings to (2) 5 quarter average shareholders’ equity excluding net unrealized investment gains and losses on securities and the effect of a change in tax laws and tax rates at enactment date. Net income return on equity is the most comparable GAAP measure.
|
•
|
Loss ratio or loss and loss adjustment expense ratio - The ratio of (1) the sum of net incurred losses and loss adjustment expenses to (2) net earned premiums.
|
•
|
Underlying loss ratio - The sum of the Loss Ratio adjusted to remove the effect of catastrophe costs and prior years' reserve development. The Loss Ratio is the most directly comparable GAAP measure. Management believes this ratio provides a valuable measure of the Company's underlying underwriting performance that may be obscured by the effects of catastrophe costs and prior years' reserve development, the amounts of which may be significant and may vary significantly between periods.
|
•
|
Expense ratio - The ratio of (1) the sum of operating expenses and the amortization of policy acquisition costs to (2) net earned premiums.
|
•
|
Combined ratio - The sum of the Loss Ratio and the Expense Ratio. A Combined Ratio less than 100% generally indicates profitable underwriting prior to the consideration of net investment income.
|
•
|
Underlying combined ratio or combined ratio excluding catastrophe costs and prior years’ reserve development - The sum of the Loss Ratio and the Expense Ratio adjusted to remove the effect of catastrophe costs and prior years’ reserve development. The Combined Ratio is the most directly comparable GAAP measure. Management believes this ratio provides a valuable measure of the Company’s underlying underwriting performance that may be obscured by the effects of catastrophe costs and prior years’ reserve development, the amounts of which may be significant and may vary significantly between periods.
|