[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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1 Horace Mann Plaza, Springfield, Illinois 62715-0001
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(Address of principal executive offices, including Zip Code)
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Registrant’s Telephone Number, Including Area Code: 217-789-2500
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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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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol
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Name of each exchange
on which registered
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Common Stock, $0.001 par value
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HMN
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New York Stock Exchange
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1A.
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Item 2.
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Item 5.
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Item 6.
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/s/ KPMG LLP
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KPMG LLP
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Chicago, Illinois
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May 10, 2019
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March 31, 2019
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December 31, 2018
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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 2019, $7,487,473; 2018, $7,373,911)
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$
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7,798,004
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$
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7,515,318
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Equity securities, at fair value
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105,487
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111,750
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Limited partnership interests
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330,434
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328,516
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Short-term and other investments
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323,853
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295,093
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Total investments
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8,557,778
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8,250,677
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Cash
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7,281
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11,906
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Deferred policy acquisition costs
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275,431
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298,742
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Goodwill
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57,483
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47,396
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Other assets
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439,008
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422,047
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Separate Account (variable annuity) assets
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2,224,099
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2,001,128
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Total assets
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$
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11,561,080
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$
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11,031,896
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Policy liabilities
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Investment contract and life policy reserves
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$
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5,748,140
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$
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5,711,193
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Unpaid claims and claim expenses
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393,549
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396,714
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Unearned premiums
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267,029
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276,225
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Total policy liabilities
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6,408,718
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6,384,132
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Other policyholder funds
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821,813
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767,988
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Other liabilities
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384,926
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290,358
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Long-term debt
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297,810
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297,740
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Separate Account (variable annuity) liabilities
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2,224,099
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2,001,128
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Total liabilities
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10,137,366
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9,741,346
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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, $0.001 par value, authorized 75,000,000 shares;
issued, 2019, 66,000,489; 2018, 65,820,369
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66
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66
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Additional paid-in capital
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474,336
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475,109
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Retained earnings
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1,236,621
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1,216,582
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Accumulated other comprehensive income (loss), net of tax:
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Net unrealized investment gains on securities
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210,839
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96,941
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Net funded status of benefit plans
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(12,185
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)
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(12,185
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)
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Treasury stock, at cost, 2019, 24,850,484 shares;
2018, 24,850,484 shares
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(485,963
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)
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(485,963
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)
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Total shareholders’ equity
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1,423,714
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1,290,550
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Total liabilities and shareholders’ equity
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$
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11,561,080
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$
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11,031,896
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Three Months Ended
March 31, |
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2019
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2018
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Revenues
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Insurance premiums and contract charges earned
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$
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209,785
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$
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202,998
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Net investment income
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92,800
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91,864
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Net investment gains (losses)
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7,417
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(1,654
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)
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Other income
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3,211
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2,281
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Total revenues
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313,213
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295,489
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Benefits, losses and expenses
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Benefits, claims and settlement expenses
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139,384
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143,562
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Interest credited
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52,922
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50,035
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DAC amortization expense
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24,973
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26,705
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Operating expenses
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54,053
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48,169
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Interest expense
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3,303
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3,172
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Total benefits, losses and expenses
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274,635
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271,643
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Income before income taxes
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38,578
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23,846
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Income tax expense
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6,412
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3,691
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Net income
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$
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32,166
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$
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20,155
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Net income per share
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Basic
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$
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0.77
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$
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0.49
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Diluted
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$
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0.77
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$
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0.48
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Weighted average number of shares
and equivalent shares
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Basic
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41,610
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41,497
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Diluted
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41,785
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41,653
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Net investment gains (losses)
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Total other-than-temporary impairment losses
on securities
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$
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(236
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)
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$
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(110
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)
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Portion of losses recognized in other
comprehensive income (loss)
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—
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—
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Net other-than-temporary impairment losses
on securities recognized in earnings
|
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(236
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)
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(110
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)
|
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Sales and other, net
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4,838
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|
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2,203
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Change in fair value - equity securities
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3,506
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(5,186
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)
|
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Change in fair value and gains realized
on settlements - derivative instruments
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(691
|
)
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1,439
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Total
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$
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7,417
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$
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(1,654
|
)
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Three Months Ended
March 31, |
||||||
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2019
|
|
2018
|
||||
Comprehensive income (loss)
|
|
|
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Net income
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$
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32,166
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|
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$
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20,155
|
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Other comprehensive income (loss), net of tax:
|
|
|
|
|
||||
Change in net unrealized investment gains
(losses) on securities
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113,898
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(107,096
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)
|
||
Change in net funded status of benefit plans
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|
—
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|
|
—
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|
||
Cumulative effect of change in accounting principle
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|
—
|
|
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(15,041
|
)
|
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Other comprehensive income (loss)
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113,898
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|
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(122,137
|
)
|
||
Total
|
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$
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146,064
|
|
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$
|
(101,982
|
)
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Three Months Ended
March 31, |
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2019
|
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2018
|
||||
Common stock, $0.001 par value
|
|
|
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||||
Beginning balance
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$
|
66
|
|
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$
|
65
|
|
Options exercised, 2019, 26,094 shares; 2018, 56,614 shares
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|
—
|
|
|
—
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|
||
Conversion of common stock units, 2019, 7,585 shares;
2018, 11,804 shares
|
|
—
|
|
|
—
|
|
||
Conversion of restricted stock units, 2019, 146,441 shares;
2018, 105,116 shares
|
|
—
|
|
|
1
|
|
||
Ending balance
|
|
66
|
|
|
66
|
|
||
|
|
|
|
|
||||
Additional paid-in capital
|
|
|
|
|
||||
Beginning balance
|
|
475,109
|
|
|
464,246
|
|
||
Options exercised and conversion of common stock
units and restricted stock units
|
|
(2,104
|
)
|
|
(125
|
)
|
||
Share-based compensation expense
|
|
1,331
|
|
|
2,156
|
|
||
Ending balance
|
|
474,336
|
|
|
466,277
|
|
||
|
|
|
|
|
||||
Retained earnings
|
|
|
|
|
||||
Beginning balance
|
|
1,216,582
|
|
|
1,231,177
|
|
||
Net income
|
|
32,166
|
|
|
20,155
|
|
||
Dividends, 2019, $0.2875 per share; 2018, $0.2850 per share
|
|
(12,127
|
)
|
|
(11,979
|
)
|
||
Cumulative effect of change in accounting principle
|
|
—
|
|
|
15,041
|
|
||
Ending balance
|
|
1,236,621
|
|
|
1,254,394
|
|
||
|
|
|
|
|
||||
Accumulated other comprehensive income (loss), net of tax:
|
|
|
|
|
||||
Beginning balance
|
|
84,756
|
|
|
286,960
|
|
||
Change in net unrealized investment gains on securities
|
|
113,898
|
|
|
(107,096
|
)
|
||
Change in net funded status of benefit plans
|
|
—
|
|
|
—
|
|
||
Cumulative effect of change in accounting principle
|
|
—
|
|
|
(15,041
|
)
|
||
Ending balance
|
|
198,654
|
|
|
164,823
|
|
||
|
|
|
|
|
||||
Treasury stock, at cost
|
|
|
|
|
||||
Beginning balance, 2019, 24,850,484 shares;
2018, 24,721,372 shares
|
|
(485,963
|
)
|
|
(480,875
|
)
|
||
Acquisition of shares, 2019, 0 shares; 2018, 161 shares
|
|
—
|
|
|
(6
|
)
|
||
Ending balance, 2019, 24,850,484 shares;
2018, 24,721,533 shares
|
|
(485,963
|
)
|
|
(480,881
|
)
|
||
|
|
|
|
|
||||
Shareholders’ equity at end of period
|
|
$
|
1,423,714
|
|
|
$
|
1,404,679
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
Cash flows - operating activities
|
|
|
|
|
||||
Premiums collected
|
|
$
|
197,695
|
|
|
$
|
179,456
|
|
Policyholder benefits paid
|
|
(101,583
|
)
|
|
(131,090
|
)
|
||
Policy acquisition and other operating expenses paid
|
|
(77,035
|
)
|
|
(72,592
|
)
|
||
Income taxes recovered
|
|
125
|
|
|
690
|
|
||
Investment income collected
|
|
89,984
|
|
|
93,426
|
|
||
Interest expense paid
|
|
(399
|
)
|
|
(256
|
)
|
||
Other
|
|
16,016
|
|
|
2,492
|
|
||
|
|
|
|
|
||||
Net cash provided by operating activities
|
|
124,803
|
|
|
72,126
|
|
||
|
|
|
|
|
||||
Cash flows - investing activities
|
|
|
|
|
|
|
||
Fixed maturity securities
|
|
|
|
|
|
|
||
Purchases
|
|
(307,451
|
)
|
|
(308,450
|
)
|
||
Sales
|
|
59,724
|
|
|
89,894
|
|
||
Maturities, paydowns, calls and redemptions
|
|
136,141
|
|
|
151,722
|
|
||
Equity securities
|
|
|
|
|
||||
Purchases
|
|
(3,569
|
)
|
|
(2,208
|
)
|
||
Sales and repayments
|
|
15,489
|
|
|
2,048
|
|
||
Limited partnership interests
|
|
|
|
|
||||
Purchases
|
|
(8,842
|
)
|
|
(13,016
|
)
|
||
Sales
|
|
9,858
|
|
|
3,996
|
|
||
Change in short-term and other investments, net
|
|
(29,341
|
)
|
|
42,310
|
|
||
Acquisition of business, net of cash acquired
|
|
(18,198
|
)
|
|
—
|
|
||
|
|
|
|
|
||||
Net cash used in investing activities
|
|
(146,189
|
)
|
|
(33,704
|
)
|
||
|
|
|
|
|
||||
Cash flows - financing activities
|
|
|
|
|
|
|
||
Dividends paid to shareholders
|
|
(11,790
|
)
|
|
(11,638
|
)
|
||
Acquisition of treasury stock
|
|
—
|
|
|
(6
|
)
|
||
Proceeds from exercise of stock options
|
|
583
|
|
|
1,136
|
|
||
Withholding tax payments on RSUs tendered
|
|
(3,311
|
)
|
|
(2,061
|
)
|
||
Annuity contracts: variable, fixed and FHLB funding agreements
|
|
|
|
|
|
|
||
Deposits
|
|
157,305
|
|
|
98,837
|
|
||
Benefits, withdrawals and net transfers to
Separate Account (variable annuity) assets
|
|
(109,246
|
)
|
|
(112,272
|
)
|
||
Life policy accounts
|
|
|
|
|
|
|||
Deposits
|
|
2,714
|
|
|
1,111
|
|
||
Withdrawals and surrenders
|
|
(904
|
)
|
|
(1,329
|
)
|
||
Change in book overdrafts
|
|
(18,590
|
)
|
|
4,124
|
|
||
|
|
|
|
|
||||
Net cash provided by (used in) financing activities
|
|
16,761
|
|
|
(22,098
|
)
|
||
|
|
|
|
|
||||
Net increase (decrease) in cash
|
|
(4,625
|
)
|
|
16,324
|
|
||
|
|
|
|
|
||||
Cash at beginning of period
|
|
11,906
|
|
|
7,627
|
|
||
|
|
|
|
|
||||
Cash at end of period
|
|
$
|
7,281
|
|
|
$
|
23,951
|
|
($ in thousands)
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Investment contract reserves
|
|
$
|
4,585,141
|
|
|
$
|
4,555,856
|
|
Life policy reserves
|
|
1,162,999
|
|
|
1,155,337
|
|
||
Total
|
|
$
|
5,748,140
|
|
|
$
|
5,711,193
|
|
($ in thousands)
|
|
Net Unrealized Investment Gains
(Losses) on Securities (1)(2)
|
|
Net Funded Status of
Benefit Plans (1)
|
|
Total (1)(3)
|
||||||
Beginning balance, January 1, 2019
|
|
$
|
96,941
|
|
|
$
|
(12,185
|
)
|
|
$
|
84,756
|
|
Other comprehensive income (loss) before reclassifications
|
|
120,303
|
|
|
—
|
|
|
120,303
|
|
|||
Amounts reclassified from AOCI
|
|
(6,405
|
)
|
|
—
|
|
|
(6,405
|
)
|
|||
Net current period other comprehensive income (loss)
|
|
113,898
|
|
|
—
|
|
|
113,898
|
|
|||
Ending balance, March 31, 2019
|
|
$
|
210,839
|
|
|
$
|
(12,185
|
)
|
|
$
|
198,654
|
|
|
|
|
|
|
|
|
||||||
Beginning balance, January 1, 2018
|
|
$
|
300,177
|
|
|
$
|
(13,217
|
)
|
|
$
|
286,960
|
|
Other comprehensive income (loss) before reclassifications
|
|
(109,539
|
)
|
|
—
|
|
|
(109,539
|
)
|
|||
Amounts reclassified from AOCI
|
|
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
|
|
(1)
|
All amounts are net of tax.
|
(2)
|
The pretax amounts reclassified from AOCI, $8,108 thousand and $(3,092) thousand, are included in net investment gains (losses) and the related income tax expenses, $1,703 thousand and $(649) thousand, are included in income tax expense in the Consolidated Statements of Operations for the three month periods ended March 31, 2019 and 2018, respectively.
|
(3)
|
The Company adopted guidance on January 1, 2018 that resulted in reclassifying $15,041 thousand of after tax net unrealized gains on equity securities from AOCI to Retained earnings.
|
($ in thousands)
|
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
||||||||
March 31, 2019
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Government and federally
sponsored agency obligations: (1)
|
|
|
|
|
|
|
|
|
||||||||
Mortgage-backed securities
|
|
$
|
793,290
|
|
|
$
|
32,299
|
|
|
$
|
5,402
|
|
|
$
|
820,187
|
|
Other, including U.S. Treasury securities
|
|
848,659
|
|
|
23,333
|
|
|
6,534
|
|
|
865,458
|
|
||||
Municipal bonds
|
|
1,915,504
|
|
|
171,412
|
|
|
3,872
|
|
|
2,083,044
|
|
||||
Foreign government bonds
|
|
83,330
|
|
|
3,084
|
|
|
179
|
|
|
86,235
|
|
||||
Corporate bonds
|
|
2,041,390
|
|
|
104,303
|
|
|
11,601
|
|
|
2,134,092
|
|
||||
Other mortgage-backed securities
|
|
1,805,300
|
|
|
16,234
|
|
|
12,546
|
|
|
1,808,988
|
|
||||
Totals
|
|
$
|
7,487,473
|
|
|
$
|
350,665
|
|
|
$
|
40,134
|
|
|
$
|
7,798,004
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Government and federally
sponsored agency obligations: (1)
|
|
|
|
|
|
|
|
|
||||||||
Mortgage-backed securities
|
|
$
|
778,038
|
|
|
$
|
22,724
|
|
|
$
|
13,321
|
|
|
$
|
787,441
|
|
Other, including U.S. Treasury securities
|
|
835,096
|
|
|
16,127
|
|
|
17,681
|
|
|
833,542
|
|
||||
Municipal bonds
|
|
1,884,313
|
|
|
133,150
|
|
|
13,494
|
|
|
2,003,969
|
|
||||
Foreign government bonds
|
|
83,343
|
|
|
2,321
|
|
|
760
|
|
|
84,904
|
|
||||
Corporate bonds
|
|
2,054,105
|
|
|
64,296
|
|
|
38,891
|
|
|
2,079,510
|
|
||||
Other mortgage-backed securities
|
|
1,739,016
|
|
|
10,467
|
|
|
23,531
|
|
|
1,725,952
|
|
||||
Totals
|
|
$
|
7,373,911
|
|
|
$
|
249,085
|
|
|
$
|
107,678
|
|
|
$
|
7,515,318
|
|
(1)
|
Fair value includes securities issued by Federal National Mortgage Association (FNMA) of $474,541 thousand and $441,308 thousand; Federal Home Loan Mortgage Corporation (FHLMC) of $421,933 thousand and $417,308 thousand; and Government National Mortgage Association (GNMA) of $96,844 thousand and $96,466 thousand as of March 31, 2019 and December 31, 2018, respectively.
|
($ in thousands)
|
|
12 Months or Less
|
|
More than 12 Months
|
|
Total
|
||||||||||||||||||
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government and federally
sponsored agency obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
|
$
|
4,364
|
|
|
$
|
49
|
|
|
$
|
218,612
|
|
|
$
|
5,353
|
|
|
$
|
222,976
|
|
|
$
|
5,402
|
|
Other
|
|
8,230
|
|
|
16
|
|
|
303,498
|
|
|
6,518
|
|
|
311,728
|
|
|
6,534
|
|
||||||
Municipal bonds
|
|
15,003
|
|
|
254
|
|
|
127,688
|
|
|
3,618
|
|
|
142,691
|
|
|
3,872
|
|
||||||
Foreign government bonds
|
|
7,925
|
|
|
59
|
|
|
6,416
|
|
|
120
|
|
|
14,341
|
|
|
179
|
|
||||||
Corporate bonds
|
|
89,954
|
|
|
808
|
|
|
215,797
|
|
|
10,793
|
|
|
305,751
|
|
|
11,601
|
|
||||||
Other mortgage-backed securities
|
|
630,075
|
|
|
8,593
|
|
|
332,167
|
|
|
3,953
|
|
|
962,242
|
|
|
12,546
|
|
||||||
Total
|
|
$
|
755,551
|
|
|
$
|
9,779
|
|
|
$
|
1,204,178
|
|
|
$
|
30,355
|
|
|
$
|
1,959,729
|
|
|
$
|
40,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Number of positions with a
gross unrealized loss
|
|
234
|
|
|
|
|
496
|
|
|
|
|
730
|
|
|
|
|||||||||
Fair value as a percentage of total fixed
maturity securities fair value
|
|
9.6
|
%
|
|
|
|
15.2
|
%
|
|
|
|
24.8
|
%
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government and federally
sponsored agency obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
|
$
|
193,447
|
|
|
$
|
5,026
|
|
|
$
|
157,295
|
|
|
$
|
8,295
|
|
|
$
|
350,742
|
|
|
$
|
13,321
|
|
Other
|
|
263,497
|
|
|
6,746
|
|
|
246,213
|
|
|
10,935
|
|
|
509,710
|
|
|
17,681
|
|
||||||
Municipal bonds
|
|
291,869
|
|
|
7,603
|
|
|
95,297
|
|
|
5,891
|
|
|
387,166
|
|
|
13,494
|
|
||||||
Foreign government bonds
|
|
16,250
|
|
|
760
|
|
|
—
|
|
|
—
|
|
|
16,250
|
|
|
760
|
|
||||||
Corporate bonds
|
|
818,519
|
|
|
27,429
|
|
|
99,171
|
|
|
11,462
|
|
|
917,690
|
|
|
38,891
|
|
||||||
Other mortgage-backed securities
|
|
913,858
|
|
|
16,076
|
|
|
291,442
|
|
|
7,455
|
|
|
1,205,300
|
|
|
23,531
|
|
||||||
Total
|
|
$
|
2,497,440
|
|
|
$
|
63,640
|
|
|
$
|
889,418
|
|
|
$
|
44,038
|
|
|
$
|
3,386,858
|
|
|
$
|
107,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Number of positions with a
gross unrealized loss
|
|
1,052
|
|
|
|
|
359
|
|
|
|
|
1,411
|
|
|
|
|||||||||
Fair value as a percentage of total fixed
maturity securities fair value
|
|
32.7
|
%
|
|
|
|
11.7
|
%
|
|
|
|
44.4
|
%
|
|
|
($ in thousands)
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
Cumulative credit loss (1)
|
|
|
|
|
||||
Beginning of period
|
|
$
|
1,529
|
|
|
$
|
3,825
|
|
New credit losses
|
|
—
|
|
|
—
|
|
||
Increases to previously recognized credit losses
|
|
—
|
|
|
—
|
|
||
Losses related to securities sold or paid down during the period
|
|
—
|
|
|
—
|
|
||
End of period
|
|
$
|
1,529
|
|
|
$
|
3,825
|
|
(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, 2019
|
||||||||||
|
|
March 31, 2019
|
|
December 31, 2018
|
|
Fair
Value
|
|
Amortized
Cost
|
||||||
Estimated expected maturity:
|
|
|
|
|
|
|
|
|
||||||
Due in 1 year or less
|
|
4.8
|
%
|
|
4.8
|
%
|
|
$
|
371,816
|
|
|
$
|
366,071
|
|
Due after 1 year through 5 years
|
|
23.8
|
%
|
|
22.8
|
%
|
|
1,854,784
|
|
|
1,813,271
|
|
||
Due after 5 years through 10 years
|
|
32.3
|
%
|
|
32.8
|
%
|
|
2,522,113
|
|
|
2,450,544
|
|
||
Due after 10 years through 20 years
|
|
26.5
|
%
|
|
26.5
|
%
|
|
2,068,846
|
|
|
1,947,733
|
|
||
Due after 20 years
|
|
12.6
|
%
|
|
13.1
|
%
|
|
980,445
|
|
|
909,854
|
|
||
Total
|
|
100.0
|
%
|
|
100.0
|
%
|
|
$
|
7,798,004
|
|
|
$
|
7,487,473
|
|
|
|
|
|
|
|
|
|
|
||||||
Average option-adjusted duration, in years
|
|
5.7
|
|
|
5.9
|
|
|
|
|
|
($ in thousands)
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
Fixed maturity securities
|
|
|
|
|
||||
Proceeds received
|
|
$
|
59,724
|
|
|
$
|
89,894
|
|
Gross gains realized
|
|
542
|
|
|
1,670
|
|
||
Gross losses realized
|
|
(105
|
)
|
|
(53
|
)
|
||
|
|
|
|
|
||||
Equity securities
|
|
|
|
|
||||
Proceeds received
|
|
$
|
15,489
|
|
|
$
|
2,048
|
|
Gross gains realized
|
|
4,745
|
|
|
616
|
|
||
Gross losses realized
|
|
(344
|
)
|
|
(34
|
)
|
($ in thousands)
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
Impairment write-downs
|
|
$
|
—
|
|
|
$
|
—
|
|
Change in intent write-downs
|
|
(236
|
)
|
|
(110
|
)
|
||
Net OTTI losses recognized in earnings
|
|
(236
|
)
|
|
(110
|
)
|
||
Sales and other, net
|
|
4,838
|
|
|
2,203
|
|
||
Change in fair value - equity securities
|
|
3,506
|
|
|
(5,186
|
)
|
||
Change in fair value and gains (losses) realized
on settlements - derivative instruments
|
|
(691
|
)
|
|
1,439
|
|
||
Net investment gains (losses)
|
|
$
|
7,417
|
|
|
$
|
(1,654
|
)
|
($ in thousands)
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
Net unrealized investment gains (losses) on securities, net of tax
|
|
|
|
|
||||
Beginning of period
|
|
$
|
111,712
|
|
|
$
|
286,176
|
|
Change in net unrealized investment gains (losses) on securities
|
|
140,012
|
|
|
(67,285
|
)
|
||
Reclassification of net investment (gains) losses
on securities to net income
|
|
(6,405
|
)
|
|
2,443
|
|
||
Cumulative effect of change in accounting principle (1)
|
|
—
|
|
|
(15,041
|
)
|
||
End of period
|
|
$
|
245,319
|
|
|
$
|
206,293
|
|
(1)
|
Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, available for sale equity securities were reclassified to equity securities at fair value and the related net unrealized gains were reclassified from AOCI to Retained earnings.
|
($ in thousands)
|
|
|
|
Gross
Amounts
Offset in the
|
|
Net Amounts
of Assets/
Liabilities
Presented
in the
|
|
Gross Amounts Not Offset
in the Consolidated
Balance Sheets
|
|
|
||||||||||||||
|
|
Gross
Amounts
|
|
Consolidated
Balance
Sheets
|
|
Consolidated
Balance
Sheets
|
|
Financial
Instruments
|
|
Cash
Collateral
Received
|
|
Net
Amount
|
||||||||||||
March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Free-standing derivatives
|
|
$
|
7,643
|
|
|
$
|
—
|
|
|
$
|
7,643
|
|
|
$
|
—
|
|
|
$
|
6,938
|
|
|
$
|
705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Free-standing derivatives
|
|
$
|
2,647
|
|
|
$
|
—
|
|
|
$
|
2,647
|
|
|
$
|
—
|
|
|
$
|
1,868
|
|
|
$
|
779
|
|
($ in thousands)
|
|
|
|
Fair Value Measurements at
|
||||||||||||||||||
|
|
Carrying
|
|
Fair
|
|
Reporting Date Using
|
||||||||||||||||
|
|
Amount
|
|
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||
March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government and federally
sponsored agency obligations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
|
$
|
820,187
|
|
|
$
|
820,187
|
|
|
$
|
—
|
|
|
$
|
816,743
|
|
|
$
|
3,444
|
|
||
Other, including U.S. Treasury securities
|
|
865,458
|
|
|
865,458
|
|
|
17,080
|
|
|
848,378
|
|
|
—
|
|
|||||||
Municipal bonds
|
|
2,083,044
|
|
|
2,083,044
|
|
|
—
|
|
|
2,035,288
|
|
|
47,756
|
|
|||||||
Foreign government bonds
|
|
86,235
|
|
|
86,235
|
|
|
—
|
|
|
86,235
|
|
|
—
|
|
|||||||
Corporate bonds
|
|
2,134,092
|
|
|
2,134,092
|
|
|
13,722
|
|
|
2,037,888
|
|
|
82,482
|
|
|||||||
Other mortgage-backed securities
|
|
1,808,988
|
|
|
1,808,988
|
|
|
—
|
|
|
1,676,642
|
|
|
132,346
|
|
|||||||
Total fixed maturity securities
|
|
7,798,004
|
|
|
7,798,004
|
|
|
30,802
|
|
|
7,501,174
|
|
|
266,028
|
|
|||||||
Equity securities
|
|
105,487
|
|
|
105,487
|
|
|
55,030
|
|
—
|
|
50,452
|
|
—
|
|
5
|
|
|||||
Short-term investments
|
|
143,454
|
|
|
143,454
|
|
|
141,793
|
|
|
1,661
|
|
|
—
|
|
|||||||
Other investments
|
|
23,393
|
|
|
23,393
|
|
|
—
|
|
|
23,393
|
|
|
—
|
|
|||||||
Totals
|
|
$
|
8,070,338
|
|
|
$
|
8,070,338
|
|
|
$
|
227,625
|
|
|
$
|
7,576,680
|
|
|
$
|
266,033
|
|
||
Separate Account (variable annuity) assets (1)
|
|
$
|
2,224,099
|
|
|
$
|
2,224,099
|
|
|
$
|
2,224,099
|
|
|
—
|
|
|
—
|
|
||||
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment contract and life policy
reserves, embedded derivatives
|
|
$
|
801
|
|
|
$
|
801
|
|
|
$
|
—
|
|
|
$
|
801
|
|
|
$
|
—
|
|
||
Other policyholder funds, embedded derivatives
|
|
$
|
84,629
|
|
|
$
|
84,629
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
84,629
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Government and federally
sponsored agency obligations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Mortgage-backed securities
|
|
$
|
787,441
|
|
|
$
|
787,441
|
|
|
$
|
—
|
|
|
$
|
784,224
|
|
|
$
|
3,217
|
|
||
Other, including U.S. Treasury securities
|
|
833,542
|
|
|
833,542
|
|
|
13,291
|
|
|
820,251
|
|
|
—
|
|
|||||||
Municipal bonds
|
|
2,003,969
|
|
|
2,003,969
|
|
|
—
|
|
|
1,956,438
|
|
|
47,531
|
|
|||||||
Foreign government bonds
|
|
84,904
|
|
|
84,904
|
|
|
—
|
|
|
84,904
|
|
|
—
|
|
|||||||
Corporate bonds
|
|
2,079,510
|
|
|
2,079,510
|
|
|
12,281
|
|
|
1,986,487
|
|
|
80,742
|
|
|||||||
Other mortgage-backed securities
|
|
1,725,952
|
|
|
1,725,952
|
|
|
—
|
|
|
1,608,958
|
|
|
116,994
|
|
|||||||
Total fixed maturity securities
|
|
7,515,318
|
|
|
7,515,318
|
|
|
25,572
|
|
|
7,241,262
|
|
|
248,484
|
|
|||||||
Equity securities
|
|
111,750
|
|
|
111,750
|
|
|
64,330
|
|
|
47,415
|
|
|
5
|
|
|||||||
Short-term investments
|
|
122,222
|
|
|
122,222
|
|
|
117,296
|
|
|
4,926
|
|
|
—
|
|
|||||||
Other investments
|
|
16,147
|
|
|
16,147
|
|
|
—
|
|
|
16,147
|
|
|
—
|
|
|||||||
Totals
|
|
$
|
7,765,437
|
|
|
$
|
7,765,437
|
|
|
$
|
207,198
|
|
|
$
|
7,309,750
|
|
|
$
|
248,489
|
|
||
Separate Account (variable annuity) assets (1)
|
|
$
|
2,001,128
|
|
|
$
|
2,001,128
|
|
|
$
|
2,001,128
|
|
|
|
|
|
||||||
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Investment contract and life policy
reserves, embedded derivatives
|
|
$
|
248
|
|
|
$
|
248
|
|
|
$
|
—
|
|
|
$
|
248
|
|
|
$
|
—
|
|
||
Other policyholder funds, embedded derivatives
|
|
$
|
78,700
|
|
|
$
|
78,700
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
78,700
|
|
($ in thousands)
|
|
Financial Assets
|
|
Financial
Liabilities(1)
|
||||||||||||||||||||||||||||
|
|
Municipal
Bonds
|
|
Corporate
Bonds
|
|
Other
Mortgage-
Backed
Securities (2)
|
|
Total
Fixed
Maturity
Securities
|
|
Equity
Securities
|
|
Short-term
Investments
|
|
Total
|
|
|
||||||||||||||||
Beginning balance, January 1, 2019
|
|
$
|
47,531
|
|
|
$
|
80,742
|
|
|
$
|
120,211
|
|
|
$
|
248,484
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
248,489
|
|
|
$
|
78,700
|
|
Transfers into Level 3 (3)
|
|
—
|
|
|
3,074
|
|
|
21,934
|
|
|
25,008
|
|
|
—
|
|
|
—
|
|
|
25,008
|
|
|
—
|
|
||||||||
Transfers out of Level 3 (3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total gains or losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net investment gains (losses) included in net income
related to financial assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net realized (gains) losses
included in net income
related to financial liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,334
|
|
||||||||
Net unrealized investment gains
(losses) included in OCI
|
|
344
|
|
|
2,549
|
|
|
(152
|
)
|
|
2,741
|
|
|
—
|
|
|
—
|
|
|
2,741
|
|
|
—
|
|
||||||||
Purchases
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Issuances
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,018
|
|
||||||||
Sales
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Settlements
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Paydowns, maturities
and distributions
|
|
(119
|
)
|
|
(3,883
|
)
|
|
(6,203
|
)
|
|
(10,205
|
)
|
|
—
|
|
|
—
|
|
|
(10,205
|
)
|
|
(1,423
|
)
|
||||||||
Ending balance, March 31, 2019
|
|
$
|
47,756
|
|
|
$
|
82,482
|
|
|
$
|
135,790
|
|
|
$
|
266,028
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
266,033
|
|
|
$
|
84,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
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 realized (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
|
|
(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, 2019 and 2018 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, 2019
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other investments
|
|
$
|
157,006
|
|
|
$
|
161,714
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
161,714
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment contract and life policy reserves,
fixed annuity contracts
|
|
4,585,141
|
|
|
4,509,518
|
|
|
—
|
|
|
—
|
|
|
4,509,518
|
|
|||||
Investment contract and life policy reserves,
account values on life contracts
|
|
89,048
|
|
|
92,200
|
|
|
—
|
|
|
—
|
|
|
92,200
|
|
|||||
Other policyholder funds
|
|
737,184
|
|
|
737,184
|
|
|
—
|
|
|
676,520
|
|
|
60,664
|
|
|||||
Long-term debt
|
|
297,810
|
|
|
306,801
|
|
|
—
|
|
|
306,801
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other investments
|
|
$
|
156,725
|
|
|
$
|
161,449
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
161,449
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment contract and life policy reserves,
fixed annuity contracts
|
|
4,555,849
|
|
|
4,478,338
|
|
|
—
|
|
|
—
|
|
|
4,478,338
|
|
|||||
Investment contract and life policy reserves,
account values on life contracts |
|
87,229
|
|
|
90,402
|
|
|
—
|
|
|
—
|
|
|
90,402
|
|
|||||
Other policyholder funds
|
|
689,287
|
|
|
689,287
|
|
|
—
|
|
|
626,325
|
|
|
62,962
|
|
|||||
Long-term debt
|
|
297,740
|
|
|
291,938
|
|
|
—
|
|
|
291,938
|
|
|
—
|
|
($ in thousands)
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
|
||||
Derivative instruments, included in Short-term and other investments
|
|
$
|
7,643
|
|
|
$
|
2,647
|
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
||||
FIA - embedded derivatives, included in Other policyholder funds
|
|
$
|
84,629
|
|
|
$
|
78,700
|
|
IUL - embedded derivatives,
included in Investment contract and life policy reserves
|
|
801
|
|
|
248
|
|
($ in thousands)
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
Change in fair value of derivatives:(1)
|
|
|
|
|
||||
Revenues
|
|
|
|
|
||||
Net investment gains (losses)
|
|
$
|
4,054
|
|
|
$
|
(849
|
)
|
|
|
|
|
|
||||
Change in fair value of embedded derivatives:
|
|
|
|
|
||||
Revenues
|
|
|
|
|
||||
Net investment gains (losses)
|
|
$
|
(4,745
|
)
|
|
$
|
2,288
|
|
(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, 2019
|
|
December 31, 2018
|
||||||||||||||||
|
|
Credit Rating
|
|
Notional
|
|
Fair
|
|
Notional
|
|
Fair
|
||||||||||
Counterparty
|
|
S&P
|
|
Moody's
|
|
Amount
|
|
Value
|
|
Amount
|
|
Value
|
||||||||
Bank of America, N.A.
|
|
A+
|
|
Aa2
|
|
$
|
164,600
|
|
|
$
|
3,302
|
|
|
$
|
144,500
|
|
|
$
|
870
|
|
Barclays Bank PLC
|
|
A
|
|
A2
|
|
32,600
|
|
|
808
|
|
|
28,500
|
|
|
247
|
|
||||
Citigroup Inc.
|
|
BBB+
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Credit Suisse International
|
|
A
|
|
A1
|
|
16,100
|
|
|
207
|
|
|
16,100
|
|
|
55
|
|
||||
Societe Generale
|
|
A
|
|
|
|
78,400
|
|
|
3,326
|
|
|
89,100
|
|
|
1,475
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
|
|
|
|
$
|
291,700
|
|
|
$
|
7,643
|
|
|
$
|
278,200
|
|
|
$
|
2,647
|
|
($ in thousands)
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
Property and Casualty
|
|
|
|
|
||||
Beginning gross reserves (1)
|
|
$
|
367,180
|
|
|
$
|
319,182
|
|
Less: reinsurance recoverables
|
|
89,725
|
|
|
57,409
|
|
||
Net reserves, beginning of period (2)
|
|
277,455
|
|
|
261,773
|
|
||
Incurred claims and claim expenses:
|
|
|
|
|
||||
Claims occurring in the current period
|
|
118,767
|
|
|
120,988
|
|
||
Decrease in estimated reserves for claims occurring in prior periods (3)
|
|
(2,000
|
)
|
|
(300
|
)
|
||
Total claims and claim expenses incurred (4)
|
|
116,767
|
|
|
120,688
|
|
||
Claims and claim expense payments for claims occurring during:
|
|
|
|
|
||||
Current period
|
|
45,714
|
|
|
47,048
|
|
||
Prior periods
|
|
67,135
|
|
|
67,075
|
|
||
Total claims and claim expense payments
|
|
112,849
|
|
|
114,123
|
|
||
Net reserves, end of period (2)
|
|
281,373
|
|
|
268,338
|
|
||
Plus: reinsurance recoverables
|
|
78,328
|
|
|
62,917
|
|
||
Ending gross reserves (1)
|
|
$
|
359,701
|
|
|
$
|
331,255
|
|
(1)
|
Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for Life and Retirement of $33,848 thousand and $27,062 thousand as of March 31, 2019 and 2018, respectively, in addition to Property and Casualty reserves.
|
(2)
|
Reserves net of anticipated reinsurance recoverables.
|
(3)
|
Shows the amounts by which the Company decreased its reserves in each of the periods indicated for claims occurring in previous periods to reflect subsequent information on such claims and changes in their projected final settlement costs.
|
(4)
|
Benefits, claims and settlement expenses as reported in the Consolidated Statements of Operations also include amounts for Life and Retirement of $22,617 thousand and $22,874 thousand for the three month periods ended March 31, 2019 and 2018, respectively, in addition to Property and Casualty amounts.
|
($ in thousands)
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Short-term debt:
|
|
|
|
|
|
|
||
Bank Credit Facility, expires June 27, 2023
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Long-term debt:
|
|
|
|
|
|
|
||
4.50% Senior Notes, due December 1, 2025. Aggregate principal amount of $250,000 thousand less unaccrued discount of $473 and $488 thousand (4.5% imputed rate) and unamortized debt issuance costs of $1,717 thousand and $1,772 thousand
|
|
247,810
|
|
|
247,740
|
|
||
Federal Home Loan Bank borrowing
|
|
50,000
|
|
|
50,000
|
|
||
Total
|
|
$
|
297,810
|
|
|
$
|
297,740
|
|
($ in thousands)
|
|
Gross
Amount
|
|
Ceded to
Other
Companies
|
|
Assumed
from Other
Companies
|
|
Net
Amount
|
||||||||
Three months ended March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Premiums written and contract deposits (1)
|
|
$
|
299,093
|
|
|
$
|
5,848
|
|
|
$
|
2,149
|
|
|
$
|
295,394
|
|
Premiums and contract charges earned
|
|
213,256
|
|
|
5,822
|
|
|
2,351
|
|
|
209,785
|
|
||||
Benefits, claims and settlement expenses
|
|
142,052
|
|
|
4,292
|
|
|
1,624
|
|
|
139,384
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
(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, |
||||||
|
|
2019
|
|
2018
|
||||
Insurance premiums and contract charges earned
|
|
|
|
|
||||
Property and Casualty
|
|
$
|
170,840
|
|
|
$
|
165,458
|
|
Retirement
|
|
8,578
|
|
|
8,068
|
|
||
Life
|
|
30,367
|
|
|
29,472
|
|
||
Total
|
|
$
|
209,785
|
|
|
$
|
202,998
|
|
|
|
|
|
|
||||
Net investment income
|
|
|
|
|
||||
Property and Casualty
|
|
$
|
10,218
|
|
|
$
|
9,516
|
|
Retirement
|
|
64,739
|
|
|
64,169
|
|
||
Life
|
|
18,052
|
|
|
18,340
|
|
||
Corporate and Other
|
|
(23
|
)
|
|
36
|
|
||
Intersegment eliminations
|
|
(186
|
)
|
|
(197
|
)
|
||
Total
|
|
$
|
92,800
|
|
|
$
|
91,864
|
|
|
|
|
|
|
||||
Net income (loss)
|
|
|
|
|
||||
Property and Casualty
|
|
$
|
15,052
|
|
|
$
|
9,722
|
|
Retirement
|
|
12,151
|
|
|
11,421
|
|
||
Life
|
|
3,277
|
|
|
3,787
|
|
||
Corporate and Other
|
|
1,686
|
|
|
(4,775
|
)
|
||
Total
|
|
$
|
32,166
|
|
|
$
|
20,155
|
|
($ in thousands)
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
|
||||
Property and Casualty
|
|
$
|
1,238,041
|
|
|
$
|
1,236,362
|
|
Retirement
|
|
8,307,656
|
|
|
7,866,969
|
|
||
Life
|
|
1,883,554
|
|
|
1,821,351
|
|
||
Corporate and Other
|
|
163,157
|
|
|
149,014
|
|
||
Intersegment eliminations
|
|
(31,328
|
)
|
|
(41,800
|
)
|
||
Total
|
|
$
|
11,561,080
|
|
|
$
|
11,031,896
|
|
($ in thousands)
|
|
Three Months Ended
March 31, 2019 |
||
Operating lease cost
|
|
$
|
809
|
|
Short-term lease cost
|
|
24
|
|
|
Total lease cost
|
|
$
|
833
|
|
($ in thousands, except lease term
and discount rate)
|
|
Three Months Ended
March 31, 2019 |
||
Supplemental Cash Flows Information
|
|
|
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
$
|
766
|
|
Weighted Average Remaining Lease Term
|
|
5.22
|
|
|
Weighted Average Discount Rate
|
|
4.11
|
%
|
($ in thousands)
|
|
March 31, 2019
|
||
Assets
|
|
|
||
Right of use assets, included in Other assets
|
|
$
|
13,229
|
|
|
|
|
||
Liabilities
|
|
|
||
Operating lease liabilities, included in Other liabilities
|
|
$
|
13,863
|
|
($ in millions)
|
|
Three Months Ended March 31,
|
|
2019-2018
|
|||||||
|
|
2019
|
|
2018
|
|
Change %
|
|||||
Total revenues
|
|
$
|
313.2
|
|
|
$
|
295.5
|
|
|
6.0
|
%
|
Net income
|
|
32.2
|
|
|
20.2
|
|
|
59.4
|
%
|
||
Per diluted share:
|
|
|
|
|
|
|
|||||
Net income
|
|
$
|
0.77
|
|
|
$
|
0.48
|
|
|
60.4
|
%
|
Net investment gains (losses), after tax
|
|
0.14
|
|
|
(0.03
|
)
|
|
N.M.
|
|||
Book value per share
|
|
$
|
34.60
|
|
|
$
|
34.35
|
|
|
0.7
|
%
|
Net income return on equity - last twelve months
|
|
2.2
|
%
|
|
12.5
|
%
|
|
|
|
||
Net income return on equity - annualized
|
|
9.5
|
%
|
|
5.6
|
%
|
|
|
|
($ in millions)
|
|
Three Months Ended
March 31, |
|
2019-2018
|
|||||||
|
|
2019
|
|
2018
|
|
Change %
|
|||||
Analysis of net income (loss) by segment:
|
|
|
|
|
|
|
|
|
|||
Property and Casualty
|
|
$
|
15.0
|
|
|
$
|
9.7
|
|
|
54.6
|
%
|
Retirement
|
|
12.2
|
|
|
11.4
|
|
|
7.0
|
%
|
||
Life
|
|
3.3
|
|
|
3.8
|
|
|
-13.2
|
%
|
||
Corporate and Other
|
|
1.7
|
|
|
(4.7
|
)
|
|
N.M.
|
|||
Net income
|
|
$
|
32.2
|
|
|
$
|
20.2
|
|
|
59.4
|
%
|
($ in millions)
|
|
Three Months Ended
March 31, |
|
2019-2018
|
|||||||
|
|
2019
|
|
2018
|
|
Change %
|
|||||
Insurance premiums and contract charges earned
|
|
$
|
209.8
|
|
|
$
|
203.0
|
|
|
3.3
|
%
|
Net investment income
|
|
92.8
|
|
|
91.9
|
|
|
1.0
|
%
|
||
Net investment gains (losses)
|
|
7.4
|
|
|
(1.7
|
)
|
|
N.M.
|
|||
Other income
|
|
3.2
|
|
|
2.3
|
|
|
39.1
|
%
|
||
Total revenues
|
|
313.2
|
|
|
295.5
|
|
|
6.0
|
%
|
||
|
|
|
|
|
|
|
|||||
Benefits, claims and settlement expenses
|
|
139.4
|
|
|
143.6
|
|
|
-2.9
|
%
|
||
Interest credited
|
|
52.9
|
|
|
50.0
|
|
|
5.8
|
%
|
||
DAC amortization expense
|
|
25.0
|
|
|
26.7
|
|
|
-6.4
|
%
|
||
Operating expenses
|
|
54.0
|
|
|
48.2
|
|
|
12.0
|
%
|
||
Interest expense
|
|
3.3
|
|
|
3.2
|
|
|
3.1
|
%
|
||
Total benefits, losses and expenses
|
|
274.6
|
|
|
271.7
|
|
|
1.1
|
%
|
||
|
|
|
|
|
|
|
|||||
Income before income taxes
|
|
38.6
|
|
|
23.8
|
|
|
62.2
|
%
|
||
Income tax expense
|
|
6.4
|
|
|
3.6
|
|
|
77.8
|
%
|
||
Net income
|
|
$
|
32.2
|
|
|
$
|
20.2
|
|
|
59.4
|
%
|
($ in millions)
|
|
Three Months Ended
March 31, |
||||||
|
|
2019
|
|
2018
|
||||
OTTI losses recognized in earnings
|
|
$
|
(0.2
|
)
|
|
$
|
(0.1
|
)
|
Sales and other, net
|
|
4.8
|
|
|
2.2
|
|
||
Change in fair value - equity securities
|
|
3.5
|
|
|
(5.2
|
)
|
||
Change in fair value and gains (losses) realized
on settlements - derivative instruments |
|
(0.7
|
)
|
|
1.4
|
|
||
Net investment gains (losses)
|
|
$
|
7.4
|
|
|
$
|
(1.7
|
)
|
•
|
Valuation of fixed maturity securities, including evaluation of other-than-temporary impairments
|
•
|
Evaluation of goodwill for impairment
|
•
|
Valuation of life and annuity deferred policy acquisition costs
|
•
|
Valuation of liabilities for property and casualty unpaid claims and claim expenses
|
•
|
Valuation of investment contract and life policy reserves
|
•
|
Property and Casualty
|
•
|
Retirement
|
•
|
Life
|
•
|
Corporate and Other
|
($ in millions, unless otherwise indicated)
|
|
Three Months Ended
March 31, |
|
2019-2018
|
|||||||
|
|
2019
|
|
2018
|
|
Change %
|
|||||
Financial Data:
|
|
|
|
|
|
|
|
|
|||
Premiums written*:
|
|
|
|
|
|
|
|||||
Automobile
|
|
$
|
116.8
|
|
|
$
|
114.9
|
|
|
1.7
|
%
|
Property and other
|
|
44.9
|
|
|
44.5
|
|
|
0.9
|
%
|
||
Total premiums written
|
|
161.7
|
|
|
159.4
|
|
|
1.4
|
%
|
||
Change in unearned insurance premiums
|
|
9.1
|
|
|
6.1
|
|
|
49.2
|
%
|
||
Total insurance premiums earned
|
|
170.8
|
|
|
165.5
|
|
|
3.2
|
%
|
||
Incurred claims and claims expenses:
|
|
|
|
|
|
|
|||||
Claims occurring in the current year
|
|
118.8
|
|
|
121.0
|
|
|
-1.8
|
%
|
||
Prior years' reserve development
|
|
(2.0
|
)
|
|
(0.3
|
)
|
|
N.M.
|
|||
Total claims and claim expenses incurred
|
|
116.8
|
|
|
120.7
|
|
|
-3.2
|
%
|
||
Operating expenses, including DAC
|
|
46.5
|
|
|
43.1
|
|
|
7.9
|
%
|
||
Underwriting gain
|
|
7.5
|
|
|
1.7
|
|
|
N.M.
|
|||
Net investment income
|
|
10.2
|
|
|
9.5
|
|
|
7.4
|
%
|
||
Income before income taxes
|
|
17.8
|
|
|
11.2
|
|
|
58.9%
|
|||
Net income/core earnings*
|
|
15.0
|
|
|
9.7
|
|
|
54.6%
|
|||
|
|
|
|
|
|
|
|||||
Operating Statistics:
|
|
|
|
|
|
|
|
|
|||
Automobile
|
|
|
|
|
|
|
|||||
Loss and loss adjustment expense ratio
|
|
70.8
|
%
|
|
76.1
|
%
|
|
-5.3
|
pts
|
||
Expense ratio
|
|
27.2
|
%
|
|
25.7
|
%
|
|
1.5
|
pts
|
||
Combined ratio:
|
|
98.0
|
%
|
|
101.8
|
%
|
|
-3.8
|
pts
|
||
Prior years' reserve development
|
|
-0.9
|
%
|
|
—
|
%
|
|
-0.9
|
pts
|
||
Catastrophes
|
|
0.8
|
%
|
|
0.6
|
%
|
|
0.2
|
pts
|
||
Underlying combined ratio*
|
|
98.1
|
%
|
|
101.2
|
%
|
|
-3.1
|
pts
|
||
Property
|
|
|
|
|
|
|
|||||
Loss and loss adjustment expense ratio
|
|
62.9
|
%
|
|
66.2
|
%
|
|
-3.3
|
pts
|
||
Expense ratio
|
|
27.6
|
%
|
|
27.1
|
%
|
|
0.5
|
pts
|
||
Combined ratio:
|
|
90.5
|
%
|
|
93.3
|
%
|
|
-2.8
|
pts
|
||
Prior years' reserve development
|
|
-1.9
|
%
|
|
-0.6
|
%
|
|
-1.3
|
pts
|
||
Catastrophes
|
|
18.3
|
%
|
|
17.2
|
%
|
|
1.1
|
pts
|
||
Underlying combined ratio*
|
|
74.1
|
%
|
|
76.7
|
%
|
|
-2.6
|
pts
|
||
|
|
|
|
|
|
|
|||||
Policies in force (in thousands)
|
|
|
|
|
|
|
|
|
|||
Automobile (1)
|
|
454
|
|
|
475
|
|
|
-4.4
|
%
|
||
Property
|
|
200
|
|
|
204
|
|
|
-2.0
|
%
|
||
Total
|
|
654
|
|
|
679
|
|
|
-3.7
|
%
|
($ in millions, unless otherwise indicated)
|
|
Three Months Ended
March 31, |
|
2019-2018
|
|||||||
|
|
2019
|
|
2018
|
|
Change %
|
|||||
Financial Data:
|
|
|
|
|
|
|
|
|
|||
Contract charges earned
|
|
$
|
8.6
|
|
|
$
|
8.0
|
|
|
7.5
|
%
|
Net investment income
|
|
64.7
|
|
|
64.2
|
|
|
0.8
|
%
|
||
Interest credited
|
|
41.7
|
|
|
38.7
|
|
|
7.8
|
%
|
||
Net interest margin without net investment gains (losses)
|
|
23.0
|
|
|
25.5
|
|
|
-9.8
|
%
|
||
Mortality loss and other reserve charges
|
|
0.6
|
|
|
1.9
|
|
|
-68.4
|
%
|
||
DAC amortization expense, excluding unlocking
|
|
4.9
|
|
|
4.8
|
|
|
2.1
|
%
|
||
DAC unlocking
|
|
(2.0
|
)
|
|
0.2
|
|
|
N.M.
|
|||
Operating expenses
|
|
15.9
|
|
|
14.4
|
|
|
10.4
|
%
|
||
Income before income taxes
|
|
14.6
|
|
|
14.0
|
|
|
4.3
|
%
|
||
Net income/core earnings*
|
|
12.2
|
|
|
11.4
|
|
|
7.0
|
%
|
||
Operating Statistics:
|
|
|
|
|
|
|
|||||
Annuity sales deposits
|
|
|
|
|
|
|
|||||
Variable
|
|
$
|
48.8
|
|
|
$
|
46.8
|
|
|
4.3
|
%
|
Fixed
|
|
58.5
|
|
|
52.0
|
|
|
12.5
|
%
|
||
Total
|
|
107.3
|
|
|
98.8
|
|
|
8.6
|
%
|
||
Single
|
|
55.9
|
|
|
48.6
|
|
|
15.0
|
%
|
||
Recurring
|
|
51.4
|
|
|
50.2
|
|
|
2.4
|
%
|
||
Total
|
|
107.3
|
|
|
98.8
|
|
|
8.6
|
%
|
||
Assets under administration (AUA)
|
|
|
|
|
|
|
|||||
Annuity assets under management
|
|
6,972.7
|
|
|
6,769.5
|
|
|
3.0
|
%
|
||
Broker and advisory assets under administration (1)
|
|
2,191.9
|
|
|
283.1
|
|
|
N.M.
|
|||
Recordkeeping assets under administration (1)
|
|
1,363.8
|
|
|
—
|
|
|
|
|||
Total
|
|
10,528.4
|
|
|
7,052.6
|
|
|
49.3
|
%
|
||
Persistency
|
|
|
|
|
|
|
|||||
Variable annuities
|
|
94.3
|
%
|
|
94.6
|
%
|
|
-0.3
|
pts
|
||
Fixed annuities
|
|
94.1
|
%
|
|
94.4
|
%
|
|
-0.3
|
pts
|
||
Total
|
|
94.1
|
%
|
|
94.5
|
%
|
|
-0.4
|
pts
|
||
Annuity contracts in force
|
|
226
|
|
|
223
|
|
|
1.3
|
%
|
||
Fixed spread (basis points)
|
|
142
|
|
|
170
|
|
|
-28bps
|
|
($ in millions)
|
|
March 31, 2019
|
|||||||||||||||
|
|
|
|
|
|
Deferred Annuities at
|
|||||||||||
|
|
Total Deferred Annuities
|
|
Minimum Guaranteed Rate
|
|||||||||||||
|
|
Percent
of Total
|
|
Accumulated
Value (AV)
|
|
Percent of
Total Deferred
Annuities AV
|
|
Percent
of Total
|
|
Accumulated
Value
|
|||||||
Minimum guaranteed interest rates:
|
|
|
|
|
|
|
|
|
|
|
|||||||
Less than 2%
|
|
26.5
|
%
|
|
$
|
1,202.3
|
|
|
47.1
|
%
|
|
14.7
|
%
|
|
$
|
566.0
|
|
Equal to 2% but less than 3%
|
|
6.5
|
%
|
|
295.6
|
|
|
82.8
|
%
|
|
6.4
|
%
|
|
244.8
|
|
||
Equal to 3% but less than 4%
|
|
13.5
|
%
|
|
611.4
|
|
|
99.9
|
%
|
|
15.9
|
%
|
|
610.9
|
|
||
Equal to 4% but less than 5%
|
|
52.3
|
%
|
|
2,373.5
|
|
|
100.0
|
%
|
|
61.7
|
%
|
|
2,373.5
|
|
||
5% or higher
|
|
1.2
|
%
|
|
52.3
|
|
|
100.0
|
%
|
|
1.3
|
%
|
|
52.3
|
|
||
Total
|
|
100.0
|
%
|
|
$
|
4,535.1
|
|
|
84.8
|
%
|
|
100.0
|
%
|
|
$
|
3,847.5
|
|
($ in millions, unless otherwise indicated)
|
|
Three Months Ended
March 31, |
|
2019-2018
|
|||||||
|
|
2019
|
|
2018
|
|
Change %
|
|||||
Financial Data:
|
|
|
|
|
|
|
|||||
Insurance premiums and contract deposits
|
|
$
|
26.4
|
|
|
$
|
25.8
|
|
|
2.3
|
%
|
Insurance premiums and contract charges earned
|
|
30.4
|
|
|
29.5
|
|
|
3.1
|
%
|
||
Net investment income
|
|
18.1
|
|
|
18.3
|
|
|
-1.1
|
%
|
||
Benefits and settlement expenses
|
|
22.0
|
|
|
21.0
|
|
|
4.8
|
%
|
||
Interest credited
|
|
11.2
|
|
|
11.3
|
|
|
-0.9
|
%
|
||
DAC amortization expense, excluding unlocking
|
|
2.0
|
|
|
1.8
|
|
|
11.1
|
%
|
||
DAC unlocking
|
|
—
|
|
|
0.1
|
|
|
N.M.
|
|||
Operating expenses
|
|
9.4
|
|
|
9.0
|
|
|
4.4
|
%
|
||
Income before income taxes
|
|
4.0
|
|
|
4.7
|
|
|
-14.9
|
%
|
||
Net income /core earnings*
|
|
3.3
|
|
|
3.8
|
|
|
-13.2
|
%
|
||
|
|
|
|
|
|
|
|||||
Operating Statistics:
|
|
|
|
|
|
|
|||||
Life insurance in force
|
|
$
|
18,409
|
|
|
$
|
17,665
|
|
|
4.2
|
%
|
Number of policies in force (in thousands)
|
|
198
|
|
|
197
|
|
|
0.5
|
%
|
||
Average face amount in force (in dollars)
|
|
$
|
92,810
|
|
|
$
|
89,271
|
|
|
4.0
|
%
|
Lapse ratio (ordinary life insurance in force)
|
|
4.6
|
%
|
|
4.9
|
%
|
|
-0.3
|
pts
|
||
Mortality costs
|
|
$
|
10.5
|
|
|
$
|
9.5
|
|
|
10.5
|
%
|
($ in millions)
|
|
Three Months Ended
March 31, |
|
2019-2018
|
|||||||
|
|
2019
|
|
2018
|
|
Change %
|
|||||
Interest expense
|
|
$
|
(3.0
|
)
|
|
$
|
(3.0
|
)
|
|
—
|
%
|
Net investment gains (losses) pretax
|
|
7.4
|
|
|
(1.7
|
)
|
|
N.M.
|
|||
Tax on net investment gains (losses)
|
|
1.6
|
|
|
(0.4
|
)
|
|
N.M.
|
|||
Net investment gains (losses) after tax
|
|
5.8
|
|
|
(1.3
|
)
|
|
N.M.
|
|||
Net income (loss)
|
|
1.7
|
|
|
(4.7
|
)
|
|
N.M.
|
|||
Core earnings (loss)*
|
|
(4.1
|
)
|
|
(3.4
|
)
|
|
-20.6
|
%
|
($ in millions)
|
|
Three Months Ended
March 31, |
|
2019-2018
|
|||||||
|
|
2019
|
|
2018
|
|
Change %
|
|||||
Total net investment income
|
|
$
|
92.8
|
|
|
$
|
91.9
|
|
|
1.0
|
%
|
Pretax net investment gains (losses)
|
|
7.4
|
|
|
(1.7
|
)
|
|
N.M.
|
|||
Pretax net unrealized investment gains on securities
|
|
310.5
|
|
|
261.1
|
|
|
18.9
|
%
|
($ in millions)
|
|
March 31, 2019
|
|||||||||||||
|
|
Number of
Issuers
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Pretax Net
Unrealized
Gain (Loss)
|
|||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Corporate bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Banking & Finance
|
|
124
|
|
|
$
|
648.5
|
|
|
$
|
628.4
|
|
|
$
|
20.1
|
|
Insurance
|
|
60
|
|
|
266.1
|
|
|
247.7
|
|
|
18.4
|
|
|||
Energy (1)
|
|
55
|
|
|
166.2
|
|
|
157.5
|
|
|
8.7
|
|
|||
Real Estate
|
|
40
|
|
|
158.6
|
|
|
154.5
|
|
|
4.1
|
|
|||
Technology
|
|
33
|
|
|
145.3
|
|
|
142.6
|
|
|
2.7
|
|
|||
Healthcare, Pharmacy
|
|
44
|
|
|
129.4
|
|
|
124.5
|
|
|
4.9
|
|
|||
Transportation
|
|
34
|
|
|
93.9
|
|
|
90.7
|
|
|
3.2
|
|
|||
Utilities
|
|
37
|
|
|
93.3
|
|
|
81.6
|
|
|
11.7
|
|
|||
Telecommunications
|
|
21
|
|
|
53.4
|
|
|
48.6
|
|
|
4.8
|
|
|||
Broadcasting & Media
|
|
13
|
|
|
50.4
|
|
|
46.4
|
|
|
4.0
|
|
|||
All other corporates (2)
|
|
169
|
|
|
329.1
|
|
|
319.1
|
|
|
10.0
|
|
|||
Total corporate bonds
|
|
630
|
|
|
2,134.2
|
|
|
2,041.6
|
|
|
92.6
|
|
|||
Mortgage-backed securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
U.S. Government and federally sponsored agencies
|
|
232
|
|
|
452.7
|
|
|
431.0
|
|
|
21.7
|
|
|||
Commercial (3)
|
|
167
|
|
|
711.4
|
|
|
705.6
|
|
|
5.8
|
|
|||
Other
|
|
31
|
|
|
86.2
|
|
|
85.7
|
|
|
0.5
|
|
|||
Municipal bonds (4)
|
|
529
|
|
|
2,083.0
|
|
|
1,915.5
|
|
|
167.5
|
|
|||
Government bonds
|
|
|
|
|
|
|
|
|
|||||||
U.S.
|
|
44
|
|
|
865.5
|
|
|
848.7
|
|
|
16.8
|
|
|||
Foreign
|
|
14
|
|
|
86.2
|
|
|
83.3
|
|
|
2.9
|
|
|||
Collateralized loan obligations (5)
|
|
136
|
|
|
789.9
|
|
|
796.8
|
|
|
(6.9
|
)
|
|||
Asset-backed securities
|
|
108
|
|
|
588.9
|
|
|
579.3
|
|
|
9.6
|
|
|||
Total fixed maturity securities
|
|
1,891
|
|
|
$
|
7,798.0
|
|
|
$
|
7,487.5
|
|
|
$
|
310.5
|
|
|
|
|
|
|
|
|
|
|
|||||||
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Non-redeemable preferred stocks
|
|
12
|
|
|
$
|
58.2
|
|
|
|
|
|
||||
Common stocks
|
|
91
|
|
|
26.8
|
|
|
|
|
|
|||||
Closed-end fund
|
|
1
|
|
|
20.5
|
|
|
|
|
|
|||||
Total equity securities
|
|
104
|
|
|
$
|
105.5
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|||||||
Total
|
|
1,995
|
|
|
$
|
7,903.5
|
|
|
|
|
|
(1)
|
At March 31, 2019, the fair value amount included $10.2 million which were non-investment grade.
|
(2)
|
The All other corporates category contains 19 additional industry sectors. Gaming, natural gas, food and beverage, metal and mining and retail represented $189.1 million of fair value at March 31, 2019, with the remaining 14 sectors each representing less than $24.0 million.
|
(3)
|
At March 31, 2019, 100% were investment grade, with an overall credit rating of AA, and the positions were well diversified by property type, geography and sponsor.
|
(4)
|
Holdings are geographically diversified, 46.5% are tax-exempt and 77.4% are revenue bonds tied to essential services, such as mass transit, water and sewer. The overall credit quality of the municipal bond portfolio was AA- at March 31, 2019.
|
(5)
|
Based on fair value, 98.1% of the collateralized loan obligation securities were rated investment grade by Standard and Poor’s Global Inc. (S&P), Moody’s Investors Service, Inc. (Moody’s) and/or Fitch Ratings, Inc. (Fitch) at March 31, 2019.
|
($ in millions)
|
|
Percent of Portfolio
|
|
|
|
|
||||||||
|
|
Fair Value
|
|
March 31, 2019
|
||||||||||
|
|
December 31, 2018
|
|
March 31, 2019
|
|
Fair
Value
|
|
Amortized
Cost
|
||||||
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||
AAA
|
|
9.1
|
%
|
|
10.4
|
%
|
|
$
|
808.7
|
|
|
$
|
798.4
|
|
AA (2)
|
|
44.5
|
|
|
44.3
|
|
|
3,455.5
|
|
|
3,318.1
|
|
||
A
|
|
22.4
|
|
|
22.2
|
|
|
1,732.1
|
|
|
1,626.7
|
|
||
BBB
|
|
21.2
|
|
|
20.5
|
|
|
1,604.3
|
|
|
1,549.6
|
|
||
BB
|
|
1.8
|
|
|
1.7
|
|
|
130.1
|
|
|
127.9
|
|
||
B
|
|
0.4
|
|
|
0.3
|
|
|
27.8
|
|
|
28.0
|
|
||
CCC or lower
|
|
0.1
|
|
|
0.1
|
|
|
0.6
|
|
|
0.6
|
|
||
Not rated (3)
|
|
0.5
|
|
|
0.5
|
|
|
38.9
|
|
|
38.2
|
|
||
Total fixed maturity securities
|
|
100.0
|
%
|
|
100.0
|
%
|
|
$
|
7,798.0
|
|
|
$
|
7,487.5
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||
AAA
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
AA
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
A
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
BBB
|
|
49.0
|
%
|
|
55.2
|
%
|
|
$
|
58.2
|
|
|
|
||
BB
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
B
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
CCC or lower
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|||
Not rated
|
|
51.0
|
|
|
44.8
|
|
|
47.3
|
|
|
|
|||
Total equity securities
|
|
100.0
|
%
|
|
100.0
|
%
|
|
$
|
105.5
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||||
Total
|
|
|
|
|
|
|
|
$
|
7,903.5
|
|
|
|
(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, 2019, the AA rated fair value amount included $865.5 million of U.S. Government and federally sponsored agency securities and $724.1 million of mortgage-backed and asset-backed securities issued by U.S. Government and federally sponsored agencies.
|
(3)
|
This category primarily represents private placement and municipal securities not rated by either S&P, Moody’s or Fitch.
|
($ in millions)
|
|
Three Months Ended
March 31, |
|
2019-2018
|
|||||||
|
|
2019
|
|
2018
|
|
Change %
|
|||||
Net cash provided by operating activities
|
|
$
|
124.8
|
|
|
$
|
72.1
|
|
|
73.1
|
%
|
Net cash used in investing activities
|
|
(146.2
|
)
|
|
(33.7
|
)
|
|
N.M.
|
|||
Net cash provided by (used in) financing activities
|
|
16.8
|
|
|
(22.1
|
)
|
|
N.M.
|
|||
Net increase (decrease) in cash
|
|
(4.6
|
)
|
|
16.3
|
|
|
N.M.
|
|||
Cash at beginning of period
|
|
11.9
|
|
|
7.6
|
|
|
N.M.
|
|||
Cash at end of period
|
|
$
|
7.3
|
|
|
$
|
23.9
|
|
|
-69.5
|
%
|
($ in millions)
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Short-term debt:
|
|
|
|
|
||||
Bank Credit Facility, expires June 27, 2023
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Long-term debt:
|
|
|
|
|
||||
4.50% Senior Notes, due December 1, 2025. Aggregate principal
amount of $250 million less unaccrued discount of $0.5 million
and $0.5 million (4.5% imputed rate) and unamortized debt
issuance costs of $1.7 million and $1.8 million
|
|
247.8
|
|
|
247.7
|
|
||
Federal Home Loan Bank borrowing
|
|
50.0
|
|
|
50.0
|
|
||
Total
|
|
$
|
297.8
|
|
|
$
|
297.7
|
|
|
|
Insurance Financial
|
|
|
||||
|
|
Strength Ratings (Outlook)
|
|
Debt Ratings (Outlook)
|
||||
As of April 30, 2019
|
|
|
|
|
||||
S&P
|
|
A
|
|
(stable)
|
|
BBB
|
|
(stable)
|
Moody’s
|
|
A2
|
|
(negative)
|
|
Baa2
|
|
(negative)
|
A.M. Best
|
|
A
|
|
(stable)
|
|
bbb
|
|
(stable)
|
Fitch
|
|
A
|
|
(rating watch negative)
|
|
BBB
|
|
(rating watch negative)
|
10.3*
|
|
|
|
|
|
10.3(a)*
|
|
|
|
|
|
10.3(b)*
|
|
|
|
|
|
10.3(c)*
|
|
|
|
|
|
10.3(d)*
|
|
|
|
|
|
10.3(e)*
|
|
|
|
|
|
10.3(f)*
|
|
|
|
|
|
10.3(g)*
|
|
|
|
|
|
10.4*
|
|
|
|
|
|
10.5*
|
|
|
|
|
|
10.6*
|
|
|
|
|
|
|
|
|
HORACE MANN EDUCATORS CORPORATION
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
May 10, 2019
|
|
/s/ Marita Zuraitis
|
|
|
|
|
|
|
|
Marita Zuraitis
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
May 10, 2019
|
|
/s/ Bret A. Conklin
|
|
|
|
|
|
|
|
Bret A. Conklin
|
|
|
|
Executive Vice President and
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
May 10, 2019
|
|
/s/ Kimberly A. Johnson
|
|
|
|
|
|
|
|
Kimberly A. Johnson
|
|
|
|
Vice President, Controller and
|
|
|
|
Principal Accounting Officer
|
Named Executive Officer
|
Annualized Salary
|
Marita Zuraitis
President and Chief Executive Officer
|
$930,000
|
Bret A. Conklin
Executive Vice President and Chief Financial Officer
|
$400,000
|
Matthew P. Sharpe
Executive Vice President, Strategy & Business Development
|
$425,000
|
William J. Caldwell
Executive Vice President, Property & Casualty
|
$400,000
|
Bret L. Benham
Executive Vice President, Life & Retirement
|
$400,000
|
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
|
EVP, Life & Retirement
|
|
December 26, 2017
|
|
|
|
TIER III PARTICIPANTS
|
||
|
|
|
*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
|
EVP, Life & Retirement
|
|
December 26, 2017
|
|
|
|
TIER III PARTICIPANTS
|
||
|
|
|
*Subject to acceptance within 30 days of effective date of participation.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Basic:
|
|
|
|
|
||||
|
|
|
|
|
||||
Net income
|
|
$
|
32,166
|
|
|
$
|
20,155
|
|
Weighted average number of common
shares during the period (in thousands)
|
|
41,610
|
|
|
41,497
|
|
||
|
|
|
|
|
||||
Net income per share – basic
|
|
$
|
0.77
|
|
|
$
|
0.49
|
|
|
|
|
|
|
||||
|
|
|
|
|
||||
Diluted:
|
|
|
|
|
||||
|
|
|
|
|
||||
Net income
|
|
$
|
32,166
|
|
|
$
|
20,155
|
|
Weighted average number of common
shares during the period
|
|
41,610
|
|
|
41,497
|
|
||
Weighted average number of common equivalent shares to reflect
the dilutive effect of common stock equivalent securities:
|
|
|
|
|
||||
Stock options
|
|
66
|
|
|
115
|
|
||
Common stock units related to deferred
compensation for employees
|
|
—
|
|
|
25
|
|
||
Restricted common stock units related
to incentive compensation
|
|
109
|
|
|
16
|
|
||
Total common and common equivalent shares
adjusted to calculate diluted earnings per share
|
|
41,785
|
|
|
41,653
|
|
||
|
|
|
|
|
||||
Net income per share – diluted
|
|
$
|
0.77
|
|
|
$
|
0.48
|
|
/s/ KPMG LLP
|
|
KPMG LLP
|
|
|
|
Chicago, Illinois
|
|
May 10, 2019
|
|
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 10, 2019
|
|
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 10, 2019
|
|
(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 10, 2019
|
|
(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 10, 2019
|
|
•
|
Pretax core earnings (loss) - Pretax net income (loss) excluding pretax impact of net investment gains (losses), discontinued operations, and cumulative effect of changes in accounting principles when applicable. Income before income taxes 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.
|
•
|
Core return on equity - LTM: 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 - LTM is the most comparable GAAP measure.
|
•
|
Net income return on equity - Annualized: The ratio of (1) annualized net income to (2) to 2 quarter average shareholders' equity (but the year-end measures are still based on a 5 quarter average).
|
•
|
Core return on equity - Annualized: The ratio of (1) annualized core earnings to (2) the 2 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 (but the year-end measures are still based on a 5 quarter average). Net income return on equity - Annualized 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.
|