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· | Bankers Life, which markets and distributes Medicare supplement insurance, interest-sensitive life insurance, traditional life insurance, fixed annuities and long-term care insurance products to the middle-income senior market through a dedicated field force of career agents and sales managers supported by a network of community-based branch offices. The Bankers Life segment includes primarily the business of Bankers Life and Casualty Company (“Bankers Life”). Bankers Life also markets and distributes Medicare Advantage plans primarily through a distribution arrangement with Humana, Inc. (“Humana”) and Medicare Part D prescription drug plans through a distribution and reinsurance arrangement with Coventry Health Care (“Coventry”). |
· | Washington National, which markets and distributes supplemental health (including specified disease, accident and hospital indemnity insurance products) and life insurance to middle-income consumers at home and at the worksite. These products are marketed through Performance Matters Associates, Inc., a wholly owned subsidiary, and through independent marketing organizations and insurance agencies, including worksite marketing. The products being marketed are underwritten by Washington National Insurance Company (“Washington National”). |
· | Colonial Penn, which markets primarily graded benefit and simplified issue life insurance directly to customers through television advertising, direct mail, the internet and telemarketing. The Colonial Penn segment includes primarily the business of Colonial Penn Life Insurance Company (“Colonial Penn”). |
· | Other CNO Business, which consists of blocks of interest-sensitive life insurance, traditional life insurance, annuities, long-term care insurance and other supplemental health products. These blocks of business are not being actively marketed and were primarily issued or acquired by Conseco Life Insurance Company (“Conseco Life”) and Washington National. |
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2. | TRANSFER OF SENIOR HEALTH INSURANCE COMPANY OF PENNSYLVANIA TO AN INDEPENDENT TRUST |
Recognition of unrealized losses on investments transferred to the Independent Trust | $ | 380.5 | (a) | ||
Gain on reinsurance recapture, net of tax | (19.3 | ) | |||
Increase to deferred tax valuation allowance based on recent results which have had a significant impact on taxable income and the effects of the transaction | 298.0 | ||||
Write-off of remaining shareholder’s equity of Senior Health | 159.2 | (a) | |||
Additional capital contribution and transaction expenses | 204.4 | (a) | |||
Total charges | $ | 1,022.8 |
(a) | Amount is before the potential tax benefit. A deferred tax valuation allowance was established for all future potential tax benefits generated by these charges since management had concluded that it is more likely than not that such tax benefits would not be utilized to offset future taxable income. |
2008 | ||||
Revenues: | ||||
Insurance policy income | $ | 227.9 | ||
Net investment income | 156.9 | |||
Net realized investment losses | (380.1 | ) | ||
Total revenues | 4.7 | |||
Benefits and expenses: | ||||
Insurance policy benefits | 311.2 | |||
Amortization | 16.7 | |||
Gain on reinsurance recapture (a) | (29.7 | ) | ||
Loss on Transfer and transaction expenses | 363.6 | |||
Other operating costs and expenses | 54.0 | |||
Total benefits and expenses | 715.8 | |||
Loss before income taxes | (711.1 | ) | ||
Income tax expense (benefit): | ||||
Tax benefit on period income | (440.7 | ) | ||
Valuation allowance for deferred tax assets | 452.3 | |||
Net loss from discontinued operations | $ | (722.7 | ) |
(a) | In the third quarter of 2008, Senior Health recaptured a block of previously reinsured long-term care business which was included in the business transferred to the Independent Trust. |
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3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
· | Premium rate increases – If premium rate increases reflect a change in our previous rate increase assumptions, the new assumptions are not reflected prospectively in our reserves. Instead, the additional premium revenue resulting from the rate increase is recognized as earned and original assumptions continue to be used to determine changes to liabilities for insurance products unless a premium deficiency exists. |
· | Benefit reductions – A policyholder may choose reduced coverage with a proportionate reduction in premium, when permitted by our contracts. This option does not require additional underwriting. Benefit reductions are treated as a partial lapse of coverage, and the balance of our reserves and deferred insurance acquisition costs is reduced in proportion to the reduced coverage. |
· | Non-forfeiture benefits offered in conjunction with a rate increase – In some cases, non-forfeiture benefits are offered to policyholders who wish to lapse their policies at the time of a significant rate increase. In these cases, exercise of this option is treated as an extinguishment of the original contract and issuance of a new contract. The balance of our reserves and deferred insurance acquisition costs are released, and a reserve for the new contract is established. |
· | Florida Order – In 2004, the Florida Office of Insurance Regulation issued an order to Washington National, regarding home health care business in Florida. The order required Washington National to offer a choice of three alternatives to holders of home health care policies in Florida subject to premium rate increases as follows: |
· | retention of their current policy with a rate increase of 50 percent in the first year and actuarially justified increases in subsequent years; |
· | receipt of a replacement policy with reduced benefits and a rate increase in the first year of 25 percent and no more than 15 percent in subsequent years; or |
· | receipt of a paid-up policy, allowing the holder to file future claims up to 100 percent of the amount of premiums paid since the inception of the policy. |
· | For contracts sold prior to 2009, we recognize distribution and licensing fee income from Coventry based upon negotiated percentages of collected premiums on the underlying Medicare Part D contracts. For contracts sold in 2009 and thereafter, we recognize distribution income based on a fixed fee per PDP contract. This fee income is recognized over the calendar year term as premiums are collected. |
· | We also pay commissions to our agents who sell the plans on behalf of Coventry. These payments are deferred and amortized over the remaining term of the initial enrollment period (the one-year life of the initial policy). |
· | We recognize premium revenue evenly over the period of the underlying Medicare Part D contracts. |
· | We recognize policyholder benefits and ceding commission expense as incurred. |
· | We recognize risk-share premium adjustments consistent with Coventry’s risk-share agreement with the Centers for Medicare and Medicaid Services. |
· | We received distribution income from Coventry and other parties based on a fixed fee per PFFS contract. This income was deferred and recognized over the remaining calendar year term of the initial enrollment period. |
· | We also paid commissions to our agents who sell the plans on behalf of Coventry and other parties. These payments were deferred and amortized over the remaining term of the initial enrollment period (the one-year life of the initial policy). |
· | We recognized revenue evenly over the period of the underlying PFFS contracts. |
· | We recognized policyholder benefits and ceding commission expense as incurred. |
Amount | Maturity | Interest rate | |||
borrowed | date | at December 31, 2010 | |||
$ | 54.0 | May 2012 | Variable rate – 0.284% | ||
13.0 | July 2012 | Variable rate – 0.349% | |||
100.0 | October 2013 | Variable rate – 0.591% | |||
100.0 | September 2015 | Variable rate – 0.611% | |||
100.0 | September 2015 | Variable rate – 0.588% | |||
100.0 | October 2015 | Variable rate – 0.616% | |||
150.0 | October 2015 | Variable rate – 0.610% | |||
146.0 | November 2015 | Fixed rate – 5.300% | |||
100.0 | November 2015 | Fixed rate – 4.890% | |||
100.0 | December 2015 | Fixed rate – 4.710% | |||
50.0 | November 2016 | Variable rate – 0.573% | |||
50.0 | November 2016 | Variable rate – 0.731% | |||
100.0 | October 2017 | Variable rate – 0.715% | |||
37.0 | November 2017 | Fixed rate – 3.750% | |||
$ | 1,200.0 |
· | Level 1 – includes assets and liabilities valued using inputs that are quoted prices in active markets for identical assets or liabilities. Our Level 1 assets include exchange traded securities. |
· | Level 2 – includes assets and liabilities valued using inputs that are quoted prices for similar assets in an active market, quoted prices for identical or similar assets in a market that is not active, observable inputs, or observable inputs that can be corroborated by market data. Level 2 assets and liabilities include those financial instruments that are valued by independent pricing services using models or other valuation methodologies. These models are primarily industry-standard models that consider various inputs such as interest rate, credit spread, reported trades, broker/dealer quotes, issuer spreads and other inputs that are observable or derived from observable information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace. Financial instruments in this category primarily include: certain public and private corporate fixed maturity securities; certain government or agency securities; certain mortgage and asset-backed securities; and non-exchange-traded derivatives such as call options to hedge liabilities related to our fixed index annuity products. |
· | Level 3 – includes assets and liabilities valued using unobservable inputs that are used in model-based valuations that contain management assumptions. Level 3 assets and liabilities include those financial instruments whose fair value is estimated based on non-binding broker prices or internally developed models or methodologies utilizing significant inputs not based on, or corroborated by, readily available market information. Financial instruments in this category include certain corporate securities (primarily private placements), certain mortgage and asset-backed securities, and other less liquid securities. Additionally, the Company’s liabilities for embedded derivatives (including embedded derivatives related to our fixed index annuity products and to a modified coinsurance arrangement) are classified in Level 3 since their values include significant unobservable inputs including actuarial assumptions. |
Quoted prices in active markets for identical assets or liabilities (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total | |||||||||||||||
Assets: | ||||||||||||||||||
Fixed maturities, available for sale: | ||||||||||||||||||
Corporate securities | $ | - | $ | 12,254.7 | $ | 2,092.5 | $ | 14,347.2 | ||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 10.0 | 282.2 | 2.0 | 294.2 | ||||||||||||||
States and political subdivisions | - | 1,772.1 | 11.4 | 1,783.5 | ||||||||||||||
Debt securities issued by foreign governments | - | .9 | - | .9 | ||||||||||||||
Asset-backed securities | - | 638.1 | 6.0 | 644.1 | ||||||||||||||
Collateralized debt obligations | - | - | 256.5 | 256.5 | ||||||||||||||
Commercial mortgage-backed securities | - | 1,363.7 | - | 1,363.7 | ||||||||||||||
Mortgage pass-through securities | 27.8 | - | 3.5 | 31.3 | ||||||||||||||
Collateralized mortgage obligations | - | 1,715.4 | 197.1 | 1,912.5 | ||||||||||||||
Total fixed maturities, available for sale | 37.8 | 18,027.1 | 2,569.0 | 20,633.9 | ||||||||||||||
Equity securities | - | 37.5 | 30.6 | 68.1 | ||||||||||||||
Trading securities: | ||||||||||||||||||
Corporate securities | 3.2 | 47.5 | 4.3 | 55.0 | ||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | - | 293.8 | - | 293.8 | ||||||||||||||
States and political subdivisions | - | 16.1 | - | 16.1 | ||||||||||||||
Asset-backed securities | - | .6 | - | .6 | ||||||||||||||
Commercial mortgage-backed securities | - | 5.2 | - | 5.2 | ||||||||||||||
Mortgage pass-through securities | .3 | - | - | .3 | ||||||||||||||
Collateralized mortgage obligations | - | 1.2 | .4 | 1.6 | ||||||||||||||
Total trading securities | 3.5 | 364.4 | 4.7 | 372.6 | ||||||||||||||
Investments held by variable interest entities | - | 414.2 | 6.7 | 420.9 | ||||||||||||||
Other invested assets | - | 192.0 | (a) | - | 192.0 | |||||||||||||
Assets held in separate accounts | - | 17.5 | - | 17.5 | ||||||||||||||
Liabilities: | ||||||||||||||||||
Liabilities for insurance products: | ||||||||||||||||||
Interest-sensitive products | - | - | 553.2 | (b) | 553.2 |
(a) | Includes company-owned life insurance and derivatives. |
(b) | Includes $553.6 million of embedded derivatives associated with our fixed index annuity products and $(.4) million of embedded derivatives associated with a modified coinsurance agreement. |
Quoted prices in active markets for identical assets or liabilities (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total | |||||||||||||||
Assets: | ||||||||||||||||||
Fixed maturities, available for sale: | ||||||||||||||||||
Corporate securities | $ | - | $ | 12,044.3 | $ | 2,247.1 | $ | 14,291.4 | ||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 19.4 | 248.0 | 2.2 | 269.6 | ||||||||||||||
States and political subdivisions | - | 842.9 | 10.7 | 853.6 | ||||||||||||||
Debt securities issued by foreign governments | - | 5.1 | - | 5.1 | ||||||||||||||
Asset-backed securities | - | 176.3 | 15.8 | 192.1 | ||||||||||||||
Collateralized debt obligations | - | - | 92.8 | 92.8 | ||||||||||||||
Commercial mortgage-backed securities | - | 752.3 | 13.7 | 766.0 | ||||||||||||||
Mortgage pass-through securities | 37.1 | 1.3 | 4.2 | 42.6 | ||||||||||||||
Collateralized mortgage obligations | - | 2,003.8 | 11.4 | 2,015.2 | ||||||||||||||
Total fixed maturities, available for sale | 56.5 | 16,074.0 | 2,397.9 | 18,528.4 | ||||||||||||||
Equity securities | .1 | - | 30.9 | 31.0 | ||||||||||||||
Trading securities: | ||||||||||||||||||
Corporate securities | 3.8 | 49.4 | 3.7 | 56.9 | ||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | - | 220.3 | - | 220.3 | ||||||||||||||
States and political subdivisions | - | 4.4 | - | 4.4 | ||||||||||||||
Asset-backed securities | - | .6 | - | .6 | ||||||||||||||
Commercial mortgage-backed securities | - | 4.9 | - | 4.9 | ||||||||||||||
Mortgage pass-through securities | .5 | - | - | .5 | ||||||||||||||
Collateralized mortgage obligations | - | 5.7 | - | 5.7 | ||||||||||||||
Total trading securities | 4.3 | 285.3 | 3.7 | 293.3 | ||||||||||||||
Securities lending collateral: | ||||||||||||||||||
Corporate securities | - | 81.0 | 13.7 | 94.7 | ||||||||||||||
Asset-backed securities | - | 16.2 | 22.9 | 39.1 | ||||||||||||||
Total securities lending collateral | - | 97.2 | 36.6 | 133.8 | ||||||||||||||
Other invested assets | - | 192.6 | (a) | 2.4 | (b) | 195.0 | ||||||||||||
Assets held in separate accounts | - | 17.3 | - | 17.3 | ||||||||||||||
Liabilities: | ||||||||||||||||||
Liabilities for insurance products: | ||||||||||||||||||
Interest-sensitive products | - | - | 496.0 | (c) | 496.0 |
____________ |
(a) | Includes company-owned life insurance and derivatives. |
(b) | Includes equity-like holdings in special-purpose entities. |
(c) | Includes $494.4 million of embedded derivatives associated with our fixed index annuity products and $1.6 million of embedded derivatives associated with a modified coinsurance agreement. |
December 31, 2010 | Amount of total gains (losses) for the year ended December 31, 2010 included in our net income relating to assets and liabilities still held as of the reporting date | |||||||||||||||||||||||||||||||||||||
Beginning balance as of December 31, 2009 | Cumulative effect of accounting change (a) | Purchases, sales, issuances and settlements, net | Total realized and unrealized gains (losses) included in net income | Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | Transfers into Level 3 (b) | Transfers out of Level 3 (b) (c) | Ending balance as of December 31, 2010 | |||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | ||||||||||||||||||||||||||||||||||||||
Corporate securities | $ | 2,247.1 | $ | (5.9 | ) | $ | 148.8 | $ | (72.7 | ) | $ | 74.5 | $ | 19.6 | $ | (318.9 | ) | $ | 2,092.5 | $ | - | |||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 2.2 | - | (.1 | ) | - | (.1 | ) | - | - | 2.0 | - | |||||||||||||||||||||||||||
States and political subdivisions | 10.7 | - | - | - | .4 | 2.1 | (1.8 | ) | 11.4 | - | ||||||||||||||||||||||||||||
Asset-backed securities | 15.8 | - | (12.3 | ) | (11.4 | ) | 13.9 | - | - | 6.0 | - | |||||||||||||||||||||||||||
Collateralized debt obligations | 92.8 | (5.7 | ) | 160.2 | (.3 | ) | 9.5 | - | - | 256.5 | - | |||||||||||||||||||||||||||
Commercial mortgage-backed securities | 13.7 | - | - | - | - | - | (13.7 | ) | - | - | ||||||||||||||||||||||||||||
Mortgage pass-through securities | 4.2 | - | (.7 | ) | - | - | - | - | 3.5 | - | ||||||||||||||||||||||||||||
Collateralized mortgage obligations | 11.4 | - | 174.8 | (.8 | ) | 5.5 | 17.3 | (11.1 | ) | 197.1 | - | |||||||||||||||||||||||||||
Total fixed maturities, available for sale | 2,397.9 | (11.6 | ) | 470.7 | (85.2 | ) | 103.7 | 39.0 | (345.5 | ) | 2,569.0 | - | ||||||||||||||||||||||||||
Equity securities | 30.9 | - | .1 | - | (.4 | ) | - | - | 30.6 | - | ||||||||||||||||||||||||||||
Trading securities: | ||||||||||||||||||||||||||||||||||||||
Corporate securities | 3.7 | - | - | - | .6 | - | - | 4.3 | .6 | |||||||||||||||||||||||||||||
Collateralized mortgage obligations | - | - | - | - | .1 | .3 | - | .4 | .1 | |||||||||||||||||||||||||||||
Total trading securities | 3.7 | - | - | - | .7 | .3 | - | 4.7 | .7 | |||||||||||||||||||||||||||||
Investments held by variable interest entities: | ||||||||||||||||||||||||||||||||||||||
Corporate securities | - | 6.9 | (1.0 | ) | - | .8 | - | - | 6.7 | - | ||||||||||||||||||||||||||||
Securities lending collateral: | ||||||||||||||||||||||||||||||||||||||
Corporate securities | 13.7 | - | (13.7 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||
Asset-backed securities | 22.9 | - | (20.9 | ) | - | - | - | (2.0 | ) | - | - | |||||||||||||||||||||||||||
Total securities lending collateral | 36.6 | - | (34.6 | ) | - | - | - | (2.0 | ) | - | - | |||||||||||||||||||||||||||
Other invested assets | 2.4 | (2.4 | ) | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||
Liabilities for insurance products: | ||||||||||||||||||||||||||||||||||||||
Interest-sensitive products | (496.0 | ) | - | (20.0 | ) | (37.2 | ) | - | - | - | (553.2 | ) | (37.2 | ) |
(a) | Amounts represent adjustments to investments related to a variable interest entity that was required to be consolidated effective January 1, 2010, as well as the reclassification of investments of a variable interest entity which was consolidated at December 31, 2009. |
(b) | Transfers in/out of Level 3 are reported as having occurred at the beginning of the period. |
(c) | Included in the transfers out of Level 3 is approximately $282 million of privately issued securities that were priced using observable market data at December 31, 2010 and were, therefore, transferred to Level 2. |
December 31, 2009 | ||||||||||||||||||||||||||||||||
Beginning balance as of December 31, 2008 | Purchases, sales, issuances and settlements, net | Total realized and unrealized gains (losses) included in net income | Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss) | Transfers into Level 3 (a) | Transfers out of Level 3 (a) | Ending balance as of December 31, 2009 | Amount of total gains (losses) for the year ended December 31, 2009 included in our net income relating to assets and liabilities still held as of the reporting date | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Fixed maturities, available for sale: | ||||||||||||||||||||||||||||||||
Corporate securities | $ | 1,715.6 | $ | 231.1 | $ | (5.2 | ) | $ | 284.8 | $ | 30.3 | $ | (9.5 | ) | $ | 2,247.1 | $ | - | ||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 2.6 | (.1 | ) | - | (.3 | ) | - | - | 2.2 | - | ||||||||||||||||||||||
States and political subdivisions | 10.5 | (.5 | ) | - | (1.1 | ) | 1.8 | - | 10.7 | - | ||||||||||||||||||||||
Asset-backed securities | 27.5 | (4.4 | ) | (5.2 | ) | 2.0 | - | (4.1 | ) | 15.8 | (1.2 | ) | ||||||||||||||||||||
Collateralized debt obligations | 96.7 | (36.3 | ) | (4.2 | ) | 36.6 | - | - | 92.8 | (2.7 | ) | |||||||||||||||||||||
Commercial mortgage-backed securities | 9.6 | (.7 | ) | (.6 | ) | 5.4 | - | - | 13.7 | - | ||||||||||||||||||||||
Mortgage pass-through securities | 4.9 | (.8 | ) | - | - | .1 | - | 4.2 | - | |||||||||||||||||||||||
Collateralized mortgage obligations | 8.7 | 10.8 | - | .1 | - | (8.2 | ) | 11.4 | - | |||||||||||||||||||||||
Total fixed maturities, available for sale | 1,876.1 | 199. | l | (15.2 | ) | 327.5 | 32.2 | (21.8 | ) | 2,397.9 | (3.9 | ) | ||||||||||||||||||||
Equity securities | 32.4 | (.3 | ) | - | (1.2 | ) | - | - | 30.9 | - | ||||||||||||||||||||||
Trading securities: | ||||||||||||||||||||||||||||||||
Corporate securities | 2.7 | - | 1.0 | - | - | - | 3.7 | 1.0 | ||||||||||||||||||||||||
Securities lending collateral: | ||||||||||||||||||||||||||||||||
Corporate securities | 34.9 | (17.0 | ) | - | .3 | - | (4.5 | ) | 13.7 | - | ||||||||||||||||||||||
Equity securities | .1 | (.1 | ) | (.3 | ) | .3 | - | - | - | (.3 | ) | |||||||||||||||||||||
Asset-backed securities | 13.1 | - | (.6 | ) | (10.0 | ) | 20.4 | - | 22.9 | (.6 | ) | |||||||||||||||||||||
Total securities lending collateral | 48.1 | (17.1 | ) | (.9 | ) | (9.4 | ) | 20.4 | (4.5 | ) | 36.6 | (.9 | ) | |||||||||||||||||||
Other invested assets | 2.3 | - | (3.4 | ) | 3.5 | - | - | 2.4 | (3.4 | ) | ||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Liabilities for insurance products: | ||||||||||||||||||||||||||||||||
Interest-sensitive products | (437.2 | ) | (63.8 | ) | 5.0 | - | - | - | (496.0 | ) | 7.3 |
(a) | Transfers in/out of Level 3 are reported as having occurred at the beginning of the period. |
2010 | 2009 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
Financial assets: | ||||||||||||||||
Fixed maturities, available for sale | $ | 20,633.9 | $ | 20,633.9 | $ | 18,528.4 | $ | 18,528.4 | ||||||||
Equity securities | 68.1 | 68.1 | 31.0 | 31.0 | ||||||||||||
Mortgage loans | 1,761.2 | 1,762.6 | 1,965.5 | 1,756.8 | ||||||||||||
Policy loans | 284.4 | 284.4 | 295.2 | 295.2 | ||||||||||||
Trading securities | 372.6 | 372.6 | 293.3 | 293.3 | ||||||||||||
Investments held by securitization entities | 420.9 | 420.9 | - | - | ||||||||||||
Securities lending collateral | - | - | 180.0 | 180.0 | ||||||||||||
Other invested assets | 240.9 | 240.9 | 236.8 | 236.8 | ||||||||||||
Cash and cash equivalents | 598.7 | 598.7 | 526.8 | 526.8 | ||||||||||||
Financial liabilities: | ||||||||||||||||
Insurance liabilities for interest-sensitive products (a) | $ | 13,194.7 | $ | 13,194.7 | $ | 13,219.2 | $ | 13,219.2 | ||||||||
Investment borrowings | 1,204.1 | 1,265.3 | 683.9 | 677.6 | ||||||||||||
Borrowings related to securitization entities | 386.9 | 345.1 | - | - | ||||||||||||
Notes payable – direct corporate obligations | 998.5 | 1,166.4 | 1,037.4 | 1,041.7 |
(a) | The estimated fair value of insurance liabilities for interest-sensitive products was approximately equal to its carrying value at December 31, 2010 and 2009. This was because interest rates credited on the vast majority of account balances approximate current rates paid on similar products and because these rates are not generally guaranteed beyond one year. |
January 1, 2010 | ||||||||||||
Amounts prior to effect of adoption of authoritative | Effect of adoption of authoritative | As | ||||||||||
guidance | guidance | adjusted | ||||||||||
Total investments | $ | 21,530.2 | $ | 247.6 | $ | 21,777.8 | ||||||
Cash and cash equivalents held by variable interest entities | 3.4 | 3.8 | 7.2 | |||||||||
Accrued investment income | 309.0 | .9 | 309.9 | |||||||||
Income tax assets, net | 1,124.0 | 8.6 | 1,132.6 | |||||||||
Other assets | 310.7 | 14.2 | 324.9 | |||||||||
Total assets | 30,343.8 | 275.1 | 30,618.9 | |||||||||
Other liabilities | 610.4 | 8.8 | 619.2 | |||||||||
Borrowings related to variable interest entities | 229.1 | 282.2 | 511.3 | |||||||||
Total liabilities | 26,811.4 | 291.0 | 27,102.4 | |||||||||
Accumulated other comprehensive income (loss) | (264.3 | ) | (6.2 | ) | (270.5 | ) | ||||||
Accumulated deficit | (614.6 | ) | (9.7 | ) | (624.3 | ) | ||||||
Total shareholders’ equity | 3,532.4 | (15.9 | ) | 3,516.5 | ||||||||
Total liabilities and shareholders’ equity | 30,343.8 | 275.1 | 30,618.9 |
December 31, | ||||
2009 | ||||
Increase to additional paid-in capital | $ | 28.0 | ||
Par value of 3.5% Debentures | $ | 116.5 | ||
Unamortized discount | (3.3 | ) | ||
Carrying value of 3.5% Debentures | $ | 113.2 |
2009 | 2008 | |||||||
Contractual interest expense | $ | 9.4 | $ | 11.3 | ||||
Amortization of discount | 9.4 | 9.5 | ||||||
Amortization of debt issue costs | 1.1 | 1.3 | ||||||
Total interest expense | $ | 19.9 | $ | 22.1 |
|
4. | INVESTMENTS |
Gross | Gross | Estimated | ||||||||||||||
Amortized | unrealized | unrealized | fair | |||||||||||||
cost | gains | losses | value | |||||||||||||
Investment grade (a): | ||||||||||||||||
Corporate securities | $ | 12,605.5 | $ | 645.2 | $ | (128.6 | ) | $ | 13,122.1 | |||||||
United States Treasury securities and obligations of United States government corporations and agencies | 300.3 | 5.7 | (11.8 | ) | 294.2 | |||||||||||
States and political subdivisions | 1,871.0 | 8.5 | (99.2 | ) | 1,780.3 | |||||||||||
Debt securities issued by foreign governments | .8 | .1 | - | .9 | ||||||||||||
Asset-backed securities | 595.3 | 9.9 | (5.1 | ) | 600.1 | |||||||||||
Collateralized debt obligations | 238.7 | 3.4 | (1.1 | ) | 241.0 | |||||||||||
Commercial mortgage-backed securities | 1,292.8 | 76.4 | (9.0 | ) | 1,360.2 | |||||||||||
Mortgage pass-through securities | 29.5 | 1.8 | - | 31.3 | ||||||||||||
Collateralized mortgage obligations | 1,416.7 | 25.7 | (30.1 | ) | 1,412.3 | |||||||||||
Total investment grade fixed maturities, available for sale | 18,350.6 | 776.7 | (284.9 | ) | 18,842.4 | |||||||||||
Below-investment grade (a): | ||||||||||||||||
Corporate securities | 1,241.1 | 24.4 | (40.4 | ) | 1,225.1 | |||||||||||
States and political subdivisions | 4.7 | - | (1.5 | ) | 3.2 | |||||||||||
Asset-backed securities | 43.7 | 1.5 | (1.2 | ) | 44.0 | |||||||||||
Collateralized debt obligations | 14.3 | 1.2 | - | 15.5 | ||||||||||||
Commercial mortgage-backed securities | 7.0 | - | (3.5 | ) | 3.5 | |||||||||||
Collateralized mortgage obligations | 494.4 | 11.2 | (5.4 | ) | 500.2 | |||||||||||
Total below-investment grade fixed maturities, available for sale | 1,805.2 | 38.3 | (52.0 | ) | 1,791.5 | |||||||||||
Total fixed maturities, available for sale | $ | 20,155.8 | $ | 815.0 | $ | (336.9 | ) | $ | 20,633.9 | |||||||
Equity securities | $ | 68.2 | $ | .8 | $ | (.9 | ) | $ | 68.1 |
(a) | Investment ratings – Investment ratings are assigned the second lowest rating by a nationally recognized statistical rating organization (Moody’s Investor Services, Inc. (“Moody’s”), S&P or Fitch Ratings (“Fitch”)), or if not rated by such firms, the rating assigned by the NAIC. NAIC designations of “1” or “2” include fixed maturities generally rated investment grade (rated “Baa3” or higher by Moody’s or rated “BBB-” or higher by S&P and Fitch). NAIC designations of “3” through “6” are referred to as below-investment grade (which generally are rated “Ba1” or lower by Moody’s or rated “BB+” or lower by S&P and Fitch). References to investment grade or below investment grade throughout our consolidated financial statements are determined as described above. |
Gross | Gross | Estimated | ||||||||||||||
Amortized | unrealized | unrealized | fair | |||||||||||||
cost | gains | losses | value | |||||||||||||
Investment grade: | ||||||||||||||||
Corporate securities | $ | 13,069.8 | $ | 371.9 | $ | (315.4 | ) | $ | 13,126.3 | |||||||
United States Treasury securities and obligations of United States government corporations and agencies | 268.5 | 4.6 | (3.5 | ) | 269.6 | |||||||||||
States and political subdivisions | 924.2 | 3.0 | (78.4 | ) | 848.8 | |||||||||||
Debt securities issued by foreign governments | 4.8 | .3 | - | 5.1 | ||||||||||||
Asset-backed securities | 154.1 | 1.7 | (17.9 | ) | 137.9 | |||||||||||
Collateralized debt obligations | 84.1 | 1.2 | (.6 | ) | 84.7 | |||||||||||
Commercial mortgage-backed securities | 867.7 | 6.2 | (108.2 | ) | 765.7 | |||||||||||
Mortgage pass-through securities | 41.1 | 1.6 | (.1 | ) | 42.6 | |||||||||||
Collateralized mortgage obligations | 1,801.4 | 4.2 | (81.0 | ) | 1,724.6 | |||||||||||
Total investment grade fixed maturities, available for sale | 17,215.7 | 394.7 | (605.1 | ) | 17,005.3 | |||||||||||
Below-investment grade: | ||||||||||||||||
Corporate securities | 1,275.4 | 5.8 | (116.1 | ) | 1,165.1 | |||||||||||
States and political subdivisions | 6.9 | - | (2.1 | ) | 4.8 | |||||||||||
Asset-backed securities | 90.9 | - | (36.7 | ) | 54.2 | |||||||||||
Collateralized debt obligations | 12.8 | - | (4.7 | ) | 8.1 | |||||||||||
Commercial mortgage-backed securities | 1.6 | - | (1.3 | ) | .3 | |||||||||||
Collateralized mortgage obligations | 394.7 | - | (104.1 | ) | 290.6 | |||||||||||
Total below-investment grade fixed maturities, available for sale | 1,782.3 | 5.8 | (265.0 | ) | 1,523.1 | |||||||||||
Total fixed maturities, available for sale | $ | 18,998.0 | $ | 400.5 | $ | (870.1 | ) | $ | 18,528.4 | |||||||
Equity securities | $ | 30.7 | $ | .8 | $ | (.5 | ) | $ | 31.0 |
Other-than- | ||||||||||||||||||||
temporary | ||||||||||||||||||||
impairments | ||||||||||||||||||||
included in | ||||||||||||||||||||
Gross | Gross | accumulated other | ||||||||||||||||||
Amortized | unrealized | unrealized | Estimated | comprehensive | ||||||||||||||||
cost | gains | losses | fair value | income (loss) | ||||||||||||||||
Corporate securities | $ | 13,846.6 | $ | 669.6 | $ | (169.0 | ) | $ | 14,347.2 | $ | - | |||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 300.3 | 5.7 | (11.8 | ) | 294.2 | - | ||||||||||||||
States and political subdivisions | 1,875.7 | 8.5 | (100.7 | ) | 1,783.5 | - | ||||||||||||||
Debt securities issued by foreign governments | .8 | .1 | - | .9 | - | |||||||||||||||
Asset-backed securities | 639.0 | 11.4 | (6.3 | ) | 644.1 | - | ||||||||||||||
Collateralized debt obligations | 253.0 | 4.6 | (1.1 | ) | 256.5 | - | ||||||||||||||
Commercial mortgage-backed securities | 1,299.8 | 76.4 | (12.5 | ) | 1,363.7 | (.1 | ) | |||||||||||||
Mortgage pass-through securities | 29.5 | 1.8 | - | 31.3 | - | |||||||||||||||
Collateralized mortgage obligations | 1,911.1 | 36.9 | (35.5 | ) | 1,912.5 | (23.3 | ) | |||||||||||||
Total fixed maturities, available for sale | $ | 20,155.8 | $ | 815.0 | $ | (336.9 | ) | $ | 20,633.9 | $ | (23.4 | ) |
Other-than- | ||||||||||||||||||||
temporary | ||||||||||||||||||||
impairments | ||||||||||||||||||||
Gross | Gross | included in other | ||||||||||||||||||
Amortized | unrealized | unrealized | Estimated | comprehensive | ||||||||||||||||
cost | gains | losses | fair value | loss | ||||||||||||||||
Corporate securities | $ | 14,345.2 | $ | 377.7 | $ | (431.5 | ) | $ | 14,291.4 | $ | - | |||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 268.5 | 4.6 | (3.5 | ) | 269.6 | - | ||||||||||||||
States and political subdivisions | 931.1 | 3.0 | (80.5 | ) | 853.6 | - | ||||||||||||||
Debt securities issued by foreign governments | 4.8 | .3 | - | 5.1 | - | |||||||||||||||
Asset-backed securities | 245.0 | 1.7 | (54.6 | ) | 192.1 | (35.1 | ) | |||||||||||||
Collateralized debt obligations | 96.9 | 1.2 | (5.3 | ) | 92.8 | - | ||||||||||||||
Commercial mortgage-backed securities | 869.3 | 6.2 | (109.5 | ) | 766.0 | (1.4 | ) | |||||||||||||
Mortgage pass-through securities | 41.1 | 1.6 | (.1 | ) | 42.6 | - | ||||||||||||||
Collateralized mortgage obligations | 2,196.1 | 4.2 | (185.1 | ) | 2,015.2 | (132.4 | ) | |||||||||||||
Total fixed maturities, available for sale | $ | 18,998.0 | $ | 400.5 | $ | (870.1 | ) | $ | 18,528.4 | $ | (168.9 | ) |
2010 | 2009 | |||||||
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized | $ | (4.4 | ) | $ | (133.5 | ) | ||
Net unrealized gains (losses) on all other investments | 476.5 | (339.9 | ) | |||||
Adjustment to the present value of future profits (a) | (17.6 | ) | 10.7 | |||||
Adjustment to deferred acquisition costs | (76.2 | ) | 59.8 | |||||
Unrecognized net loss related to deferred compensation plan | (7.7 | ) | (8.2 | ) | ||||
Deferred income tax asset (liability) | (132.3 | ) | 146.8 | |||||
Accumulated other comprehensive income (loss) | $ | 238.3 | $ | (264.3 | ) |
(a) | The present value of future profits is the value assigned to the right to receive future cash flows from contracts existing at September 10, 2003 (the date our Predecessor emerged from bankruptcy). |
Percent of | ||||||||||||||||
Gross | gross | |||||||||||||||
Percent of | unrealized | unrealized | ||||||||||||||
Carrying value | fixed maturities | losses | losses | |||||||||||||
Energy/pipelines | $ | 2,001.1 | 9.7 | % | $ | 14.3 | 4.2 | % | ||||||||
Collateralized mortgage obligations | 1,912.5 | 9.3 | 35.5 | 10.5 | ||||||||||||
Utilities | 1,826.6 | 8.9 | 5.7 | 1.7 | ||||||||||||
States and political subdivisions | 1,783.5 | 8.6 | 100.7 | 29.9 | ||||||||||||
Commercial mortgage-backed securities | 1,363.7 | 6.6 | 12.5 | 3.7 | ||||||||||||
Insurance | 1,227.1 | 5.9 | 19.7 | 5.8 | ||||||||||||
Food/beverage | 1,085.2 | 5.3 | 9.8 | 2.9 | ||||||||||||
Healthcare/pharmaceuticals | 907.4 | 4.4 | 5.7 | 1.7 | ||||||||||||
Banks | 869.1 | 4.2 | 44.1 | 13.1 | ||||||||||||
Cable/media | 794.0 | 3.9 | 11.5 | 3.4 | ||||||||||||
Real estate/REITs | 760.0 | 3.7 | 6.1 | 1.8 | ||||||||||||
Asset-backed securities | 644.1 | 3.1 | 6.3 | 1.9 | ||||||||||||
Transportation | 544.6 | 2.6 | 3.2 | 1.0 | ||||||||||||
Capital goods | 495.6 | 2.4 | 4.0 | 1.2 | ||||||||||||
Building materials | 439.8 | 2.1 | 12.4 | 3.7 | ||||||||||||
Telecom | 423.1 | 2.1 | 9.1 | 2.7 | ||||||||||||
Aerospace/defense | 349.2 | 1.7 | 1.2 | .4 | ||||||||||||
Metals and mining | 333.5 | 1.6 | 2.1 | .6 | ||||||||||||
Chemicals | 309.5 | 1.5 | 2.2 | .6 | ||||||||||||
U.S. Treasury and Obligations | 294.2 | 1.4 | 11.8 | 3.5 | ||||||||||||
Paper | 272.2 | 1.3 | 4.8 | 1.4 | ||||||||||||
Collateralized debt obligations | 256.5 | 1.2 | 1.1 | .3 | ||||||||||||
Brokerage | 238.1 | 1.2 | 3.0 | .9 | ||||||||||||
Consumer products | 229.4 | 1.1 | 5.0 | 1.5 | ||||||||||||
Entertainment/hotels | 218.5 | 1.1 | .9 | .3 | ||||||||||||
Other | 1,055.4 | 5.1 | 4.2 | 1.3 | ||||||||||||
Total fixed maturities, available for sale | $ | 20,633.9 | 100.0 | % | $ | 336.9 | 100.0 | % |
Estimated | ||||||||
Amortized | fair | |||||||
cost | value | |||||||
Due in one year or less | $ | 146.4 | $ | 146.0 | ||||
Due after one year through five years | 1,146.0 | 1,202.8 | ||||||
Due after five years through ten years | 3,981.4 | 4,195.0 | ||||||
Due after ten years | 10,749.6 | 10,882.0 | ||||||
Subtotal | 16,023.4 | 16,425.8 | ||||||
Structured securities | 4,132.4 | 4,208.1 | ||||||
Total fixed maturities, available for sale | $ | 20,155.8 | $ | 20,633.9 |
2010 | 2009 | 2008 | ||||||||||
Fixed maturities | $ | 1,162.6 | $ | 1,083.7 | $ | 1,094.4 | ||||||
Trading income related to policyholder and reinsurer accounts and other special-purpose portfolios | 43.7 | 11.1 | 28.6 | |||||||||
Equity securities | .8 | 1.5 | 1.4 | |||||||||
Mortgage loans | 121.7 | 130.8 | 126.1 | |||||||||
Policy loans | 18.2 | 21.2 | 23.6 | |||||||||
Options related to fixed index products: | ||||||||||||
Option income (loss) | 57.3 | (63.0 | ) | (71.9 | ) | |||||||
Change in value of options | (29.1 | ) | 113.7 | (32.4 | ) | |||||||
Other invested assets | 9.1 | 10.0 | 13.8 | |||||||||
Cash and cash equivalents | .5 | 1.1 | 11.9 | |||||||||
Gross investment income | 1,384.8 | 1,310.1 | 1,195.5 | |||||||||
Less investment expenses | 17.9 | 17.4 | 16.7 | |||||||||
Net investment income | $ | 1,366.9 | $ | 1,292.7 | $ | 1,178.8 |
2010 | 2009 | 2008 | ||||||||||
Fixed maturity securities, available for sale: | ||||||||||||
Realized gains on sale | $ | 347.1 | $ | 367.9 | $ | 110.3 | ||||||
Realized losses on sale | (147.7 | ) | (233.9 | ) | (177.3 | ) | ||||||
Impairments: | ||||||||||||
Total other-than-temporary impairment losses | (94.8 | ) | (337.8 | ) | (152.7 | ) | ||||||
Other-than-temporary impairment losses recognized in other comprehensive loss | (4.7 | ) | 188.3 | - | ||||||||
Net impairment losses recognized | (99.5 | ) | (149.5 | ) | (152.7 | ) | ||||||
Net realized investment gains (losses) from fixed maturities | 99.9 | (15.5 | ) | (219.7 | ) | |||||||
Equity securities | .1 | - | - | |||||||||
Commercial mortgage loans | (16.9 | ) | (13.5 | ) | (19.7 | ) | ||||||
Impairments of mortgage loans and other investments | (50.3 | ) | (45.9 | ) | (9.6 | ) | ||||||
Other | (2.6 | ) | 14.4 | (13.4 | ) | |||||||
Net realized investment gains (losses) | $ | 30.2 | $ | (60.5 | ) | $ | (262.4 | ) |
At date of sale | ||||||||||||
Number of | Amortized | Fair | ||||||||||
Period | issuers | cost | value | |||||||||
Less than 6 months prior to sale | 10 | $ | 56.9 | $ | 44.0 | |||||||
Greater than or equal to 6 and less than 12 months prior to sale | 2 | 1.2 | .8 | |||||||||
Greater than 12 months | 43 | 259.8 | 174.4 | |||||||||
55 | $ | 317.9 | $ | 219.2 |
Year ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
Credit losses on fixed maturity securities, available for sale, beginning of year | $ | (27.2 | ) | $ | (.6 | ) | ||
Add: credit losses on other-than-temporary impairments not previously recognized | (1.7 | ) | (20.7 | ) | ||||
Less: credit losses on securities sold | 33.3 | 5.4 | ||||||
Less: credit losses on securities impaired due to intent to sell (a) | 1.9 | - | ||||||
Add: credit losses on previously impaired securities | (12.4 | ) | (11.3 | ) | ||||
Less: increases in cash flows expected on previously impaired securities | - | - | ||||||
Credit losses on fixed maturity securities, available for sale, end of year | $ | (6.1 | ) | $ | (27.2 | ) |
(a) | Represents securities for which the amount previously recognized in accumulated other comprehensive income (loss) was recognized in earnings because we intend to sell the security or we more likely than not will be required to sell the security before recovery of its amortized cost basis. |
Estimated | ||||||||
Amortized | fair | |||||||
cost | value | |||||||
Due in one year or less | $ | 18.0 | $ | 16.4 | ||||
Due after one year through five years | 204.5 | 200.2 | ||||||
Due after five years through ten years | 663.7 | 634.9 | ||||||
Due after ten years | 4,521.5 | 4,274.7 | ||||||
Subtotal | 5,407.7 | 5,126.2 | ||||||
Structured securities | 1,409.3 | 1,353.9 | ||||||
Total | $ | 6,817.0 | $ | 6,480.1 |
Number | Cost | Unrealized | Estimated | |||||||||||||
Period | of issuers | basis | loss | fair value | ||||||||||||
Less than 6 months | 7 | $ | 38.2 | $ | (9.7 | ) | $ | 28.5 | ||||||||
Greater than or equal to 6 months and less than 12 months | 1 | .4 | (.1 | ) | .3 | |||||||||||
Greater than 12 months | 4 | 11.9 | (5.0 | ) | 6.9 | |||||||||||
12 | $ | 50.5 | $ | (14.8 | ) | $ | 35.7 |
Below investment grade | Total gross | |||||||||||||||||||
Investment grade | B+ and | unrealized | ||||||||||||||||||
AAA/AA/A | BBB | BB | below | losses | ||||||||||||||||
States and political subdivisions | $ | 68.1 | $ | 31.1 | $ | 1.5 | $ | - | $ | 100.7 | ||||||||||
Banks | 20.3 | 19.6 | 4.2 | - | 44.1 | |||||||||||||||
Collateralized mortgage obligations | 29.5 | .6 | - | 5.4 | 35.5 | |||||||||||||||
Insurance | 4.9 | 11.9 | 1.0 | 1.9 | 19.7 | |||||||||||||||
Energy/pipelines | .2 | 13.9 | .1 | .1 | 14.3 | |||||||||||||||
Commercial mortgage-backed securities | 4.2 | 4.8 | 3.5 | - | 12.5 | |||||||||||||||
Building materials | - | 8.9 | 3.1 | .4 | 12.4 | |||||||||||||||
U.S. Treasury and Obligations | 11.8 | - | - | - | 11.8 | |||||||||||||||
Cable/media | - | 2.0 | 3.5 | 6.0 | 11.5 | |||||||||||||||
Food/beverage | .3 | 9.0 | - | .5 | 9.8 | |||||||||||||||
Telecom | 4.3 | 3.3 | 1.5 | - | 9.1 | |||||||||||||||
Asset-backed securities | 3.0 | 2.1 | .1 | 1.1 | 6.3 | |||||||||||||||
Real estate/REITs | .1 | 1.2 | 3.2 | 1.6 | 6.1 | |||||||||||||||
Utilities | 2.4 | 2.2 | - | 1.1 | 5.7 | |||||||||||||||
Healthcare/pharmaceuticals | 1.2 | 4.1 | .3 | .1 | 5.7 | |||||||||||||||
Consumer products | - | 2.4 | 2.3 | .3 | 5.0 | |||||||||||||||
Paper | - | 1.3 | 3.5 | - | 4.8 | |||||||||||||||
Capital goods | .2 | .9 | 2.9 | - | 4.0 | |||||||||||||||
Transportation | .7 | 1.3 | 1.2 | - | 3.2 | |||||||||||||||
Brokerage | 1.9 | 1.1 | - | - | 3.0 | |||||||||||||||
Chemicals | - | 2.2 | - | - | 2.2 | |||||||||||||||
Metals and mining | - | 2.1 | - | - | 2.1 | |||||||||||||||
Aerospace/defense | 1.0 | .2 | - | - | 1.2 | |||||||||||||||
Collateralized debt obligations | 1.1 | - | - | - | 1.1 | |||||||||||||||
Technology | - | .8 | .1 | .1 | 1.0 | |||||||||||||||
Entertainment/hotels | - | .9 | - | - | .9 | |||||||||||||||
Gaming | - | - | - | .7 | .7 | |||||||||||||||
Textiles | - | - | - | .3 | .3 | |||||||||||||||
Retail | .2 | - | - | - | .2 | |||||||||||||||
Other | - | 1.6 | - | .4 | 2.0 | |||||||||||||||
Total fixed maturities, available for sale | $ | 155.4 | $ | 129.5 | $ | 32.0 | $ | 20.0 | $ | 336.9 |
Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Description of securities | value | losses | value | losses | value | losses | ||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | $ | 196.9 | $ | (11.8 | ) | $ | .2 | $ | - | $ | 197.1 | $ | (11.8 | ) | ||||||||||
States and political subdivisions | 1,201.9 | (54.8 | ) | 229.6 | (45.9 | ) | 1,431.5 | (100.7 | ) | |||||||||||||||
Corporate securities | 2,633.0 | (80.6 | ) | 864.6 | (88.4 | ) | 3,497.6 | (169.0 | ) | |||||||||||||||
Asset-backed securities | 272.2 | (2.4 | ) | 54.0 | (3.9 | ) | 326.2 | (6.3 | ) | |||||||||||||||
Collateralized debt obligations | 117.0 | (.9 | ) | 5.8 | (.2 | ) | 122.8 | (1.1 | ) | |||||||||||||||
Commercial mortgage-backed securities | 15.5 | - | 111.8 | (12.5 | ) | 127.3 | (12.5 | ) | ||||||||||||||||
Mortgage pass-through securities | .3 | - | 3.4 | - | 3.7 | - | ||||||||||||||||||
Collateralized mortgage obligations | 661.0 | (29.1 | ) | 112.9 | (6.4 | ) | 773.9 | (35.5 | ) | |||||||||||||||
Total fixed maturities, available for sale | $ | 5,097.8 | $ | (179.6 | ) | $ | 1,382.3 | $ | (157.3 | ) | $ | 6,480.1 | $ | (336.9 | ) |
Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Description of securities | value | losses | value | losses | value | losses | ||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | $ | 157.6 | $ | (3.5 | ) | $ | - | $ | - | $ | 157.6 | $ | (3.5 | ) | ||||||||||
States and political subdivisions | 375.1 | (18.0 | ) | 291.5 | (62.5 | ) | 666.6 | (80.5 | ) | |||||||||||||||
Corporate securities | 3,707.1 | (109.0 | ) | 2,919.5 | (322.5 | ) | 6,626.6 | (431.5 | ) | |||||||||||||||
Asset-backed securities | 7.2 | (.3 | ) | 133.1 | (54.3 | ) | 140.3 | (54.6 | ) | |||||||||||||||
Collateralized debt obligations | 34.5 | (.6 | ) | 5.7 | (4.7 | ) | 40.2 | (5.3 | ) | |||||||||||||||
Commercial mortgage-backed securities | 211.5 | (4.3 | ) | 250.8 | (105.2 | ) | 462.3 | (109.5 | ) | |||||||||||||||
Mortgage pass-through securities | - | - | 4.2 | (.1 | ) | 4.2 | (.1 | ) | ||||||||||||||||
Collateralized mortgage obligations | 1,301.3 | (41.6 | ) | 460.3 | (143.5 | ) | 1,761.6 | (185.1 | ) | |||||||||||||||
Total fixed maturities, available for sale | $ | 5,794.3 | $ | (177.3 | ) | $ | 4,065.1 | $ | (692.8 | ) | $ | 9,859.4 | $ | (870.1 | ) |
Par | Amortized | Estimated | ||||||||||
value | cost | fair value | ||||||||||
Below 4 percent | $ | 370.0 | $ | 328.0 | $ | 331.8 | ||||||
4 percent – 5 percent | 516.5 | 506.2 | 484.0 | |||||||||
5 percent – 6 percent | 2,364.2 | 2,289.4 | 2,359.2 | |||||||||
6 percent – 7 percent | 891.6 | 841.0 | 865.4 | |||||||||
7 percent – 8 percent | 83.3 | 84.5 | 85.0 | |||||||||
8 percent and above | 84.9 | 83.3 | 82.7 | |||||||||
Total structured securities | $ | 4,310.5 | $ | 4,132.4 | $ | 4,208.1 |
Estimated fair value | ||||||||||||
Percent | ||||||||||||
Amortized | of fixed | |||||||||||
Type | cost | Amount | maturities | |||||||||
Pass-throughs, sequential and equivalent securities | $ | 1,347.9 | $ | 1,354.0 | 6.6 | % | ||||||
Planned amortization classes, target amortization classes and accretion-directed bonds | 568.9 | 565.4 | 2.7 | |||||||||
Commercial mortgage-backed securities | 1,299.8 | 1,363.7 | 6.6 | |||||||||
Asset-backed securities | 639.0 | 644.1 | 3.1 | |||||||||
Collateralized debt obligations | 253.0 | 256.5 | 1.2 | |||||||||
Other | 23.8 | 24.4 | .2 | |||||||||
Total structured securities | $ | 4,132.4 | $ | 4,208.1 | 20.4 | % |
Estimated fair | ||||||||
Loan-to-value ratio (a) | Carrying value | value | ||||||
Less than 60% | $ | 705.9 | $ | 752.5 | ||||
60% to 70% | 657.2 | 630.7 | ||||||
70% to 80% | 296.5 | 286.5 | ||||||
80% to 90% | 46.3 | 43.9 | ||||||
Greater than 90% | 55.3 | 49.0 | ||||||
Total | $ | 1,761.2 | $ | 1,762.6 |
(a) | Loan-to-value ratios are calculated as the ratio of: (i) the carrying value of the commercial mortgage loans; to (ii) the estimated fair value of the underlying commercial property. |
|
Interest | ||||||||||||||||||||
Withdrawal | Mortality | rate | ||||||||||||||||||
assumption | assumption | assumption | 2010 | 2009 | ||||||||||||||||
Future policy benefits: | ||||||||||||||||||||
Interest-sensitive products: | ||||||||||||||||||||
Investment contracts | N/A | N/A | (c) | $ | 9,742.9 | $ | 9,676.1 | |||||||||||||
Universal life contracts | N/A | N/A | N/A | 3,451.8 | 3,543.1 | |||||||||||||||
Total interest-sensitive products | 13,194.7 | 13,219.2 | ||||||||||||||||||
Traditional products: | ||||||||||||||||||||
Traditional life insurance contracts | Company experience | (a) | 5% | 2,354.3 | 2,325.4 | |||||||||||||||
Limited-payment annuities | Company experience, if applicable | (b) | 4% | 873.4 | 892.8 | |||||||||||||||
Individual and group accident and health | Company experience | Company experience | 6% | 7,079.9 | 6,845.3 | |||||||||||||||
Total traditional products | 10,307.6 | 10,063.5 | ||||||||||||||||||
Claims payable and other policyholder funds | N/A | N/A | N/A | 968.7 | 994.0 | |||||||||||||||
Liabilities related to separate accounts | N/A | N/A | N/A | 17.5 | 17.3 | |||||||||||||||
Total | $ | 24,488.5 | $ | 24,294.0 |
(a) | Principally, modifications of the 1965 - 70 and 1975 - 80 Basic, Select and Ultimate Tables. |
(b) | Principally, the 1984 United States Population Table and the NAIC 1983 Individual Annuitant Mortality Table. |
(c) | In 2010 and 2009, all of this liability represented account balances where future benefits are not guaranteed. |
2010 | 2009 | 2008 | ||||||||||
Balance, beginning of the year | $ | 1,444.0 | $ | 1,341.3 | $ | 1,247.7 | ||||||
Incurred claims (net of reinsurance) related to: | ||||||||||||
Current year | 1,505.8 | 1,616.8 | 1,729.3 | |||||||||
Prior years (a) | (15.6 | ) | (32.3 | ) | (25.9 | ) | ||||||
Total incurred | 1,490.2 | 1,584.5 | 1,703.4 | |||||||||
Interest on claim reserves | 73.4 | 69.3 | 61.4 | |||||||||
Paid claims (net of reinsurance) related to: | ||||||||||||
Current year | 827.0 | 910.7 | 1,001.1 | |||||||||
Prior years | 694.1 | 691.6 | 609.5 | |||||||||
Total paid | 1,521.1 | 1,602.3 | 1,610.6 | |||||||||
Net change in balance for reinsurance assumed and ceded | 57.2 | 51.2 | (60.6 | ) | ||||||||
Balance, end of the year | $ | 1,543.7 | $ | 1,444.0 | $ | 1,341.3 |
(a) | The reserves and liabilities we establish are necessarily based on estimates, assumptions and prior years’ statistics. Such amounts will fluctuate based upon the estimation procedures used to determine the amount of unpaid losses. It is possible that actual claims will exceed our reserves and have a material adverse effect on our results of operations and financial condition. |
|
2010 | 2009 | 2008 | ||||||||||
Current tax expense | $ | 9.7 | $ | 9.3 | $ | 3.8 | ||||||
Deferred tax provision | 94.2 | 50.8 | 5.6 | |||||||||
Income tax expense on period income | 103.9 | 60.1 | 9.4 | |||||||||
Valuation allowance | (95.0 | ) | 27.8 | 403.9 | ||||||||
Total income tax expense | $ | 8.9 | $ | 87.9 | $ | 413.3 |
2010 | 2009 | 2008 | ||||||||||
U.S. statutory corporate rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
Valuation allowance | (32.4 | ) | 16.0 | 10,916.2 | ||||||||
Other nondeductible expenses (benefits) | (.3 | ) | (1.4 | ) | 125.9 | |||||||
State taxes | .8 | 1.0 | 78.0 | |||||||||
Provision for tax issues, tax credits and other | (.1 | ) | - | 15.2 | ||||||||
Effective tax rate | 3.0 | % | 50.6 | % | 11,170.3 | % |
2010 | 2009 | |||||||
Deferred tax assets: | ||||||||
Net federal operating loss carryforwards attributable to: | ||||||||
Life insurance subsidiaries | $ | 681.7 | $ | 745.3 | ||||
Non-life companies | 870.6 | 883.9 | ||||||
Net state operating loss carryforwards | 17.8 | 19.1 | ||||||
Tax credits | 23.4 | 18.5 | ||||||
Capital loss carryforwards | 339.7 | 393.8 | ||||||
Deductible temporary differences: | ||||||||
Investments | 5.3 | - | ||||||
Insurance liabilities | 738.9 | 782.1 | ||||||
Unrealized depreciation of investments | - | 146.8 | ||||||
Other | 62.8 | 44.0 | ||||||
Gross deferred tax assets | 2,740.2 | 3,033.5 | ||||||
Deferred tax liabilities: | ||||||||
Investments | - | (38.1 | ) | |||||
Present value of future profits and deferred acquisition costs | (676.3 | ) | (694.0 | ) | ||||
Unrealized appreciation on investments | (132.3 | ) | - | |||||
Gross deferred tax liabilities | (808.6 | ) | (732.1 | ) | ||||
Net deferred tax assets before valuation allowance | 1,931.6 | 2,301.4 | ||||||
Valuation allowance | (1,081.4 | ) | (1,176.4 | ) | ||||
Net deferred tax assets | 850.2 | 1,125.0 | ||||||
Current income taxes accrued | (10.8 | ) | (1.0 | ) | ||||
Income tax assets, net | $ | 839.4 | $ | 1,124.0 |
Balance at December 31, 2007 | $ | 672.9 | |||
Increase in 2008 | 856.2 | (a) | |||
Expiration of capital loss carryforwards | (209.7 | ) | |||
Write-off of capital loss carryforwards related to Senior Health | (133.2 | ) | |||
Write-off of certain NOLs related to Senior Health | (5.5 | ) | |||
Balance at December 31, 2008 | 1,180.7 | ||||
Increase in 2009 | 27.8 | (b) | |||
Expiration of capital loss carryforwards | (32.1 | ) | |||
Balance at December 31, 2009 | 1,176.4 | ||||
Decrease in 2010 | (95.0 | ) | (c) | ||
Balance at December 31, 2010 | $ | 1,081.4 |
(a) | The $856.2 million increase to our valuation allowance during 2008 included increases of: (i) $452 million of deferred tax assets related to Senior Health, which was transferred to an independent trust during 2008; (ii) $298 million related to our reassessment of the recovery of our deferred tax assets in accordance with GAAP, following the additional losses incurred as a result of the transaction to transfer Senior Health to an independent trust; (iii) $60 million related to the recognition of additional realized investment losses for which we are unlikely to receive any tax benefit; and (iv) $45 million related to the estimated additional future expense following the modifications to our Senior Credit Agreement as described in the note to these consolidated financial statements entitled “Notes Payable - Direct Corporate Obligations.” |
(b) | The $27.8 million increase to our valuation allowance during 2009 included increases of: (i) $23.0 million related to our reassessment of the recovery of our deferred tax assets following the completion of reinsurance transactions in 2009; and (ii) $4.8 million related to the recognition of additional realized investment losses for which we are unlikely to receive any tax benefit. |
(c) | The $95.0 million reduction to the deferred tax valuation allowance during 2010 resulted from the utilization of NOLs and capital loss carryforwards and higher projections of future taxable income based on evidence we consider to be objective and verifiable. |
Year of expiration | Net operating loss carryforwards (a) | Capital loss | Total loss | |||||||||||||||
Life | Non-life | carryforwards | carryforwards | |||||||||||||||
2011 | $ | - | $ | .1 | $ | - | $ | .1 | ||||||||||
2013 | - | - | 942.0 | 942.0 | ||||||||||||||
2014 | - | - | 28.7 | 28.7 | ||||||||||||||
2018 | 1,713.9 | (a) | - | - | 1,713.9 | |||||||||||||
2021 | 29.6 | - | - | 29.6 | ||||||||||||||
2022 | 204.1 | - | - | 204.1 | ||||||||||||||
2023 | - | 1,999.3 | (a) | - | 1,999.3 | |||||||||||||
2024 | - | 3.2 | - | 3.2 | ||||||||||||||
2025 | - | 118.8 | - | 118.8 | ||||||||||||||
2027 | - | 216.8 | - | 216.8 | ||||||||||||||
2028 | - | .5 | - | .5 | ||||||||||||||
2029 | - | 148.7 | - | 148.7 | ||||||||||||||
Total | $ | 1,947.6 | $ | 2,487.4 | $ | 970.7 | $ | 5,405.7 |
(a) | The allocation of the NOLs summarized above assumes the IRS does not take an adverse position in the future regarding the tax position we plan to take in our tax returns with respect to the allocation of cancellation of indebtedness income. If the IRS disagrees with the tax position we plan to take with respect to the allocation of cancellation of indebtedness income, and their position prevails, approximately $631 million of the NOLs expiring in 2018 would be characterized as non-life NOLs. |
|
2010 | 2009 | |||||||
3.5% Debentures | $ | - | $ | 116.5 | ||||
7.0% Debentures | 293.0 | 176.5 | ||||||
New senior secured credit agreement | 375.0 | - | ||||||
9.0% Senior Secured Notes | 275.0 | - | ||||||
Previous senior credit agreement | - | 652.1 | ||||||
6% Senior Health Note | 75.0 | 100.0 | ||||||
Unamortized discount on 3.5% Debentures | - | (3.3 | ) | |||||
Unamortized discount on 7.0% Debentures | (14.8 | ) | (4.4 | ) | ||||
Unamortized discount on new senior secured credit agreement | (4.7 | ) | - | |||||
Direct corporate obligations | $ | 998.5 | $ | 1,037.4 |
· | limitations on debt (including, without limitation, guarantees and other contingent obligations); |
· | limitations on issuances of disqualified capital stock; |
· | limitations on liens and further negative pledges; |
· | limitations on sales, transfers and other dispositions of assets; |
· | limitations on transactions with affiliates; |
· | limitations on changes in the nature of the Company’s business; |
· | limitations on mergers, consolidations and acquisitions; |
· | limitations on dividends and other distributions, stock repurchases and redemptions and other restricted payments; |
· | limitations on investments and acquisitions; |
· | limitations on prepayment of certain debt; |
· | limitations on modifications or waivers of certain debt documents and charter documents; |
· | investment portfolio requirements for insurance subsidiaries; |
· | limitations on restrictions affecting subsidiaries; |
· | limitations on holding company activities; and |
· | limitations on changes in accounting policies. |
· | incur or guarantee additional indebtedness or issue preferred stock; |
· | pay dividends or make other distributions to shareholders; |
· | purchase or redeem capital stock or subordinated indebtedness; |
· | make investments; |
· | create liens; |
· | incur restrictions on the Company’s ability and the ability of the Restricted Subsidiaries to pay dividends or make other payments to the Company; |
· | sell assets, including capital stock of the Company’s subsidiaries; |
· | consolidate or merge with or into other companies or transfer all or substantially all of the Company’s assets; and |
· | engage in transactions with affiliates. |
· | the minimum risk-based capital ratio requirement was 200% through December 31, 2010 and was to increase to 225% for 2011 and 250% for 2012 (the risk-based capital requirement was previously scheduled to return to 250% after June 30, 2010); |
· | the required minimum level of statutory capital and surplus was $1.1 billion through December 31, 2010 and was to increase to $1.2 billion for 2011 and $1.3 billion for 2012 (the required minimum level of statutory capital and surplus was previously scheduled to return to $1.27 billion after June 30, 2010); |
· | the interest coverage ratio requirement was 1.50 through December 31, 2010 and was to increase to 1.75 for 2011 and 2.00 for 2012 (the interest coverage ratio requirement was previously scheduled to return to 2.00 after June 30, 2010); and |
· | the debt to total capital ratio requirement was 32.5% though December 31, 2009 and decreased to 30% thereafter (the debt to total capital ratio requirement was previously scheduled to return to 30% after June 30, 2010). |
2011 | $ | 55.0 | ||
2012 | 65.0 | |||
2013 | 80.0 | |||
2014 | 75.0 | |||
2015 | 85.0 | |||
2016 | 383.0 | |||
2018 | 275.0 | |||
$ | 1,018.0 |
|
8. | COMMITMENTS AND CONTINGENCIES |
2011 | $ | 45.0 | ||
2012 | 33.8 | |||
2013 | 27.0 | |||
2014 | 20.7 | |||
2015 | 17.4 | |||
Thereafter | 45.6 | |||
Total | $ | 189.5 |
|
9. | OTHER DISCLOSURES |
2010 | 2009 | |||||||
Benefit obligations: | ||||||||
Discount rate | 5.50 | % | 5.75 | % | ||||
Net periodic cost: | ||||||||
Discount rate | 5.75 | % | 6.03 | % |
2011 | $ | 4.7 | ||
2012 | 4.8 | |||
2013 | 5.4 | |||
2014 | 5.8 | |||
2015 | 6.3 | |||
2016 – 2020 | 36.5 |
|
10. | SHAREHOLDERS’ EQUITY |
2010 | 2009 | 2008 | ||||||||||||
Balance, beginning of year | 250,786 | 184,754 | 184,652 | |||||||||||
Issuance of common stock | - | 65,900 | - | |||||||||||
Shares issued under employee benefit compensation plans | 265 | (a) | 132 | 102 | (a) | |||||||||
Stock options exercised | 33 | - | - | |||||||||||
Balance, end of year | 251,084 | 250,786 | 184,754 |
(a) | In 2010 and 2008, such amount was reduced by 74 thousand shares and 16 thousand shares, respectively, which were tendered for the payment of federal and state taxes owed on the issuance of restricted stock. |
Weighted | Weighted | |||||||||||||||
average | average | Aggregate | ||||||||||||||
exercise | remaining | intrinsic | ||||||||||||||
Shares | price | life | value | |||||||||||||
Outstanding at the beginning of the year | 8,560 | $ | 11.65 | |||||||||||||
Options granted | 1,849 | 6.43 | ||||||||||||||
Exercised | (33 | ) | 2.83 | $ | - | |||||||||||
Forfeited or terminated | (622 | ) | 8.81 | |||||||||||||
Outstanding at the end of the year | 9,754 | 10.87 | 3.6 years | $ | 38.3 | |||||||||||
Options exercisable at the end of the year | 4,374 | 2.9 years | $ | 24.1 | ||||||||||||
Available for future grant | 9,326 |
Weighted | Weighted | ||||||||||||
average | average | Aggregate | |||||||||||
exercise | remaining | intrinsic | |||||||||||
Shares | price | life | value | ||||||||||
Outstanding at the beginning of the year | 5,864 | $ | 16.94 | ||||||||||
Options granted | 3,219 | 2.64 | |||||||||||
Exercised | - | - | $ | - | |||||||||
Forfeited or terminated | (523 | ) | 15.52 | ||||||||||
Outstanding at the end of the year | 8,560 | 11.65 | 4.1 years | $ | 31.6 | ||||||||
Options exercisable at the end of the year | 2,992 | 4.4 years | $ | 19.4 | |||||||||
Available for future grant | 12,565 |
Weighted | Weighted | ||||||||||||
average | average | Aggregate | |||||||||||
exercise | remaining | Intrinsic | |||||||||||
Shares | price | life | Value | ||||||||||
Outstanding at the beginning of the year | 4,828 | $ | 19.82 | ||||||||||
Options granted | 1,863 | 10.27 | |||||||||||
Exercised | - | - | $ | - | |||||||||
Forfeited or terminated | (827 | ) | 18.69 | ||||||||||
Outstanding at the end of the year | 5,864 | 16.94 | 4.8 years | $ | 27.9 | ||||||||
Options exercisable at the end of the year | 2,412 | 5.5 years | $ | 16.6 | |||||||||
Available for future grant | 1,154 |
2010 Grants | 2009 Grantss | 2008 Grantss | ||||||||||
Weighted average risk-free interest rates | 2.5 | % | 1.6 | % | 2.5 | % | ||||||
Weighted average dividend yields | 0.0 | % | 0.0 | % | 0.0 | % | ||||||
Volatility factors | 105 | % | 108 | % | 24 | % | ||||||
Weighted average expected life | 4.7 years | 3.8 years | 3.7 years | |||||||||
Weighted average fair value per share | $ | 4.90 | $ | 1.89 | $ | 2.25 |
Options outstanding | Options exercisable | |||||||||||||||||||||
Number | Remaining | Average exercise | Number | Average exercise | ||||||||||||||||||
Range of exercise prices | outstanding | life (in years) | price | exercisable | price | |||||||||||||||||
$ | 1.13 | 647 | 3.3 | $ | 1.13 | - | $ | - | ||||||||||||||
$ | 2.83 - $3.11 | 2,213 | 3.4 | 3.05 | - | - | ||||||||||||||||
$ | 4.79 - $6.45 | 1,788 | 6.2 | 6.41 | - | - | ||||||||||||||||
$ | 8.91 - $12.96 | 1,531 | 2.2 | 10.58 | 799 | 10.61 | ||||||||||||||||
$ | 14.78 - $21.67 | 3,098 | 2.9 | 19.32 | 3,098 | 19.32 | ||||||||||||||||
$ | 22.42 - $25.45 | 477 | 4.8 | 23.18 | 477 | 23.18 | ||||||||||||||||
9,754 | 4,374 |
Weighted | ||||||||
average | ||||||||
grant date | ||||||||
Shares | fair value | |||||||
Non-vested shares, beginning of year | 748 | $ | 2.15 | |||||
Granted | 985 | 6.28 | ||||||
Vested | (340 | ) | 3.89 | |||||
Forfeited | (74 | ) | 4.61 | |||||
Non-vested shares, end of year | 1,319 | 4.65 |
2010 | 2009 | 2008 | ||||||||||
Income (loss) before discontinued operations | $ | 284.6 | $ | 85.7 | $ | (409.6 | ) | |||||
Discontinued operations | - | - | (722.7 | ) | ||||||||
Net income (loss) for basic earnings per share | 284.6 | 85.7 | (1,132.3 | ) | ||||||||
Add: interest expense on 7.0% Debentures, net of income taxes | 13.3 | 1.1 | - | |||||||||
Net income (loss) for diluted earnings per share | $ | 297.9 | $ | 86.8 | $ | (1,132.3 | ) | |||||
Shares: | ||||||||||||
Weighted average shares outstanding for basic earnings per share | 250,973 | 188,365 | 184,704 | |||||||||
Effect of dilutive securities on weighted average shares: | ||||||||||||
7% Debentures | 49,014 | 4,281 | - | |||||||||
Stock option and restricted stock plans | 1,871 | 694 | - | |||||||||
Dilutive potential common shares | 50,885 | 4,975 | - | |||||||||
Weighted average shares outstanding for diluted earnings per share | 301,858 | 193,340 | 184,704 |
2008 | ||||
Equivalent common shares that were antidilutive during the year: | ||||
Stock option and restricted stock plans | 32 | |||
Antidilutive equivalent common shares | 32 |
Total shareholder | Operating return | Pre-tax operating | ||||||||||
return awards | on equity awards | income awards | ||||||||||
Awards outstanding at December 31, 2007 | 218 | 146 | - | |||||||||
Granted in 2008 | 387 | 258 | - | |||||||||
Forfeited | (54 | ) | (37 | ) | - | |||||||
Awards outstanding at December 31, 2008 | 551 | 367 | - | |||||||||
Granted in 2009 | - | 620 | - | |||||||||
Forfeited | (220 | ) | (162 | ) | - | |||||||
Awards outstanding at December 31, 2009 | 331 | 825 | - | |||||||||
Granted in 2010 | - | - | 687 | |||||||||
Forfeited | (331 | ) | (270 | ) | (35 | ) | ||||||
Awards outstanding at December 31, 2010 | - | 555 | 652 |
|
2010 | 2009 | 2008 | ||||||||||
Traditional products: | ||||||||||||
Direct premiums collected | $ | 4,252.0 | $ | 4,128.1 | $ | 4,313.5 | ||||||
Reinsurance assumed | 99.4 | 476.5 | 642.8 | |||||||||
Reinsurance ceded | (264.7 | ) | (185.7 | ) | (164.3 | ) | ||||||
Premiums collected, net of reinsurance | 4,086.7 | 4,418.9 | 4,792.0 | |||||||||
Change in unearned premiums | 2.9 | (2.1 | ) | (13.5 | ) | |||||||
Less premiums on universal life and products without mortality and morbidity risk which are recorded as additions to insurance liabilities | (1,730.1 | ) | (1,668.9 | ) | (1,863.5 | ) | ||||||
Premiums on traditional products with mortality or morbidity risk | 2,359.5 | 2,747.9 | 2,915.0 | |||||||||
Fees and surrender charges on interest-sensitive products | 310.5 | 345.7 | 338.6 | |||||||||
Insurance policy income | $ | 2,670.0 | $ | 3,093.6 | $ | 3,253.6 |
2010 | 2009 | 2008 | ||||||||||
Commission expense | $ | 96.8 | $ | 114.3 | $ | 128.2 | ||||||
Salaries and wages | 175.6 | 173.5 | 160.5 | |||||||||
Other | 230.5 | 240.5 | 231.6 | |||||||||
Total other operating costs and expenses | $ | 502.9 | $ | 528.3 | $ | 520.3 |
2010 | 2009 | 2008 | ||||||||||
Balance, beginning of year | $ | 1,175.9 | $ | 1,477.8 | $ | 1,573.6 | ||||||
Amortization | (139.0 | ) | (177.5 | ) | (187.3 | ) | ||||||
Effect of reinsurance transactions | - | (24.1 | ) | - | ||||||||
Amounts related to fair value adjustment of actively managed fixed maturities | (28.3 | ) | (100.3 | ) | 92.7 | |||||||
Other | - | - | (1.2 | ) | ||||||||
Balance, end of year | $ | 1,008.6 | $ | 1,175.9 | $ | 1,477.8 |
2010 | 2009 | 2008 | ||||||||||
Balance, beginning of year | $ | 1,790.9 | $ | 1,812.6 | $ | 1,423.0 | ||||||
Additions | 424.8 | 407.5 | 459.1 | |||||||||
Amortization | (304.8 | ) | (255.2 | ) | (180.6 | ) | ||||||
Effect of reinsurance transactions | - | (79.0 | ) | - | ||||||||
Amounts related to fair value adjustment of fixed maturities, available for sale | (136.0 | ) | (95.0 | ) | 111.1 | |||||||
Other adjustments | (10.7 | ) | - | - | ||||||||
Balance, end of year | $ | 1,764.2 | $ | 1,790.9 | $ | 1,812.6 |
|
2010 | 2009 | 2008 | ||||||||||
Stock option and restricted stock plans | $ | 11.4 | $ | 9.1 | $ | 7.4 | ||||||
Change in securities lending collateral | 103.7 | 223.1 | 51.6 | |||||||||
Change in securities lending payable | (103.7 | ) | (223.1 | ) | (51.6 | ) |
2010 | 2009 | 2008 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net income (loss) | $ | 284.6 | $ | 85.7 | $ | (1,132.3 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Amortization and depreciation | 465.3 | 460.9 | 420.7 | |||||||||
Income taxes | 8.5 | 80.7 | 429.0 | |||||||||
Insurance liabilities | 437.6 | 421.4 | 460.6 | |||||||||
Accrual and amortization of investment income | (62.0 | ) | (125.4 | ) | 3.9 | |||||||
Deferral of policy acquisition costs | (418.2 | ) | (407.5 | ) | (459.1 | ) | ||||||
Net realized investment (gains) losses | (30.2 | ) | 60.5 | 642.5 | ||||||||
(Gain) loss on extinguishment of debt | 6.8 | 22.2 | (21.2 | ) | ||||||||
Loss on Transfer | - | - | 319.9 | |||||||||
Gain on reinsurance recapture | - | - | (29.7 | ) | ||||||||
Other | 41.6 | 13.2 | 6.0 | |||||||||
Net cash provided by operating activities | $ | 734.0 | $ | 611.7 | $ | 640.3 |
|
2010 | 2009 | |||||||
Statutory capital and surplus | $ | 1,525.1 | $ | 1,410.7 | ||||
Asset valuation reserve | 71.3 | 28.2 | ||||||
Interest maintenance reserve | 428.1 | 290.6 | ||||||
Total | $ | 2,024.5 | $ | 1,729.5 |
|
14. | BUSINESS SEGMENTS |
2010 | 2009 | 2008 | ||||||||||
Revenues: | ||||||||||||
Bankers Life: | ||||||||||||
Insurance policy income: | ||||||||||||
Annuities | $ | 39.5 | $ | 41.4 | $ | 49.2 | ||||||
Health | 1,366.0 | 1,711.7 | 1,872.9 | |||||||||
Life | 190.7 | 206.1 | 187.8 | |||||||||
Net investment income (a) | 758.9 | 678.1 | 558.2 | |||||||||
Fee revenue and other income (a) | 12.8 | 10.2 | 11.0 | |||||||||
Total Bankers Life revenues | 2,367.9 | 2,647.5 | 2,679.1 | |||||||||
Washington National: | ||||||||||||
Insurance policy income: | ||||||||||||
Health | 559.3 | 563.2 | 574.8 | |||||||||
Life | 16.8 | 29.4 | 35.3 | |||||||||
Other | 4.9 | 5.3 | 7.1 | |||||||||
Net investment income (a) | 185.4 | 188.9 | 197.3 | |||||||||
Fee revenue and other income (a) | 1.1 | 1.5 | .7 | |||||||||
Total Washington National revenues | 767.5 | 788.3 | 815.2 | |||||||||
Colonial Penn: | ||||||||||||
Insurance policy income: | ||||||||||||
Health | 6.8 | 8.1 | 9.5 | |||||||||
Life | 188.1 | 188.0 | 175.3 | |||||||||
Net investment income (a) | 39.3 | 38.7 | 39.6 | |||||||||
Fee revenue and other income (a) | .7 | .9 | 1.8 | |||||||||
Total Colonial Penn revenues | 234.9 | 235.7 | 226.2 | |||||||||
Other CNO Business: | ||||||||||||
Insurance policy income: | ||||||||||||
Annuities | 12.9 | 29.5 | 14.1 | |||||||||
Health | 29.9 | 32.1 | 34.6 | |||||||||
Life | 252.5 | 275.8 | 289.7 | |||||||||
Other | 2.6 | 3.0 | 3.3 | |||||||||
Net investment income (a) | 364.6 | 371.9 | 355.2 | |||||||||
Fee revenue and other income (a) | - | - | 1.0 | |||||||||
Total Other CNO Business revenues | 662.5 | 712.3 | 697.9 | |||||||||
Corporate operations: | ||||||||||||
Net investment income | 18.7 | 15.1 | 28.5 | |||||||||
Fee and other income | 2.2 | 3.0 | 5.2 | |||||||||
Total corporate revenues | 20.9 | 18.1 | 33.7 | |||||||||
Total revenues | 4,053.7 | 4,401.9 | 4,452.1 |
2010 | 2009 | 2008 | ||||||||||
Expenses: | ||||||||||||
Bankers Life: | ||||||||||||
Insurance policy benefits | $ | 1,607.3 | $ | 1,905.0 | $ | 2,090.4 | ||||||
Amortization | 290.5 | 267.9 | 234.8 | |||||||||
Interest expense on investment borrowings | 1.0 | - | - | |||||||||
Other operating costs and expenses | 185.0 | 196.6 | 182.4 | |||||||||
Total Bankers Life expenses | 2,083.8 | 2,369.5 | 2,507.6 | |||||||||
Washington National: | ||||||||||||
Insurance policy benefits | 450.6 | 467.0 | 473.2 | |||||||||
Amortization | 56.9 | 53.9 | 54.0 | |||||||||
Other operating costs and expenses | 155.4 | 156.5 | 166.9 | |||||||||
Total Washington National expenses | 662.9 | 677.4 | 694.1 | |||||||||
Colonial Penn: | ||||||||||||
Insurance policy benefits | 144.8 | 143.0 | 139.4 | |||||||||
Amortization | 33.3 | 33.3 | 32.0 | |||||||||
Other operating costs and expenses | 30.3 | 30.0 | 29.6 | |||||||||
Total Colonial Penn expenses | 208.4 | 206.3 | 201.0 | |||||||||
Other CNO Business: | ||||||||||||
Insurance policy benefits | 521.0 | 551.7 | 509.5 | |||||||||
Amortization | 51.6 | 81.6 | 68.6 | |||||||||
Interest expense on investment borrowings | 20.0 | 20.5 | 22.4 | |||||||||
Other operating costs and expenses | 81.4 | 102.1 | 97.2 | |||||||||
Total Other CNO Business expenses | 674.0 | 755.9 | 697.7 | |||||||||
Corporate operations: | ||||||||||||
Interest expense on corporate debt | 79.3 | 84.7 | 67.9 | |||||||||
Interest expense on variable interest entities | 12.9 | 12.7 | 16.2 | |||||||||
Other operating costs and expenses | 50.8 | 43.1 | 44.2 | |||||||||
(Gain) loss on extinguishment or modification of debt | 6.8 | 22.2 | (21.2 | ) | ||||||||
Total corporate expenses | 149.8 | 162.7 | 107.1 | |||||||||
Total expenses | 3,778.9 | 4,171.8 | 4,207.5 | |||||||||
Income (loss) before net realized investment losses (net of related amortization), income taxes and discontinued operations: | ||||||||||||
Bankers Life | 284.1 | 278.0 | 171.5 | |||||||||
Washington National | 104.6 | 110.9 | 121.1 | |||||||||
Colonial Penn | 26.5 | 29.4 | 25.2 | |||||||||
Other CNO Business | (11.5 | ) | (43.6 | ) | .2 | |||||||
Corporate operations | (128.9 | ) | (144.6 | ) | (73.4 | ) | ||||||
Income before net realized investment losses (net of related amortization), income taxes and discontinued operations | $ | 274.8 | $ | 230.1 | $ | 244.6 | ||||||
(a) | It is not practicable to provide additional components of revenue by product or services. |
2010 | 2009 | 2008 | ||||||||||
Total segment revenues | $ | 4,053.7 | $ | 4,401.9 | $ | 4,452.1 | ||||||
Net realized investment gains (losses) | 30.2 | (60.5 | ) | (262.4 | ) | |||||||
Consolidated revenues | $ | 4,083.9 | $ | 4,341.4 | $ | 4,189.7 | ||||||
Total segment expenses | $ | 3,778.9 | $ | 4,171.8 | $ | 4,207.5 | ||||||
Amortization related to net realized investment gains (losses) | 11.5 | (4.0 | ) | (21.5 | ) | |||||||
Consolidated expenses | $ | 3,790.4 | $ | 4,167.8 | $ | 4,186.0 |
2010 | 2009 | |||||||
Assets: | ||||||||
Bankers Life | $ | 16,150.0 | $ | 14,503.8 | ||||
Washington National | 4,033.7 | 4,070.7 | ||||||
Colonial Penn | 999.3 | 971.4 | ||||||
Other CNO Business | 8,999.5 | 9,254.6 | ||||||
Corporate operations | 1,717.1 | 1,543.3 | ||||||
Total assets | $ | 31,899.6 | $ | 30,343.8 | ||||
Liabilities: | ||||||||
Bankers Life | $ | 14,074.3 | $ | 12,832.4 | ||||
Washington National | 3,170.7 | 3,325.0 | ||||||
Colonial Penn | 733.9 | 763.3 | ||||||
Other CNO Business | 8,152.1 | 8,564.2 | ||||||
Corporate operations | 1,443.3 | 1,326.5 | ||||||
Total liabilities | $ | 27,574.3 | $ | 26,811.4 |
Present | Deferred | |||||||||||
value of | acquisition | Insurance | ||||||||||
Segment | future profits | costs | liabilities | |||||||||
2010 | ||||||||||||
Bankers Life | $ | 467.2 | $ | 1,149.5 | $ | 13,065.8 | ||||||
Washington National | 426.9 | 212.3 | 2,979.2 | |||||||||
Colonial Penn | 81.7 | 226.5 | 717.8 | |||||||||
Other CNO Business | 32.8 | 175.9 | 7,725.7 | |||||||||
Total | $ | 1,008.6 | $ | 1,764.2 | $ | 24,488.5 | ||||||
2009 | ||||||||||||
Bankers Life | $ | 569.5 | $ | 1,179.1 | $ | 12,384.8 | ||||||
Washington National | 455.1 | 185.4 | 3,117.2 | |||||||||
Colonial Penn | 92.4 | 199.8 | 713.8 | |||||||||
Other CNO Business | 58.9 | 226.6 | 8,078.2 | |||||||||
Total | $ | 1,175.9 | $ | 1,790.9 | $ | 24,294.0 |
|
2010 | 1st Qtr. | 2nd Qtr. | 3rd Qtr. | 4th Qtr. | ||||||||||||
Revenues | $ | 1,002.4 | $ | 953.2 | $ | 1,052.5 | $ | 1,075.8 | ||||||||
Income before income taxes | $ | 53.1 | $ | 51.8 | $ | 77.3 | $ | 111.3 | ||||||||
Income tax expense (benefit) | 19.2 | 18.7 | 27.9 | (56.9 | ) | |||||||||||
Net income | $ | 33.9 | $ | 33.1 | $ | 49.4 | $ | 168.2 | ||||||||
Income per common share: | ||||||||||||||||
Basic: | ||||||||||||||||
Net income | $ | .14 | $ | .13 | $ | .20 | $ | .67 | ||||||||
Diluted: | ||||||||||||||||
Net income | $ | .13 | $ | .12 | $ | .17 | $ | .56 |
2009 | 1st Qtr. | 2nd Qtr. | 3rd Qtr. | 4th Qtr. | ||||||||||||
Revenues | $ | 1,069.5 | $ | 1,095.6 | $ | 1,118.6 | $ | 1,057.7 | ||||||||
Income before income taxes | $ | 42.2 | $ | 49.6 | $ | 64.1 | $ | 17.7 | ||||||||
Income tax expense (benefit) | 17.7 | 22.0 | 48.7 | (.5 | ) | |||||||||||
Net income | $ | 24.5 | $ | 27.6 | $ | 15.4 | $ | 18.2 | ||||||||
Income per common share: | ||||||||||||||||
Basic: | ||||||||||||||||
Net income | $ | .13 | $ | .15 | $ | .08 | $ | .09 | ||||||||
Diluted: | ||||||||||||||||
Net income | $ | .13 | $ | .15 | $ | .08 | $ | .09 |
|
16. | INVESTMENTS IN VARIABLE INTEREST ENTITIES |
December 31, 2010 | ||||||||||||
Fall Creek | Net effect on | |||||||||||
and | consolidated | |||||||||||
Eagle Creek | Eliminations | balance sheet | ||||||||||
Assets: | ||||||||||||
Investments held by variable interest entities | $ | 420.9 | $ | - | $ | 420.9 | ||||||
Notes receivable of VIEs held by insurance subsidiaries | - | (96.8 | ) | (96.8 | ) | |||||||
Cash and cash equivalents held by variable interest entities | 26.8 | - | 26.8 | |||||||||
Accrued investment income | 1.4 | (4.8 | ) | (3.4 | ) | |||||||
Income tax assets, net | 20.9 | (6.5 | ) | 14.4 | ||||||||
Other assets | 15.9 | - | 15.9 | |||||||||
Total assets | $ | 485.9 | $ | (108.1 | ) | $ | 377.8 | |||||
Liabilities: | ||||||||||||
Other liabilities | $ | 22.0 | $ | (4.6 | ) | $ | 17.4 | |||||
Borrowings related to variable interest entities | 386.9 | - | 386.9 | |||||||||
Notes payable of VIEs held by insurance subsidiaries | 115.6 | (115.6 | ) | - | ||||||||
Total liabilities | $ | 524.5 | $ | (120.2 | ) | $ | 404.3 |
December 31, 2009 | ||||||||||||
Net effect on | ||||||||||||
consolidated | ||||||||||||
Fall Creek | Eliminations | balance sheet | ||||||||||
Assets: | ||||||||||||
Fixed maturities, available for sale | $ | 268.0 | $ | - | $ | 268.0 | ||||||
Notes receivable of VIE held by insurance subsidiaries | - | (81.9 | ) | (81.9 | ) | |||||||
Cash and cash equivalents – restricted | 3.4 | - | 3.4 | |||||||||
Accrued investment income | 1.2 | (3.0 | ) | (1.8 | ) | |||||||
Income tax assets, net | 19.3 | (5.3 | ) | 14.0 | ||||||||
Other assets | 8.0 | - | 8.0 | |||||||||
Total assets | $ | 299.9 | $ | (90.2 | ) | $ | 209.7 | |||||
Liabilities: | ||||||||||||
Other liabilities | $ | 7.7 | $ | (3.2 | ) | $ | 4.5 | |||||
Investment borrowings | 229.1 | - | 229.1 | |||||||||
Notes payable of VIE held by insurance subsidiaries | 99.2 | (99.2 | ) | - | ||||||||
Total liabilities | $ | 336.0 | $ | (102.4 | ) | $ | 233.6 |
2010 | 2009 | 2008 | ||||||||||
Revenues: | ||||||||||||
Net investment income – policyholder and reinsurer accounts and other special-purpose portfolios | $ | 20.1 | $ | 13.4 | $ | 23.6 | ||||||
Fee revenue and other income | .6 | .3 | .5 | |||||||||
Total revenues | 20.7 | 13.7 | 24.1 | |||||||||
Expenses: | ||||||||||||
Interest expense | 12.9 | 12.7 | 16.2 | |||||||||
Other operating expenses | .6 | .2 | .7 | |||||||||
Total expenses | 13.5 | 12.9 | 16.9 | |||||||||
Income (loss) before net realized investment losses and income taxes | 7.2 | .8 | 7.2 | |||||||||
Net realized investment losses | (3.7 | ) | (14.2 | ) | (24.9 | ) | ||||||
Income (loss) before income taxes | $ | 3.5 | $ | (13.4 | ) | $ | (17.7 | ) |
Estimated | ||||||||
Amortized | fair | |||||||
cost | value | |||||||
(Dollars in millions) | ||||||||
Due in one year or less | $ | 11.9 | $ | 12.1 | ||||
Due after one year through five years | 328.4 | 320.1 | ||||||
Due after five years through ten years | 87.7 | 88.7 | ||||||
Total | $ | 428.0 | $ | 420.9 |
Percent of | ||||||||||||||||
Percent | Gross | gross | ||||||||||||||
of fixed | unrealized | unrealized | ||||||||||||||
Carrying value | maturities | losses | losses | |||||||||||||
Cable/media | $ | 70.7 | 16.8 | % | $ | 2.3 | 21.5 | % | ||||||||
Healthcare/pharmaceuticals | 60.0 | 14.2 | 1.0 | 9.2 | ||||||||||||
Chemicals | 23.6 | 5.6 | .4 | 3.4 | ||||||||||||
Retail | 20.9 | 5.0 | .3 | 2.7 | ||||||||||||
Entertainment/hotels | 19.6 | 4.7 | .5 | 4.4 | ||||||||||||
Autos | 18.6 | 4.4 | .1 | 1.4 | ||||||||||||
Gaming | 18.4 | 4.4 | 1.1 | 10.3 | ||||||||||||
Utilities | 18.4 | 4.4 | 1.5 | 14.0 | ||||||||||||
Capital goods | 16.1 | 3.8 | .3 | 2.6 | ||||||||||||
Consumer products | 16.0 | 3.8 | .4 | 3.9 | ||||||||||||
Food/beverage | 15.9 | 3.8 | .1 | 1.0 | ||||||||||||
Aerospace/defense | 15.8 | 3.8 | - | .5 | ||||||||||||
Paper | 14.2 | 3.4 | .1 | .6 | ||||||||||||
Energy/pipelines | 12.1 | 2.8 | 1.0 | 9.1 | ||||||||||||
Technology | 11.0 | 2.6 | .2 | 2.2 | ||||||||||||
Insurance | 7.1 | 1.7 | - | - | ||||||||||||
Other | 62.5 | 14.8 | 1.5 | 13.2 | ||||||||||||
Total | $ | 420.9 | 100.0 | % | $ | 10.8 | 100.0 | % |
Estimated | ||||||||
Amortized | fair | |||||||
cost | value | |||||||
(Dollars in millions) | ||||||||
Due in one year or less | $ | 4.0 | $ | 3.9 | ||||
Due after one year through five years | 234.4 | 224.0 | ||||||
Due after five years through ten years | 28.2 | 27.9 | ||||||
Total | $ | 266.6 | $ | 255.8 |
Number | Cost | Unrealized | Estimated | |||||||||||||
of issuers | basis | loss | fair value | |||||||||||||
Less than 6 months | 1 | $ | 2.0 | $ | ( .5 | ) | $ | 1.5 | ||||||||
Greater than or equal to 6 and less than 12 months | 5 | 10.4 | (2.6 | ) | 7.8 | |||||||||||
Greater than 12 months | 1 | 2.0 | (.8 | ) | 1.2 | |||||||||||
7 | $ | 14.4 | $ | (3.9 | ) | $ | 10.5 |
At date of sale | ||||||||||||
Number | Amortized | Fair | ||||||||||
of issuers | cost | value | ||||||||||
Less than six months prior to sale | 2 | $ | .1 | $ | .1 | |||||||
Greater than or equal to 6 and less than 12 months prior to sale | 2 | 1.2 | .8 | |||||||||
Greater than 12 months prior to sale | 2 | 1.3 | .4 | |||||||||
6 | $ | 2.6 | $ | 1.3 |
|
ASSETS | ||||||||
2010 | 2009 | |||||||
Cash and cash equivalents - unrestricted | $ | 160.0 | $ | 145.3 | ||||
Other invested assets | .2 | .2 | ||||||
Investment in wholly-owned subsidiaries (eliminated in consolidation) | 5,362.0 | 4,902.4 | ||||||
Receivable from subsidiaries (eliminated in consolidation) | 2.3 | .9 | ||||||
Other assets | 20.5 | 16.1 | ||||||
Total assets | $ | 5,545.0 | $ | 5,064.9 | ||||
Liabilities: | ||||||||
Notes payable | $ | 998.5 | $ | 1,037.4 | ||||
Payable to subsidiaries (eliminated in consolidation) | 78.3 | 360.2 | ||||||
Income tax liabilities, net | 87.2 | 76.2 | ||||||
Other liabilities | 55.7 | 58.7 | ||||||
Total liabilities | 1,219.7 | 1,532.5 | ||||||
Commitments and Contingencies | ||||||||
Shareholders’ equity: | ||||||||
Common stock and additional paid-in capital ($.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: 2010 – 251,084,174; 2009 – 250,786,216) | $ | 4,426.7 | 4,411.3 | |||||
Accumulated other comprehensive income (loss) | 238.3 | (264.3 | ) | |||||
Accumulated deficit | (339.7 | ) | (614.6 | ) | ||||
Total shareholders’ equity | 4,325.3 | 3,532.4 | ||||||
Total liabilities and shareholders’ equity | $ | 5,545.0 | $ | 5,064.9 |
2010 | 2009 | 2008 | ||||||||||
Revenues: | ||||||||||||
Net investment income | $ | - | $ | - | $ | 2.3 | ||||||
Net realized investment losses | - | (.2 | ) | (25.9 | ) | |||||||
Fee and interest income from subsidiaries (eliminated in consolidation) | - | - | .7 | |||||||||
Total revenues | - | (.2 | ) | (22.9 | ) | |||||||
Expenses: | ||||||||||||
Interest expense on notes payable | 79.3 | 84.7 | 67.9 | |||||||||
Intercompany expenses (eliminated in consolidation) | 1.3 | 2.4 | 8.3 | |||||||||
Operating costs and expenses | 49.3 | 45.6 | 34.2 | |||||||||
(Gain) loss on extinguishment or modification of debt | 6.8 | 22.2 | (21.2 | ) | ||||||||
Total expenses | 136.7 | 154.9 | 89.2 | |||||||||
Loss before income taxes and equity in undistributed earnings of subsidiaries | (136.7 | ) | (155.1 | ) | (112.1 | ) | ||||||
Income tax expense (benefit): | ||||||||||||
Income tax benefit on period income | (50.8 | ) | (57.8 | ) | (39.1 | ) | ||||||
Valuation allowance for deferred tax assets | - | - | 54.1 | |||||||||
Loss before equity in undistributed earnings of subsidiaries and discontinued operations | (85.9 | ) | (97.3 | ) | (127.1 | ) | ||||||
Equity in undistributed earnings of subsidiaries (eliminated in consolidation) | 370.5 | 183.0 | (282.5 | ) | ||||||||
Income (loss) before discontinued operations | 284.6 | 85.7 | (409.6 | ) | ||||||||
Discontinued operations, net of income taxes: | ||||||||||||
Parent company | - | - | (166.3 | ) | ||||||||
Subsidiary | - | - | (556.4 | ) | ||||||||
Net income (loss) | $ | 284.6 | $ | 85.7 | $ | (1,132.3 | ) |
2010 | 2009 | 2008 | ||||||||||
Cash flows used by operating activities | $ | (119.1 | ) | $ | (110.7 | ) | $ | (97.4 | ) | |||
Cash flows from investing activities: | ||||||||||||
Sales of investments | - | - | 13.9 | |||||||||
Purchases of investments | - | - | (39.8 | ) | ||||||||
Investments and advances to consolidated subsidiaries* | 26.6 | - | (24.0 | ) | ||||||||
Change in restricted cash | - | - | 1.9 | |||||||||
Net cash used by investing activities | 26.6 | - | (48.0 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||
Issuance of notes payable, net | 756.1 | 172.0 | 75.0 | |||||||||
Issuance of common stock | - | 296.3 | - | |||||||||
Payments on notes payable | (793.6 | ) | (461.2 | ) | (44.0 | ) | ||||||
Expenses related to debt modification or extinguishment of debt | - | (14.7 | ) | - | ||||||||
Issuance of notes payable to affiliates* | 177.0 | 266.9 | 148.0 | |||||||||
Payments on notes payable to affiliates* | (32.3 | ) | (59.8 | ) | (61.4 | ) | ||||||
Net cash provided by financing activities | 107.2 | 199.5 | 117.6 | |||||||||
Net increase (decrease) in cash and cash equivalents | 14.7 | 88.8 | (27.8 | ) | ||||||||
Cash and cash equivalents, beginning of the year | 145.3 | 56.5 | 84.3 | |||||||||
Cash and cash equivalents, end of the year | $ | 160.0 | $ | 145.3 | $ | 56.5 |
|
2010 | 2009 | 2008 | ||||||||||
Life insurance inforce: | ||||||||||||
Direct | $ | 59,388.5 | $ | 61,814.4 | $ | 65,271.1 | ||||||
Assumed | 374.2 | 403.5 | 1,129.8 | |||||||||
Ceded | (14,800.9 | ) | (16,461.5 | ) | (13,805.9 | ) | ||||||
Net insurance inforce | $ | 44,961.8 | $ | 45,756.4 | $ | 52,595.0 | ||||||
Percentage of assumed to net | .8 | % | .9 | % | 2.1 | % | ||||||
2010 | 2009 | 2008 | ||||||||||
Insurance policy income: | ||||||||||||
Direct | $ | 2,525.5 | $ | 2,451.8 | $ | 2,438.0 | ||||||
Assumed | 92.6 | 475.5 | 641.0 | |||||||||
Ceded | (258.6 | ) | (179.4 | ) | (164.0 | ) | ||||||
Net premiums | $ | 2,359.5 | $ | 2,747.9 | $ | 2,915.0 | ||||||
Percentage of assumed to net | 3.9 | % | 17.3 | % | 22.0 | % |
|
|