|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
Net cash proceeds | $ | 222.0 | ||
Net assets being sold: | ||||
Investments | 3,863.8 | |||
Cash and cash equivalents | 164.7 | |||
Accrued investment income | 42.7 | |||
Present value of future profits | 15.5 | |||
Deferred acquisition costs | 37.6 | |||
Reinsurance receivables | 307.4 | |||
Income tax assets, net | 84.4 | |||
Other assets | 2.8 | |||
Liabilities for insurance products | (3,201.3 | ) | ||
Other liabilities | (199.1 | ) | ||
Investment borrowings | (383.4 | ) | ||
Accumulated other comprehensive income | (240.5 | ) | ||
Net assets being sold | 494.6 | |||
Loss before taxes | (272.6 | ) | ||
Tax expense related to tax gain on sale | 21.6 | |||
Previously unrecognized tax benefit now recognized as a result of the gain | (7.4 | ) | ||
Valuation allowance release related to the gain | (14.2 | ) | ||
Valuation allowance increase related to the decrease in projected future taxable income | 19.4 | |||
Net loss | $ | (292.0 | ) |
|
|
September 30, 2014 | December 31, 2013 | |||||||
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized | $ | 5.9 | $ | 6.5 | ||||
Net unrealized gains on all other investments | 2,028.7 | 1,322.6 | (b) | |||||
Adjustment to present value of future profits (a) | (151.9 | ) | (47.7 | ) | ||||
Adjustment to deferred acquisition costs | (380.7 | ) | (137.0 | ) | ||||
Adjustment to insurance liabilities | (160.9 | ) | — | |||||
Unrecognized net loss related to deferred compensation plan | (6.1 | ) | (7.1 | ) | ||||
Deferred income tax liabilities | (475.7 | ) | (405.5 | ) | ||||
Accumulated other comprehensive income | $ | 859.3 | $ | 731.8 |
(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 Conseco, Inc., an Indiana corporation (our "Predecessor"), emerged from bankruptcy. |
(b) | At December 31, 2013, net unrealized gains on all other investments included $226.2 million related to CLIC which was treated as held for sale effective January 1, 2014 and ultimately sold on July 1, 2014. The unrealized gains (losses) presented as a component of accumulated other comprehensive income for the nine months ended September 30, 2014 were reduced by $226.2 million for the unrealized gains on CLIC's portfolio as of January 1, 2014. |
Amortized cost | Gross unrealized gains | Gross unrealized losses | Estimated fair value | Other-than-temporary impairments included in accumulated other comprehensive income | |||||||||||||||
Corporate securities | $ | 12,378.0 | $ | 1,593.3 | $ | (44.1 | ) | $ | 13,927.2 | $ | — | ||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 137.5 | 14.3 | (.3 | ) | 151.5 | — | |||||||||||||
States and political subdivisions | 1,977.4 | 232.1 | (5.2 | ) | 2,204.3 | — | |||||||||||||
Debt securities issued by foreign governments | 1.8 | — | — | 1.8 | — | ||||||||||||||
Asset-backed securities | 1,228.4 | 83.7 | (3.1 | ) | 1,309.0 | — | |||||||||||||
Collateralized debt obligations | 323.7 | 3.9 | (.7 | ) | 326.9 | — | |||||||||||||
Commercial mortgage-backed securities | 1,210.3 | 78.7 | (.6 | ) | 1,288.4 | — | |||||||||||||
Mortgage pass-through securities | 7.7 | .4 | — | 8.1 | — | ||||||||||||||
Collateralized mortgage obligations | 1,305.2 | 89.5 | (1.4 | ) | 1,393.3 | (3.3 | ) | ||||||||||||
Total fixed maturities, available for sale | $ | 18,570.0 | $ | 2,095.9 | $ | (55.4 | ) | $ | 20,610.5 | $ | (3.3 | ) | |||||||
Equity securities | $ | 360.8 | $ | 13.0 | $ | (1.0 | ) | $ | 372.8 |
Amortized cost | Estimated fair value | ||||||
(Dollars in millions) | |||||||
Due in one year or less | $ | 210.9 | $ | 216.3 | |||
Due after one year through five years | 1,829.0 | 2,017.4 | |||||
Due after five years through ten years | 2,847.4 | 3,077.5 | |||||
Due after ten years | 9,607.4 | 10,973.6 | |||||
Subtotal | 14,494.7 | 16,284.8 | |||||
Structured securities | 4,075.3 | 4,325.7 | |||||
Total fixed maturities, available for sale | $ | 18,570.0 | $ | 20,610.5 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||
Gross realized gains on sale | $ | 8.3 | $ | 12.9 | $ | 54.7 | $ | 40.3 | |||||||
Gross realized losses on sale | (2.6 | ) | (6.4 | ) | (11.1 | ) | (9.8 | ) | |||||||
Impairments: | |||||||||||||||
Total other-than-temporary impairment losses | — | (1.6 | ) | — | (1.6 | ) | |||||||||
Other-than-temporary impairment losses recognized in accumulated other comprehensive income | — | — | — | — | |||||||||||
Net impairment losses recognized | — | (1.6 | ) | — | (1.6 | ) | |||||||||
Net realized investment gains from fixed maturities | 5.7 | 4.9 | 43.6 | 28.9 | |||||||||||
Equity securities | 1.9 | — | 9.8 | — | |||||||||||
Commercial mortgage loans | (1.2 | ) | (1.7 | ) | (.1 | ) | (1.0 | ) | |||||||
Impairments of mortgage loans and other investments | (2.8 | ) | (1.3 | ) | (14.7 | ) | (1.9 | ) | |||||||
Other | .4 | (2.0 | ) | 1.2 | (7.6 | ) | |||||||||
Net realized investment gains (losses) | $ | 4.0 | $ | (.1 | ) | $ | 39.8 | $ | 18.4 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Credit losses on fixed maturity securities, available for sale, beginning of period | $ | (1.2 | ) | $ | (1.5 | ) | $ | (1.3 | ) | $ | (1.6 | ) | |||
Add: credit losses on other-than-temporary impairments not previously recognized | — | — | — | — | |||||||||||
Less: credit losses on securities sold | .1 | .1 | .2 | .2 | |||||||||||
Less: credit losses on securities impaired due to intent to sell (a) | — | — | — | — | |||||||||||
Add: credit losses on previously impaired securities | — | — | — | — | |||||||||||
Less: increases in cash flows expected on previously impaired securities | — | — | — | — | |||||||||||
Credit losses on fixed maturity securities, available for sale, end of period | $ | (1.1 | ) | $ | (1.4 | ) | $ | (1.1 | ) | $ | (1.4 | ) |
(a) | Represents securities for which the amount previously recognized in accumulated other comprehensive income 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. |
Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
Description of securities | Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | ||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | $ | 1.0 | $ | — | $ | 18.3 | $ | (.3 | ) | $ | 19.3 | $ | (.3 | ) | ||||||||||
States and political subdivisions | 66.1 | (1.0 | ) | 90.6 | (4.2 | ) | 156.7 | (5.2 | ) | |||||||||||||||
Corporate securities | 871.1 | (20.7 | ) | 311.7 | (23.4 | ) | 1,182.8 | (44.1 | ) | |||||||||||||||
Asset-backed securities | 116.7 | (1.1 | ) | 69.5 | (2.0 | ) | 186.2 | (3.1 | ) | |||||||||||||||
Collateralized debt obligations | 91.2 | (.7 | ) | — | — | 91.2 | (.7 | ) | ||||||||||||||||
Commercial mortgage-backed securities | 35.9 | (.2 | ) | 19.1 | (.4 | ) | 55.0 | (.6 | ) | |||||||||||||||
Mortgage pass-through securities | .9 | — | .8 | — | 1.7 | — | ||||||||||||||||||
Collateralized mortgage obligations | 113.6 | (1.2 | ) | 10.2 | (.2 | ) | 123.8 | (1.4 | ) | |||||||||||||||
Total fixed maturities, available for sale | $ | 1,296.5 | $ | (24.9 | ) | $ | 520.2 | $ | (30.5 | ) | $ | 1,816.7 | $ | (55.4 | ) | |||||||||
Equity securities | $ | 128.3 | $ | (1.0 | ) | $ | .5 | $ | — | $ | 128.8 | $ | (1.0 | ) |
Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
Description of securities | Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | ||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | $ | 23.8 | $ | (.6 | ) | $ | — | $ | — | $ | 23.8 | $ | (.6 | ) | ||||||||||
States and political subdivisions | 473.6 | (30.3 | ) | 79.2 | (8.7 | ) | 552.8 | (39.0 | ) | |||||||||||||||
Corporate securities | 2,432.4 | (137.7 | ) | 170.3 | (20.8 | ) | 2,602.7 | (158.5 | ) | |||||||||||||||
Asset-backed securities | 308.4 | (6.5 | ) | 32.5 | (.7 | ) | 340.9 | (7.2 | ) | |||||||||||||||
Collateralized debt obligations | 46.7 | (.5 | ) | — | — | 46.7 | (.5 | ) | ||||||||||||||||
Commercial mortgage-backed securities | 161.8 | (5.8 | ) | — | — | 161.8 | (5.8 | ) | ||||||||||||||||
Mortgage pass-through securities | 1.6 | — | 1.6 | — | 3.2 | — | ||||||||||||||||||
Collateralized mortgage obligations | 121.8 | (1.6 | ) | 2.2 | — | 124.0 | (1.6 | ) | ||||||||||||||||
Total fixed maturities, available for sale | $ | 3,570.1 | $ | (183.0 | ) | $ | 285.8 | $ | (30.2 | ) | $ | 3,855.9 | $ | (213.2 | ) | |||||||||
Equity securities | $ | .5 | $ | — | $ | — | $ | — | $ | .5 | $ | — |
|
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income (loss) for basic earnings per share | $ | 117.4 | $ | 283.0 | $ | (32.5 | ) | $ | 372.0 | ||||||
Add: interest expense on 7.0% Senior Debentures due 2016 (the "7.0% Debentures"), net of income taxes | — | — | — | 1.6 | |||||||||||
Net income (loss) for diluted earnings per share | $ | 117.4 | $ | 283.0 | $ | (32.5 | ) | $ | 373.6 | ||||||
Shares: | |||||||||||||||
Weighted average shares outstanding for basic earnings per share | 210,525 | 222,876 | 215,790 | 221,819 | |||||||||||
Effect of dilutive securities on weighted average shares: | |||||||||||||||
7.0% Debentures | — | 839 | — | 7,707 | |||||||||||
Stock options, restricted stock and performance units | 2,447 | 2,858 | — | 2,699 | |||||||||||
Warrants (a) | 2,486 | 2,774 | — | 2,344 | |||||||||||
Dilutive potential common shares | 4,933 | 6,471 | — | 12,750 | |||||||||||
Weighted average shares outstanding for diluted earnings per share | 215,458 | 229,347 | 215,790 | 234,569 |
(a) | All outstanding warrants were repurchased in September 2014 as further discussed in the note to the consolidated financial statements entitled "Changes in Common Stock." Accordingly, the warrants will have no dilutive effect in periods beginning after September 30, 2014. |
|
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues: | |||||||||||||||
Bankers Life: | |||||||||||||||
Insurance policy income: | |||||||||||||||
Annuities | $ | 6.6 | $ | 5.6 | $ | 21.8 | $ | 22.1 | |||||||
Health | 319.4 | 323.3 | 970.4 | 990.0 | |||||||||||
Life | 90.4 | 78.5 | 248.6 | 232.4 | |||||||||||
Net investment income (a) | 231.2 | 235.4 | 703.2 | 723.7 | |||||||||||
Fee revenue and other income (a) | 7.0 | 5.8 | 18.1 | 13.5 | |||||||||||
Total Bankers Life revenues | 654.6 | 648.6 | 1,962.1 | 1,981.7 | |||||||||||
Washington National: | |||||||||||||||
Insurance policy income: | |||||||||||||||
Annuities | .9 | 6.5 | 3.3 | 9.7 | |||||||||||
Health | 147.1 | 147.0 | 444.8 | 438.2 | |||||||||||
Life | 6.0 | 5.7 | 18.2 | 17.3 | |||||||||||
Net investment income (a) | 65.2 | 72.9 | 206.0 | 220.6 | |||||||||||
Fee revenue and other income (a) | .3 | .3 | .7 | .7 | |||||||||||
Total Washington National revenues | 219.5 | 232.4 | 673.0 | 686.5 | |||||||||||
Colonial Penn: | |||||||||||||||
Insurance policy income: | |||||||||||||||
Health | .8 | 1.1 | 2.7 | 3.3 | |||||||||||
Life | 60.9 | 57.0 | 181.2 | 169.7 | |||||||||||
Net investment income (a) | 10.3 | 10.2 | 31.5 | 30.0 | |||||||||||
Fee revenue and other income (a) | .2 | .2 | .7 | .6 | |||||||||||
Total Colonial Penn revenues | 72.2 | 68.5 | 216.1 | 203.6 | |||||||||||
Other CNO Business: | |||||||||||||||
Insurance policy income - health | — | 5.9 | — | 18.2 | |||||||||||
Net investment income (a) | — | 8.0 | — | 24.8 | |||||||||||
Total Other CNO Business revenues | — | 13.9 | — | 43.0 | |||||||||||
Corporate operations: | |||||||||||||||
Net investment income | (1.0 | ) | 11.0 | 11.7 | 25.6 | ||||||||||
Fee and other income | 1.9 | 1.7 | 4.6 | 4.9 | |||||||||||
Total corporate revenues | 0.9 | 12.7 | 16.3 | 30.5 | |||||||||||
Total revenues | 947.2 | 976.1 | 2,867.5 | 2,945.3 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Expenses: | |||||||||||||||
Bankers Life: | |||||||||||||||
Insurance policy benefits | $ | 394.9 | $ | 427.3 | $ | 1,237.8 | $ | 1,331.9 | |||||||
Amortization | 47.1 | 39.7 | 140.7 | 139.9 | |||||||||||
Interest expense on investment borrowings | 2.0 | 1.8 | 5.8 | 4.9 | |||||||||||
Other operating costs and expenses | 98.8 | 93.5 | 294.4 | 277.5 | |||||||||||
Total Bankers Life expenses | 542.8 | 562.3 | 1,678.7 | 1,754.2 | |||||||||||
Washington National: | |||||||||||||||
Insurance policy benefits | 129.5 | 141.6 | 394.1 | 409.6 | |||||||||||
Amortization | 14.8 | 14.4 | 47.1 | 47.7 | |||||||||||
Interest expense on investment borrowings | .4 | .5 | 1.3 | 1.5 | |||||||||||
Other operating costs and expenses | 47.2 | 42.9 | 139.5 | 124.9 | |||||||||||
Total Washington National expenses | 191.9 | 199.4 | 582.0 | 583.7 | |||||||||||
Colonial Penn: | |||||||||||||||
Insurance policy benefits | 41.1 | 39.8 | 129.0 | 124.0 | |||||||||||
Amortization | 3.7 | 3.7 | 11.5 | 11.1 | |||||||||||
Other operating costs and expenses | 27.0 | 29.2 | 77.6 | 76.9 | |||||||||||
Total Colonial Penn expenses | 71.8 | 72.7 | 218.1 | 212.0 | |||||||||||
Other CNO Business: | |||||||||||||||
Insurance policy benefits | — | 13.5 | — | 44.4 | |||||||||||
Other operating costs and expenses | — | 6.1 | — | 18.8 | |||||||||||
Total Other CNO Business expenses | — | 19.6 | — | 63.2 | |||||||||||
Corporate operations: | |||||||||||||||
Interest expense on corporate debt | 10.9 | 11.7 | 33.1 | 39.9 | |||||||||||
Interest expense on investment borrowings | — | — | — | .1 | |||||||||||
Other operating costs and expenses | 10.0 | 3.3 | 46.9 | 15.6 | |||||||||||
Total corporate expenses | 20.9 | 15.0 | 80.0 | 55.6 | |||||||||||
Total expenses | 827.4 | 869.0 | 2,558.8 | 2,668.7 | |||||||||||
Pre-tax operating earnings by segment: | |||||||||||||||
Bankers Life | 111.8 | 86.3 | 283.4 | 227.5 | |||||||||||
Washington National | 27.6 | 33.0 | 91.0 | 102.8 | |||||||||||
Colonial Penn | .4 | (4.2 | ) | (2.0 | ) | (8.4 | ) | ||||||||
Other CNO Business | — | (5.7 | ) | — | (20.2 | ) | |||||||||
Corporate operations | (20.0 | ) | (2.3 | ) | (63.7 | ) | (25.1 | ) | |||||||
Pre-tax operating earnings | $ | 119.8 | $ | 107.1 | $ | 308.7 | $ | 276.6 |
(a) | It is not practicable to provide additional components of revenue by product or services. |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Total segment revenues | $ | 947.2 | $ | 976.1 | $ | 2,867.5 | $ | 2,945.3 | |||||||
Net realized investment gains (losses) | 4.0 | (1.7 | ) | 37.0 | 13.1 | ||||||||||
Revenues related to certain non-strategic investments and earnings attributable to VIEs | 8.3 | 9.0 | 21.9 | 24.1 | |||||||||||
Fee revenue related to transition and support services agreements | 7.5 | — | 7.5 | — | |||||||||||
Revenues of CLIC prior to being sold | — | 110.4 | 210.8 | 335.4 | |||||||||||
Consolidated revenues | 967.0 | 1,093.8 | 3,144.7 | 3,317.9 | |||||||||||
Total segment expenses | 827.4 | 869.0 | 2,558.8 | 2,668.7 | |||||||||||
Insurance policy benefits - fair value changes in embedded derivative liabilities | — | (4.9 | ) | 25.3 | (37.0 | ) | |||||||||
Amortization related to fair value changes in embedded derivative liabilities | .1 | 1.5 | (6.8 | ) | 13.0 | ||||||||||
Amortization related to net realized investment gains | .1 | .1 | .6 | 1.3 | |||||||||||
Expenses related to certain non-strategic investments and earnings attributable to VIEs | 10.9 | 11.8 | 30.7 | 31.7 | |||||||||||
Loss on extinguishment or modification of debt | — | — | .6 | 65.4 | |||||||||||
Net loss on sale of CLIC and gain on reinsurance transactions | (32.1 | ) | — | 242.7 | — | ||||||||||
Expenses related to transition and support services agreements | 6.2 | — | 6.2 | — | |||||||||||
Expenses of CLIC prior to being sold | — | 101.9 | 187.4 | 311.1 | |||||||||||
Consolidated expenses | 812.6 | 979.4 | 3,045.5 | 3,054.2 | |||||||||||
Income before tax | 154.4 | 114.4 | 99.2 | 263.7 | |||||||||||
Income tax expense: | |||||||||||||||
Tax expense on period income | 53.8 | 38.1 | 133.1 | 113.9 | |||||||||||
Valuation allowance for deferred tax assets and other tax items | (16.8 | ) | (206.7 | ) | (1.4 | ) | (222.2 | ) | |||||||
Net income (loss) | $ | 117.4 | $ | 283.0 | $ | (32.5 | ) | $ | 372.0 |
|
|
|
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Current tax expense | $ | 5.4 | $ | 3.4 | $ | 11.5 | $ | 8.8 | |||||||
Deferred tax expense | 48.4 | 34.7 | 121.6 | 106.5 | |||||||||||
Valuation allowance applicable to current year income | (3.0 | ) | (9.8 | ) | (3.0 | ) | (9.8 | ) | |||||||
Income tax expense calculated based on estimated annual effective tax rate | 50.8 | 28.3 | 130.1 | 105.5 | |||||||||||
Income tax expense (benefit) on discrete items: | |||||||||||||||
Related to the sale of CLIC: | |||||||||||||||
Tax expense related to tax gain on sale | — | — | 21.6 | — | |||||||||||
Previously unrecognized tax benefit recognized as a result of the gain | — | — | (7.4 | ) | — | ||||||||||
Valuation allowance release related to the gain | — | — | (14.2 | ) | — | ||||||||||
Valuation allowance increase related to the decrease in projected future taxable income | — | — | 19.4 | — | |||||||||||
Valuation allowance reduction resulting from the realization of capital gains and utilization of loss carryforwards | (.4 | ) | (118.0 | ) | (4.4 | ) | (133.5 | ) | |||||||
Valuation allowance reduction applicable to the settlement with the IRS regarding the classification of a portion of the cancellation of indebtedness income | — | (71.8 | ) | — | (71.8 | ) | |||||||||
Valuation allowance reduction related to the increase in projected future taxable income | (12.6 | ) | — | (12.6 | ) | — | |||||||||
Deferred tax benefit related to loss on extinguishment or modification of debt | — | — | — | (1.4 | ) | ||||||||||
Other items | (.8 | ) | (7.1 | ) | (.8 | ) | (7.1 | ) | |||||||
Total income tax expense | $ | 37.0 | $ | (168.6 | ) | $ | 131.7 | $ | (108.3 | ) |
Nine months ended | |||||
September 30, | |||||
2014 | 2013 | ||||
U.S. statutory corporate rate | 35.0 | % | 35.0 | % | |
Valuation allowance | (.7 | ) | (3.5 | ) | |
Non-taxable income and nondeductible benefits, net | (.8 | ) | (.9 | ) | |
State taxes | 1.5 | 1.4 | |||
Estimated annual effective tax rate | 35.0 | % | 32.0 | % |
September 30, 2014 | December 31, 2013 | ||||||
Deferred tax assets: | |||||||
Net federal operating loss carryforwards | $ | 1,097.6 | $ | 1,240.2 | |||
Net state operating loss carryforwards | 17.2 | 20.0 | |||||
Tax credits | 44.2 | 43.9 | |||||
Capital loss carryforwards | — | 13.4 | |||||
Deductible temporary differences: | |||||||
Investments | 62.3 | 74.3 | |||||
Insurance liabilities | 566.5 | 723.8 | |||||
Other | 56.2 | 64.7 | |||||
Gross deferred tax assets | 1,844.0 | 2,180.3 | |||||
Deferred tax liabilities: | |||||||
Present value of future profits and deferred acquisition costs | (319.1 | ) | (306.8 | ) | |||
Accumulated other comprehensive income | (475.7 | ) | (405.5 | ) | |||
Gross deferred tax liabilities | (794.8 | ) | (712.3 | ) | |||
Net deferred tax assets before valuation allowance | 1,049.2 | 1,468.0 | |||||
Valuation allowance | (280.0 | ) | (294.8 | ) | |||
Net deferred tax assets | 769.2 | 1,173.2 | |||||
Current income taxes accrued | (38.1 | ) | (26.0 | ) | |||
Income tax assets, net | $ | 731.1 | $ | 1,147.2 |
Year of expiration | Net operating loss carryforwards | Total loss | ||||||||||
Life | Non-life | carryforwards | ||||||||||
2018 | $ | 47.3 | $ | — | $ | 47.3 | ||||||
2021 | 30.0 | — | 30.0 | |||||||||
2022 | 152.0 | — | 152.0 | |||||||||
2023 | 742.6 | 2,073.3 | 2,815.9 | |||||||||
2025 | — | 115.5 | 115.5 | |||||||||
2027 | — | 202.6 | 202.6 | |||||||||
2028 | — | 67.3 | 67.3 | |||||||||
2029 | — | 205.5 | 205.5 | |||||||||
2032 | — | 44.0 | 44.0 | |||||||||
Subtotal | 971.9 | 2,708.2 | 3,680.1 | |||||||||
Less: | ||||||||||||
Unrecognized tax benefits | (342.9 | ) | (201.2 | ) | (544.1 | ) | ||||||
Total | $ | 629.0 | $ | 2,507.0 | $ | 3,136.0 |
|
September 30, 2014 | December 31, 2013 | ||||||
Senior Secured Credit Agreement (as defined below) | $ | 541.9 | $ | 581.5 | |||
6.375% Senior Secured Notes due October 2020 (the "6.375% Notes") | 275.0 | 275.0 | |||||
7.0% Debentures | — | 3.5 | |||||
Unamortized discount on Senior Secured Credit Agreement | (2.9 | ) | (3.6 | ) | |||
Direct corporate obligations | $ | 814.0 | $ | 856.4 |
Year ending September 30, | |||
2015 | $ | 79.2 | |
2016 | 79.2 | ||
2017 | 4.3 | ||
2018 | 379.2 | ||
2019 | — | ||
Thereafter | 275.0 | ||
$ | 816.9 |
|
Amount | Maturity | Interest rate at | ||||
borrowed | date | September 30, 2014 | ||||
$ | 50.0 | October 2015 | Variable rate – 0.504% | |||
100.0 | June 2016 | Variable rate – 0.595% | ||||
75.0 | June 2016 | Variable rate – 0.393% | ||||
100.0 | October 2016 | Variable rate – 0.412% | ||||
50.0 | November 2016 | Variable rate – 0.504% | ||||
50.0 | November 2016 | Variable rate – 0.624% | ||||
57.7 | June 2017 | Variable rate – 0.586% | ||||
50.0 | August 2017 | Variable rate – 0.434% | ||||
75.0 | August 2017 | Variable rate – 0.385% | ||||
100.0 | October 2017 | Variable rate – 0.666% | ||||
50.0 | November 2017 | Variable rate – 0.745% | ||||
50.0 | January 2018 | Variable rate – 0.584% | ||||
50.0 | January 2018 | Variable rate – 0.573% | ||||
50.0 | February 2018 | Variable rate – 0.547% | ||||
50.0 | February 2018 | Variable rate – 0.321% | ||||
22.0 | February 2018 | Variable rate – 0.568% | ||||
100.0 | May 2018 | Variable rate – 0.602% | ||||
50.0 | July 2018 | Variable rate – 0.705% | ||||
50.0 | August 2018 | Variable rate – 0.354% | ||||
50.0 | January 2019 | Variable rate – 0.653% | ||||
50.0 | February 2019 | Variable rate – 0.321% | ||||
100.0 | March 2019 | Variable rate – 0.634% | ||||
21.8 | July 2019 | Variable rate – 0.644% | ||||
21.8 | June 2020 | Fixed rate – 1.960% | ||||
28.3 | August 2021 | Fixed rate – 2.550% | ||||
26.9 | March 2023 | Fixed rate – 2.160% | ||||
20.5 | June 2025 | Fixed rate – 2.940% | ||||
$ | 1,499.0 |
|
Balance, December 31, 2013 | 220,324 | ||
Treasury stock purchased and retired | (14,118 | ) | |
Stock options exercised | 893 | ||
Restricted and performance stock vested | 541 | (a) | |
Balance, September 30, 2014 | 207,640 |
(a) | Such amount was reduced by 230 thousand shares which were tendered to the Company for the payment of required federal and state tax withholdings owed on the vesting of restricted and performance stock. |
|
|
Gross amounts not offset in the balance sheet | |||||||||||||||||||||||||
Gross amounts of recognized assets | Gross amounts offset in the balance sheet | Net amounts of assets presented in the balance sheet | Financial instruments | Cash collateral received | Net amount | ||||||||||||||||||||
September 30, 2014: | |||||||||||||||||||||||||
Call Options | $ | 98.3 | $ | — | $ | 98.3 | $ | — | $ | — | $ | 98.3 | |||||||||||||
December 31, 2013: | |||||||||||||||||||||||||
Call Options | 156.2 | — | 156.2 | — | — | 156.2 |
Gross amounts not offset in the balance sheet | |||||||||||||||||||||||||
Gross amounts of recognized liabilities | Gross amounts offset in the balance sheet | Net amounts of liabilities presented in the balance sheet | Financial instruments | Cash collateral pledged | Net amount | ||||||||||||||||||||
September 30, 2014: | |||||||||||||||||||||||||
Repurchase agreements (a) | $ | 20.4 | $ | — | $ | 20.4 | $ | — | $ | — | $ | 20.4 |
(a) | As of September 30, 2014, these agreements were collateralized by investment securities with a fair value of $25.5 million. There were no repurchase agreements outstanding at December 31, 2013. |
|
|
|
Nine months ended | |||||||
September 30, | |||||||
2014 | 2013 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | (32.5 | ) | $ | 372.0 | ||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Amortization and depreciation | 218.2 | 241.1 | |||||
Income taxes | 128.9 | (112.6 | ) | ||||
Insurance liabilities | 228.9 | 298.8 | |||||
Accrual and amortization of investment income | (112.3 | ) | (189.4 | ) | |||
Deferral of policy acquisition costs | (176.6 | ) | (161.8 | ) | |||
Net realized investment gains | (39.8 | ) | (18.4 | ) | |||
Payment to reinsurer pursuant to long-term care business reinsured | (590.3 | ) | — | ||||
Net loss on sale of CLIC and gain on reinsurance transactions | 242.7 | — | |||||
Loss on extinguishment or modification of debt | .6 | 65.4 | |||||
Other | 8.3 | (23.0 | ) | ||||
Net cash from operating activities | $ | (123.9 | ) | (a) | $ | 472.1 |
(a) | Cash flows from operating activities reflect outflows in the 2014 period due to the payment to reinsurer to transfer certain long-term care business. |
Investments | $ | 139.4 | (a) (b) | |
Cash | 7.7 | |||
Present value of future profits and deferred acquisition costs | 29.0 | (b) | ||
Reinsurance receivables | (155.9 | ) | (b) | |
Other liabilities | 5.9 | (b) | ||
Gain on reinsurance transaction (classified as "Net loss on sale of subsidiary and gain on reinsurance transactions") | 26.1 | |||
Income tax expense | 9.2 | |||
Gain on reinsurance transaction (net of income taxes) | $ | 16.9 |
Nine months ended | |||||||
September 30, | |||||||
2014 | 2013 | ||||||
Stock options, restricted stock and performance units | $ | 11.6 | $ | 10.8 |
|
September 30, 2014 | |||||||||||
VIEs | Eliminations | Net effect on consolidated balance sheet | |||||||||
Assets: | |||||||||||
Investments held by variable interest entities | $ | 1,343.0 | $ | — | $ | 1,343.0 | |||||
Notes receivable of VIEs held by insurance subsidiaries | — | (148.2 | ) | (148.2 | ) | ||||||
Cash and cash equivalents held by variable interest entities | 150.7 | — | 150.7 | ||||||||
Accrued investment income | 3.1 | — | 3.1 | ||||||||
Income tax assets, net | 12.9 | (2.3 | ) | 10.6 | |||||||
Other assets | 18.2 | (1.3 | ) | 16.9 | |||||||
Total assets | $ | 1,527.9 | $ | (151.8 | ) | $ | 1,376.1 | ||||
Liabilities: | |||||||||||
Other liabilities | $ | 104.5 | $ | (3.7 | ) | $ | 100.8 | ||||
Borrowings related to variable interest entities | 1,295.0 | — | 1,295.0 | ||||||||
Notes payable of VIEs held by insurance subsidiaries | 152.2 | (152.2 | ) | — | |||||||
Total liabilities | $ | 1,551.7 | $ | (155.9 | ) | $ | 1,395.8 |
December 31, 2013 | |||||||||||
VIEs | Eliminations | Net effect on consolidated balance sheet | |||||||||
Assets: | |||||||||||
Investments held by variable interest entities | $ | 1,046.7 | $ | — | $ | 1,046.7 | |||||
Notes receivable of VIEs held by insurance subsidiaries | — | (108.5 | ) | (108.5 | ) | ||||||
Cash and cash equivalents held by variable interest entities | 104.3 | — | 104.3 | ||||||||
Accrued investment income | 1.9 | — | 1.9 | ||||||||
Income tax assets, net | 5.4 | (2.5 | ) | 2.9 | |||||||
Other assets | 22.6 | (.9 | ) | 21.7 | |||||||
Total assets | $ | 1,180.9 | $ | (111.9 | ) | $ | 1,069.0 | ||||
Liabilities: | |||||||||||
Other liabilities | $ | 66.0 | $ | (4.0 | ) | $ | 62.0 | ||||
Borrowings related to variable interest entities | 1,012.3 | — | 1,012.3 | ||||||||
Notes payable of VIEs held by insurance subsidiaries | 112.5 | (112.5 | ) | — | |||||||
Total liabilities | $ | 1,190.8 | $ | (116.5 | ) | $ | 1,074.3 |
Amortized cost | Estimated fair value | ||||||
(Dollars in millions) | |||||||
Due after one year through five years | $ | 389.0 | $ | 385.5 | |||
Due after five years through ten years | 970.7 | 957.5 | |||||
Total | $ | 1,359.7 | $ | 1,343.0 |
|
• | Level 1 – includes assets and liabilities valued using inputs that are unadjusted quoted prices in active markets for identical assets or liabilities. Our Level 1 assets primarily include cash and 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 consider various inputs such as credit rating, maturity, corporate credit spreads, reported trades and other inputs that are observable or derived from observable information in the marketplace or are supported by transactions executed in the marketplace. Financial assets in this category primarily include: certain publicly registered and privately placed corporate fixed maturity securities; certain government or agency securities; certain mortgage and asset-backed securities; certain equity securities; most investments held by our consolidated VIEs; certain mutual fund and hedge fund investments; most short-term investments; and non-exchange-traded derivatives such as call options. Financial liabilities in this category include investment borrowings, notes payable and borrowings related to VIEs. |
• | 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 broker/dealer quotes, pricing services or internally developed models or methodologies utilizing significant inputs not based on, or corroborated by, readily available market information. Financial assets in this category include certain corporate securities (primarily certain below-investment grade privately placed securities), certain structured securities, mortgage loans, and other less liquid securities. Financial liabilities in this category include our insurance liabilities for interest-sensitive products, which includes embedded derivatives (including embedded derivatives related to our fixed index annuity products and to a modified coinsurance arrangement) 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 | $ | — | $ | 13,592.4 | $ | 334.8 | $ | 13,927.2 | |||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 151.5 | — | 151.5 | |||||||||||
States and political subdivisions | — | 2,204.3 | — | 2,204.3 | |||||||||||
Debt securities issued by foreign governments | — | 1.8 | — | 1.8 | |||||||||||
Asset-backed securities | — | 1,246.7 | 62.3 | 1,309.0 | |||||||||||
Collateralized debt obligations | — | 326.9 | — | 326.9 | |||||||||||
Commercial mortgage-backed securities | — | 1,287.3 | 1.1 | 1,288.4 | |||||||||||
Mortgage pass-through securities | — | 7.0 | 1.1 | 8.1 | |||||||||||
Collateralized mortgage obligations | — | 1,393.2 | .1 | 1,393.3 | |||||||||||
Total fixed maturities, available for sale | — | 20,211.1 | 399.4 | 20,610.5 | |||||||||||
Equity securities - corporate securities | 172.7 | 173.0 | 27.1 | 372.8 | |||||||||||
Trading securities: | |||||||||||||||
Corporate securities | — | 24.0 | — | 24.0 | |||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 3.7 | — | 3.7 | |||||||||||
Asset-backed securities | — | 26.6 | — | 26.6 | |||||||||||
Commercial mortgage-backed securities | — | 119.7 | 28.7 | 148.4 | |||||||||||
Mortgage pass-through securities | — | .1 | — | .1 | |||||||||||
Collateralized mortgage obligations | — | 24.3 | 6.0 | 30.3 | |||||||||||
Equity securities | 1.9 | — | — | 1.9 | |||||||||||
Total trading securities | 1.9 | 198.4 | 34.7 | 235.0 | |||||||||||
Investments held by variable interest entities - corporate securities | — | 1,339.1 | 3.9 | 1,343.0 | |||||||||||
Other invested assets - derivatives | .9 | 98.3 | — | 99.2 | |||||||||||
Assets held in separate accounts | — | 6.9 | — | 6.9 | |||||||||||
Total assets carried at fair value by category | $ | 175.5 | $ | 22,026.8 | $ | 465.1 | $ | 22,667.4 | |||||||
Liabilities: | |||||||||||||||
Liabilities for insurance products: | |||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | $ | — | $ | — | $ | 992.2 | $ | 992.2 | |||||||
Total liabilities for insurance products | — | — | 992.2 | 992.2 | |||||||||||
Total liabilities carried at fair value by category | $ | — | $ | — | $ | 992.2 | $ | 992.2 |
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 | $ | — | $ | 15,340.1 | $ | 359.6 | $ | 15,699.7 | |||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 73.1 | — | 73.1 | |||||||||||
States and political subdivisions | — | 2,204.4 | — | 2,204.4 | |||||||||||
Asset-backed securities | — | 1,419.9 | 42.2 | 1,462.1 | |||||||||||
Collateralized debt obligations | — | 47.3 | 246.7 | 294.0 | |||||||||||
Commercial mortgage-backed securities | — | 1,609.0 | — | 1,609.0 | |||||||||||
Mortgage pass-through securities | — | 11.8 | 1.6 | 13.4 | |||||||||||
Collateralized mortgage obligations | — | 1,848.9 | — | 1,848.9 | |||||||||||
Total fixed maturities, available for sale | — | 22,554.5 | 650.1 | 23,204.6 | |||||||||||
Equity securities - corporate securities | 79.6 | 118.9 | 24.5 | 223.0 | |||||||||||
Trading securities: | |||||||||||||||
Corporate securities | — | 45.2 | — | 45.2 | |||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 4.6 | — | 4.6 | |||||||||||
States and political subdivisions | — | 14.1 | — | 14.1 | |||||||||||
Asset-backed securities | — | 24.3 | — | 24.3 | |||||||||||
Commercial mortgage-backed securities | — | 125.8 | — | 125.8 | |||||||||||
Mortgage pass-through securities | — | .1 | — | .1 | |||||||||||
Collateralized mortgage obligations | — | 31.1 | — | 31.1 | |||||||||||
Equity securities | 2.4 | — | — | 2.4 | |||||||||||
Total trading securities | 2.4 | 245.2 | — | 247.6 | |||||||||||
Investments held by variable interest entities - corporate securities | — | 1,046.7 | — | 1,046.7 | |||||||||||
Other invested assets - derivatives | .6 | 156.2 | — | 156.8 | |||||||||||
Assets held in separate accounts | — | 10.3 | — | 10.3 | |||||||||||
Total assets carried at fair value by category | $ | 82.6 | $ | 24,131.8 | $ | 674.6 | $ | 24,889.0 | |||||||
Liabilities: | |||||||||||||||
Liabilities for insurance products: | |||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | $ | — | $ | — | $ | 903.7 | $ | 903.7 | |||||||
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement | — | — | 1.8 | 1.8 | |||||||||||
Total liabilities for insurance products | — | — | 905.5 | 905.5 | |||||||||||
Total liabilities carried at fair value by category | $ | — | $ | — | $ | 905.5 | $ | 905.5 |
September 30, 2014 | |||||||||||||||||||
Quoted prices in active markets for identical assets or liabilities (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total estimated fair value | Total carrying amount | |||||||||||||||
Assets: | |||||||||||||||||||
Mortgage loans | $ | — | $ | — | $ | 1,675.5 | $ | 1,675.5 | $ | 1,621.8 | |||||||||
Policy loans | — | — | 106.2 | 106.2 | 106.2 | ||||||||||||||
Other invested assets: | |||||||||||||||||||
Company-owned life insurance | — | 146.2 | — | 146.2 | 146.2 | ||||||||||||||
Alternative investment funds | — | 84.7 | — | 84.7 | 84.7 | ||||||||||||||
Cash and cash equivalents: | |||||||||||||||||||
Unrestricted | 344.1 | 108.0 | — | 452.1 | 452.1 | ||||||||||||||
Held by variable interest entities | 150.7 | — | — | 150.7 | 150.7 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Policyholder account balances (a) | — | — | 10,659.2 | 10,659.2 | 10,659.2 | ||||||||||||||
Investment borrowings | — | 1,519.7 | — | 1,519.7 | 1,519.4 | ||||||||||||||
Borrowings related to variable interest entities | — | 941.7 | — | 941.7 | 1,295.0 | ||||||||||||||
Notes payable – direct corporate obligations | — | 828.7 | — | 828.7 | 814.0 |
December 31, 2013 | |||||||||||||||||||
Quoted prices in active markets for identical assets or liabilities (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total estimated fair value | Total carrying amount | |||||||||||||||
Assets: | |||||||||||||||||||
Mortgage loans | $ | — | $ | — | $ | 1,749.5 | $ | 1,749.5 | $ | 1,729.5 | |||||||||
Policy loans | — | — | 277.0 | 277.0 | 277.0 | ||||||||||||||
Other invested assets: | |||||||||||||||||||
Company-owned life insurance | — | 144.8 | — | 144.8 | 144.8 | ||||||||||||||
Alternative investment funds | — | 67.6 | — | 67.6 | 67.6 | ||||||||||||||
Cash and cash equivalents: | |||||||||||||||||||
Unrestricted | 457.8 | 241.2 | — | 699.0 | 699.0 | ||||||||||||||
Held by variable interest entities | 104.3 | — | — | 104.3 | 104.3 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Policyholder account balances (a) | — | — | 12,776.4 | 12,776.4 | 12,776.4 | ||||||||||||||
Investment borrowings | — | 1,948.5 | — | 1,948.5 | 1,900.0 | ||||||||||||||
Borrowings related to variable interest entities | — | 993.7 | — | 993.7 | 1,012.3 | ||||||||||||||
Notes payable – direct corporate obligations | — | 872.5 | — | 872.5 | 856.4 |
(a) | The estimated fair value of insurance liabilities for policyholder account balances was approximately equal to its carrying value at September 30, 2014 and December 31, 2013. 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. |
September 30, 2014 | ||||||||||||||||||||||||||||||||
Beginning balance as of June 30, 2014 | Purchases, sales, issuances and settlements, net (b) | 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 September 30, 2014 | Amount of total gains (losses) for the three months ended September 30, 2014 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 | $ | 389.8 | $ | 6.6 | $ | — | $ | (.9 | ) | $ | 37.5 | $ | (98.2 | ) | $ | 334.8 | $ | — | ||||||||||||||
States and political subdivisions | 28.7 | — | — | — | — | (28.7 | ) | — | — | |||||||||||||||||||||||
Asset-backed securities | 52.7 | (.1 | ) | — | .2 | 9.5 | — | 62.3 | — | |||||||||||||||||||||||
Collateralized debt obligations | 14.2 | — | — | — | — | (14.2 | ) | — | — | |||||||||||||||||||||||
Commercial mortgage-backed securities | — | 1.1 | — | — | — | — | 1.1 | — | ||||||||||||||||||||||||
Mortgage pass-through securities | 1.3 | (.2 | ) | — | — | — | — | 1.1 | — | |||||||||||||||||||||||
Collateralized mortgage obligations | .1 | — | — | — | — | — | .1 | — | ||||||||||||||||||||||||
Total fixed maturities, available for sale | 486.8 | 7.4 | — | (.7 | ) | 47.0 | (141.1 | ) | 399.4 | — | ||||||||||||||||||||||
Equity securities - corporate securities | 26.2 | .9 | — | — | — | — | 27.1 | — | ||||||||||||||||||||||||
Trading securities: | ||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | — | — | (.4 | ) | 29.1 | — | 28.7 | (.4 | ) | ||||||||||||||||||||||
Collateralized mortgage obligations | 5.9 | — | — | .1 | — | — | 6.0 | .1 | ||||||||||||||||||||||||
Total trading securities | 5.9 | — | — | (.3 | ) | 29.1 | — | 34.7 | (.3 | ) | ||||||||||||||||||||||
Investments held by variable interest entities - corporate securities | — | 3.0 | — | (.1 | ) | 1.0 | — | 3.9 | — | |||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Liabilities for insurance products: | ||||||||||||||||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | (980.3 | ) | (12.2 | ) | .3 | — | — | — | (992.2 | ) | .3 | |||||||||||||||||||||
Total liabilities for insurance products | (980.3 | ) | (12.2 | ) | .3 | — | — | — | (992.2 | ) | .3 |
(a) | Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. |
(b) | Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the three months ended September 30, 2014 (dollars in millions): |
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | 15.7 | $ | (9.1 | ) | $ | — | $ | — | $ | 6.6 | ||||||||
Asset-backed securities | 1.9 | (2.0 | ) | — | — | (.1 | ) | ||||||||||||
Commercial mortgage-backed securities | 1.1 | — | — | — | 1.1 | ||||||||||||||
Mortgage pass-through securities | — | (.2 | ) | — | — | (.2 | ) | ||||||||||||
Total fixed maturities, available for sale | 18.7 | (11.3 | ) | — | — | 7.4 | |||||||||||||
Equity securities - corporate securities | .9 | — | — | — | .9 | ||||||||||||||
Investments held by variable interest entities - corporate securities | 3.0 | — | — | — | 3.0 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | (29.2 | ) | 3.9 | (.5 | ) | 13.6 | (12.2 | ) | |||||||||||
Total liabilities for insurance products | (29.2 | ) | 3.9 | (.5 | ) | 13.6 | (12.2 | ) |
September 30, 2014 | ||||||||||||||||||||||||||||||||||||
Beginning balance as of December 31, 2013 | Purchases, sales, issuances and settlements, net (b) | 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) | Assets of CLIC sold | Ending balance as of September 30, 2014 | Amount of total gains (losses) for the nine months ended September 30, 2014 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 | $ | 359.6 | $ | 44.9 | $ | — | $ | 11.6 | $ | 52.7 | $ | (82.8 | ) | $ | (51.2 | ) | $ | 334.8 | $ | — | ||||||||||||||||
States and political subdivisions | — | — | — | .1 | 2.1 | — | (2.2 | ) | — | — | ||||||||||||||||||||||||||
Asset-backed securities | 42.2 | 8.9 | — | 4.0 | 16.9 | — | (9.7 | ) | 62.3 | — | ||||||||||||||||||||||||||
Collateralized debt obligations | 246.7 | — | — | — | — | (246.7 | ) | — | — | — | ||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 1.1 | — | — | — | — | — | 1.1 | — | |||||||||||||||||||||||||||
Mortgage pass-through securities | 1.6 | (.5 | ) | — | — | — | — | — | 1.1 | — | ||||||||||||||||||||||||||
Collateralized mortgage obligations | — | (.1 | ) | — | — | .2 | — | — | .1 | — | ||||||||||||||||||||||||||
Total fixed maturities, available for sale | 650.1 | 54.3 | — | 15.7 | 71.9 | (329.5 | ) | (63.1 | ) | 399.4 | — | |||||||||||||||||||||||||
Equity securities - corporate securities | 24.5 | 2.6 | — | — | — | — | — | 27.1 | — | |||||||||||||||||||||||||||
Trading securities: | ||||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 29.1 | — | (.4 | ) | — | — | — | 28.7 | (.4 | ) | |||||||||||||||||||||||||
Collateralized mortgage obligations | — | — | — | .2 | 5.8 | — | — | 6.0 | .2 | |||||||||||||||||||||||||||
Total trading securities | — | 29.1 | — | (.2 | ) | 5.8 | — | — | 34.7 | (.2 | ) | |||||||||||||||||||||||||
Investments held by variable interest entities - corporate securities | — | 3.0 | — | (.1 | ) | 1.0 | — | — | 3.9 | — | ||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||
Liabilities for insurance products: | ||||||||||||||||||||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | (903.7 | ) | (62.0 | ) | (26.5 | ) | — | — | — | — | (992.2 | ) | (26.5 | ) | ||||||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement | (1.8 | ) | 1.8 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Total liabilities for insurance products | (905.5 | ) | (60.2 | ) | (26.5 | ) | — | — | — | — | (992.2 | ) | (26.5 | ) |
(a) | Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. |
(b) | Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the nine months ended September 30, 2014 (dollars in millions): |
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | 47.7 | $ | (2.8 | ) | $ | — | $ | — | $ | 44.9 | ||||||||
Asset-backed securities | 11.8 | (2.9 | ) | — | — | 8.9 | |||||||||||||
Commercial mortgage-backed securities | 1.1 | — | — | — | 1.1 | ||||||||||||||
Mortgage pass-through securities | 1.1 | (1.6 | ) | — | — | (.5 | ) | ||||||||||||
Collateralized mortgage obligations | — | (.1 | ) | — | — | (.1 | ) | ||||||||||||
Total fixed maturities, available for sale | 61.7 | (7.4 | ) | — | — | 54.3 | |||||||||||||
Equity securities - corporate securities | 2.6 | — | — | — | 2.6 | ||||||||||||||
Trading securities - commercial mortgage-backed securities | 29.1 | — | — | — | 29.1 | ||||||||||||||
Investments held by variable interest entities - corporate securities | 3.0 | — | — | — | 3.0 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | (86.9 | ) | 7.5 | (25.1 | ) | 42.5 | (62.0 | ) | |||||||||||
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement | — | 3.4 | (1.6 | ) | — | 1.8 | |||||||||||||
Total liabilities for insurance products | (86.9 | ) | 10.9 | (26.7 | ) | 42.5 | (60.2 | ) |
September 30, 2013 | |||||||||||||||||||||||||||||||
Beginning balance as of June 30, 2013 | Purchases, sales, issuances and settlements, net (b) | 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 September 30, 2013 | Amount of total gains (losses) for the three months ended September 30, 2013 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 | $ | 393.1 | $ | (2.1 | ) | $ | — | $ | 1.4 | $ | 12.9 | $ | (48.0 | ) | $ | 357.3 | $ | — | |||||||||||||
Asset-backed securities | 45.4 | (7.2 | ) | — | .3 | — | (2.0 | ) | 36.5 | — | |||||||||||||||||||||
Collateralized debt obligations | 287.6 | (18.0 | ) | — | .6 | — | (10.1 | ) | 260.1 | — | |||||||||||||||||||||
Commercial mortgage-backed securities | 3.3 | — | — | — | — | (3.3 | ) | — | — | ||||||||||||||||||||||
Mortgage pass-through securities | 1.8 | (.1 | ) | — | — | — | — | 1.7 | — | ||||||||||||||||||||||
Collateralized mortgage obligations | .1 | — | — | — | — | — | .1 | — | |||||||||||||||||||||||
Total fixed maturities, available for sale | 731.3 | (27.4 | ) | — | 2.3 | 12.9 | (63.4 | ) | 655.7 | — | |||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||||
Corporate securities | .1 | .7 | — | — | 23.0 | — | 23.8 | — | |||||||||||||||||||||||
Venture capital investments | 3.1 | — | — | .2 | — | — | 3.3 | — | |||||||||||||||||||||||
Total equity securities | 3.2 | .7 | — | .2 | 23.0 | — | 27.1 | — | |||||||||||||||||||||||
Trading securities: | |||||||||||||||||||||||||||||||
Asset-backed securities | — | — | — | .6 | 25.7 | — | 26.3 | .6 | |||||||||||||||||||||||
Collateralized mortgage obligations | 10.4 | — | — | — | — | (4.8 | ) | 5.6 | — | ||||||||||||||||||||||
Total trading securities | 10.4 | — | — | .6 | 25.7 | (4.8 | ) | 31.9 | .6 | ||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | (796.3 | ) | (45.2 | ) | (1.4 | ) | — | — | — | (842.9 | ) | (1.4 | ) | ||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement | (2.6 | ) | .5 | — | — | — | — | (2.1 | ) | — | |||||||||||||||||||||
Total liabilities for insurance products | (798.9 | ) | (44.7 | ) | (1.4 | ) | — | — | — | (845.0 | ) | (1.4 | ) |
(a) | Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. |
(b) | Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the three months ended September 30, 2013 (dollars in millions): |
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | — | $ | (2.1 | ) | $ | — | $ | — | $ | (2.1 | ) | |||||||
Asset-backed securities | — | (7.2 | ) | — | — | (7.2 | ) | ||||||||||||
Collateralized debt obligations | 5.9 | (23.9 | ) | — | — | (18.0 | ) | ||||||||||||
Mortgage pass-through securities | — | (.1 | ) | — | — | (.1 | ) | ||||||||||||
Total fixed maturities, available for sale | 5.9 | (33.3 | ) | — | — | (27.4 | ) | ||||||||||||
Equity securities - corporate securities | .7 | — | — | — | .7 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | (25.4 | ) | — | (30.0 | ) | 10.2 | (45.2 | ) | |||||||||||
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement | — | .5 | — | — | .5 | ||||||||||||||
Total liabilities for insurance products | (25.4 | ) | .5 | (30.0 | ) | 10.2 | (44.7 | ) |
September 30, 2013 | |||||||||||||||||||||||||||||||
Beginning balance as of December 31, 2012 | Purchases, sales, issuances and settlements, net (b) | 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 September 30, 2013 | Amount of total gains (losses) for the nine months ended September 30, 2013 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 | $ | 355.5 | $ | 14.0 | $ | (.3 | ) | $ | (12.8 | ) | $ | 13.2 | $ | (12.3 | ) | $ | 357.3 | $ | — | ||||||||||||
States and political subdivisions | 13.1 | — | — | — | — | (13.1 | ) | — | — | ||||||||||||||||||||||
Asset-backed securities | 44.0 | (4.5 | ) | .1 | (3.1 | ) | — | — | 36.5 | — | |||||||||||||||||||||
Collateralized debt obligations | 324.0 | (70.5 | ) | .1 | 6.5 | — | — | 260.1 | — | ||||||||||||||||||||||
Commercial mortgage-backed securities | 6.2 | — | — | — | — | (6.2 | ) | — | — | ||||||||||||||||||||||
Mortgage pass-through securities | 1.9 | (.2 | ) | — | — | — | — | 1.7 | — | ||||||||||||||||||||||
Collateralized mortgage obligations | 16.9 | (.1 | ) | — | — | — | (16.7 | ) | .1 | — | |||||||||||||||||||||
Total fixed maturities, available for sale | 761.6 | (61.3 | ) | (.1 | ) | (9.4 | ) | 13.2 | (48.3 | ) | 655.7 | — | |||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||||
Corporate securities | .1 | 34.7 | — | (11.0 | ) | — | — | 23.8 | — | ||||||||||||||||||||||
Venture capital investments | 2.8 | — | — | .5 | — | — | 3.3 | — | |||||||||||||||||||||||
Total equity securities | 2.9 | 34.7 | — | (10.5 | ) | — | — | 27.1 | — | ||||||||||||||||||||||
Trading securities: | |||||||||||||||||||||||||||||||
States and political subdivisions | .6 | — | — | — | — | (.6 | ) | — | — | ||||||||||||||||||||||
Asset-backed securities | — | — | — | (.4 | ) | 26.7 | — | 26.3 | (.4 | ) | |||||||||||||||||||||
Collateralized debt obligations | 7.3 | (7.7 | ) | .6 | (.2 | ) | — | — | — | (.2 | ) | ||||||||||||||||||||
Collateralized mortgage obligations | 5.8 | — | — | (.2 | ) | — | — | 5.6 | (.2 | ) | |||||||||||||||||||||
Total trading securities | 13.7 | (7.7 | ) | .6 | (.8 | ) | 26.7 | (.6 | ) | 31.9 | (.8 | ) | |||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | (734.0 | ) | (141.0 | ) | 32.1 | — | — | — | (842.9 | ) | 32.1 | ||||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement | (5.5 | ) | 3.4 | — | — | — | — | (2.1 | ) | — | |||||||||||||||||||||
Total liabilities for insurance products | (739.5 | ) | (137.6 | ) | 32.1 | — | — | — | (845.0 | ) | 32.1 |
(a) | Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. |
(b) | Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the nine months ended September 30, 2013 (dollars in millions): |
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | 24.0 | $ | (10.0 | ) | $ | — | $ | — | $ | 14.0 | ||||||||
Asset-backed securities | 7.6 | (12.1 | ) | — | — | (4.5 | ) | ||||||||||||
Collateralized debt obligations | 6.0 | (76.5 | ) | — | — | (70.5 | ) | ||||||||||||
Mortgage pass-through securities | — | (.2 | ) | — | — | (.2 | ) | ||||||||||||
Collateralized mortgage obligations | — | (.1 | ) | — | — | (.1 | ) | ||||||||||||
Total fixed maturities, available for sale | 37.6 | (98.9 | ) | — | — | (61.3 | ) | ||||||||||||
Equity securities - corporate securities | 34.7 | — | — | — | 34.7 | ||||||||||||||
Trading securities - collateralized debt obligations | — | (7.7 | ) | — | — | (7.7 | ) | ||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | (78.2 | ) | 1.4 | (94.2 | ) | 30.0 | (141.0 | ) | |||||||||||
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement | — | 3.4 | — | — | 3.4 | ||||||||||||||
Total liabilities for insurance products | (78.2 | ) | 4.8 | (94.2 | ) | 30.0 | (137.6 | ) |
Fair value at September 30, 2014 | Valuation technique(s) | Unobservable inputs | Range (weighted average) | ||||||
Assets: | |||||||||
Corporate securities (a) | $ | 262.9 | Discounted cash flow analysis | Discount margins | 1.55% - 5.11% (2.43%) | ||||
Asset-backed securities (b) | 29.3 | Discounted cash flow analysis | Discount margins | 2.03% - 4.15% (2.94%) | |||||
Equity security (c) | 27.1 | Market approach | Projected cash flows | Not applicable | |||||
Other assets categorized as Level 3 (d) | 145.8 | Unadjusted third-party price source | Not applicable | Not applicable | |||||
Total | 465.1 | ||||||||
Liabilities: | |||||||||
Interest-sensitive products (e) | 992.2 | Discounted projected embedded derivatives | Projected portfolio yields | 5.35% - 6.63% (5.60%) | |||||
Discount rates | 0.00 - 3.42% (2.03%) | ||||||||
Surrender rates | 2.80% - 54.60% (14.39%) |
(a) | Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. |
(b) | Asset-backed securities - The significant unobservable input used in the fair value measurement of these asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. |
(c) | Equity security - This equity security represents an investment in a company that is constructing a manufacturing facility. The significant unobservable input is the cash flows that will be generated upon completion of the manufacturing facility. Given the nature of this investment, the best current indicator of value is the cost basis of the investment, which we believe approximates market value. |
(d) | Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources. |
(e) | Interest-sensitive products - The significant unobservable inputs used in the fair value measurement of our interest-sensitive products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative. |
Fair value at December 31, 2013 | Valuation technique(s) | Unobservable inputs | Range (weighted average) | ||||||
Assets: | |||||||||
Corporate securities (a) | $ | 260.3 | Discounted cash flow analysis | Discount margins | 1.65% - 2.90% (2.36%) | ||||
Asset-backed securities (b) | 35.1 | Discounted cash flow analysis | Discount margins | 2.03% - 4.20% (3.09%) | |||||
Collateralized debt obligations (c) | 240.7 | Discounted cash flow analysis | Recoveries | 64% - 67% (65.8%) | |||||
Constant prepayment rate | 20% | ||||||||
Discount margins | .95% - 2.00% (1.32%) | ||||||||
Annual default rate | 1.14% - 5.57% (3.05%) | ||||||||
Portfolio CCC % | 1.52% - 21.79% (12.57%) | ||||||||
Equity security (d) | 24.5 | Market approach | Projected cash flows | Not applicable | |||||
Other assets categorized as Level 3 (e) | 114.0 | Unadjusted third-party price source | Not applicable | Not applicable | |||||
Total | 674.6 | ||||||||
Liabilities: | |||||||||
Interest-sensitive products (f) | 905.5 | Discounted projected embedded derivatives | Projected portfolio yields | 5.35% - 6.63% (5.60%) | |||||
Discount rates | 0.00 - 4.64% (2.47%) | ||||||||
Surrender rates | 2.80% - 54.60% (14.39%) |
(a) | Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. |
(b) | Asset-backed securities - The significant unobservable input used in the fair value measurement of these asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. |
(c) | Collateralized debt obligations - The significant unobservable inputs used in the fair value measurement of our collateralized debt obligations relate to collateral performance, including default rate, recoveries and constant prepayment rate, as well as discount margins of the underlying collateral. Significant increases (decreases) in default rate in isolation would result in a significantly lower (higher) fair value measurement. Generally, a significant increase (decrease) in the constant prepayment rate and recoveries in isolation would result in a significantly higher (lower) fair value measurement. Generally a significant increase (decrease) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the annual default rate is accompanied by a directionally similar change in the assumption used for discount margins and portfolio CCC % and a directionally opposite change in the assumption used for constant prepayment rate and recoveries. A tranche's payment priority and investment cost basis could alter generalized fair value outcomes. |
(d) | Equity security - This equity security represents an investment in a company that is constructing a manufacturing facility. The significant unobservable input is the cash flows that will be generated upon completion of the manufacturing facility. Given the nature of this investment, the best current indicator of value is the cost basis of the investment, which we believe approximates market value. |
(e) | Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources. |
(f) | Interest-sensitive products - The significant unobservable inputs used in the fair value measurement of our interest-sensitive products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative. |
|
• | Level 1 – includes assets and liabilities valued using inputs that are unadjusted quoted prices in active markets for identical assets or liabilities. Our Level 1 assets primarily include cash and 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 consider various inputs such as credit rating, maturity, corporate credit spreads, reported trades and other inputs that are observable or derived from observable information in the marketplace or are supported by transactions executed in the marketplace. Financial assets in this category primarily include: certain publicly registered and privately placed corporate fixed maturity securities; certain government or agency securities; certain mortgage and asset-backed securities; certain equity securities; most investments held by our consolidated VIEs; certain mutual fund and hedge fund investments; most short-term investments; and non-exchange-traded derivatives such as call options. Financial liabilities in this category include investment borrowings, notes payable and borrowings related to VIEs. |
• | 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 broker/dealer quotes, pricing services or internally developed models or methodologies utilizing significant inputs not based on, or corroborated by, readily available market information. Financial assets in this category include certain corporate securities (primarily certain below-investment grade privately placed securities), certain structured securities, mortgage loans, and other less liquid securities. Financial liabilities in this category include our insurance liabilities for interest-sensitive products, which includes embedded derivatives (including embedded derivatives related to our fixed index annuity products and to a modified coinsurance arrangement) since their values include significant unobservable inputs including actuarial assumptions. |
|
Net cash proceeds | $ | 222.0 | ||
Net assets being sold: | ||||
Investments | 3,863.8 | |||
Cash and cash equivalents | 164.7 | |||
Accrued investment income | 42.7 | |||
Present value of future profits | 15.5 | |||
Deferred acquisition costs | 37.6 | |||
Reinsurance receivables | 307.4 | |||
Income tax assets, net | 84.4 | |||
Other assets | 2.8 | |||
Liabilities for insurance products | (3,201.3 | ) | ||
Other liabilities | (199.1 | ) | ||
Investment borrowings | (383.4 | ) | ||
Accumulated other comprehensive income | (240.5 | ) | ||
Net assets being sold | 494.6 | |||
Loss before taxes | (272.6 | ) | ||
Tax expense related to tax gain on sale | 21.6 | |||
Previously unrecognized tax benefit now recognized as a result of the gain | (7.4 | ) | ||
Valuation allowance release related to the gain | (14.2 | ) | ||
Valuation allowance increase related to the decrease in projected future taxable income | 19.4 | |||
Net loss | $ | (292.0 | ) |
|
September 30, 2014 | December 31, 2013 | |||||||
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized | $ | 5.9 | $ | 6.5 | ||||
Net unrealized gains on all other investments | 2,028.7 | 1,322.6 | (b) | |||||
Adjustment to present value of future profits (a) | (151.9 | ) | (47.7 | ) | ||||
Adjustment to deferred acquisition costs | (380.7 | ) | (137.0 | ) | ||||
Adjustment to insurance liabilities | (160.9 | ) | — | |||||
Unrecognized net loss related to deferred compensation plan | (6.1 | ) | (7.1 | ) | ||||
Deferred income tax liabilities | (475.7 | ) | (405.5 | ) | ||||
Accumulated other comprehensive income | $ | 859.3 | $ | 731.8 |
(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 Conseco, Inc., an Indiana corporation (our "Predecessor"), emerged from bankruptcy. |
(b) | At December 31, 2013, net unrealized gains on all other investments included $226.2 million related to CLIC which was treated as held for sale effective January 1, 2014 and ultimately sold on July 1, 2014. The unrealized gains (losses) presented as a component of accumulated other comprehensive income for the nine months ended September 30, 2014 were reduced by $226.2 million for the unrealized gains on CLIC's portfolio as of January 1, 2014. |
Amortized cost | Gross unrealized gains | Gross unrealized losses | Estimated fair value | Other-than-temporary impairments included in accumulated other comprehensive income | |||||||||||||||
Corporate securities | $ | 12,378.0 | $ | 1,593.3 | $ | (44.1 | ) | $ | 13,927.2 | $ | — | ||||||||
United States Treasury securities and obligations of United States government corporations and agencies | 137.5 | 14.3 | (.3 | ) | 151.5 | — | |||||||||||||
States and political subdivisions | 1,977.4 | 232.1 | (5.2 | ) | 2,204.3 | — | |||||||||||||
Debt securities issued by foreign governments | 1.8 | — | — | 1.8 | — | ||||||||||||||
Asset-backed securities | 1,228.4 | 83.7 | (3.1 | ) | 1,309.0 | — | |||||||||||||
Collateralized debt obligations | 323.7 | 3.9 | (.7 | ) | 326.9 | — | |||||||||||||
Commercial mortgage-backed securities | 1,210.3 | 78.7 | (.6 | ) | 1,288.4 | — | |||||||||||||
Mortgage pass-through securities | 7.7 | .4 | — | 8.1 | — | ||||||||||||||
Collateralized mortgage obligations | 1,305.2 | 89.5 | (1.4 | ) | 1,393.3 | (3.3 | ) | ||||||||||||
Total fixed maturities, available for sale | $ | 18,570.0 | $ | 2,095.9 | $ | (55.4 | ) | $ | 20,610.5 | $ | (3.3 | ) | |||||||
Equity securities | $ | 360.8 | $ | 13.0 | $ | (1.0 | ) | $ | 372.8 |
Amortized cost | Estimated fair value | ||||||
(Dollars in millions) | |||||||
Due in one year or less | $ | 210.9 | $ | 216.3 | |||
Due after one year through five years | 1,829.0 | 2,017.4 | |||||
Due after five years through ten years | 2,847.4 | 3,077.5 | |||||
Due after ten years | 9,607.4 | 10,973.6 | |||||
Subtotal | 14,494.7 | 16,284.8 | |||||
Structured securities | 4,075.3 | 4,325.7 | |||||
Total fixed maturities, available for sale | $ | 18,570.0 | $ | 20,610.5 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||
Gross realized gains on sale | $ | 8.3 | $ | 12.9 | $ | 54.7 | $ | 40.3 | |||||||
Gross realized losses on sale | (2.6 | ) | (6.4 | ) | (11.1 | ) | (9.8 | ) | |||||||
Impairments: | |||||||||||||||
Total other-than-temporary impairment losses | — | (1.6 | ) | — | (1.6 | ) | |||||||||
Other-than-temporary impairment losses recognized in accumulated other comprehensive income | — | — | — | — | |||||||||||
Net impairment losses recognized | — | (1.6 | ) | — | (1.6 | ) | |||||||||
Net realized investment gains from fixed maturities | 5.7 | 4.9 | 43.6 | 28.9 | |||||||||||
Equity securities | 1.9 | — | 9.8 | — | |||||||||||
Commercial mortgage loans | (1.2 | ) | (1.7 | ) | (.1 | ) | (1.0 | ) | |||||||
Impairments of mortgage loans and other investments | (2.8 | ) | (1.3 | ) | (14.7 | ) | (1.9 | ) | |||||||
Other | .4 | (2.0 | ) | 1.2 | (7.6 | ) | |||||||||
Net realized investment gains (losses) | $ | 4.0 | $ | (.1 | ) | $ | 39.8 | $ | 18.4 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Credit losses on fixed maturity securities, available for sale, beginning of period | $ | (1.2 | ) | $ | (1.5 | ) | $ | (1.3 | ) | $ | (1.6 | ) | |||
Add: credit losses on other-than-temporary impairments not previously recognized | — | — | — | — | |||||||||||
Less: credit losses on securities sold | .1 | .1 | .2 | .2 | |||||||||||
Less: credit losses on securities impaired due to intent to sell (a) | — | — | — | — | |||||||||||
Add: credit losses on previously impaired securities | — | — | — | — | |||||||||||
Less: increases in cash flows expected on previously impaired securities | — | — | — | — | |||||||||||
Credit losses on fixed maturity securities, available for sale, end of period | $ | (1.1 | ) | $ | (1.4 | ) | $ | (1.1 | ) | $ | (1.4 | ) |
(a) | Represents securities for which the amount previously recognized in accumulated other comprehensive income 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. |
Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
Description of securities | Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | ||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | $ | 1.0 | $ | — | $ | 18.3 | $ | (.3 | ) | $ | 19.3 | $ | (.3 | ) | ||||||||||
States and political subdivisions | 66.1 | (1.0 | ) | 90.6 | (4.2 | ) | 156.7 | (5.2 | ) | |||||||||||||||
Corporate securities | 871.1 | (20.7 | ) | 311.7 | (23.4 | ) | 1,182.8 | (44.1 | ) | |||||||||||||||
Asset-backed securities | 116.7 | (1.1 | ) | 69.5 | (2.0 | ) | 186.2 | (3.1 | ) | |||||||||||||||
Collateralized debt obligations | 91.2 | (.7 | ) | — | — | 91.2 | (.7 | ) | ||||||||||||||||
Commercial mortgage-backed securities | 35.9 | (.2 | ) | 19.1 | (.4 | ) | 55.0 | (.6 | ) | |||||||||||||||
Mortgage pass-through securities | .9 | — | .8 | — | 1.7 | — | ||||||||||||||||||
Collateralized mortgage obligations | 113.6 | (1.2 | ) | 10.2 | (.2 | ) | 123.8 | (1.4 | ) | |||||||||||||||
Total fixed maturities, available for sale | $ | 1,296.5 | $ | (24.9 | ) | $ | 520.2 | $ | (30.5 | ) | $ | 1,816.7 | $ | (55.4 | ) | |||||||||
Equity securities | $ | 128.3 | $ | (1.0 | ) | $ | .5 | $ | — | $ | 128.8 | $ | (1.0 | ) |
Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
Description of securities | Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | ||||||||||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | $ | 23.8 | $ | (.6 | ) | $ | — | $ | — | $ | 23.8 | $ | (.6 | ) | ||||||||||
States and political subdivisions | 473.6 | (30.3 | ) | 79.2 | (8.7 | ) | 552.8 | (39.0 | ) | |||||||||||||||
Corporate securities | 2,432.4 | (137.7 | ) | 170.3 | (20.8 | ) | 2,602.7 | (158.5 | ) | |||||||||||||||
Asset-backed securities | 308.4 | (6.5 | ) | 32.5 | (.7 | ) | 340.9 | (7.2 | ) | |||||||||||||||
Collateralized debt obligations | 46.7 | (.5 | ) | — | — | 46.7 | (.5 | ) | ||||||||||||||||
Commercial mortgage-backed securities | 161.8 | (5.8 | ) | — | — | 161.8 | (5.8 | ) | ||||||||||||||||
Mortgage pass-through securities | 1.6 | — | 1.6 | — | 3.2 | — | ||||||||||||||||||
Collateralized mortgage obligations | 121.8 | (1.6 | ) | 2.2 | — | 124.0 | (1.6 | ) | ||||||||||||||||
Total fixed maturities, available for sale | $ | 3,570.1 | $ | (183.0 | ) | $ | 285.8 | $ | (30.2 | ) | $ | 3,855.9 | $ | (213.2 | ) | |||||||||
Equity securities | $ | .5 | $ | — | $ | — | $ | — | $ | .5 | $ | — |
|
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income (loss) for basic earnings per share | $ | 117.4 | $ | 283.0 | $ | (32.5 | ) | $ | 372.0 | ||||||
Add: interest expense on 7.0% Senior Debentures due 2016 (the "7.0% Debentures"), net of income taxes | — | — | — | 1.6 | |||||||||||
Net income (loss) for diluted earnings per share | $ | 117.4 | $ | 283.0 | $ | (32.5 | ) | $ | 373.6 | ||||||
Shares: | |||||||||||||||
Weighted average shares outstanding for basic earnings per share | 210,525 | 222,876 | 215,790 | 221,819 | |||||||||||
Effect of dilutive securities on weighted average shares: | |||||||||||||||
7.0% Debentures | — | 839 | — | 7,707 | |||||||||||
Stock options, restricted stock and performance units | 2,447 | 2,858 | — | 2,699 | |||||||||||
Warrants (a) | 2,486 | 2,774 | — | 2,344 | |||||||||||
Dilutive potential common shares | 4,933 | 6,471 | — | 12,750 | |||||||||||
Weighted average shares outstanding for diluted earnings per share | 215,458 | 229,347 | 215,790 | 234,569 |
(a) | All outstanding warrants were repurchased in September 2014 as further discussed in the note to the consolidated financial statements entitled "Changes in Common Stock." Accordingly, the warrants will have no dilutive effect in periods beginning after September 30, 2014. |
|
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues: | |||||||||||||||
Bankers Life: | |||||||||||||||
Insurance policy income: | |||||||||||||||
Annuities | $ | 6.6 | $ | 5.6 | $ | 21.8 | $ | 22.1 | |||||||
Health | 319.4 | 323.3 | 970.4 | 990.0 | |||||||||||
Life | 90.4 | 78.5 | 248.6 | 232.4 | |||||||||||
Net investment income (a) | 231.2 | 235.4 | 703.2 | 723.7 | |||||||||||
Fee revenue and other income (a) | 7.0 | 5.8 | 18.1 | 13.5 | |||||||||||
Total Bankers Life revenues | 654.6 | 648.6 | 1,962.1 | 1,981.7 | |||||||||||
Washington National: | |||||||||||||||
Insurance policy income: | |||||||||||||||
Annuities | .9 | 6.5 | 3.3 | 9.7 | |||||||||||
Health | 147.1 | 147.0 | 444.8 | 438.2 | |||||||||||
Life | 6.0 | 5.7 | 18.2 | 17.3 | |||||||||||
Net investment income (a) | 65.2 | 72.9 | 206.0 | 220.6 | |||||||||||
Fee revenue and other income (a) | .3 | .3 | .7 | .7 | |||||||||||
Total Washington National revenues | 219.5 | 232.4 | 673.0 | 686.5 | |||||||||||
Colonial Penn: | |||||||||||||||
Insurance policy income: | |||||||||||||||
Health | .8 | 1.1 | 2.7 | 3.3 | |||||||||||
Life | 60.9 | 57.0 | 181.2 | 169.7 | |||||||||||
Net investment income (a) | 10.3 | 10.2 | 31.5 | 30.0 | |||||||||||
Fee revenue and other income (a) | .2 | .2 | .7 | .6 | |||||||||||
Total Colonial Penn revenues | 72.2 | 68.5 | 216.1 | 203.6 | |||||||||||
Other CNO Business: | |||||||||||||||
Insurance policy income - health | — | 5.9 | — | 18.2 | |||||||||||
Net investment income (a) | — | 8.0 | — | 24.8 | |||||||||||
Total Other CNO Business revenues | — | 13.9 | — | 43.0 | |||||||||||
Corporate operations: | |||||||||||||||
Net investment income | (1.0 | ) | 11.0 | 11.7 | 25.6 | ||||||||||
Fee and other income | 1.9 | 1.7 | 4.6 | 4.9 | |||||||||||
Total corporate revenues | 0.9 | 12.7 | 16.3 | 30.5 | |||||||||||
Total revenues | 947.2 | 976.1 | 2,867.5 | 2,945.3 |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Expenses: | |||||||||||||||
Bankers Life: | |||||||||||||||
Insurance policy benefits | $ | 394.9 | $ | 427.3 | $ | 1,237.8 | $ | 1,331.9 | |||||||
Amortization | 47.1 | 39.7 | 140.7 | 139.9 | |||||||||||
Interest expense on investment borrowings | 2.0 | 1.8 | 5.8 | 4.9 | |||||||||||
Other operating costs and expenses | 98.8 | 93.5 | 294.4 | 277.5 | |||||||||||
Total Bankers Life expenses | 542.8 | 562.3 | 1,678.7 | 1,754.2 | |||||||||||
Washington National: | |||||||||||||||
Insurance policy benefits | 129.5 | 141.6 | 394.1 | 409.6 | |||||||||||
Amortization | 14.8 | 14.4 | 47.1 | 47.7 | |||||||||||
Interest expense on investment borrowings | .4 | .5 | 1.3 | 1.5 | |||||||||||
Other operating costs and expenses | 47.2 | 42.9 | 139.5 | 124.9 | |||||||||||
Total Washington National expenses | 191.9 | 199.4 | 582.0 | 583.7 | |||||||||||
Colonial Penn: | |||||||||||||||
Insurance policy benefits | 41.1 | 39.8 | 129.0 | 124.0 | |||||||||||
Amortization | 3.7 | 3.7 | 11.5 | 11.1 | |||||||||||
Other operating costs and expenses | 27.0 | 29.2 | 77.6 | 76.9 | |||||||||||
Total Colonial Penn expenses | 71.8 | 72.7 | 218.1 | 212.0 | |||||||||||
Other CNO Business: | |||||||||||||||
Insurance policy benefits | — | 13.5 | — | 44.4 | |||||||||||
Other operating costs and expenses | — | 6.1 | — | 18.8 | |||||||||||
Total Other CNO Business expenses | — | 19.6 | — | 63.2 | |||||||||||
Corporate operations: | |||||||||||||||
Interest expense on corporate debt | 10.9 | 11.7 | 33.1 | 39.9 | |||||||||||
Interest expense on investment borrowings | — | — | — | .1 | |||||||||||
Other operating costs and expenses | 10.0 | 3.3 | 46.9 | 15.6 | |||||||||||
Total corporate expenses | 20.9 | 15.0 | 80.0 | 55.6 | |||||||||||
Total expenses | 827.4 | 869.0 | 2,558.8 | 2,668.7 | |||||||||||
Pre-tax operating earnings by segment: | |||||||||||||||
Bankers Life | 111.8 | 86.3 | 283.4 | 227.5 | |||||||||||
Washington National | 27.6 | 33.0 | 91.0 | 102.8 | |||||||||||
Colonial Penn | .4 | (4.2 | ) | (2.0 | ) | (8.4 | ) | ||||||||
Other CNO Business | — | (5.7 | ) | — | (20.2 | ) | |||||||||
Corporate operations | (20.0 | ) | (2.3 | ) | (63.7 | ) | (25.1 | ) | |||||||
Pre-tax operating earnings | $ | 119.8 | $ | 107.1 | $ | 308.7 | $ | 276.6 |
(a) | It is not practicable to provide additional components of revenue by product or services. |
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Total segment revenues | $ | 947.2 | $ | 976.1 | $ | 2,867.5 | $ | 2,945.3 | |||||||
Net realized investment gains (losses) | 4.0 | (1.7 | ) | 37.0 | 13.1 | ||||||||||
Revenues related to certain non-strategic investments and earnings attributable to VIEs | 8.3 | 9.0 | 21.9 | 24.1 | |||||||||||
Fee revenue related to transition and support services agreements | 7.5 | — | 7.5 | — | |||||||||||
Revenues of CLIC prior to being sold | — | 110.4 | 210.8 | 335.4 | |||||||||||
Consolidated revenues | 967.0 | 1,093.8 | 3,144.7 | 3,317.9 | |||||||||||
Total segment expenses | 827.4 | 869.0 | 2,558.8 | 2,668.7 | |||||||||||
Insurance policy benefits - fair value changes in embedded derivative liabilities | — | (4.9 | ) | 25.3 | (37.0 | ) | |||||||||
Amortization related to fair value changes in embedded derivative liabilities | .1 | 1.5 | (6.8 | ) | 13.0 | ||||||||||
Amortization related to net realized investment gains | .1 | .1 | .6 | 1.3 | |||||||||||
Expenses related to certain non-strategic investments and earnings attributable to VIEs | 10.9 | 11.8 | 30.7 | 31.7 | |||||||||||
Loss on extinguishment or modification of debt | — | — | .6 | 65.4 | |||||||||||
Net loss on sale of CLIC and gain on reinsurance transactions | (32.1 | ) | — | 242.7 | — | ||||||||||
Expenses related to transition and support services agreements | 6.2 | — | 6.2 | — | |||||||||||
Expenses of CLIC prior to being sold | — | 101.9 | 187.4 | 311.1 | |||||||||||
Consolidated expenses | 812.6 | 979.4 | 3,045.5 | 3,054.2 | |||||||||||
Income before tax | 154.4 | 114.4 | 99.2 | 263.7 | |||||||||||
Income tax expense: | |||||||||||||||
Tax expense on period income | 53.8 | 38.1 | 133.1 | 113.9 | |||||||||||
Valuation allowance for deferred tax assets and other tax items | (16.8 | ) | (206.7 | ) | (1.4 | ) | (222.2 | ) | |||||||
Net income (loss) | $ | 117.4 | $ | 283.0 | $ | (32.5 | ) | $ | 372.0 |
|
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Current tax expense | $ | 5.4 | $ | 3.4 | $ | 11.5 | $ | 8.8 | |||||||
Deferred tax expense | 48.4 | 34.7 | 121.6 | 106.5 | |||||||||||
Valuation allowance applicable to current year income | (3.0 | ) | (9.8 | ) | (3.0 | ) | (9.8 | ) | |||||||
Income tax expense calculated based on estimated annual effective tax rate | 50.8 | 28.3 | 130.1 | 105.5 | |||||||||||
Income tax expense (benefit) on discrete items: | |||||||||||||||
Related to the sale of CLIC: | |||||||||||||||
Tax expense related to tax gain on sale | — | — | 21.6 | — | |||||||||||
Previously unrecognized tax benefit recognized as a result of the gain | — | — | (7.4 | ) | — | ||||||||||
Valuation allowance release related to the gain | — | — | (14.2 | ) | — | ||||||||||
Valuation allowance increase related to the decrease in projected future taxable income | — | — | 19.4 | — | |||||||||||
Valuation allowance reduction resulting from the realization of capital gains and utilization of loss carryforwards | (.4 | ) | (118.0 | ) | (4.4 | ) | (133.5 | ) | |||||||
Valuation allowance reduction applicable to the settlement with the IRS regarding the classification of a portion of the cancellation of indebtedness income | — | (71.8 | ) | — | (71.8 | ) | |||||||||
Valuation allowance reduction related to the increase in projected future taxable income | (12.6 | ) | — | (12.6 | ) | — | |||||||||
Deferred tax benefit related to loss on extinguishment or modification of debt | — | — | — | (1.4 | ) | ||||||||||
Other items | (.8 | ) | (7.1 | ) | (.8 | ) | (7.1 | ) | |||||||
Total income tax expense | $ | 37.0 | $ | (168.6 | ) | $ | 131.7 | $ | (108.3 | ) |
Nine months ended | |||||
September 30, | |||||
2014 | 2013 | ||||
U.S. statutory corporate rate | 35.0 | % | 35.0 | % | |
Valuation allowance | (.7 | ) | (3.5 | ) | |
Non-taxable income and nondeductible benefits, net | (.8 | ) | (.9 | ) | |
State taxes | 1.5 | 1.4 | |||
Estimated annual effective tax rate | 35.0 | % | 32.0 | % |
September 30, 2014 | December 31, 2013 | ||||||
Deferred tax assets: | |||||||
Net federal operating loss carryforwards | $ | 1,097.6 | $ | 1,240.2 | |||
Net state operating loss carryforwards | 17.2 | 20.0 | |||||
Tax credits | 44.2 | 43.9 | |||||
Capital loss carryforwards | — | 13.4 | |||||
Deductible temporary differences: | |||||||
Investments | 62.3 | 74.3 | |||||
Insurance liabilities | 566.5 | 723.8 | |||||
Other | 56.2 | 64.7 | |||||
Gross deferred tax assets | 1,844.0 | 2,180.3 | |||||
Deferred tax liabilities: | |||||||
Present value of future profits and deferred acquisition costs | (319.1 | ) | (306.8 | ) | |||
Accumulated other comprehensive income | (475.7 | ) | (405.5 | ) | |||
Gross deferred tax liabilities | (794.8 | ) | (712.3 | ) | |||
Net deferred tax assets before valuation allowance | 1,049.2 | 1,468.0 | |||||
Valuation allowance | (280.0 | ) | (294.8 | ) | |||
Net deferred tax assets | 769.2 | 1,173.2 | |||||
Current income taxes accrued | (38.1 | ) | (26.0 | ) | |||
Income tax assets, net | $ | 731.1 | $ | 1,147.2 |
Year of expiration | Net operating loss carryforwards | Total loss | ||||||||||
Life | Non-life | carryforwards | ||||||||||
2018 | $ | 47.3 | $ | — | $ | 47.3 | ||||||
2021 | 30.0 | — | 30.0 | |||||||||
2022 | 152.0 | — | 152.0 | |||||||||
2023 | 742.6 | 2,073.3 | 2,815.9 | |||||||||
2025 | — | 115.5 | 115.5 | |||||||||
2027 | — | 202.6 | 202.6 | |||||||||
2028 | — | 67.3 | 67.3 | |||||||||
2029 | — | 205.5 | 205.5 | |||||||||
2032 | — | 44.0 | 44.0 | |||||||||
Subtotal | 971.9 | 2,708.2 | 3,680.1 | |||||||||
Less: | ||||||||||||
Unrecognized tax benefits | (342.9 | ) | (201.2 | ) | (544.1 | ) | ||||||
Total | $ | 629.0 | $ | 2,507.0 | $ | 3,136.0 |
|
September 30, 2014 | December 31, 2013 | ||||||
Senior Secured Credit Agreement (as defined below) | $ | 541.9 | $ | 581.5 | |||
6.375% Senior Secured Notes due October 2020 (the "6.375% Notes") | 275.0 | 275.0 | |||||
7.0% Debentures | — | 3.5 | |||||
Unamortized discount on Senior Secured Credit Agreement | (2.9 | ) | (3.6 | ) | |||
Direct corporate obligations | $ | 814.0 | $ | 856.4 |
Year ending September 30, | |||
2015 | $ | 79.2 | |
2016 | 79.2 | ||
2017 | 4.3 | ||
2018 | 379.2 | ||
2019 | — | ||
Thereafter | 275.0 | ||
$ | 816.9 |
|
Amount | Maturity | Interest rate at | ||||
borrowed | date | September 30, 2014 | ||||
$ | 50.0 | October 2015 | Variable rate – 0.504% | |||
100.0 | June 2016 | Variable rate – 0.595% | ||||
75.0 | June 2016 | Variable rate – 0.393% | ||||
100.0 | October 2016 | Variable rate – 0.412% | ||||
50.0 | November 2016 | Variable rate – 0.504% | ||||
50.0 | November 2016 | Variable rate – 0.624% | ||||
57.7 | June 2017 | Variable rate – 0.586% | ||||
50.0 | August 2017 | Variable rate – 0.434% | ||||
75.0 | August 2017 | Variable rate – 0.385% | ||||
100.0 | October 2017 | Variable rate – 0.666% | ||||
50.0 | November 2017 | Variable rate – 0.745% | ||||
50.0 | January 2018 | Variable rate – 0.584% | ||||
50.0 | January 2018 | Variable rate – 0.573% | ||||
50.0 | February 2018 | Variable rate – 0.547% | ||||
50.0 | February 2018 | Variable rate – 0.321% | ||||
22.0 | February 2018 | Variable rate – 0.568% | ||||
100.0 | May 2018 | Variable rate – 0.602% | ||||
50.0 | July 2018 | Variable rate – 0.705% | ||||
50.0 | August 2018 | Variable rate – 0.354% | ||||
50.0 | January 2019 | Variable rate – 0.653% | ||||
50.0 | February 2019 | Variable rate – 0.321% | ||||
100.0 | March 2019 | Variable rate – 0.634% | ||||
21.8 | July 2019 | Variable rate – 0.644% | ||||
21.8 | June 2020 | Fixed rate – 1.960% | ||||
28.3 | August 2021 | Fixed rate – 2.550% | ||||
26.9 | March 2023 | Fixed rate – 2.160% | ||||
20.5 | June 2025 | Fixed rate – 2.940% | ||||
$ | 1,499.0 |
|
Balance, December 31, 2013 | 220,324 | ||
Treasury stock purchased and retired | (14,118 | ) | |
Stock options exercised | 893 | ||
Restricted and performance stock vested | 541 | (a) | |
Balance, September 30, 2014 | 207,640 |
(a) | Such amount was reduced by 230 thousand shares which were tendered to the Company for the payment of required federal and state tax withholdings owed on the vesting of restricted and performance stock. |
|
Gross amounts not offset in the balance sheet | |||||||||||||||||||||||||
Gross amounts of recognized assets | Gross amounts offset in the balance sheet | Net amounts of assets presented in the balance sheet | Financial instruments | Cash collateral received | Net amount | ||||||||||||||||||||
September 30, 2014: | |||||||||||||||||||||||||
Call Options | $ | 98.3 | $ | — | $ | 98.3 | $ | — | $ | — | $ | 98.3 | |||||||||||||
December 31, 2013: | |||||||||||||||||||||||||
Call Options | 156.2 | — | 156.2 | — | — | 156.2 |
Gross amounts not offset in the balance sheet | |||||||||||||||||||||||||
Gross amounts of recognized liabilities | Gross amounts offset in the balance sheet | Net amounts of liabilities presented in the balance sheet | Financial instruments | Cash collateral pledged | Net amount | ||||||||||||||||||||
September 30, 2014: | |||||||||||||||||||||||||
Repurchase agreements (a) | $ | 20.4 | $ | — | $ | 20.4 | $ | — | $ | — | $ | 20.4 |
(a) | As of September 30, 2014, these agreements were collateralized by investment securities with a fair value of $25.5 million. There were no repurchase agreements outstanding at December 31, 2013. |
|
Nine months ended | |||||||
September 30, | |||||||
2014 | 2013 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | (32.5 | ) | $ | 372.0 | ||
Adjustments to reconcile net income to net cash from operating activities: | |||||||
Amortization and depreciation | 218.2 | 241.1 | |||||
Income taxes | 128.9 | (112.6 | ) | ||||
Insurance liabilities | 228.9 | 298.8 | |||||
Accrual and amortization of investment income | (112.3 | ) | (189.4 | ) | |||
Deferral of policy acquisition costs | (176.6 | ) | (161.8 | ) | |||
Net realized investment gains | (39.8 | ) | (18.4 | ) | |||
Payment to reinsurer pursuant to long-term care business reinsured | (590.3 | ) | — | ||||
Net loss on sale of CLIC and gain on reinsurance transactions | 242.7 | — | |||||
Loss on extinguishment or modification of debt | .6 | 65.4 | |||||
Other | 8.3 | (23.0 | ) | ||||
Net cash from operating activities | $ | (123.9 | ) | (a) | $ | 472.1 |
(a) | Cash flows from operating activities reflect outflows in the 2014 period due to the payment to reinsurer to transfer certain long-term care business. |
Investments | $ | 139.4 | (a) (b) | |
Cash | 7.7 | |||
Present value of future profits and deferred acquisition costs | 29.0 | (b) | ||
Reinsurance receivables | (155.9 | ) | (b) | |
Other liabilities | 5.9 | (b) | ||
Gain on reinsurance transaction (classified as "Net loss on sale of subsidiary and gain on reinsurance transactions") | 26.1 | |||
Income tax expense | 9.2 | |||
Gain on reinsurance transaction (net of income taxes) | $ | 16.9 |
Nine months ended | |||||||
September 30, | |||||||
2014 | 2013 | ||||||
Stock options, restricted stock and performance units | $ | 11.6 | $ | 10.8 |
|
September 30, 2014 | |||||||||||
VIEs | Eliminations | Net effect on consolidated balance sheet | |||||||||
Assets: | |||||||||||
Investments held by variable interest entities | $ | 1,343.0 | $ | — | $ | 1,343.0 | |||||
Notes receivable of VIEs held by insurance subsidiaries | — | (148.2 | ) | (148.2 | ) | ||||||
Cash and cash equivalents held by variable interest entities | 150.7 | — | 150.7 | ||||||||
Accrued investment income | 3.1 | — | 3.1 | ||||||||
Income tax assets, net | 12.9 | (2.3 | ) | 10.6 | |||||||
Other assets | 18.2 | (1.3 | ) | 16.9 | |||||||
Total assets | $ | 1,527.9 | $ | (151.8 | ) | $ | 1,376.1 | ||||
Liabilities: | |||||||||||
Other liabilities | $ | 104.5 | $ | (3.7 | ) | $ | 100.8 | ||||
Borrowings related to variable interest entities | 1,295.0 | — | 1,295.0 | ||||||||
Notes payable of VIEs held by insurance subsidiaries | 152.2 | (152.2 | ) | — | |||||||
Total liabilities | $ | 1,551.7 | $ | (155.9 | ) | $ | 1,395.8 |
December 31, 2013 | |||||||||||
VIEs | Eliminations | Net effect on consolidated balance sheet | |||||||||
Assets: | |||||||||||
Investments held by variable interest entities | $ | 1,046.7 | $ | — | $ | 1,046.7 | |||||
Notes receivable of VIEs held by insurance subsidiaries | — | (108.5 | ) | (108.5 | ) | ||||||
Cash and cash equivalents held by variable interest entities | 104.3 | — | 104.3 | ||||||||
Accrued investment income | 1.9 | — | 1.9 | ||||||||
Income tax assets, net | 5.4 | (2.5 | ) | 2.9 | |||||||
Other assets | 22.6 | (.9 | ) | 21.7 | |||||||
Total assets | $ | 1,180.9 | $ | (111.9 | ) | $ | 1,069.0 | ||||
Liabilities: | |||||||||||
Other liabilities | $ | 66.0 | $ | (4.0 | ) | $ | 62.0 | ||||
Borrowings related to variable interest entities | 1,012.3 | — | 1,012.3 | ||||||||
Notes payable of VIEs held by insurance subsidiaries | 112.5 | (112.5 | ) | — | |||||||
Total liabilities | $ | 1,190.8 | $ | (116.5 | ) | $ | 1,074.3 |
Amortized cost | Estimated fair value | ||||||
(Dollars in millions) | |||||||
Due after one year through five years | $ | 389.0 | $ | 385.5 | |||
Due after five years through ten years | 970.7 | 957.5 | |||||
Total | $ | 1,359.7 | $ | 1,343.0 |
|
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 | $ | — | $ | 13,592.4 | $ | 334.8 | $ | 13,927.2 | |||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 151.5 | — | 151.5 | |||||||||||
States and political subdivisions | — | 2,204.3 | — | 2,204.3 | |||||||||||
Debt securities issued by foreign governments | — | 1.8 | — | 1.8 | |||||||||||
Asset-backed securities | — | 1,246.7 | 62.3 | 1,309.0 | |||||||||||
Collateralized debt obligations | — | 326.9 | — | 326.9 | |||||||||||
Commercial mortgage-backed securities | — | 1,287.3 | 1.1 | 1,288.4 | |||||||||||
Mortgage pass-through securities | — | 7.0 | 1.1 | 8.1 | |||||||||||
Collateralized mortgage obligations | — | 1,393.2 | .1 | 1,393.3 | |||||||||||
Total fixed maturities, available for sale | — | 20,211.1 | 399.4 | 20,610.5 | |||||||||||
Equity securities - corporate securities | 172.7 | 173.0 | 27.1 | 372.8 | |||||||||||
Trading securities: | |||||||||||||||
Corporate securities | — | 24.0 | — | 24.0 | |||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 3.7 | — | 3.7 | |||||||||||
Asset-backed securities | — | 26.6 | — | 26.6 | |||||||||||
Commercial mortgage-backed securities | — | 119.7 | 28.7 | 148.4 | |||||||||||
Mortgage pass-through securities | — | .1 | — | .1 | |||||||||||
Collateralized mortgage obligations | — | 24.3 | 6.0 | 30.3 | |||||||||||
Equity securities | 1.9 | — | — | 1.9 | |||||||||||
Total trading securities | 1.9 | 198.4 | 34.7 | 235.0 | |||||||||||
Investments held by variable interest entities - corporate securities | — | 1,339.1 | 3.9 | 1,343.0 | |||||||||||
Other invested assets - derivatives | .9 | 98.3 | — | 99.2 | |||||||||||
Assets held in separate accounts | — | 6.9 | — | 6.9 | |||||||||||
Total assets carried at fair value by category | $ | 175.5 | $ | 22,026.8 | $ | 465.1 | $ | 22,667.4 | |||||||
Liabilities: | |||||||||||||||
Liabilities for insurance products: | |||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | $ | — | $ | — | $ | 992.2 | $ | 992.2 | |||||||
Total liabilities for insurance products | — | — | 992.2 | 992.2 | |||||||||||
Total liabilities carried at fair value by category | $ | — | $ | — | $ | 992.2 | $ | 992.2 |
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 | $ | — | $ | 15,340.1 | $ | 359.6 | $ | 15,699.7 | |||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 73.1 | — | 73.1 | |||||||||||
States and political subdivisions | — | 2,204.4 | — | 2,204.4 | |||||||||||
Asset-backed securities | — | 1,419.9 | 42.2 | 1,462.1 | |||||||||||
Collateralized debt obligations | — | 47.3 | 246.7 | 294.0 | |||||||||||
Commercial mortgage-backed securities | — | 1,609.0 | — | 1,609.0 | |||||||||||
Mortgage pass-through securities | — | 11.8 | 1.6 | 13.4 | |||||||||||
Collateralized mortgage obligations | — | 1,848.9 | — | 1,848.9 | |||||||||||
Total fixed maturities, available for sale | — | 22,554.5 | 650.1 | 23,204.6 | |||||||||||
Equity securities - corporate securities | 79.6 | 118.9 | 24.5 | 223.0 | |||||||||||
Trading securities: | |||||||||||||||
Corporate securities | — | 45.2 | — | 45.2 | |||||||||||
United States Treasury securities and obligations of United States government corporations and agencies | — | 4.6 | — | 4.6 | |||||||||||
States and political subdivisions | — | 14.1 | — | 14.1 | |||||||||||
Asset-backed securities | — | 24.3 | — | 24.3 | |||||||||||
Commercial mortgage-backed securities | — | 125.8 | — | 125.8 | |||||||||||
Mortgage pass-through securities | — | .1 | — | .1 | |||||||||||
Collateralized mortgage obligations | — | 31.1 | — | 31.1 | |||||||||||
Equity securities | 2.4 | — | — | 2.4 | |||||||||||
Total trading securities | 2.4 | 245.2 | — | 247.6 | |||||||||||
Investments held by variable interest entities - corporate securities | — | 1,046.7 | — | 1,046.7 | |||||||||||
Other invested assets - derivatives | .6 | 156.2 | — | 156.8 | |||||||||||
Assets held in separate accounts | — | 10.3 | — | 10.3 | |||||||||||
Total assets carried at fair value by category | $ | 82.6 | $ | 24,131.8 | $ | 674.6 | $ | 24,889.0 | |||||||
Liabilities: | |||||||||||||||
Liabilities for insurance products: | |||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | $ | — | $ | — | $ | 903.7 | $ | 903.7 | |||||||
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement | — | — | 1.8 | 1.8 | |||||||||||
Total liabilities for insurance products | — | — | 905.5 | 905.5 | |||||||||||
Total liabilities carried at fair value by category | $ | — | $ | — | $ | 905.5 | $ | 905.5 |
September 30, 2014 | |||||||||||||||||||
Quoted prices in active markets for identical assets or liabilities (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total estimated fair value | Total carrying amount | |||||||||||||||
Assets: | |||||||||||||||||||
Mortgage loans | $ | — | $ | — | $ | 1,675.5 | $ | 1,675.5 | $ | 1,621.8 | |||||||||
Policy loans | — | — | 106.2 | 106.2 | 106.2 | ||||||||||||||
Other invested assets: | |||||||||||||||||||
Company-owned life insurance | — | 146.2 | — | 146.2 | 146.2 | ||||||||||||||
Alternative investment funds | — | 84.7 | — | 84.7 | 84.7 | ||||||||||||||
Cash and cash equivalents: | |||||||||||||||||||
Unrestricted | 344.1 | 108.0 | — | 452.1 | 452.1 | ||||||||||||||
Held by variable interest entities | 150.7 | — | — | 150.7 | 150.7 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Policyholder account balances (a) | — | — | 10,659.2 | 10,659.2 | 10,659.2 | ||||||||||||||
Investment borrowings | — | 1,519.7 | — | 1,519.7 | 1,519.4 | ||||||||||||||
Borrowings related to variable interest entities | — | 941.7 | — | 941.7 | 1,295.0 | ||||||||||||||
Notes payable – direct corporate obligations | — | 828.7 | — | 828.7 | 814.0 |
December 31, 2013 | |||||||||||||||||||
Quoted prices in active markets for identical assets or liabilities (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total estimated fair value | Total carrying amount | |||||||||||||||
Assets: | |||||||||||||||||||
Mortgage loans | $ | — | $ | — | $ | 1,749.5 | $ | 1,749.5 | $ | 1,729.5 | |||||||||
Policy loans | — | — | 277.0 | 277.0 | 277.0 | ||||||||||||||
Other invested assets: | |||||||||||||||||||
Company-owned life insurance | — | 144.8 | — | 144.8 | 144.8 | ||||||||||||||
Alternative investment funds | — | 67.6 | — | 67.6 | 67.6 | ||||||||||||||
Cash and cash equivalents: | |||||||||||||||||||
Unrestricted | 457.8 | 241.2 | — | 699.0 | 699.0 | ||||||||||||||
Held by variable interest entities | 104.3 | — | — | 104.3 | 104.3 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Policyholder account balances (a) | — | — | 12,776.4 | 12,776.4 | 12,776.4 | ||||||||||||||
Investment borrowings | — | 1,948.5 | — | 1,948.5 | 1,900.0 | ||||||||||||||
Borrowings related to variable interest entities | — | 993.7 | — | 993.7 | 1,012.3 | ||||||||||||||
Notes payable – direct corporate obligations | — | 872.5 | — | 872.5 | 856.4 |
(a) | The estimated fair value of insurance liabilities for policyholder account balances was approximately equal to its carrying value at September 30, 2014 and December 31, 2013. 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. |
September 30, 2014 | ||||||||||||||||||||||||||||||||
Beginning balance as of June 30, 2014 | Purchases, sales, issuances and settlements, net (b) | 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 September 30, 2014 | Amount of total gains (losses) for the three months ended September 30, 2014 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 | $ | 389.8 | $ | 6.6 | $ | — | $ | (.9 | ) | $ | 37.5 | $ | (98.2 | ) | $ | 334.8 | $ | — | ||||||||||||||
States and political subdivisions | 28.7 | — | — | — | — | (28.7 | ) | — | — | |||||||||||||||||||||||
Asset-backed securities | 52.7 | (.1 | ) | — | .2 | 9.5 | — | 62.3 | — | |||||||||||||||||||||||
Collateralized debt obligations | 14.2 | — | — | — | — | (14.2 | ) | — | — | |||||||||||||||||||||||
Commercial mortgage-backed securities | — | 1.1 | — | — | — | — | 1.1 | — | ||||||||||||||||||||||||
Mortgage pass-through securities | 1.3 | (.2 | ) | — | — | — | — | 1.1 | — | |||||||||||||||||||||||
Collateralized mortgage obligations | .1 | — | — | — | — | — | .1 | — | ||||||||||||||||||||||||
Total fixed maturities, available for sale | 486.8 | 7.4 | — | (.7 | ) | 47.0 | (141.1 | ) | 399.4 | — | ||||||||||||||||||||||
Equity securities - corporate securities | 26.2 | .9 | — | — | — | — | 27.1 | — | ||||||||||||||||||||||||
Trading securities: | ||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | — | — | (.4 | ) | 29.1 | — | 28.7 | (.4 | ) | ||||||||||||||||||||||
Collateralized mortgage obligations | 5.9 | — | — | .1 | — | — | 6.0 | .1 | ||||||||||||||||||||||||
Total trading securities | 5.9 | — | — | (.3 | ) | 29.1 | — | 34.7 | (.3 | ) | ||||||||||||||||||||||
Investments held by variable interest entities - corporate securities | — | 3.0 | — | (.1 | ) | 1.0 | — | 3.9 | — | |||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Liabilities for insurance products: | ||||||||||||||||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | (980.3 | ) | (12.2 | ) | .3 | — | — | — | (992.2 | ) | .3 | |||||||||||||||||||||
Total liabilities for insurance products | (980.3 | ) | (12.2 | ) | .3 | — | — | — | (992.2 | ) | .3 |
(a) | Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. |
(b) | Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the three months ended September 30, 2014 (dollars in millions): |
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | 15.7 | $ | (9.1 | ) | $ | — | $ | — | $ | 6.6 | ||||||||
Asset-backed securities | 1.9 | (2.0 | ) | — | — | (.1 | ) | ||||||||||||
Commercial mortgage-backed securities | 1.1 | — | — | — | 1.1 | ||||||||||||||
Mortgage pass-through securities | — | (.2 | ) | — | — | (.2 | ) | ||||||||||||
Total fixed maturities, available for sale | 18.7 | (11.3 | ) | — | — | 7.4 | |||||||||||||
Equity securities - corporate securities | .9 | — | — | — | .9 | ||||||||||||||
Investments held by variable interest entities - corporate securities | 3.0 | — | — | — | 3.0 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | (29.2 | ) | 3.9 | (.5 | ) | 13.6 | (12.2 | ) | |||||||||||
Total liabilities for insurance products | (29.2 | ) | 3.9 | (.5 | ) | 13.6 | (12.2 | ) |
September 30, 2014 | ||||||||||||||||||||||||||||||||||||
Beginning balance as of December 31, 2013 | Purchases, sales, issuances and settlements, net (b) | 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) | Assets of CLIC sold | Ending balance as of September 30, 2014 | Amount of total gains (losses) for the nine months ended September 30, 2014 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 | $ | 359.6 | $ | 44.9 | $ | — | $ | 11.6 | $ | 52.7 | $ | (82.8 | ) | $ | (51.2 | ) | $ | 334.8 | $ | — | ||||||||||||||||
States and political subdivisions | — | — | — | .1 | 2.1 | — | (2.2 | ) | — | — | ||||||||||||||||||||||||||
Asset-backed securities | 42.2 | 8.9 | — | 4.0 | 16.9 | — | (9.7 | ) | 62.3 | — | ||||||||||||||||||||||||||
Collateralized debt obligations | 246.7 | — | — | — | — | (246.7 | ) | — | — | — | ||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 1.1 | — | — | — | — | — | 1.1 | — | |||||||||||||||||||||||||||
Mortgage pass-through securities | 1.6 | (.5 | ) | — | — | — | — | — | 1.1 | — | ||||||||||||||||||||||||||
Collateralized mortgage obligations | — | (.1 | ) | — | — | .2 | — | — | .1 | — | ||||||||||||||||||||||||||
Total fixed maturities, available for sale | 650.1 | 54.3 | — | 15.7 | 71.9 | (329.5 | ) | (63.1 | ) | 399.4 | — | |||||||||||||||||||||||||
Equity securities - corporate securities | 24.5 | 2.6 | — | — | — | — | — | 27.1 | — | |||||||||||||||||||||||||||
Trading securities: | ||||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 29.1 | — | (.4 | ) | — | — | — | 28.7 | (.4 | ) | |||||||||||||||||||||||||
Collateralized mortgage obligations | — | — | — | .2 | 5.8 | — | — | 6.0 | .2 | |||||||||||||||||||||||||||
Total trading securities | — | 29.1 | — | (.2 | ) | 5.8 | — | — | 34.7 | (.2 | ) | |||||||||||||||||||||||||
Investments held by variable interest entities - corporate securities | — | 3.0 | — | (.1 | ) | 1.0 | — | — | 3.9 | — | ||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||
Liabilities for insurance products: | ||||||||||||||||||||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | (903.7 | ) | (62.0 | ) | (26.5 | ) | — | — | — | — | (992.2 | ) | (26.5 | ) | ||||||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement | (1.8 | ) | 1.8 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Total liabilities for insurance products | (905.5 | ) | (60.2 | ) | (26.5 | ) | — | — | — | — | (992.2 | ) | (26.5 | ) |
(a) | Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. |
(b) | Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the nine months ended September 30, 2014 (dollars in millions): |
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | 47.7 | $ | (2.8 | ) | $ | — | $ | — | $ | 44.9 | ||||||||
Asset-backed securities | 11.8 | (2.9 | ) | — | — | 8.9 | |||||||||||||
Commercial mortgage-backed securities | 1.1 | — | — | — | 1.1 | ||||||||||||||
Mortgage pass-through securities | 1.1 | (1.6 | ) | — | — | (.5 | ) | ||||||||||||
Collateralized mortgage obligations | — | (.1 | ) | — | — | (.1 | ) | ||||||||||||
Total fixed maturities, available for sale | 61.7 | (7.4 | ) | — | — | 54.3 | |||||||||||||
Equity securities - corporate securities | 2.6 | — | — | — | 2.6 | ||||||||||||||
Trading securities - commercial mortgage-backed securities | 29.1 | — | — | — | 29.1 | ||||||||||||||
Investments held by variable interest entities - corporate securities | 3.0 | — | — | — | 3.0 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | (86.9 | ) | 7.5 | (25.1 | ) | 42.5 | (62.0 | ) | |||||||||||
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement | — | 3.4 | (1.6 | ) | — | 1.8 | |||||||||||||
Total liabilities for insurance products | (86.9 | ) | 10.9 | (26.7 | ) | 42.5 | (60.2 | ) |
September 30, 2013 | |||||||||||||||||||||||||||||||
Beginning balance as of June 30, 2013 | Purchases, sales, issuances and settlements, net (b) | 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 September 30, 2013 | Amount of total gains (losses) for the three months ended September 30, 2013 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 | $ | 393.1 | $ | (2.1 | ) | $ | — | $ | 1.4 | $ | 12.9 | $ | (48.0 | ) | $ | 357.3 | $ | — | |||||||||||||
Asset-backed securities | 45.4 | (7.2 | ) | — | .3 | — | (2.0 | ) | 36.5 | — | |||||||||||||||||||||
Collateralized debt obligations | 287.6 | (18.0 | ) | — | .6 | — | (10.1 | ) | 260.1 | — | |||||||||||||||||||||
Commercial mortgage-backed securities | 3.3 | — | — | — | — | (3.3 | ) | — | — | ||||||||||||||||||||||
Mortgage pass-through securities | 1.8 | (.1 | ) | — | — | — | — | 1.7 | — | ||||||||||||||||||||||
Collateralized mortgage obligations | .1 | — | — | — | — | — | .1 | — | |||||||||||||||||||||||
Total fixed maturities, available for sale | 731.3 | (27.4 | ) | — | 2.3 | 12.9 | (63.4 | ) | 655.7 | — | |||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||||
Corporate securities | .1 | .7 | — | — | 23.0 | — | 23.8 | — | |||||||||||||||||||||||
Venture capital investments | 3.1 | — | — | .2 | — | — | 3.3 | — | |||||||||||||||||||||||
Total equity securities | 3.2 | .7 | — | .2 | 23.0 | — | 27.1 | — | |||||||||||||||||||||||
Trading securities: | |||||||||||||||||||||||||||||||
Asset-backed securities | — | — | — | .6 | 25.7 | — | 26.3 | .6 | |||||||||||||||||||||||
Collateralized mortgage obligations | 10.4 | — | — | — | — | (4.8 | ) | 5.6 | — | ||||||||||||||||||||||
Total trading securities | 10.4 | — | — | .6 | 25.7 | (4.8 | ) | 31.9 | .6 | ||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | (796.3 | ) | (45.2 | ) | (1.4 | ) | — | — | — | (842.9 | ) | (1.4 | ) | ||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement | (2.6 | ) | .5 | — | — | — | — | (2.1 | ) | — | |||||||||||||||||||||
Total liabilities for insurance products | (798.9 | ) | (44.7 | ) | (1.4 | ) | — | — | — | (845.0 | ) | (1.4 | ) |
(a) | Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. |
(b) | Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the three months ended September 30, 2013 (dollars in millions): |
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | — | $ | (2.1 | ) | $ | — | $ | — | $ | (2.1 | ) | |||||||
Asset-backed securities | — | (7.2 | ) | — | — | (7.2 | ) | ||||||||||||
Collateralized debt obligations | 5.9 | (23.9 | ) | — | — | (18.0 | ) | ||||||||||||
Mortgage pass-through securities | — | (.1 | ) | — | — | (.1 | ) | ||||||||||||
Total fixed maturities, available for sale | 5.9 | (33.3 | ) | — | — | (27.4 | ) | ||||||||||||
Equity securities - corporate securities | .7 | — | — | — | .7 | ||||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | (25.4 | ) | — | (30.0 | ) | 10.2 | (45.2 | ) | |||||||||||
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement | — | .5 | — | — | .5 | ||||||||||||||
Total liabilities for insurance products | (25.4 | ) | .5 | (30.0 | ) | 10.2 | (44.7 | ) |
September 30, 2013 | |||||||||||||||||||||||||||||||
Beginning balance as of December 31, 2012 | Purchases, sales, issuances and settlements, net (b) | 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 September 30, 2013 | Amount of total gains (losses) for the nine months ended September 30, 2013 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 | $ | 355.5 | $ | 14.0 | $ | (.3 | ) | $ | (12.8 | ) | $ | 13.2 | $ | (12.3 | ) | $ | 357.3 | $ | — | ||||||||||||
States and political subdivisions | 13.1 | — | — | — | — | (13.1 | ) | — | — | ||||||||||||||||||||||
Asset-backed securities | 44.0 | (4.5 | ) | .1 | (3.1 | ) | — | — | 36.5 | — | |||||||||||||||||||||
Collateralized debt obligations | 324.0 | (70.5 | ) | .1 | 6.5 | — | — | 260.1 | — | ||||||||||||||||||||||
Commercial mortgage-backed securities | 6.2 | — | — | — | — | (6.2 | ) | — | — | ||||||||||||||||||||||
Mortgage pass-through securities | 1.9 | (.2 | ) | — | — | — | — | 1.7 | — | ||||||||||||||||||||||
Collateralized mortgage obligations | 16.9 | (.1 | ) | — | — | — | (16.7 | ) | .1 | — | |||||||||||||||||||||
Total fixed maturities, available for sale | 761.6 | (61.3 | ) | (.1 | ) | (9.4 | ) | 13.2 | (48.3 | ) | 655.7 | — | |||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||||
Corporate securities | .1 | 34.7 | — | (11.0 | ) | — | — | 23.8 | — | ||||||||||||||||||||||
Venture capital investments | 2.8 | — | — | .5 | — | — | 3.3 | — | |||||||||||||||||||||||
Total equity securities | 2.9 | 34.7 | — | (10.5 | ) | — | — | 27.1 | — | ||||||||||||||||||||||
Trading securities: | |||||||||||||||||||||||||||||||
States and political subdivisions | .6 | — | — | — | — | (.6 | ) | — | — | ||||||||||||||||||||||
Asset-backed securities | — | — | — | (.4 | ) | 26.7 | — | 26.3 | (.4 | ) | |||||||||||||||||||||
Collateralized debt obligations | 7.3 | (7.7 | ) | .6 | (.2 | ) | — | — | — | (.2 | ) | ||||||||||||||||||||
Collateralized mortgage obligations | 5.8 | — | — | (.2 | ) | — | — | 5.6 | (.2 | ) | |||||||||||||||||||||
Total trading securities | 13.7 | (7.7 | ) | .6 | (.8 | ) | 26.7 | (.6 | ) | 31.9 | (.8 | ) | |||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | (734.0 | ) | (141.0 | ) | 32.1 | — | — | — | (842.9 | ) | 32.1 | ||||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement | (5.5 | ) | 3.4 | — | — | — | — | (2.1 | ) | — | |||||||||||||||||||||
Total liabilities for insurance products | (739.5 | ) | (137.6 | ) | 32.1 | — | — | — | (845.0 | ) | 32.1 |
(a) | Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate. |
(b) | Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts. The following summarizes such activity for the nine months ended September 30, 2013 (dollars in millions): |
Purchases | Sales | Issuances | Settlements | Purchases, sales, issuances and settlements, net | |||||||||||||||
Assets: | |||||||||||||||||||
Fixed maturities, available for sale: | |||||||||||||||||||
Corporate securities | $ | 24.0 | $ | (10.0 | ) | $ | — | $ | — | $ | 14.0 | ||||||||
Asset-backed securities | 7.6 | (12.1 | ) | — | — | (4.5 | ) | ||||||||||||
Collateralized debt obligations | 6.0 | (76.5 | ) | — | — | (70.5 | ) | ||||||||||||
Mortgage pass-through securities | — | (.2 | ) | — | — | (.2 | ) | ||||||||||||
Collateralized mortgage obligations | — | (.1 | ) | — | — | (.1 | ) | ||||||||||||
Total fixed maturities, available for sale | 37.6 | (98.9 | ) | — | — | (61.3 | ) | ||||||||||||
Equity securities - corporate securities | 34.7 | — | — | — | 34.7 | ||||||||||||||
Trading securities - collateralized debt obligations | — | (7.7 | ) | — | — | (7.7 | ) | ||||||||||||
Liabilities: | |||||||||||||||||||
Liabilities for insurance products: | |||||||||||||||||||
Interest-sensitive products - embedded derivatives associated with fixed index annuity products | (78.2 | ) | 1.4 | (94.2 | ) | 30.0 | (141.0 | ) | |||||||||||
Interest-sensitive products - embedded derivatives associated with modified coinsurance agreement | — | 3.4 | — | — | 3.4 | ||||||||||||||
Total liabilities for insurance products | (78.2 | ) | 4.8 | (94.2 | ) | 30.0 | (137.6 | ) |
Fair value at September 30, 2014 | Valuation technique(s) | Unobservable inputs | Range (weighted average) | ||||||
Assets: | |||||||||
Corporate securities (a) | $ | 262.9 | Discounted cash flow analysis | Discount margins | 1.55% - 5.11% (2.43%) | ||||
Asset-backed securities (b) | 29.3 | Discounted cash flow analysis | Discount margins | 2.03% - 4.15% (2.94%) | |||||
Equity security (c) | 27.1 | Market approach | Projected cash flows | Not applicable | |||||
Other assets categorized as Level 3 (d) | 145.8 | Unadjusted third-party price source | Not applicable | Not applicable | |||||
Total | 465.1 | ||||||||
Liabilities: | |||||||||
Interest-sensitive products (e) | 992.2 | Discounted projected embedded derivatives | Projected portfolio yields | 5.35% - 6.63% (5.60%) | |||||
Discount rates | 0.00 - 3.42% (2.03%) | ||||||||
Surrender rates | 2.80% - 54.60% (14.39%) |
(a) | Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. |
(b) | Asset-backed securities - The significant unobservable input used in the fair value measurement of these asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. |
(c) | Equity security - This equity security represents an investment in a company that is constructing a manufacturing facility. The significant unobservable input is the cash flows that will be generated upon completion of the manufacturing facility. Given the nature of this investment, the best current indicator of value is the cost basis of the investment, which we believe approximates market value. |
(d) | Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources. |
(e) | Interest-sensitive products - The significant unobservable inputs used in the fair value measurement of our interest-sensitive products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative. |
Fair value at December 31, 2013 | Valuation technique(s) | Unobservable inputs | Range (weighted average) | ||||||
Assets: | |||||||||
Corporate securities (a) | $ | 260.3 | Discounted cash flow analysis | Discount margins | 1.65% - 2.90% (2.36%) | ||||
Asset-backed securities (b) | 35.1 | Discounted cash flow analysis | Discount margins | 2.03% - 4.20% (3.09%) | |||||
Collateralized debt obligations (c) | 240.7 | Discounted cash flow analysis | Recoveries | 64% - 67% (65.8%) | |||||
Constant prepayment rate | 20% | ||||||||
Discount margins | .95% - 2.00% (1.32%) | ||||||||
Annual default rate | 1.14% - 5.57% (3.05%) | ||||||||
Portfolio CCC % | 1.52% - 21.79% (12.57%) | ||||||||
Equity security (d) | 24.5 | Market approach | Projected cash flows | Not applicable | |||||
Other assets categorized as Level 3 (e) | 114.0 | Unadjusted third-party price source | Not applicable | Not applicable | |||||
Total | 674.6 | ||||||||
Liabilities: | |||||||||
Interest-sensitive products (f) | 905.5 | Discounted projected embedded derivatives | Projected portfolio yields | 5.35% - 6.63% (5.60%) | |||||
Discount rates | 0.00 - 4.64% (2.47%) | ||||||||
Surrender rates | 2.80% - 54.60% (14.39%) |
(a) | Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. |
(b) | Asset-backed securities - The significant unobservable input used in the fair value measurement of these asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. |
(c) | Collateralized debt obligations - The significant unobservable inputs used in the fair value measurement of our collateralized debt obligations relate to collateral performance, including default rate, recoveries and constant prepayment rate, as well as discount margins of the underlying collateral. Significant increases (decreases) in default rate in isolation would result in a significantly lower (higher) fair value measurement. Generally, a significant increase (decrease) in the constant prepayment rate and recoveries in isolation would result in a significantly higher (lower) fair value measurement. Generally a significant increase (decrease) in discount margin in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the annual default rate is accompanied by a directionally similar change in the assumption used for discount margins and portfolio CCC % and a directionally opposite change in the assumption used for constant prepayment rate and recoveries. A tranche's payment priority and investment cost basis could alter generalized fair value outcomes. |
(d) | Equity security - This equity security represents an investment in a company that is constructing a manufacturing facility. The significant unobservable input is the cash flows that will be generated upon completion of the manufacturing facility. Given the nature of this investment, the best current indicator of value is the cost basis of the investment, which we believe approximates market value. |
(e) | Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources. |
(f) | Interest-sensitive products - The significant unobservable inputs used in the fair value measurement of our interest-sensitive products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative. |
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|