x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Iowa | 42-1447959 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o |
Page | |
June 30, 2016 | December 31, 2015 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Investments: | |||||||
Fixed maturity securities: | |||||||
Available for sale, at fair value (amortized cost: 2016 - $36,982,728; 2015 - $35,823,710) | $ | 39,863,803 | $ | 36,421,839 | |||
Held for investment, at amortized cost (fair value: 2016 - $68,542; 2015 - $65,377) | 76,722 | 76,622 | |||||
Equity securities, available for sale, at fair value (cost: 2016 - $7,518; 2015 - $7,515) | 7,813 | 7,828 | |||||
Mortgage loans on real estate | 2,451,375 | 2,435,257 | |||||
Derivative instruments | 576,262 | 337,256 | |||||
Other investments | 292,776 | 291,530 | |||||
Total investments | 43,268,751 | 39,570,332 | |||||
Cash and cash equivalents | 1,547,041 | 397,749 | |||||
Coinsurance deposits | 4,120,911 | 3,187,470 | |||||
Accrued investment income | 377,393 | 362,104 | |||||
Deferred policy acquisition costs | 2,417,192 | 2,905,136 | |||||
Deferred sales inducements | 1,843,672 | 2,232,148 | |||||
Deferred income taxes | — | 232,683 | |||||
Income taxes recoverable | 35,677 | 29,599 | |||||
Other assets | 110,691 | 112,171 | |||||
Total assets | $ | 53,721,328 | $ | 49,029,392 | |||
Liabilities and Stockholders' Equity | |||||||
Liabilities: | |||||||
Policy benefit reserves | $ | 49,432,481 | $ | 45,495,431 | |||
Other policy funds and contract claims | 304,827 | 324,850 | |||||
Notes payable | 393,739 | 393,227 | |||||
Subordinated debentures | 241,650 | 241,452 | |||||
Deferred income taxes | 99,194 | — | |||||
Other liabilities | 636,047 | 629,897 | |||||
Total liabilities | 51,107,938 | 47,084,857 | |||||
Stockholders' equity: | |||||||
Preferred stock, par value $1 per share, 2,000,000 shares authorized, 2016 and 2015 - no shares issued and outstanding | — | — | |||||
Common stock, par value $1 per share, 200,000,000 shares authorized; issued and outstanding: 2016 - 82,278,771 shares (excluding 3,244,255 treasury shares); 2015 - 81,354,079 shares (excluding 3,448,750 treasury shares) | 82,279 | 81,354 | |||||
Additional paid-in capital | 636,861 | 630,367 | |||||
Accumulated other comprehensive income | 893,232 | 201,663 | |||||
Retained earnings | 1,001,018 | 1,031,151 | |||||
Total stockholders' equity | 2,613,390 | 1,944,535 | |||||
Total liabilities and stockholders' equity | $ | 53,721,328 | $ | 49,029,392 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues: | |||||||||||||||
Premiums and other considerations | $ | 11,458 | $ | 10,037 | $ | 18,803 | $ | 17,034 | |||||||
Annuity product charges | 41,124 | 32,409 | 77,629 | 61,091 | |||||||||||
Net investment income | 459,830 | 418,176 | 910,656 | 817,845 | |||||||||||
Change in fair value of derivatives | 39,099 | (23,024 | ) | (34,966 | ) | (54,124 | ) | ||||||||
Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses | 2,737 | 4,324 | 5,424 | 9,203 | |||||||||||
OTTI losses on investments: | |||||||||||||||
Total OTTI losses | (762 | ) | — | (6,780 | ) | (132 | ) | ||||||||
Portion of OTTI losses recognized in (from) other comprehensive income | (3,684 | ) | (828 | ) | (3,360 | ) | (828 | ) | |||||||
Net OTTI losses recognized in operations | (4,446 | ) | (828 | ) | (10,140 | ) | (960 | ) | |||||||
Total revenues | 549,802 | 441,094 | 967,406 | 850,089 | |||||||||||
Benefits and expenses: | |||||||||||||||
Insurance policy benefits and change in future policy benefits | 13,393 | 12,450 | 22,502 | 21,670 | |||||||||||
Interest sensitive and index product benefits | 111,121 | 306,141 | 208,792 | 588,966 | |||||||||||
Amortization of deferred sales inducements | 30,672 | 75,518 | 58,151 | 86,471 | |||||||||||
Change in fair value of embedded derivatives | 284,303 | (219,601 | ) | 550,160 | (168,388 | ) | |||||||||
Interest expense on notes payable | 6,882 | 7,354 | 13,762 | 14,693 | |||||||||||
Interest expense on subordinated debentures | 3,206 | 3,047 | 6,374 | 6,063 | |||||||||||
Amortization of deferred policy acquisition costs | 50,665 | 104,700 | 100,378 | 118,986 | |||||||||||
Other operating costs and expenses | 26,823 | 24,868 | 53,653 | 45,990 | |||||||||||
Total benefits and expenses | 527,065 | 314,477 | 1,013,772 | 714,451 | |||||||||||
Income (loss) before income taxes | 22,737 | 126,617 | (46,366 | ) | 135,638 | ||||||||||
Income tax expense (benefit) | 8,029 | 43,772 | (16,233 | ) | 46,890 | ||||||||||
Net income (loss) | $ | 14,708 | $ | 82,845 | $ | (30,133 | ) | $ | 88,748 | ||||||
Earnings (loss) per common share | $ | 0.18 | $ | 1.07 | $ | (0.37 | ) | $ | 1.15 | ||||||
Earnings (loss) per common share - assuming dilution | $ | 0.18 | $ | 1.05 | $ | (0.37 | ) | $ | 1.12 | ||||||
Weighted average common shares outstanding (in thousands): | |||||||||||||||
Earnings (loss) per common share | 82,517 | 77,237 | 82,323 | 77,140 | |||||||||||
Earnings (loss) per common share - assuming dilution | 83,184 | 79,227 | 83,073 | 79,173 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income (loss) | $ | 14,708 | $ | 82,845 | $ | (30,133 | ) | $ | 88,748 | ||||||
Other comprehensive income (loss): | |||||||||||||||
Change in net unrealized investment gains/losses (1) | 555,412 | (778,097 | ) | 1,060,760 | (513,984 | ) | |||||||||
Noncredit component of OTTI losses (1) | 1,713 | 413 | 1,566 | 413 | |||||||||||
Reclassification of unrealized investment gains/losses to net income (loss) (1) | 1,511 | 825 | 1,627 | 1,844 | |||||||||||
Other comprehensive income (loss) before income tax | 558,636 | (776,859 | ) | 1,063,953 | (511,727 | ) | |||||||||
Income tax effect related to other comprehensive income (loss) | (195,523 | ) | 271,900 | (372,384 | ) | 179,105 | |||||||||
Other comprehensive income (loss) | 363,113 | (504,959 | ) | 691,569 | (332,622 | ) | |||||||||
Comprehensive income (loss) | $ | 377,821 | $ | (422,114 | ) | $ | 661,436 | $ | (243,874 | ) |
(1) | Net of related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs. |
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Retained Earnings | Total Stockholders' Equity | |||||||||||||||
Balance at December 31, 2015 | $ | 81,354 | $ | 630,367 | $ | 201,663 | $ | 1,031,151 | $ | 1,944,535 | |||||||||
Net loss for period | — | — | — | (30,133 | ) | (30,133 | ) | ||||||||||||
Other comprehensive income | — | — | 691,569 | — | 691,569 | ||||||||||||||
Share-based compensation, including excess income tax benefits | — | 3,889 | — | — | 3,889 | ||||||||||||||
Issuance of 831,694 shares of common stock under compensation plans, including excess income tax benefits | 832 | 2,699 | — | — | 3,531 | ||||||||||||||
Issuance of 92,998 shares of common stock to settle warrants that have reached their expiration | 93 | (94 | ) | — | — | (1 | ) | ||||||||||||
Balance at June 30, 2016 | $ | 82,279 | $ | 636,861 | $ | 893,232 | $ | 1,001,018 | $ | 2,613,390 | |||||||||
Balance at December 31, 2014 | $ | 76,062 | $ | 513,218 | $ | 721,401 | $ | 829,195 | $ | 2,139,876 | |||||||||
Net income for period | — | — | — | 88,748 | 88,748 | ||||||||||||||
Other comprehensive loss | — | — | (332,622 | ) | — | (332,622 | ) | ||||||||||||
Share-based compensation, including excess income tax benefits | — | 6,361 | — | — | 6,361 | ||||||||||||||
Issuance of 731,170 shares of common stock under compensation plans, including excess income tax benefits | 732 | 4,667 | — | — | 5,399 | ||||||||||||||
Balance at June 30, 2015 | $ | 76,794 | $ | 524,246 | $ | 388,779 | $ | 917,943 | $ | 1,907,762 |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Operating activities | |||||||
Net income (loss) | $ | (30,133 | ) | $ | 88,748 | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Interest sensitive and index product benefits | 208,792 | 588,966 | |||||
Amortization of deferred sales inducements | 58,151 | 86,471 | |||||
Annuity product charges | (77,629 | ) | (61,091 | ) | |||
Change in fair value of embedded derivatives | 550,160 | (168,388 | ) | ||||
Change in traditional life and accident and health insurance reserves | 2,261 | 1,699 | |||||
Policy acquisition costs deferred | (304,877 | ) | (292,140 | ) | |||
Amortization of deferred policy acquisition costs | 100,378 | 118,986 | |||||
Provision for depreciation and other amortization | 1,745 | 2,518 | |||||
Amortization of discounts and premiums on investments | (5,342 | ) | (6,528 | ) | |||
Realized gains/losses on investments and net OTTI losses recognized in operations | 4,716 | (8,243 | ) | ||||
Change in fair value of derivatives | 34,172 | 53,191 | |||||
Deferred income taxes | (40,257 | ) | 3,096 | ||||
Share-based compensation | 3,448 | 3,347 | |||||
Change in accrued investment income | (15,289 | ) | (16,613 | ) | |||
Change in income taxes recoverable/payable | (6,078 | ) | (12,636 | ) | |||
Change in other assets | 706 | 178 | |||||
Change in other policy funds and contract claims | (23,793 | ) | (27,115 | ) | |||
Change in collateral held for derivatives | 10,615 | (97,273 | ) | ||||
Change in other liabilities | (41,573 | ) | 13,141 | ||||
Other | (7,793 | ) | (4,817 | ) | |||
Net cash provided by operating activities | 422,380 | 265,497 | |||||
Investing activities | |||||||
Sales, maturities, or repayments of investments: | |||||||
Fixed maturity securities - available for sale | 1,421,976 | 886,573 | |||||
Mortgage loans on real estate | 215,904 | 229,179 | |||||
Derivative instruments | 15,859 | 452,212 | |||||
Other investments | 11,597 | 10,930 | |||||
Acquisition of investments: | |||||||
Fixed maturity securities - available for sale | (2,542,281 | ) | (3,312,404 | ) | |||
Mortgage loans on real estate | (229,328 | ) | (239,408 | ) | |||
Derivative instruments | (289,412 | ) | (275,523 | ) | |||
Other investments | (6,945 | ) | (4,901 | ) | |||
Purchases of property, furniture and equipment | (506 | ) | (592 | ) | |||
Net cash used in investing activities | (1,403,136 | ) | (2,253,934 | ) |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Financing activities | |||||||
Receipts credited to annuity and single premium universal life policyholder account balances | $ | 4,181,709 | $ | 3,095,837 | |||
Coinsurance deposits | (884,741 | ) | (16,800 | ) | |||
Return of annuity policyholder account balances | (1,168,302 | ) | (1,022,667 | ) | |||
Excess tax benefits realized from share-based compensation plans | 441 | 3,014 | |||||
Proceeds from issuance of common stock | 3,779 | 5,399 | |||||
Change in checks in excess of cash balance | (2,838 | ) | (44,046 | ) | |||
Net cash provided by financing activities | 2,130,048 | 2,020,737 | |||||
Increase in cash and cash equivalents | 1,149,292 | 32,300 | |||||
Cash and cash equivalents at beginning of period | 397,749 | 701,514 | |||||
Cash and cash equivalents at end of period | $ | 1,547,041 | $ | 733,814 | |||
Supplemental disclosures of cash flow information | |||||||
Cash paid during period for: | |||||||
Interest expense | $ | 19,390 | $ | 19,526 | |||
Income taxes | 29,961 | 53,401 | |||||
Non-cash operating activity: | |||||||
Deferral of sales inducements | 196,207 | 219,191 | |||||
Non-cash financing activities: | |||||||
Common stock issued to settle warrants that have expired | 93 | — |
June 30, 2016 | December 31, 2015 | ||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Assets | |||||||||||||||
Fixed maturity securities: | |||||||||||||||
Available for sale | $ | 39,863,803 | $ | 39,863,803 | $ | 36,421,839 | $ | 36,421,839 | |||||||
Held for investment | 76,722 | 68,542 | 76,622 | 65,377 | |||||||||||
Equity securities, available for sale | 7,813 | 7,813 | 7,828 | 7,828 | |||||||||||
Mortgage loans on real estate | 2,451,375 | 2,478,023 | 2,435,257 | 2,471,864 | |||||||||||
Derivative instruments | 576,262 | 576,262 | 337,256 | 337,256 | |||||||||||
Other investments | 292,776 | 291,107 | 285,044 | 290,075 | |||||||||||
Cash and cash equivalents | 1,547,041 | 1,547,041 | 397,749 | 397,749 | |||||||||||
Coinsurance deposits | 4,120,911 | 3,700,449 | 3,187,470 | 2,860,882 | |||||||||||
Interest rate caps | 427 | 427 | 1,410 | 1,410 | |||||||||||
Counterparty collateral | 91,457 | 91,457 | 82,312 | 82,312 | |||||||||||
Liabilities | |||||||||||||||
Policy benefit reserves | 49,086,249 | 41,155,256 | 45,151,460 | 38,435,515 | |||||||||||
Single premium immediate annuity (SPIA) benefit reserves | 304,365 | 315,420 | 324,264 | 336,066 | |||||||||||
Notes payable | 393,739 | 424,804 | 393,227 | 417,752 | |||||||||||
Subordinated debentures | 241,650 | 229,881 | 241,452 | 216,933 | |||||||||||
Interest rate swap | 5,971 | 5,971 | 3,139 | 3,139 |
Level 1— | Quoted prices are available in active markets for identical financial instruments as of the reporting date. We do not adjust the quoted price for these financial instruments, even in situations where we hold a large position and a sale could reasonably impact the quoted price. |
Level 2— | Quoted prices in active markets for similar financial instruments, quoted prices for identical or similar financial instruments in markets that are not active; and models and other valuation methodologies using inputs other than quoted prices that are observable. |
Level 3— | Models and other valuation methodologies using significant inputs that are unobservable for financial instruments and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in Level 3 are securities for which no market activity or data exists and for which we used discounted expected future cash flows with our own assumptions about what a market participant would use in determining fair value. |
Total Fair Value | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
(Dollars in thousands) | |||||||||||||||
June 30, 2016 | |||||||||||||||
Assets | |||||||||||||||
Fixed maturity securities: | |||||||||||||||
Available for sale: | |||||||||||||||
United States Government full faith and credit | $ | 449,439 | $ | 442,226 | $ | 7,213 | $ | — | |||||||
United States Government sponsored agencies | 1,380,266 | — | 1,380,266 | — | |||||||||||
United States municipalities, states and territories | 3,975,544 | — | 3,975,544 | — | |||||||||||
Foreign government obligations | 253,990 | — | 253,990 | — | |||||||||||
Corporate securities | 26,383,116 | 7 | 26,383,109 | — | |||||||||||
Residential mortgage backed securities | 1,392,441 | — | 1,392,441 | — | |||||||||||
Commercial mortgage backed securities | 4,735,210 | — | 4,735,210 | — | |||||||||||
Other asset backed securities | 1,293,797 | — | 1,293,797 | — | |||||||||||
Equity securities, available for sale: finance, insurance and real estate | 7,813 | — | 7,813 | — | |||||||||||
Derivative instruments | 576,262 | — | 576,262 | — | |||||||||||
Cash and cash equivalents | 1,547,041 | 1,547,041 | — | — | |||||||||||
Interest rate caps | 427 | — | 427 | — | |||||||||||
Counterparty collateral | 91,457 | — | 91,457 | — | |||||||||||
$ | 42,086,803 | $ | 1,989,274 | $ | 40,097,529 | $ | — | ||||||||
Liabilities | |||||||||||||||
Interest rate swap | $ | 5,971 | $ | — | $ | 5,971 | $ | — | |||||||
Fixed index annuities - embedded derivatives | 6,499,015 | — | — | 6,499,015 | |||||||||||
$ | 6,504,986 | $ | — | $ | 5,971 | $ | 6,499,015 | ||||||||
December 31, 2015 | |||||||||||||||
Assets | |||||||||||||||
Fixed maturity securities: | |||||||||||||||
Available for sale: | |||||||||||||||
United States Government full faith and credit | $ | 471,256 | $ | 438,598 | $ | 32,658 | $ | — | |||||||
United States Government sponsored agencies | 1,398,611 | — | 1,398,611 | — | |||||||||||
United States municipalities, states and territories | 3,755,367 | — | 3,755,367 | — | |||||||||||
Foreign government obligations | 212,565 | — | 212,565 | — | |||||||||||
Corporate securities | 23,802,394 | 121 | 23,802,273 | — | |||||||||||
Residential mortgage backed securities | 1,462,072 | — | 1,462,072 | — | |||||||||||
Commercial mortgage backed securities | 4,174,396 | — | 4,174,396 | — | |||||||||||
Other asset backed securities | 1,145,178 | — | 1,145,178 | — | |||||||||||
Equity securities, available for sale: finance, insurance and real estate | 7,828 | — | 7,828 | — | |||||||||||
Derivative instruments | 337,256 | — | 337,256 | — | |||||||||||
Cash and cash equivalents | 397,749 | 397,749 | — | — | |||||||||||
Interest rate caps | 1,410 | — | 1,410 | — | |||||||||||
Counterparty collateral | 82,312 | — | 82,312 | — | |||||||||||
$ | 37,248,394 | $ | 836,468 | $ | 36,411,926 | $ | — | ||||||||
Liabilities | |||||||||||||||
Interest rate swap | $ | 3,139 | $ | — | $ | 3,139 | $ | — | |||||||
Fixed index annuities - embedded derivatives | 5,983,622 | — | — | 5,983,622 | |||||||||||
$ | 5,986,761 | $ | — | $ | 3,139 | $ | 5,983,622 |
• | reported trading prices, |
• | benchmark yields, |
• | broker-dealer quotes, |
• | benchmark securities, |
• | bids and offers, |
• | credit ratings, |
• | relative credit information, and |
• | other reference data. |
Average Lapse Rates | Average Partial Withdrawal Rates | |||||||
Contract Duration (Years) | June 30, 2016 | December 31, 2015 | June 30, 2016 | December 31, 2015 | ||||
1 - 5 | 1.77% | 1.58% | 3.30% | 3.08% | ||||
6 - 10 | 6.59% | 8.55% | 3.30% | 3.55% | ||||
11 - 15 | 11.25% | 12.01% | 3.31% | 3.59% | ||||
16 - 20 | 12.04% | 12.99% | 3.17% | 3.22% | ||||
20+ | 11.69% | 12.54% | 3.17% | 3.22% |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Available for sale securities | |||||||||||||||
Beginning balance | $ | — | $ | 342 | $ | — | $ | 375 | |||||||
Principal returned | — | (9 | ) | — | (21 | ) | |||||||||
Amortization of premium/accretion of discount | — | (409 | ) | — | (466 | ) | |||||||||
Total gains (losses) (realized/unrealized): | |||||||||||||||
Included in other comprehensive income (loss) | — | 240 | — | 276 | |||||||||||
Included in operations | — | (138 | ) | — | (138 | ) | |||||||||
Ending balance | $ | — | $ | 26 | $ | — | $ | 26 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Fixed index annuities - embedded derivatives | |||||||||||||||
Beginning balance | $ | 6,254,466 | $ | 5,865,171 | $ | 5,983,622 | $ | 5,574,653 | |||||||
Premiums less benefits | 44,632 | 453,317 | 135,761 | 813,712 | |||||||||||
Change in fair value, net | 199,917 | (334,481 | ) | 379,632 | (404,358 | ) | |||||||||
Ending balance | $ | 6,499,015 | $ | 5,984,007 | $ | 6,499,015 | $ | 5,984,007 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
(Dollars in thousands) | |||||||||||||||
June 30, 2016 | |||||||||||||||
Fixed maturity securities: | |||||||||||||||
Available for sale: | |||||||||||||||
United States Government full faith and credit | $ | 446,560 | $ | 2,879 | $ | — | $ | 449,439 | |||||||
United States Government sponsored agencies | 1,319,088 | 61,728 | (550 | ) | 1,380,266 | ||||||||||
United States municipalities, states and territories | 3,459,913 | 516,314 | (683 | ) | 3,975,544 | ||||||||||
Foreign government obligations | 234,382 | 25,063 | (5,455 | ) | 253,990 | ||||||||||
Corporate securities | 24,393,498 | 2,201,998 | (212,380 | ) | 26,383,116 | ||||||||||
Residential mortgage backed securities | 1,257,634 | 136,085 | (1,278 | ) | 1,392,441 | ||||||||||
Commercial mortgage backed securities | 4,600,531 | 173,501 | (38,822 | ) | 4,735,210 | ||||||||||
Other asset backed securities | 1,271,122 | 40,148 | (17,473 | ) | 1,293,797 | ||||||||||
$ | 36,982,728 | $ | 3,157,716 | $ | (276,641 | ) | $ | 39,863,803 | |||||||
Held for investment: | |||||||||||||||
Corporate security | $ | 76,722 | $ | — | $ | (8,180 | ) | $ | 68,542 | ||||||
Equity securities, available for sale: | |||||||||||||||
Finance, insurance, and real estate | $ | 7,518 | $ | 295 | $ | — | $ | 7,813 | |||||||
December 31, 2015 | |||||||||||||||
Fixed maturity securities: | |||||||||||||||
Available for sale: | |||||||||||||||
United States Government full faith and credit | $ | 470,567 | $ | 988 | $ | (299 | ) | $ | 471,256 | ||||||
United States Government sponsored agencies | 1,386,219 | 26,801 | (14,409 | ) | 1,398,611 | ||||||||||
United States municipalities, states and territories | 3,422,667 | 341,328 | (8,628 | ) | 3,755,367 | ||||||||||
Foreign government obligations | 210,953 | 12,547 | (10,935 | ) | 212,565 | ||||||||||
Corporate securities | 23,597,530 | 887,288 | (682,424 | ) | 23,802,394 | ||||||||||
Residential mortgage backed securities | 1,366,985 | 98,576 | (3,489 | ) | 1,462,072 | ||||||||||
Commercial mortgage backed securities | 4,238,265 | 41,412 | (105,281 | ) | 4,174,396 | ||||||||||
Other asset backed securities | 1,130,524 | 34,534 | (19,880 | ) | 1,145,178 | ||||||||||
$ | 35,823,710 | $ | 1,443,474 | $ | (845,345 | ) | $ | 36,421,839 | |||||||
Held for investment: | |||||||||||||||
Corporate security | $ | 76,622 | $ | — | $ | (11,245 | ) | $ | 65,377 | ||||||
Equity securities, available for sale: | |||||||||||||||
Finance, insurance, and real estate | $ | 7,515 | $ | 313 | $ | — | $ | 7,828 |
Available for sale | Held for investment | ||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Due in one year or less | $ | 320,122 | $ | 325,370 | $ | — | $ | — | |||||||
Due after one year through five years | 2,673,105 | 2,836,994 | — | — | |||||||||||
Due after five years through ten years | 10,956,902 | 11,483,761 | — | — | |||||||||||
Due after ten years through twenty years | 8,357,708 | 9,305,285 | — | — | |||||||||||
Due after twenty years | 7,545,605 | 8,490,945 | 76,722 | 68,542 | |||||||||||
29,853,442 | 32,442,355 | 76,722 | 68,542 | ||||||||||||
Residential mortgage backed securities | 1,257,633 | 1,392,441 | — | — | |||||||||||
Commercial mortgage backed securities | 4,600,531 | 4,735,210 | — | — | |||||||||||
Other asset backed securities | 1,271,122 | 1,293,797 | — | — | |||||||||||
$ | 36,982,728 | $ | 39,863,803 | $ | 76,722 | $ | 68,542 |
June 30, 2016 | December 31, 2015 | ||||||
(Dollars in thousands) | |||||||
Net unrealized gains on available for sale fixed maturity securities and equity securities | $ | 2,881,370 | $ | 598,442 | |||
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements | (1,541,834 | ) | (322,859 | ) | |||
Deferred income tax valuation allowance reversal | 22,534 | 22,534 | |||||
Deferred income tax expense | (468,838 | ) | (96,454 | ) | |||
Net unrealized gains reported as accumulated other comprehensive income | $ | 893,232 | $ | 201,663 |
June 30, 2016 | December 31, 2015 | |||||||||||||||
NAIC Designation | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||
(Dollars in thousands) | ||||||||||||||||
1 | $ | 23,685,524 | $ | 25,965,937 | $ | 23,363,259 | $ | 24,207,801 | ||||||||
2 | 12,154,249 | 12,860,194 | 11,709,730 | 11,589,325 | ||||||||||||
3 | 1,045,123 | 972,142 | 758,531 | 643,293 | ||||||||||||
4 | 141,552 | 107,753 | 60,480 | 44,312 | ||||||||||||
5 | 19,384 | 12,180 | — | — | ||||||||||||
6 | 13,618 | 14,139 | 8,332 | 2,485 | ||||||||||||
$ | 37,059,450 | $ | 39,932,345 | $ | 35,900,332 | $ | 36,487,216 |
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
June 30, 2016 | |||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||
Available for sale: | |||||||||||||||||||||||
United States Government sponsored agencies | $ | 61,450 | $ | (550 | ) | $ | — | $ | — | $ | 61,450 | $ | (550 | ) | |||||||||
United States municipalities, states and territories | — | — | 6,752 | (683 | ) | 6,752 | (683 | ) | |||||||||||||||
Foreign government obligations | — | — | 19,141 | (5,455 | ) | 19,141 | (5,455 | ) | |||||||||||||||
Corporate securities: | |||||||||||||||||||||||
Finance, insurance and real estate | 168,620 | (8,462 | ) | 172,731 | (7,056 | ) | 341,351 | (15,518 | ) | ||||||||||||||
Manufacturing, construction and mining | 354,576 | (24,505 | ) | 764,467 | (107,685 | ) | 1,119,043 | (132,190 | ) | ||||||||||||||
Utilities and related sectors | 209,329 | (6,837 | ) | 345,800 | (28,023 | ) | 555,129 | (34,860 | ) | ||||||||||||||
Wholesale/retail trade | 80,220 | (2,736 | ) | 62,330 | (7,574 | ) | 142,550 | (10,310 | ) | ||||||||||||||
Services, media and other | 97,145 | (7,014 | ) | 151,222 | (12,488 | ) | 248,367 | (19,502 | ) | ||||||||||||||
Residential mortgage backed securities | 39,184 | (1,258 | ) | 653 | (20 | ) | 39,837 | (1,278 | ) | ||||||||||||||
Commercial mortgage backed securities | 1,164,578 | (38,822 | ) | — | — | 1,164,578 | (38,822 | ) | |||||||||||||||
Other asset backed securities | 304,638 | (10,633 | ) | 98,345 | (6,840 | ) | 402,983 | (17,473 | ) | ||||||||||||||
$ | 2,479,740 | $ | (100,817 | ) | $ | 1,621,441 | $ | (175,824 | ) | $ | 4,101,181 | $ | (276,641 | ) | |||||||||
Held for investment: | |||||||||||||||||||||||
Corporate security: | |||||||||||||||||||||||
Insurance | $ | — | $ | — | $ | 68,542 | $ | (8,180 | ) | $ | 68,542 | $ | (8,180 | ) | |||||||||
December 31, 2015 | |||||||||||||||||||||||
Fixed maturity securities: | |||||||||||||||||||||||
Available for sale: | |||||||||||||||||||||||
United States Government full faith and credit | $ | 37,730 | $ | (299 | ) | $ | — | $ | — | $ | 37,730 | $ | (299 | ) | |||||||||
United States Government sponsored agencies | 957,053 | (14,409 | ) | — | — | 957,053 | (14,409 | ) | |||||||||||||||
United States municipalities, states and territories | 261,823 | (8,474 | ) | 2,846 | (154 | ) | 264,669 | (8,628 | ) | ||||||||||||||
Foreign government obligations | 42,966 | (1,762 | ) | 15,463 | (9,173 | ) | 58,429 | (10,935 | ) | ||||||||||||||
Corporate securities: | |||||||||||||||||||||||
Finance, insurance and real estate | 2,077,223 | (59,607 | ) | 49,912 | (14,855 | ) | 2,127,135 | (74,462 | ) | ||||||||||||||
Manufacturing, construction and mining | 3,517,967 | (246,456 | ) | 376,229 | (131,003 | ) | 3,894,196 | (377,459 | ) | ||||||||||||||
Utilities and related sectors | 2,240,652 | (138,940 | ) | 97,184 | (22,565 | ) | 2,337,836 | (161,505 | ) | ||||||||||||||
Wholesale/retail trade | 473,050 | (17,863 | ) | 38,682 | (8,125 | ) | 511,732 | (25,988 | ) | ||||||||||||||
Services, media and other | 1,037,011 | (39,937 | ) | 32,050 | (3,073 | ) | 1,069,061 | (43,010 | ) | ||||||||||||||
Residential mortgage backed securities | 162,770 | (2,958 | ) | 6,438 | (531 | ) | 169,208 | (3,489 | ) | ||||||||||||||
Commercial mortgage backed securities | 2,679,510 | (105,002 | ) | 11,495 | (279 | ) | 2,691,005 | (105,281 | ) | ||||||||||||||
Other asset backed securities | 457,055 | (10,581 | ) | 46,657 | (9,299 | ) | 503,712 | (19,880 | ) | ||||||||||||||
$ | 13,944,810 | $ | (646,288 | ) | $ | 676,956 | $ | (199,057 | ) | $ | 14,621,766 | $ | (845,345 | ) | |||||||||
Held for investment: | |||||||||||||||||||||||
Corporate security: | |||||||||||||||||||||||
Insurance | $ | 65,377 | $ | (11,245 | ) | $ | — | $ | — | $ | 65,377 | $ | (11,245 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Fixed maturity securities held for investment carried at amortized cost | $ | 820 | $ | (17,326 | ) | $ | 3,065 | $ | (10,227 | ) | |||||
Investments carried at fair value: | |||||||||||||||
Fixed maturity securities, available for sale | $ | 1,167,861 | $ | (1,547,155 | ) | $ | 2,282,946 | $ | (1,026,989 | ) | |||||
Equity securities, available for sale | (1 | ) | 11 | (18 | ) | 53 | |||||||||
1,167,860 | (1,547,144 | ) | 2,282,928 | (1,026,936 | ) | ||||||||||
Adjustment for effect on other balance sheet accounts: | |||||||||||||||
Deferred policy acquisition costs and deferred sales inducements | (609,224 | ) | 770,285 | (1,218,975 | ) | 515,209 | |||||||||
Deferred income tax asset/liability | (195,523 | ) | 271,900 | (372,384 | ) | 179,105 | |||||||||
(804,747 | ) | 1,042,185 | (1,591,359 | ) | 694,314 | ||||||||||
Change in net unrealized gains on investments carried at fair value | $ | 363,113 | $ | (504,959 | ) | $ | 691,569 | $ | (332,622 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Available for sale fixed maturity securities: | |||||||||||||||
Gross realized gains | $ | 4,604 | $ | 2,212 | $ | 6,091 | $ | 4,500 | |||||||
Gross realized losses | (1,368 | ) | (511 | ) | (2,599 | ) | (800 | ) | |||||||
3,236 | 1,701 | 3,492 | 3,700 | ||||||||||||
Other investments: | |||||||||||||||
Gain on sale of real estate | 705 | 195 | 836 | 1,033 | |||||||||||
Loss on sale of real estate | (1 | ) | (193 | ) | (93 | ) | (575 | ) | |||||||
Impairment losses on real estate | — | — | — | (629 | ) | ||||||||||
704 | 2 | 743 | (171 | ) | |||||||||||
Mortgage loans on real estate: | |||||||||||||||
Decrease (increase) in allowance for credit losses | (2,885 | ) | (499 | ) | (3,833 | ) | 1,299 | ||||||||
Recovery of specific allowance | 1,682 | 3,120 | 5,022 | 4,375 | |||||||||||
(1,203 | ) | 2,621 | 1,189 | 5,674 | |||||||||||
$ | 2,737 | $ | 4,324 | $ | 5,424 | $ | 9,203 |
• | the length of time and the extent to which the fair value has been less than amortized cost or cost; |
• | whether the issuer is current on all payments and all contractual payments have been made as agreed; |
• | the remaining payment terms and the financial condition and near-term prospects of the issuer; |
• | the lack of ability to refinance due to liquidity problems in the credit market; |
• | the fair value of any underlying collateral; |
• | the existence of any credit protection available; |
• | our intent to sell and whether it is more likely than not we would be required to sell prior to recovery for debt securities; |
• | our assessment in the case of equity securities including perpetual preferred stocks with credit deterioration that the security cannot recover to cost in a reasonable period of time; |
• | our intent and ability to retain equity securities for a period of time sufficient to allow for recovery; |
• | consideration of rating agency actions; and |
• | changes in estimated cash flows of mortgage and asset backed securities. |
Discount Rate | Default Rate | Loss Severity | ||||||||||||||||||
Sector | Vintage | Min | Max | Min | Max | Min | Max | |||||||||||||
Six months ended June 30, 2016 | ||||||||||||||||||||
Prime | 2005 | 7.7 | % | 7.7 | % | 14 | % | 14 | % | 50 | % | 50 | % | |||||||
2006 | 7.3 | % | 7.3 | % | 13 | % | 13 | % | 50 | % | 50 | % | ||||||||
2007 | 6.2 | % | 6.4 | % | 18 | % | 31 | % | 50 | % | 55 | % | ||||||||
Alt-A | 2005 | 7.4 | % | 7.4 | % | 11 | % | 11 | % | 60 | % | 60 | % | |||||||
Six months ended June 30, 2015 | ||||||||||||||||||||
Prime | 2006 | 6.5 | % | 6.5 | % | 14 | % | 14 | % | 40 | % | 40 | % | |||||||
2007 | 6.4 | % | 7.0 | % | 15 | % | 19 | % | 55 | % | 55 | % | ||||||||
Alt-A | 2005 | 5.6 | % | 5.6 | % | 99 | % | 99 | % | 2 | % | 2 | % |
Number of Securities | Total OTTI Losses | Portion of OTTI Losses Recognized in (from) Other Comprehensive Income | Net OTTI Losses Recognized in Operations | |||||||||||
(Dollars in thousands) | ||||||||||||||
Three months ended June 30, 2016 | ||||||||||||||
Fixed maturity securities, available for sale: | ||||||||||||||
Residential mortgage backed securities | 2 | $ | — | $ | (202 | ) | $ | (202 | ) | |||||
Commercial mortgage backed securities | 2 | (762 | ) | — | (762 | ) | ||||||||
Other asset backed securities | 1 | — | (3,482 | ) | (3,482 | ) | ||||||||
5 | $ | (762 | ) | $ | (3,684 | ) | $ | (4,446 | ) | |||||
Three months ended June 30, 2015 | ||||||||||||||
Fixed maturity securities, available for sale: | ||||||||||||||
Residential mortgage backed securities | 3 | $ | — | $ | (828 | ) | $ | (828 | ) | |||||
Six months ended June 30, 2016 | ||||||||||||||
Fixed maturity securities, available for sale: | ||||||||||||||
Corporate securities: | ||||||||||||||
Energy | 2 | $ | (642 | ) | $ | — | $ | (642 | ) | |||||
Telecommunications | 1 | (4,462 | ) | 562 | (3,900 | ) | ||||||||
Utilities | 1 | (136 | ) | — | (136 | ) | ||||||||
Residential mortgage backed securities | 6 | — | (440 | ) | (440 | ) | ||||||||
Commercial mortgage backed securities | 5 | (1,540 | ) | — | (1,540 | ) | ||||||||
Other asset backed securities | 1 | — | (3,482 | ) | (3,482 | ) | ||||||||
16 | $ | (6,780 | ) | $ | (3,360 | ) | $ | (10,140 | ) | |||||
Six months ended June 30, 2015 | ||||||||||||||
Fixed maturity securities, available for sale: | ||||||||||||||
Residential mortgage backed securities | 4 | $ | (132 | ) | $ | (828 | ) | $ | (960 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Cumulative credit loss at beginning of period | $ | (151,518 | ) | $ | (127,182 | ) | $ | (145,824 | ) | $ | (127,050 | ) | |||
Credit losses on securities for which OTTI has not previously been recognized | (762 | ) | — | (6,218 | ) | (132 | ) | ||||||||
Additional credit losses on securities for which OTTI has previously been recognized | (3,684 | ) | (828 | ) | (3,922 | ) | (828 | ) | |||||||
Accumulated losses on securities that were disposed of during the period | 1,556 | — | 1,556 | — | |||||||||||
Cumulative credit loss at end of period | $ | (154,408 | ) | $ | (128,010 | ) | $ | (154,408 | ) | $ | (128,010 | ) |
Amortized Cost | OTTI Recognized in Other Comprehensive Income | Change in Fair Value Since OTTI was Recognized | Fair Value | ||||||||||||
(Dollars in thousands) | |||||||||||||||
June 30, 2016 | |||||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||
Corporate securities | $ | 8,764 | $ | (3,537 | ) | $ | 7,234 | $ | 12,461 | ||||||
Residential mortgage backed securities | 416,615 | (170,284 | ) | 200,735 | 447,066 | ||||||||||
Commercial mortgage backed securities | 16,646 | — | 206 | 16,852 | |||||||||||
Other asset backed securities | 4,854 | (1,643 | ) | (1,533 | ) | 1,678 | |||||||||
$ | 446,879 | $ | (175,464 | ) | $ | 206,642 | $ | 478,057 | |||||||
December 31, 2015 | |||||||||||||||
Fixed maturity securities, available for sale: | |||||||||||||||
Corporate securities | $ | 6,396 | $ | (2,975 | ) | $ | 9 | $ | 3,430 | ||||||
Residential mortgage backed securities | 466,871 | (170,724 | ) | 199,149 | 495,296 | ||||||||||
Other asset backed securities | 8,154 | (5,125 | ) | (553 | ) | 2,476 | |||||||||
$ | 481,421 | $ | (178,824 | ) | $ | 198,605 | $ | 501,202 |
June 30, 2016 | December 31, 2015 | ||||||
(Dollars in thousands) | |||||||
Principal outstanding | $ | 2,463,412 | $ | 2,449,909 | |||
Loan loss allowance | (10,852 | ) | (14,142 | ) | |||
Deferred prepayment fees | (1,185 | ) | (510 | ) | |||
Carrying value | $ | 2,451,375 | $ | 2,435,257 |
June 30, 2016 | December 31, 2015 | ||||||||||||
Principal | Percent | Principal | Percent | ||||||||||
(Dollars in thousands) | |||||||||||||
Geographic distribution | |||||||||||||
East | $ | 672,512 | 27.3 | % | $ | 698,113 | 28.5 | % | |||||
Middle Atlantic | 160,283 | 6.5 | % | 160,261 | 6.6 | % | |||||||
Mountain | 234,568 | 9.5 | % | 252,442 | 10.3 | % | |||||||
New England | 12,944 | 0.6 | % | 13,161 | 0.5 | % | |||||||
Pacific | 385,306 | 15.6 | % | 355,268 | 14.5 | % | |||||||
South Atlantic | 472,253 | 19.2 | % | 456,227 | 18.6 | % | |||||||
West North Central | 325,402 | 13.2 | % | 313,120 | 12.8 | % | |||||||
West South Central | 200,144 | 8.1 | % | 201,317 | 8.2 | % | |||||||
$ | 2,463,412 | 100.0 | % | $ | 2,449,909 | 100.0 | % | ||||||
Property type distribution | |||||||||||||
Office | $ | 341,209 | 13.9 | % | $ | 396,154 | 16.2 | % | |||||
Medical Office | 72,087 | 2.9 | % | 77,438 | 3.2 | % | |||||||
Retail | 815,013 | 33.1 | % | 790,158 | 32.2 | % | |||||||
Industrial/Warehouse | 690,503 | 28.0 | % | 686,400 | 28.0 | % | |||||||
Hotel | 3,255 | 0.1 | % | 3,361 | 0.1 | % | |||||||
Apartment | 372,459 | 15.1 | % | 352,971 | 14.4 | % | |||||||
Mixed use/other | 168,886 | 6.9 | % | 143,427 | 5.9 | % | |||||||
$ | 2,463,412 | 100.0 | % | $ | 2,449,909 | 100.0 | % |
Three Months Ended June 30, 2016 | Three Months Ended June 30, 2015 | ||||||||||||||
Specific Allowance | General Allowance | Specific Allowance | General Allowance | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Beginning allowance balance | $ | (5,750 | ) | $ | (6,000 | ) | $ | (12,452 | ) | $ | (7,000 | ) | |||
Charge-offs | 2,101 | — | 15 | — | |||||||||||
Recoveries | 1,682 | — | 3,120 | — | |||||||||||
Change in provision for credit losses | (2,585 | ) | (300 | ) | 1 | (500 | ) | ||||||||
Ending allowance balance | $ | (4,552 | ) | $ | (6,300 | ) | $ | (9,316 | ) | $ | (7,500 | ) | |||
Six Months Ended June 30, 2016 | Six Months Ended June 30, 2015 | ||||||||||||||
Specific Allowance | General Allowance | Specific Allowance | General Allowance | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Beginning allowance balance | $ | (7,842 | ) | $ | (6,300 | ) | $ | (12,333 | ) | $ | (10,300 | ) | |||
Charge-offs | 2,101 | — | 143 | — | |||||||||||
Recoveries | 5,022 | — | 4,375 | — | |||||||||||
Change in provision for credit losses | (3,833 | ) | — | (1,501 | ) | 2,800 | |||||||||
Ending allowance balance | $ | (4,552 | ) | $ | (6,300 | ) | $ | (9,316 | ) | $ | (7,500 | ) |
June 30, 2016 | December 31, 2015 | ||||||
(Dollars in thousands) | |||||||
Individually evaluated for impairment | $ | 10,342 | $ | 21,277 | |||
Collectively evaluated for impairment | 2,453,070 | 2,428,632 | |||||
Total loans evaluated for impairment | $ | 2,463,412 | $ | 2,449,909 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Real estate owned at beginning of period | $ | 5,356 | $ | 14,611 | $ | 6,485 | $ | 20,238 | |||||||
Real estate acquired in satisfaction of mortgage loans | — | — | — | — | |||||||||||
Sales | (5,338 | ) | (1,581 | ) | (6,444 | ) | (6,480 | ) | |||||||
Impairments | — | — | — | (629 | ) | ||||||||||
Depreciation | (18 | ) | (72 | ) | (41 | ) | (171 | ) | |||||||
Real estate owned at end of period | $ | — | $ | 12,958 | $ | — | $ | 12,958 |
June 30, 2016 | December 31, 2015 | ||||||
(Dollars in thousands) | |||||||
Credit Exposure--By Payment Activity | |||||||
Performing | $ | 2,453,915 | $ | 2,438,341 | |||
In workout | 1,648 | 11,568 | |||||
Delinquent | — | — | |||||
Collateral dependent | 7,849 | — | |||||
$ | 2,463,412 | $ | 2,449,909 |
30 - 59 Days | 60 - 89 Days | 90 Days and Over | Total Past Due | Current | Collateral Dependent Receivables | Total Financing Receivables | |||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||
Commercial Mortgage Loans | |||||||||||||||||||||||||||
June 30, 2016 | $ | — | $ | — | $ | — | $ | — | $ | 2,455,563 | $ | 7,849 | $ | 2,463,412 | |||||||||||||
December 31, 2015 | $ | — | $ | — | $ | — | $ | — | $ | 2,449,909 | $ | — | $ | 2,449,909 |
Recorded Investment | Unpaid Principal Balance | Related Allowance | |||||||||
(Dollars in thousands) | |||||||||||
June 30, 2016 | |||||||||||
Mortgage loans with an allowance | $ | 5,790 | $ | 10,342 | $ | (4,552 | ) | ||||
Mortgage loans with no related allowance | 4,723 | 4,723 | — | ||||||||
$ | 10,513 | $ | 15,065 | $ | (4,552 | ) | |||||
December 31, 2015 | |||||||||||
Mortgage loans with an allowance | $ | 13,435 | $ | 21,277 | $ | (7,842 | ) | ||||
Mortgage loans with no related allowance | 8,859 | 8,859 | — | ||||||||
$ | 22,294 | $ | 30,136 | $ | (7,842 | ) |
Average Recorded Investment | Interest Income Recognized | ||||||
(Dollars in thousands) | |||||||
Three months ended June 30, 2016 | |||||||
Mortgage loans with an allowance | $ | 6,921 | $ | 164 | |||
Mortgage loans with no related allowance | 4,737 | 74 | |||||
$ | 11,658 | $ | 238 | ||||
Three months ended June 30, 2015 | |||||||
Mortgage loans with an allowance | $ | 15,518 | $ | 394 | |||
Mortgage loans with no related allowance | 11,856 | 180 | |||||
$ | 27,374 | $ | 574 | ||||
Six months ended June 30, 2016 | |||||||
Mortgage loans with an allowance | $ | 7,166 | $ | 329 | |||
Mortgage loans with no related allowance | 4,793 | 150 | |||||
$ | 11,959 | $ | 479 | ||||
Six months ended June 30, 2015 | |||||||
Mortgage loans with an allowance | $ | 15,893 | $ | 738 | |||
Mortgage loans with no related allowance | 11,873 | 372 | |||||
$ | 27,766 | $ | 1,110 |
• | borrower is in default, |
• | borrower has declared bankruptcy, |
• | there is growing concern about the borrower's ability to continue as a going concern, |
• | borrower has insufficient cash flows to service debt, |
• | borrower's inability to obtain funds from other sources, and |
• | there is a breach of financial covenants by the borrower. |
• | assets used to satisfy debt are less than our recorded investment, |
• | interest rate is modified, |
• | maturity date extension at an interest rate less than market rate, |
• | capitalization of interest, |
• | delaying principal and/or interest for a period of three months or more, and |
• | partial forgiveness of the balance or charge-off. |
Geographic Region | Number of TDRs | Principal Balance Outstanding | Specific Loan Loss Allowance | Net Carrying Amount | ||||||||||
(Dollars in thousands) | ||||||||||||||
June 30, 2016 | ||||||||||||||
South Atlantic | 2 | $ | 3,881 | $ | (461 | ) | $ | 3,420 | ||||||
East North Central | 1 | 2,061 | (467 | ) | 1,594 | |||||||||
3 | $ | 5,942 | $ | (928 | ) | $ | 5,014 | |||||||
December 31, 2015 | ||||||||||||||
South Atlantic | 6 | $ | 11,155 | $ | (2,992 | ) | $ | 8,163 | ||||||
East North Central | 2 | 3,306 | (467 | ) | 2,839 | |||||||||
West North Central | 1 | 5,913 | — | 5,913 | ||||||||||
9 | $ | 20,374 | $ | (3,459 | ) | $ | 16,915 |
June 30, 2016 | December 31, 2015 | ||||||
(Dollars in thousands) | |||||||
Assets | |||||||
Derivative instruments | |||||||
Call options | $ | 576,262 | $ | 337,256 | |||
Other assets | |||||||
Interest rate caps | 427 | 1,410 | |||||
$ | 576,689 | $ | 338,666 | ||||
Liabilities | |||||||
Policy benefit reserves - annuity products | |||||||
Fixed index annuities - embedded derivatives | $ | 6,499,015 | $ | 5,983,622 | |||
Other liabilities | |||||||
Interest rate swap | 5,971 | 3,139 | |||||
$ | 6,504,986 | $ | 5,986,761 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Change in fair value of derivatives: | |||||||||||||||
Call options | $ | 40,394 | $ | (20,141 | ) | $ | (30,357 | ) | $ | (49,361 | ) | ||||
2015 notes hedges | — | (3,942 | ) | — | (3,375 | ) | |||||||||
Interest rate swap | (982 | ) | 827 | (3,626 | ) | (934 | ) | ||||||||
Interest rate caps | (313 | ) | 232 | (983 | ) | (454 | ) | ||||||||
$ | 39,099 | $ | (23,024 | ) | $ | (34,966 | ) | $ | (54,124 | ) | |||||
Change in fair value of embedded derivatives: | |||||||||||||||
Fixed index annuities—embedded derivatives | $ | 199,917 | $ | (334,481 | ) | $ | 379,632 | $ | (404,358 | ) | |||||
Other changes in difference between policy benefit reserves computed using derivative accounting vs. long-duration contracts accounting | 84,386 | 118,822 | 170,528 | 239,345 | |||||||||||
2015 notes embedded conversion derivative | — | (3,942 | ) | — | (3,375 | ) | |||||||||
$ | 284,303 | $ | (219,601 | ) | $ | 550,160 | $ | (168,388 | ) |
June 30, 2016 | December 31, 2015 | |||||||||||||||||||
Counterparty | Credit Rating (S&P) | Credit Rating (Moody's) | Notional Amount | Fair Value | Notional Amount | Fair Value | ||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Bank of America | A | A1 | $ | 6,555,160 | $ | 124,871 | $ | 6,257,861 | $ | 67,662 | ||||||||||
Barclays | A- | A2 | 2,677,943 | 58,261 | 2,463,768 | 35,273 | ||||||||||||||
BNP Paribas | A | A1 | 1,154,557 | 25,532 | 1,520,710 | 16,944 | ||||||||||||||
Citibank, N.A. | A | A1 | 3,667,666 | 46,160 | 3,786,498 | 23,587 | ||||||||||||||
Credit Suisse | A | A2 | 1,573,916 | 29,563 | 1,278,492 | 12,508 | ||||||||||||||
Deutsche Bank | BBB+ | Baa2 | 557,990 | 6,167 | 1,349,002 | 10,704 | ||||||||||||||
J.P. Morgan | A+ | Aa3 | 1,308,604 | 24,114 | 838,982 | 5,283 | ||||||||||||||
Morgan Stanley | A | A1 | 3,322,720 | 38,833 | 3,465,457 | 33,171 | ||||||||||||||
Royal Bank of Canada | AA- | Aa3 | 3,260,997 | 76,346 | 2,820,410 | 48,654 | ||||||||||||||
SunTrust | A- | Baa1 | 1,542,351 | 38,407 | 1,308,434 | 20,028 | ||||||||||||||
Wells Fargo | AA- | Aa2 | 4,426,882 | 105,968 | 4,187,955 | 63,442 | ||||||||||||||
Exchange traded | 99,949 | 2,040 | — | — | ||||||||||||||||
$ | 30,148,735 | $ | 576,262 | $ | 29,277,569 | $ | 337,256 |
Notional | Pay | June 30, 2016 | December 31, 2015 | ||||||||||||||||
Maturity Date | Amount | Receive Rate | Rate | Counterparty | Fair Value | Fair Value | |||||||||||||
(Dollars in thousands) | |||||||||||||||||||
March 15, 2021 | $ | 85,500 | LIBOR | 2.415 | % | SunTrust | $ | (5,971 | ) | $ | (3,139 | ) |
Notional | Cap | June 30, 2016 | December 31, 2015 | ||||||||||||||||
Maturity Date | Amount | Floating Rate | Rate | Counterparty | Fair Value | Fair Value | |||||||||||||
(Dollars in thousands) | |||||||||||||||||||
July 7, 2021 | $ | 40,000 | LIBOR | 2.50 | % | SunTrust | $ | 213 | $ | 708 | |||||||||
July 8, 2021 | 12,000 | LIBOR | 2.50 | % | SunTrust | 64 | 212 | ||||||||||||
July 29, 2021 | 27,000 | LIBOR | 2.50 | % | SunTrust | 150 | 490 | ||||||||||||
$ | 79,000 | $ | 427 | $ | 1,410 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||
Numerator: | |||||||||||||||
Net income (loss) - numerator for earnings (loss) per common share | $ | 14,708 | $ | 82,845 | $ | (30,133 | ) | $ | 88,748 | ||||||
Denominator: | |||||||||||||||
Weighted average common shares outstanding (1) | 82,516,927 | 77,237,200 | 82,322,919 | 77,139,992 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
2015 warrants | — | 779,926 | 30,439 | 793,132 | |||||||||||
Stock options and deferred compensation agreements | 353,052 | 1,087,893 | 422,809 | 1,123,614 | |||||||||||
Restricted stock and restricted stock units | 314,158 | 122,298 | 296,649 | 116,405 | |||||||||||
Denominator for earnings (loss) per common share - assuming dilution | 83,184,137 | 79,227,317 | 83,072,816 | 79,173,143 | |||||||||||
Earnings (loss) per common share | $ | 0.18 | $ | 1.07 | $ | (0.37 | ) | $ | 1.15 | ||||||
Earnings (loss) per common share - assuming dilution | $ | 0.18 | $ | 1.05 | $ | (0.37 | ) | $ | 1.12 |
(1) | Weighted average common shares outstanding include shares vested under the NMO Deferred Compensation Plan. |
Period | Number of Shares | Range of Exercise Prices | ||||
Minimum | Maximum | |||||
Three months ended June 30, 2016 | 1,061,541 | $24.79 | $24.79 | |||
Three months ended June 30, 2015 | — | $— | $— | |||
Six months ended June 30, 2016 | 1,061,541 | $24.79 | $24.79 | |||
Six months ended June 30, 2015 | — | $— | $— |
• | general economic conditions and other factors, including prevailing interest rate levels and stock and credit market performance which may affect (among other things) our ability to sell our products, our ability to access capital resources and the costs associated therewith, the fair value of our investments, which could result in impairments and other than temporary impairments, and certain liabilities, and the lapse rate and profitability of policies; |
• | customer response to new products and marketing initiatives; |
• | changes in Federal income tax laws and regulations which may affect the relative income tax advantages of our products; |
• | increasing competition in the sale of annuities; |
• | regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) bank sales and underwriting of insurance products and regulation of the sale, underwriting and pricing of products; and |
• | the risk factors or uncertainties listed from time to time in our filings with the SEC. |
• | the amount of assets under our management, |
• | investment spreads we earn on our policyholder account balances, |
• | our ability to manage our investment portfolio to maximize returns and minimize risks such as interest rate changes and defaults or impairment of investments, |
• | our ability to manage interest rates credited to policyholders and costs of the options purchased to fund the annual index credits on our fixed index annuities, |
• | our ability to manage the costs of acquiring new business (principally commissions to agents and bonuses credited to policyholders) and |
• | our ability to manage our operating expenses. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2016 | 2015 | 2016 | 2015 | ||||
Average yield on invested assets | 4.54% | 4.78% | 4.56% | 4.76% | |||
Aggregate cost of money | 1.92% | 1.94% | 1.92% | 1.96% | |||
Aggregate investment spread | 2.62% | 2.84% | 2.64% | 2.80% | |||
Impact of: | |||||||
Investment yield - additional prepayment income | 0.04% | 0.07% | 0.06% | 0.04% | |||
Cost of money benefit of over hedging | —% | 0.07% | —% | 0.06% |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
Product Type | 2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | ||||||||||||||||
Fixed index annuities | $ | 1,525,546 | $ | 1,757,193 | $ | 3,213,548 | $ | 2,984,433 | ||||||||
Annual reset fixed rate annuities | 15,866 | 13,137 | 32,571 | 24,187 | ||||||||||||
Multi-year fixed rate annuities | 550,558 | 17,715 | 935,590 | 87,217 | ||||||||||||
Single premium immediate annuities | 8,313 | 9,632 | 13,627 | 18,164 | ||||||||||||
Total before coinsurance ceded | 2,100,283 | 1,797,677 | 4,195,336 | 3,114,001 | ||||||||||||
Coinsurance ceded | 594,269 | 68,952 | 1,055,255 | 173,946 | ||||||||||||
Net after coinsurance ceded | $ | 1,506,014 | $ | 1,728,725 | $ | 3,140,081 | $ | 2,940,055 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Reconciliation of net income (loss) to operating income: | |||||||||||||||
Net income (loss) | $ | 14,708 | $ | 82,845 | $ | (30,133 | ) | $ | 88,748 | ||||||
Adjustments to arrive at operating income: | |||||||||||||||
Net realized (gains) losses and net OTTI losses on investments, net of offsets | 605 | (2,556 | ) | 1,760 | (5,377 | ) | |||||||||
Change in fair value of derivatives and embedded derivatives - index annuities, net of offsets | 53,129 | (44,403 | ) | 150,678 | 22,133 | ||||||||||
Change in fair value of derivatives and embedded derivatives - debt | 768 | (1,670 | ) | 3,532 | 171 | ||||||||||
Income taxes | (19,108 | ) | 16,729 | (54,737 | ) | (5,912 | ) | ||||||||
Operating income | $ | 50,102 | $ | 50,945 | $ | 71,100 | $ | 99,763 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Surrender charges | $ | 11,997 | $ | 11,413 | $ | 26,562 | $ | 22,967 | |||||||
Lifetime income benefit riders (LIBR) fees | 29,127 | 20,996 | 51,067 | 38,124 | |||||||||||
$ | 41,124 | $ | 32,409 | $ | 77,629 | $ | 61,091 | ||||||||
Withdrawals from annuity policies subject to surrender charges | $ | 102,525 | $ | 92,509 | $ | 217,287 | $ | 185,502 | |||||||
Average surrender charge collected on withdrawals subject to surrender charges | 11.7 | % | 12.3 | % | 12.2 | % | 12.4 | % | |||||||
Fund values on policies subject to LIBR fees | $ | 4,464,676 | $ | 3,594,108 | $ | 7,876,599 | $ | 6,475,701 | |||||||
Weighted average per policy LIBR fee | 0.65 | % | 0.58 | % | 0.65 | % | 0.59 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Call options: | |||||||||||||||
Gain (loss) on option expiration | $ | (135,558 | ) | $ | 105,939 | $ | (245,198 | ) | $ | 211,293 | |||||
Change in unrealized gains/losses | 175,952 | (126,080 | ) | 214,841 | (260,654 | ) | |||||||||
2015 notes hedges | — | (3,942 | ) | — | (3,375 | ) | |||||||||
Interest rate swap | (982 | ) | 827 | (3,626 | ) | (934 | ) | ||||||||
Interest rate caps | (313 | ) | 232 | (983 | ) | (454 | ) | ||||||||
$ | 39,099 | $ | (23,024 | ) | $ | (34,966 | ) | $ | (54,124 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2016 | 2015 | 2016 | 2015 | ||||
S&P 500 Index | |||||||
Point-to-point strategy | 0.0% - 1.9% | 0.5% - 7.9% | 0.0% - 1.9% | 0.5% - 8.9% | |||
Monthly average strategy | 0.0% - 0.0% | 0.4% - 8.0% | 0.0% - 2.9% | 0.4% - 9.0% | |||
Monthly point-to-point strategy | 0.0% - 0.0% | 0.0% - 11.4% | 0.0% - 0.0% | 0.0% - 12.1% | |||
Fixed income (bond index) strategies | 0.0% -10.0% | 0.0% - 10.0% | 0.0% - 10.0% | 0.0% - 10.0% |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Available for sale fixed maturity securities: | |||||||||||||||
Gross realized gains | $ | 4,604 | $ | 2,212 | $ | 6,091 | $ | 4,500 | |||||||
Gross realized losses | (1,368 | ) | (511 | ) | (2,599 | ) | (800 | ) | |||||||
3,236 | 1,701 | 3,492 | 3,700 | ||||||||||||
Other investments: | |||||||||||||||
Gain on sale of real estate | 705 | 195 | 836 | 1,033 | |||||||||||
Loss on sale of real estate | (1 | ) | (193 | ) | (93 | ) | (575 | ) | |||||||
Impairment losses on real estate | — | — | — | (629 | ) | ||||||||||
704 | 2 | 743 | (171 | ) | |||||||||||
Mortgage loans on real estate: | |||||||||||||||
Decrease (increase) in allowance for credit losses | (2,885 | ) | (499 | ) | (3,833 | ) | 1,299 | ||||||||
Recovery of specific allowance | 1,682 | 3,120 | 5,022 | 4,375 | |||||||||||
(1,203 | ) | 2,621 | 1,189 | 5,674 | |||||||||||
$ | 2,737 | $ | 4,324 | $ | 5,424 | $ | 9,203 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Index credits on index policies | $ | 8,900 | $ | 216,902 | $ | 15,431 | $ | 414,505 | |||||||
Interest credited (including changes in minimum guaranteed interest for fixed index annuities) | 68,461 | 64,602 | 132,973 | 129,796 | |||||||||||
Lifetime income benefit riders | 33,760 | 24,637 | 60,388 | 44,665 | |||||||||||
$ | 111,121 | $ | 306,141 | $ | 208,792 | $ | 588,966 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Amortization of deferred sales inducements before gross profit adjustments | $ | 58,699 | $ | 52,212 | $ | 134,180 | $ | 101,851 | |||||||
Gross profit adjustments: | |||||||||||||||
Fair value accounting for derivatives and embedded derivatives | (27,541 | ) | 22,918 | (74,707 | ) | (16,613 | ) | ||||||||
Net realized gains (losses) on investments and net OTTI losses recognized in operations | (486 | ) | 388 | (1,322 | ) | 1,233 | |||||||||
Amortization of deferred sales inducements after gross profit adjustments | $ | 30,672 | $ | 75,518 | $ | 58,151 | $ | 86,471 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Fixed index annuities - embedded derivatives | $ | 199,917 | $ | (334,481 | ) | $ | 379,632 | $ | (404,358 | ) | |||||
Other changes in difference between policy benefit reserves computed using derivative accounting vs. long-duration contracts accounting | 84,386 | 118,822 | 170,528 | 239,345 | |||||||||||
2015 notes embedded conversion derivative | — | (3,942 | ) | — | (3,375 | ) | |||||||||
$ | 284,303 | $ | (219,601 | ) | $ | 550,160 | $ | (168,388 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Amortization of deferred policy acquisition costs before gross profit adjustments | $ | 83,354 | $ | 74,107 | $ | 192,952 | $ | 144,893 | |||||||
Gross profit adjustments: | |||||||||||||||
Fair value accounting for derivatives and embedded derivatives | (32,070 | ) | 30,041 | (90,939 | ) | (27,540 | ) | ||||||||
Net realized gains (losses) on investments and net OTTI losses recognized in operations | (619 | ) | 552 | (1,635 | ) | 1,633 | |||||||||
Amortization of deferred policy acquisition costs after gross profit adjustments | $ | 50,665 | $ | 104,700 | $ | 100,378 | $ | 118,986 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Salary and benefits | $ | 12,754 | $ | 12,803 | $ | 26,828 | $ | 23,112 | |||||||
Risk charges | 7,283 | 5,298 | 14,059 | 10,130 | |||||||||||
Other | 6,786 | 6,767 | 12,766 | 12,748 | |||||||||||
Total other operating costs and expenses | $ | 26,823 | $ | 24,868 | $ | 53,653 | $ | 45,990 |
June 30, 2016 | December 31, 2015 | ||||||||||||
Carrying Amount | Percent | Carrying Amount | Percent | ||||||||||
(Dollars in thousands) | |||||||||||||
Fixed maturity securities: | |||||||||||||
United States Government full faith and credit | $ | 449,439 | 1.0 | % | $ | 471,256 | 1.3 | % | |||||
United States Government sponsored agencies | 1,380,266 | 3.2 | % | 1,398,611 | 3.5 | % | |||||||
United States municipalities, states and territories | 3,975,544 | 9.2 | % | 3,755,367 | 9.5 | % | |||||||
Foreign government obligations | 253,990 | 0.6 | % | 212,565 | 0.5 | % | |||||||
Corporate securities | 26,459,838 | 61.2 | % | 23,879,016 | 60.3 | % | |||||||
Residential mortgage backed securities | 1,392,441 | 3.2 | % | 1,462,072 | 3.7 | % | |||||||
Commercial mortgage backed securities | 4,735,210 | 10.9 | % | 4,174,396 | 10.5 | % | |||||||
Other asset backed securities | 1,293,797 | 3.0 | % | 1,145,178 | 2.9 | % | |||||||
Total fixed maturity securities | 39,940,525 | 92.3 | % | 36,498,461 | 92.2 | % | |||||||
Equity securities | 7,813 | — | % | 7,828 | — | % | |||||||
Mortgage loans on real estate | 2,451,375 | 5.7 | % | 2,435,257 | 6.2 | % | |||||||
Derivative instruments | 576,262 | 1.3 | % | 337,256 | 0.9 | % | |||||||
Other investments | 292,776 | 0.7 | % | 291,530 | 0.7 | % | |||||||
$ | 43,268,751 | 100.0 | % | $ | 39,570,332 | 100.0 | % |
June 30, 2016 | December 31, 2015 | |||||||||||||
Rating Agency Rating | Carrying Amount | Percent of Fixed Maturity Securities | Carrying Amount | Percent of Fixed Maturity Securities | ||||||||||
(Dollars in thousands) | ||||||||||||||
Aaa/Aa/A | $ | 25,522,259 | 63.9 | % | $ | 23,724,648 | 65.0 | % | ||||||
Baa | 12,943,431 | 32.4 | % | 11,491,609 | 31.5 | % | ||||||||
Total investment grade | 38,465,690 | 96.3 | % | 35,216,257 | 96.5 | % | ||||||||
Ba | 819,379 | 2.1 | % | 657,760 | 1.8 | % | ||||||||
B | 133,805 | 0.3 | % | 68,712 | 0.2 | % | ||||||||
Caa | 74,266 | 0.2 | % | 91,998 | 0.3 | % | ||||||||
Ca and lower | 447,385 | 1.1 | % | 463,734 | 1.2 | % | ||||||||
Total below investment grade | 1,474,835 | 3.7 | % | 1,282,204 | 3.5 | % | ||||||||
$ | 39,940,525 | 100.0 | % | $ | 36,498,461 | 100.0 | % |
NAIC Designation | NRSRO Equivalent Rating | |
1 | Aaa/Aa/A | |
2 | Baa | |
3 | Ba | |
4 | B | |
5 | Caa | |
6 | Ca and lower |
June 30, 2016 | December 31, 2015 | |||||||||||||||||||||||||||||
NAIC Designation | Amortized Cost | Fair Value | Carrying Amount | Percent of Total Carrying Amount | Amortized Cost | Fair Value | Carrying Amount | Percent of Total Carrying Amount | ||||||||||||||||||||||
(Dollars in thousands) | (Dollars in thousands) | |||||||||||||||||||||||||||||
1 | $ | 23,685,524 | $ | 25,965,937 | $ | 25,965,937 | 65.0 | % | $ | 23,363,259 | $ | 24,207,801 | $ | 24,207,801 | 66.3 | % | ||||||||||||||
2 | 12,154,249 | 12,860,194 | 12,860,194 | 32.2 | % | 11,709,730 | 11,589,325 | 11,589,325 | 31.8 | % | ||||||||||||||||||||
3 | 1,045,123 | 972,142 | 980,322 | 2.5 | % | 758,531 | 643,293 | 654,538 | 1.8 | % | ||||||||||||||||||||
4 | 141,552 | 107,753 | 107,753 | 0.3 | % | 60,480 | 44,312 | 44,312 | 0.1 | % | ||||||||||||||||||||
5 | 19,384 | 12,180 | 12,180 | — | % | — | — | — | — | % | ||||||||||||||||||||
6 | 13,618 | 14,139 | 14,139 | — | % | 8,332 | 2,485 | 2,485 | — | % | ||||||||||||||||||||
$ | 37,059,450 | $ | 39,932,345 | $ | 39,940,525 | 100.0 | % | $ | 35,900,332 | $ | 36,487,216 | $ | 36,498,461 | 100.0 | % |
Number of Securities | Amortized Cost | Unrealized Losses | Fair Value | |||||||||||
(Dollars in thousands) | ||||||||||||||
June 30, 2016 | ||||||||||||||
Fixed maturity securities, available for sale: | ||||||||||||||
United States Government sponsored agencies | 2 | $ | 62,000 | $ | (550 | ) | $ | 61,450 | ||||||
United States municipalities, states and territories | 2 | 7,435 | (683 | ) | 6,752 | |||||||||
Foreign government obligations | 2 | 24,596 | (5,455 | ) | 19,141 | |||||||||
Corporate securities: | ||||||||||||||
Finance, insurance and real estate | 28 | 356,869 | (15,518 | ) | 341,351 | |||||||||
Manufacturing, construction and mining | 112 | 1,251,233 | (132,190 | ) | 1,119,043 | |||||||||
Utilities and related sectors | 69 | 589,989 | (34,860 | ) | 555,129 | |||||||||
Wholesale/retail trade | 12 | 152,860 | (10,310 | ) | 142,550 | |||||||||
Services, media and other | 30 | 267,869 | (19,502 | ) | 248,367 | |||||||||
Residential mortgage backed securities | 15 | 41,115 | (1,278 | ) | 39,837 | |||||||||
Commercial mortgage backed securities | 104 | 1,203,400 | (38,822 | ) | 1,164,578 | |||||||||
Other asset backed securities | 34 | 420,456 | (17,473 | ) | 402,983 | |||||||||
410 | $ | 4,377,822 | $ | (276,641 | ) | $ | 4,101,181 | |||||||
Fixed maturity securities, held for investment: | ||||||||||||||
Corporate security: | ||||||||||||||
Insurance | 1 | $ | 76,722 | $ | (8,180 | ) | $ | 68,542 | ||||||
December 31, 2015 | ||||||||||||||
Fixed maturity securities, available for sale: | ||||||||||||||
United States Government full faith and credit | 4 | $ | 38,029 | $ | (299 | ) | $ | 37,730 | ||||||
United States Government sponsored agencies | 21 | 971,462 | (14,409 | ) | 957,053 | |||||||||
United States municipalities, states and territories | 76 | 273,297 | (8,628 | ) | 264,669 | |||||||||
Foreign government obligations | 6 | 69,364 | (10,935 | ) | 58,429 | |||||||||
Corporate securities: | ||||||||||||||
Finance, insurance and real estate | 145 | 2,201,597 | (74,462 | ) | 2,127,135 | |||||||||
Manufacturing, construction and mining | 334 | 4,271,655 | (377,459 | ) | 3,894,196 | |||||||||
Utilities and related sectors | 216 | 2,499,341 | (161,505 | ) | 2,337,836 | |||||||||
Wholesale/retail trade | 43 | 537,720 | (25,988 | ) | 511,732 | |||||||||
Services, media and other | 101 | 1,112,071 | (43,010 | ) | 1,069,061 | |||||||||
Residential mortgage backed securities | 34 | 172,697 | (3,489 | ) | 169,208 | |||||||||
Commercial mortgage backed securities | 222 | 2,796,286 | (105,281 | ) | 2,691,005 | |||||||||
Other asset backed securities | 43 | 523,592 | (19,880 | ) | 503,712 | |||||||||
1,245 | $ | 15,467,111 | $ | (845,345 | ) | $ | 14,621,766 | |||||||
Fixed maturity securities, held for investment: | ||||||||||||||
Corporate security: | ||||||||||||||
Insurance | 1 | $ | 76,622 | $ | (11,245 | ) | $ | 65,377 |
NAIC Designation | Carrying Value of Securities with Gross Unrealized Losses | Percent of Total | Gross Unrealized Losses | Percent of Total | ||||||||||
(Dollars in thousands) | ||||||||||||||
June 30, 2016 | ||||||||||||||
1 | $ | 1,854,928 | 44.4 | % | $ | (58,004 | ) | 20.4 | % | |||||
2 | 1,475,149 | 35.3 | % | (100,966 | ) | 35.4 | % | |||||||
3 | 726,312 | 17.4 | % | (80,430 | ) | 28.2 | % | |||||||
4 | 106,728 | 2.5 | % | (33,800 | ) | 11.9 | % | |||||||
5 | 12,180 | 0.3 | % | (7,204 | ) | 2.5 | % | |||||||
6 | 2,606 | 0.1 | % | (4,417 | ) | 1.6 | % | |||||||
$ | 4,177,903 | 100.0 | % | $ | (284,821 | ) | 100.0 | % | ||||||
December 31, 2015 | ||||||||||||||
1 | $ | 8,278,102 | 56.3 | % | $ | (280,209 | ) | 32.7 | % | |||||
2 | 5,813,570 | 39.6 | % | (436,543 | ) | 51.0 | % | |||||||
3 | 560,199 | 3.8 | % | (117,814 | ) | 13.7 | % | |||||||
4 | 44,041 | 0.3 | % | (16,168 | ) | 1.9 | % | |||||||
5 | — | — | % | — | — | % | ||||||||
6 | 2,476 | — | % | (5,856 | ) | 0.7 | % | |||||||
$ | 14,698,388 | 100.0 | % | $ | (856,590 | ) | 100.0 | % |
Number of Securities | Amortized Cost | Fair Value | Gross Unrealized Losses | |||||||||||
(Dollars in thousands) | ||||||||||||||
June 30, 2016 | ||||||||||||||
Fixed maturity securities: | ||||||||||||||
Investment grade: | ||||||||||||||
Less than six months | 137 | $ | 1,662,265 | $ | 1,611,199 | $ | (51,066 | ) | ||||||
Six months or more and less than twelve months | 51 | 569,140 | 544,291 | (24,849 | ) | |||||||||
Twelve months or greater | 106 | 1,321,314 | 1,233,755 | (87,559 | ) | |||||||||
Total investment grade | 294 | 3,552,719 | 3,389,245 | (163,474 | ) | |||||||||
Below investment grade: | ||||||||||||||
Less than six months | 40 | 188,256 | 178,642 | (9,614 | ) | |||||||||
Six months or more and less than twelve months | 31 | 160,896 | 145,608 | (15,288 | ) | |||||||||
Twelve months or greater | 46 | 552,673 | 456,228 | (96,445 | ) | |||||||||
Total below investment grade | 117 | 901,825 | 780,478 | (121,347 | ) | |||||||||
411 | $ | 4,454,544 | $ | 4,169,723 | $ | (284,821 | ) | |||||||
December 31, 2015 | ||||||||||||||
Fixed maturity securities: | ||||||||||||||
Investment grade: | ||||||||||||||
Less than six months | 588 | $ | 7,395,125 | $ | 7,193,059 | $ | (202,066 | ) | ||||||
Six months or more and less than twelve months | 484 | 6,799,113 | 6,388,844 | (410,269 | ) | |||||||||
Twelve months or greater | 44 | 592,600 | 484,646 | (107,954 | ) | |||||||||
Total investment grade | 1,116 | 14,786,838 | 14,066,549 | (720,289 | ) | |||||||||
Below investment grade: | ||||||||||||||
Less than six months | 87 | 297,879 | 279,947 | (17,932 | ) | |||||||||
Six months or more and less than twelve months | 15 | 175,603 | 148,337 | (27,266 | ) | |||||||||
Twelve months or greater | 28 | 283,413 | 192,310 | (91,103 | ) | |||||||||
Total below investment grade | 130 | 756,895 | 620,594 | (136,301 | ) | |||||||||
1,246 | $ | 15,543,733 | $ | 14,687,143 | $ | (856,590 | ) |
Number of Securities | Amortized Cost | Fair Value | Gross Unrealized Losses | |||||||||||
(Dollars in thousands) | ||||||||||||||
June 30, 2016 | ||||||||||||||
Investment grade: | ||||||||||||||
Less than six months | 34 | $ | 350,409 | $ | 313,177 | $ | (37,232 | ) | ||||||
Six months or more and less than twelve months | 1 | 13,209 | 9,620 | (3,589 | ) | |||||||||
Twelve months or greater | 3 | 31,139 | 22,373 | (8,766 | ) | |||||||||
Total investment grade | 38 | 394,757 | 345,170 | (49,587 | ) | |||||||||
Below investment grade: | ||||||||||||||
Less than six months | 29 | 262,389 | 232,965 | (29,424 | ) | |||||||||
Six months or more and less than twelve months | — | — | — | — | ||||||||||
Twelve months or greater | 13 | 142,382 | 94,296 | (48,086 | ) | |||||||||
Total below investment grade | 42 | 404,771 | 327,261 | (77,510 | ) | |||||||||
80 | $ | 799,528 | $ | 672,431 | $ | (127,097 | ) | |||||||
December 31, 2015 | ||||||||||||||
Investment grade: | ||||||||||||||
Less than six months | 37 | $ | 460,894 | $ | 339,047 | $ | (121,847 | ) | ||||||
Six months or more and less than twelve months | 13 | 122,794 | 82,149 | (40,645 | ) | |||||||||
Twelve months or greater | 1 | 2,856 | 1,999 | (857 | ) | |||||||||
Total investment grade | 51 | 586,544 | 423,195 | (163,349 | ) | |||||||||
Below investment grade: | ||||||||||||||
Less than six months | 13 | 73,412 | 44,976 | (28,436 | ) | |||||||||
Six months or more and less than twelve months | 13 | 145,886 | 88,308 | (57,578 | ) | |||||||||
Twelve months or greater | 3 | 30,930 | 14,213 | (16,717 | ) | |||||||||
Total below investment grade | 29 | 250,228 | 147,497 | (102,731 | ) | |||||||||
80 | $ | 836,772 | $ | 570,692 | $ | (266,080 | ) |
Available for sale | Held for investment | ||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||
(Dollars in thousands) | |||||||||||||||
June 30, 2016 | |||||||||||||||
Due in one year or less | $ | — | $ | — | $ | — | $ | — | |||||||
Due after one year through five years | 284,854 | 268,009 | — | — | |||||||||||
Due after five years through ten years | 1,122,736 | 1,054,687 | — | — | |||||||||||
Due after ten years through twenty years | 363,714 | 330,010 | — | — | |||||||||||
Due after twenty years | 941,547 | 841,077 | 76,722 | 68,542 | |||||||||||
2,712,851 | 2,493,783 | 76,722 | 68,542 | ||||||||||||
Residential mortgage backed securities | 41,115 | 39,837 | — | — | |||||||||||
Commercial mortgage backed securities | 1,203,400 | 1,164,578 | — | — | |||||||||||
Other asset backed securities | 420,456 | 402,983 | — | — | |||||||||||
$ | 4,377,822 | $ | 4,101,181 | $ | 76,722 | $ | 68,542 | ||||||||
December 31, 2015 | |||||||||||||||
Due in one year or less | $ | — | $ | — | $ | — | $ | — | |||||||
Due after one year through five years | 257,994 | 247,957 | — | — | |||||||||||
Due after five years through ten years | 6,111,139 | 5,802,168 | — | — | |||||||||||
Due after ten years through twenty years | 2,816,752 | 2,693,742 | — | — | |||||||||||
Due after twenty years | 2,788,651 | 2,513,974 | 76,622 | 65,377 | |||||||||||
11,974,536 | 11,257,841 | 76,622 | 65,377 | ||||||||||||
Residential mortgage backed securities | 172,697 | 169,208 | — | — | |||||||||||
Commercial mortgage backed securities | 2,796,286 | 2,691,005 | — | — | |||||||||||
Other asset backed securities | 523,592 | 503,712 | — | — | |||||||||||
$ | 15,467,111 | $ | 14,621,766 | $ | 76,622 | $ | 65,377 |
June 30, 2016 | ||||||||||||||
Sector and Subsector | Amortized Cost | Fair Value | Unrealized Gain (Loss) | Average Credit Rating | ||||||||||
(Dollars in thousands) | ||||||||||||||
Energy | ||||||||||||||
Independent | $ | 499,692 | $ | 494,424 | $ | (5,268 | ) | Baa | ||||||
Integrated | 491,459 | 521,976 | 30,517 | A | ||||||||||
Oil field services | 405,207 | 380,973 | (24,234 | ) | Baa | |||||||||
Refining | 104,622 | 108,976 | 4,354 | Baa | ||||||||||
Midstream | 760,507 | 768,248 | 7,741 | Baa | ||||||||||
Government owned no guarantee | 284,207 | 305,970 | 21,763 | A | ||||||||||
Metals & Mining | 562,055 | 554,527 | (7,528 | ) | Baa | |||||||||
Total Energy and Metals & Mining | $ | 3,107,749 | $ | 3,135,094 | $ | 27,345 | Baa |
Amortized Cost at June 30, 2016 | ||||||||||||||||||||||||||||||||
Energy | ||||||||||||||||||||||||||||||||
NRSRO Rating | Independent | Integrated | Oil field services | Refining | Midstream | Government Owned No Guarantee | Metals & Mining | Total | ||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||
Aaa | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Aa | — | 228,196 | — | — | — | 19,912 | — | 248,108 | ||||||||||||||||||||||||
A | 89,477 | 78,798 | 135,821 | 12,104 | 90,864 | 214,437 | 76,592 | 698,093 | ||||||||||||||||||||||||
Baa | 363,984 | 149,246 | 176,218 | 92,518 | 635,624 | 25,262 | 287,890 | 1,730,742 | ||||||||||||||||||||||||
Ba | 32,189 | 35,219 | 64,104 | — | 34,019 | — | 129,879 | 295,410 | ||||||||||||||||||||||||
B | 14,042 | — | 29,064 | — | — | 24,596 | 54,134 | 121,836 | ||||||||||||||||||||||||
Below B | — | — | — | — | — | — | 13,560 | 13,560 | ||||||||||||||||||||||||
$ | 499,692 | $ | 491,459 | $ | 405,207 | $ | 104,622 | $ | 760,507 | $ | 284,207 | $ | 562,055 | $ | 3,107,749 |
Fair Value at June 30, 2016 | ||||||||||||||||||||||||||||||||
Energy | ||||||||||||||||||||||||||||||||
NRSRO Rating | Independent | Integrated | Oil field services | Refining | Midstream | Government Owned No Guarantee | Metals & Mining | Total | ||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||
Aaa | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Aa | — | 250,929 | — | — | — | 22,120 | — | 273,049 | ||||||||||||||||||||||||
A | 95,615 | 82,530 | 149,461 | 12,631 | 98,202 | 238,764 | 82,365 | 759,568 | ||||||||||||||||||||||||
Baa | 357,636 | 155,938 | 161,209 | 96,345 | 640,424 | 25,945 | 292,484 | 1,729,981 | ||||||||||||||||||||||||
Ba | 28,678 | 32,579 | 50,616 | — | 29,622 | — | 125,285 | 266,780 | ||||||||||||||||||||||||
B | 12,495 | — | 19,687 | — | — | 19,141 | 40,174 | 91,497 | ||||||||||||||||||||||||
Below B | — | — | — | — | — | — | 14,219 | 14,219 | ||||||||||||||||||||||||
$ | 494,424 | $ | 521,976 | $ | 380,973 | $ | 108,976 | $ | 768,248 | $ | 305,970 | $ | 554,527 | $ | 3,135,094 |
June 30, 2016 | |||||||||
Amortized Cost | Carrying Amount/Fair Value | Percent of Total Carrying Amount | |||||||
(Dollars in thousands) | |||||||||
GIIPS (1) | $ | 232,062 | $ | 261,615 | 0.7% | ||||
Asia/Pacific | 389,702 | 425,044 | 1.1% | ||||||
Non-GIIPS Europe | 2,654,195 | 2,844,906 | 7.1% | ||||||
Latin America | 231,951 | 224,213 | 0.6% | ||||||
Non-U.S. North America | 1,215,639 | 1,253,629 | 3.1% | ||||||
Australia & New Zealand | 656,656 | 693,948 | 1.7% | ||||||
Other | 947,045 | 993,181 | 2.5% | ||||||
$ | 6,327,250 | $ | 6,696,536 | 16.8% |
(1) | Greece, Ireland, Italy, Portugal and Spain continue to cause credit risk as economic conditions in these countries continue to be volatile, especially within the financial and banking sectors. All of our exposure in GIIPS are corporate securities with issuers domiciled in these countries. None of our foreign government obligations were held in any of these countries. |
June 30, 2016 | |||||||
Amortized Cost | Carrying Amount/ Fair Value | ||||||
(Dollars in thousands) | |||||||
GIIPS (1) | $ | 28,759 | $ | 29,825 | |||
Asia/Pacific | 11,500 | 8,915 | |||||
Non-GIIPS Europe | 98,970 | 91,988 | |||||
Latin America | 33,904 | 21,290 | |||||
Non-U.S. North America | 137,292 | 120,008 | |||||
$ | 310,425 | $ | 272,026 |
General Description | Number of Securities | Amortized Cost | Unrealized Gains (Losses) | Fair Value | Months in Continuous Unrealized Loss Position | Months Unrealized Losses Greater Than 20% | ||||||||||||
(Dollars in thousands) | ||||||||||||||||||
Investment grade | ||||||||||||||||||
Corporate securities: | ||||||||||||||||||
Financials | 1 | $ | 20,000 | $ | (2,568 | ) | $ | 17,432 | 58 | — | ||||||||
Other asset backed securities: | ||||||||||||||||||
Financials | 1 | 2,218 | (665 | ) | 1,553 | 63 | 14 | |||||||||||
2 | $ | 22,218 | $ | (3,233 | ) | $ | 18,985 | |||||||||||
Below investment grade | ||||||||||||||||||
Corporate securities: | ||||||||||||||||||
Energy | 4 | $ | 45,045 | $ | (12,718 | ) | $ | 32,327 | 22 - 38 | 0 - 18 | ||||||||
Materials | 4 | 32,749 | (9,123 | ) | 23,626 | 12 - 41 | 0 - 8 | |||||||||||
Industrials | 1 | 4,981 | (2,981 | ) | 2,000 | 20 | 11 | |||||||||||
Telecommunications | 1 | 2,171 | (1,241 | ) | 930 | 24 | 12 | |||||||||||
Other asset backed securities: | ||||||||||||||||||
Financials | 1 | 4,854 | (3,176 | ) | 1,678 | 37 | 18 | |||||||||||
11 | $ | 89,800 | $ | (29,239 | ) | $ | 60,561 | |||||||||||
13 | $ | 112,018 | $ | (32,472 | ) | $ | 79,546 |
June 30, 2016 | December 31, 2015 | ||||||||||||
Principal Outstanding | Percent of Total Principal Outstanding | Principal Outstanding | Percent of Total Principal Outstanding | ||||||||||
(Dollars in thousands) | |||||||||||||
Debt Service Coverage Ratio: | |||||||||||||
Greater than or equal to 1.5 | $ | 1,715,921 | 69.7 | % | $ | 1,772,226 | 72.3 | % | |||||
Greater than or equal to 1.2 and less than 1.5 | 530,110 | 21.5 | % | 414,482 | 16.9 | % | |||||||
Greater than or equal to 1.0 and less than 1.2 | 132,296 | 5.4 | % | 141,799 | 5.8 | % | |||||||
Less than 1.0 | 85,085 | 3.4 | % | 121,402 | 5.0 | % | |||||||
$ | 2,463,412 | 100.0 | % | $ | 2,449,909 | 100.0 | % |
June 30, 2016 | December 31, 2015 | ||||||
(Dollars in thousands) | |||||||
Impaired mortgage loans with an allowance | $ | 10,342 | $ | 21,277 | |||
Impaired mortgage loans with no related allowance | 4,723 | 8,859 | |||||
Allowance for probable loan losses | (4,552 | ) | (7,842 | ) | |||
Net carrying value of impaired mortgage loans | $ | 10,513 | $ | 22,294 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Annual index credits to policyholders on their anniversaries | $ | 8,900 | $ | 216,902 | $ | 15,431 | $ | 414,505 | |||||||
Proceeds received at expiration of options related to such credits | 9,308 | 222,864 | 16,050 | 425,446 |
Exhibit No. | Description | Method of Filing | ||
10.1 | Form of Restricted Stock Award Agreement with respect to Common Stock of American Equity Investment Life Holding Company - Non-Employee Directors | Filed herewith | ||
10.2 | Form of First Amendment to Employee Stock Option Agreements between American Equity Investment Life Holding Company and each of David J. Noble and Debra J. Richardson | Filed herewith | ||
10.3 | Retirement and Transition Agreement, dated as of June 29, 2016, between American Equity Investment Life Holding Company and Debra J. Richardson | Filed herewith | ||
10.4 | Form of Restricted Stock Agreement with respect to Common Stock of American Equity Investment Life Holding Company | Incorporated by reference to Exhibit 10.1 to Form 8-K filed on June 8, 2016 | ||
10.5 | Form of Performance Restricted Stock Unit Award Agreement | Incorporated by reference to Exhibit 10.2 to Form 8-K filed on June 8, 2016 | ||
12.1 | Ratio of Earnings to Fixed Charges | Filed herewith | ||
31.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
31.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
101.INS | XBRL Instance Document | Filed herewith | ||
101.SCH | XBRL Taxonomy Extension Schema Document | Filed herewith | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | Filed herewith | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith |
Date: | August 9, 2016 | AMERICAN EQUITY INVESTMENT LIFE | |||
HOLDING COMPANY | |||||
By: | /s/ John M. Matovina | ||||
John M. Matovina, Chief Executive Officer and President | |||||
(Principal Executive Officer) | |||||
By: | /s/ Ted M. Johnson | ||||
Ted M. Johnson, Chief Financial Officer and Treasurer | |||||
(Principal Financial Officer) | |||||
By: | /s/ Scott A. Samuelson | ||||
Scott A. Samuelson, Vice President - Controller | |||||
(Principal Accounting Officer) |
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY | ||
By: | ||
Name: | John M. Matovina | |
Title: | Chief Executive Officer | |
PARTICIPANT | ||
Name: |
AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY | ||
By: | ||
John M. Matovina, CEO and President | ||
OPTIONEE: | ||
Name: |
2. | Effect of Retirement. |
(a) | As of January 1, 2017 (the “Retirement Date”), the Executive shall no longer be an employee of the Company. |
(b) | 2016 Cash Incentive Award. The Executive will be entitled to receive an award for 2016 pursuant to the Company’s Short-Term Performance Incentive Plan (the “Short-Term Plan”) as she will be deemed to be actively employed as of the last day of the Award Year (as defined in the Short-Term Plan). For the basis of determining the amount of her Incentive Award (as defined in the Short-Term Plan), Executive’s Base Salary (as defined in the Short-Term Plan) will be deemed to be $257,500. Payment will be made to the Executive within the timeframe, and subject to the provisions of, the Short-Term Plan. |
(c) | Deferred Compensation. Following the Transition Period, the Executive shall be entitled to receive her account balance under the Company’s deferred compensation plan which balance shall be paid to the Executive in accordance with the terms of such plan. |
(d) | RSUs. Subject to Sections 3 and 4 hereof, each restricted stock unit (“RSU”) granted to the Executive by the Company before the Transition Period will be treated pursuant to Section 2(e)(iii) of the relevant Award Agreement between the Company and the Executive. For the avoidance of doubt, RSUs granted other than under the 2009 Employee Incentive Plan shall be deemed subject to the definition of “Retirement” as contained in the 2009 Employee Incentive Plan. For purposes of calculating awards under all outstanding Award Agreements as of the Retirement Date, the Executive’s employment shall be deemed to have terminated on June 30, 2016. |
(e) | Options. Subject to Sections 3 and 4 hereof, following the Transition Period, the Executive shall be entitled to exercise each option to purchase shares of the Company’s common stock which the Executive holds and which is outstanding as of the Retirement Date (collectively, the “Options”), in whole or in part, until the expiration date of the Option. Such Options shall continue to be governed by the terms of the applicable agreements, terms and conditions and plans (including provisions permitting adjustment of options in the event of certain corporate events). Each Option is listed on Exhibit A hereto; along with the number of shares subject thereto, the applicable per-share exercise price and the expiration date of such Option. |
(f) | Health Insurance. For a period of eighteen (18) months following the Transition Period (the “COBRA Period”), the Executive will be eligible to participate in the Company’s COBRA continuation medical coverage. During the COBRA Period, the Company shall contribute towards the Executive’s COBRA continuation coverage an amount equal to the employer-paid health insurance premium the Executive would have received if she remained employed by the Company; provided, however, that nothing in this Section 2(e) shall limit the Company’s right to amend or terminate at any time such benefits. |
3. | Release of Claims. |
4. | Confidentiality. |
5. | General Provisions. |
(a) | Severability. It is the desire and intent of the parties that the provisions of this Agreement shall be enforced to the fullest extent permissible. In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of this Agreement shall remain valid and enforceable and continue in full force and effect to the fullest extent consistent with law. |
(b) | Notices. Any and all notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be effective when delivered in person, consigned to a reputable national or international courier service (including Federal Express), and addressed to the Executive at the last known address on the books of the Company or, in the case of the Company, at the Company’s principal place of business, attention of the Chairman of the Company, or to such other address as either party may specify by notice to the other actually received. |
(c) | Successors and Assigns. This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. |
(d) | Governing Law; Captions; Amendment. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Iowa, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified except by a written agreement executed by the parties hereto or their respective successors and legal representatives. |
(e) | Code Section 409A Compliance. The Company and the Executive each hereby affirm that it is their mutual view that the provision of payments and benefits described or referenced herein are exempt from or in compliance with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the Treasury regulations relating thereto (“Section 409A”) and that each party’s tax reporting shall be completed in a manner consistent with such view. The Company and the Executive each agree that upon the Retirement Date, the Executive shall experience a “separation from service” for purposes of Section 409A. Any payments that qualify for the “short-term deferral” exception or another exception under Section 409A shall be paid under the applicable exception. For purposes of the limitations on nonqualified deferred compensation under Section 409A of the Code, each payment of compensation under this Agreement shall be treated as a separate payment of compensation. Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement during the six-month period immediately following the Transition Period shall instead be paid on the first business day after the date that is six months following the Retirement Date (or death, if earlier). Notwithstanding anything to the contrary in this Agreement, all reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A, including, where applicable, the requirement that (x) the amount of expenses eligible for reimbursement, or in kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in kind benefits to be provided, in any other calendar year; (y) the reimbursement of an eligible expense shall be made no later than the last day of the calendar year following the year in which the expense is incurred; and (z) the right to reimbursement or in kind benefits is not subject to liquidation or exchange for another benefit. Neither the Company nor its affiliates shall be liable in any manner for any federal, state or local income or excise taxes (including but not limited to any taxes under Section 409A), or penalties or interest with respect thereto, as a result of the payment of any compensation or benefits hereunder or the inclusion of any such compensation or benefits or the value thereof in the Executive’s income. The Executive acknowledges and agrees that the Company shall not be responsible for any additional taxes or penalties resulting from the application of Section 409A. |
(f) | Withholding. Notwithstanding any other provision of this Agreement, the Company may withhold from amounts payable under this Agreement all amounts that are required or authorized to be withheld, including, but not limited to, federal, state, local and foreign taxes to be withheld by applicable laws or regulations. |
(g) | Entire Agreement. This Agreement constitutes the entire agreement between the Executive and the Company with respect to the subjects addressed herein and supersedes all prior agreements, understandings and representations, written or oral, with respect to those subjects. |
(h) | Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and which together shall be deemed to be one and the same instrument. |
ACCEPTED AND AGREED TO: | ACCEPTED AND AGREED TO: | ||
Debra J. Richardson | American Equity Investment Life Holding Company | ||
By: | |||
Date: June 29, 2016 | Date: June 29, 2016 |
Vesting Date | Expiration Date | # of Options | Exercise Price |
6/11/2013 | 6/11/2020 | 27,750 | $9.27 |
5/8/2012 | 5/8/2019 | 40,000 | $7.00 |
6/11/2011 | 6/11/2018 | 40,000 | $10.85 |
Six Months Ended | Year Ended December 31, | ||||||||||||||||||||||
June 30, 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Consolidated income (loss) before income taxes | $ | (46,366 | ) | $ | 337,314 | $ | 196,064 | $ | 389,332 | $ | 85,989 | $ | 132,914 | ||||||||||
Interest sensitive and index product benefits and amortization of deferred sales inducements | 266,943 | 1,177,443 | 1,605,119 | 1,525,980 | 895,636 | 846,878 | |||||||||||||||||
Interest expense on notes payable | 13,762 | 28,849 | 36,370 | 38,870 | 28,479 | 31,633 | |||||||||||||||||
Interest expense on subordinated debentures | 6,374 | 12,239 | 12,122 | 12,088 | 13,458 | 13,977 | |||||||||||||||||
Interest expense on amounts due under repurchase agreements and other interest expense | — | 2 | 18 | 139 | — | 30 | |||||||||||||||||
Interest portion of rental expense | 463 | 902 | 847 | 797 | 697 | 665 | |||||||||||||||||
Consolidated earnings | $ | 241,176 | $ | 1,556,749 | $ | 1,850,540 | $ | 1,967,206 | $ | 1,024,259 | $ | 1,026,097 | |||||||||||
Interest sensitive and index product benefits and amortization of deferred sales inducements | $ | 266,943 | $ | 1,177,443 | $ | 1,605,119 | $ | 1,525,980 | $ | 895,636 | $ | 846,878 | |||||||||||
Interest expense on notes payable | 13,762 | 28,849 | 36,370 | 38,870 | 28,479 | 31,633 | |||||||||||||||||
Interest expense on subordinated debentures | 6,374 | 12,239 | 12,122 | 12,088 | 13,458 | 13,977 | |||||||||||||||||
Interest expense on amounts due under repurchase agreements and other interest expense | — | 2 | 18 | 139 | — | 30 | |||||||||||||||||
Interest portion of rental expense | 463 | 902 | 847 | 797 | 697 | 665 | |||||||||||||||||
Combined fixed charges | $ | 287,542 | $ | 1,219,435 | $ | 1,654,476 | $ | 1,577,874 | $ | 938,270 | $ | 893,183 | |||||||||||
Ratio of consolidated earnings to fixed charges | 0.8 | 1.3 | 1.1 | 1.2 | 1.1 | 1.1 | |||||||||||||||||
Ratio of consolidated earnings to fixed charges, both excluding interest sensitive and index product benefits and amortization of deferred sales inducements | (1.3 | ) | 9.0 | 5.0 | 8.5 | 3.0 | 3.9 |
1. | I have reviewed this quarterly report on Form 10-Q of American Equity Investment Life Holding Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | August 9, 2016 | By: | /s/ JOHN M. MATOVINA | |
John M. Matovina, Chief Executive Officer and President (Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of American Equity Investment Life Holding Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | August 9, 2016 | By: | /s/ TED M. JOHNSON | |
Ted M. Johnson, Chief Financial Officer and Treasurer (Principal Financial Officer) |
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 9, 2016 | By: | /s/ JOHN M. MATOVINA | |
John M. Matovina, Chief Executive Officer and President (Principal Executive Officer) |
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 9, 2016 | By: | /s/ TED M. JOHNSON | |
Ted M. Johnson, Chief Financial Officer and Treasurer (Principal Financial Officer) |
Document and Entity Information Document - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Aug. 05, 2016 |
|
Document Information [Line Items] | ||
Entity Registrant Name | AMERICAN EQUITY INVESTMENT LIFE HOLDING CO | |
Entity Central Index Key | 0001039828 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 87,997,986 |
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fixed maturity securities: | ||
Available for sale, at fair value, amortized cost | $ 36,982,728 | $ 35,823,710 |
Held for investment, at amortized cost, fair value | 68,542 | 65,377 |
Equity securities, available for sale, at fair value, cost | $ 7,518 | $ 7,515 |
Stockholders' equity: | ||
Preferred stock, par value (dollars per share) | $ 1 | $ 1 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 82,278,771 | 81,354,079 |
Common stock, shares outstanding | 82,278,771 | 81,354,079 |
Common stock, shares held in treasury | 3,244,255 | 3,448,750 |
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
||||
Net income (loss) | $ 14,708 | $ 82,845 | $ (30,133) | $ 88,748 | |||
Other comprehensive income (loss): | |||||||
Change in net unrealized investment gains/losses (1) | [1] | 555,412 | (778,097) | 1,060,760 | (513,984) | ||
Noncredit component of OTTI losses (1) | [1] | 1,713 | 413 | 1,566 | 413 | ||
Reclassification of unrealized investment gains/losses to net income (loss) (1) | [1] | 1,511 | 825 | 1,627 | 1,844 | ||
Other comprehensive income (loss) before income tax | 558,636 | (776,859) | 1,063,953 | (511,727) | |||
Income tax effect related to other comprehensive income (loss) | (195,523) | 271,900 | (372,384) | 179,105 | |||
Other comprehensive income (loss) | 363,113 | (504,959) | 691,569 | (332,622) | |||
Comprehensive income (loss) | $ 377,821 | $ (422,114) | $ 661,436 | $ (243,874) | |||
|
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands |
Total |
Common Stock [Member] |
Additional Paid-In Capital [Member] |
Accumulated Other Comprehensive Income [Member] |
Retained Earnings [Member] |
---|---|---|---|---|---|
Stockholders' equity at beginning of period at Dec. 31, 2014 | $ 2,139,876 | $ 76,062 | $ 513,218 | $ 721,401 | $ 829,195 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 88,748 | 88,748 | |||
Other comprehensive income (loss) | (332,622) | (332,622) | |||
Share-based compensation, including excess income tax benefits | 6,361 | 6,361 | |||
Issuance of common stock under compensation plans, including excess income tax benefits | 5,399 | 732 | 4,667 | ||
Stockholders' equity at end of period at Jun. 30, 2015 | 1,907,762 | 76,794 | 524,246 | 388,779 | 917,943 |
Stockholders' equity at beginning of period at Dec. 31, 2015 | 1,944,535 | 81,354 | 630,367 | 201,663 | 1,031,151 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (30,133) | (30,133) | |||
Other comprehensive income (loss) | 691,569 | 691,569 | |||
Share-based compensation, including excess income tax benefits | 3,889 | 3,889 | |||
Issuance of common stock under compensation plans, including excess income tax benefits | 3,531 | 832 | 2,699 | ||
Issuance of common stock to settle warrants that have reached their expiration | (1) | 93 | (94) | ||
Stockholders' equity at end of period at Jun. 30, 2016 | $ 2,613,390 | $ 82,279 | $ 636,861 | $ 893,232 | $ 1,001,018 |
Consolidated Statements of Changes in Stockholders' Equity (Parentheticals) - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Shares of common stock issued under compensation plans, including excess income tax benefits | 831,694 | 731,170 |
Shares of common stock issued to settle warrants that have reached their expiration | 92,998 |
Consolidated Statements of Cash Flows - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Operating activities | ||
Net income (loss) | $ (30,133) | $ 88,748 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Interest sensitive and index product benefits | 208,792 | 588,966 |
Amortization of deferred sales inducements | 58,151 | 86,471 |
Annuity product charges | (77,629) | (61,091) |
Change in fair value of embedded derivatives | 550,160 | (168,388) |
Change in traditional life and accident and health insurance reserves | 2,261 | 1,699 |
Policy acquisition costs deferred | (304,877) | (292,140) |
Amortization of deferred policy acquisition costs | 100,378 | 118,986 |
Provision for depreciation and other amortization | 1,745 | 2,518 |
Amortization of discounts and premiums on investments | (5,342) | (6,528) |
Realized gains/losses on investments and net OTTI losses recognized in operations | 4,716 | (8,243) |
Change in fair value of derivatives | 34,172 | 53,191 |
Deferred income taxes | (40,257) | 3,096 |
Share-based compensation | 3,448 | 3,347 |
Change in accrued investment income | (15,289) | (16,613) |
Change in income taxes recoverable/payable | (6,078) | (12,636) |
Change in other assets | 706 | 178 |
Change in other policy funds and contract claims | (23,793) | (27,115) |
Change in collateral held for derivatives | 10,615 | (97,273) |
Change in other liabilities | (41,573) | 13,141 |
Other | (7,793) | (4,817) |
Net cash provided by operating activities | 422,380 | 265,497 |
Sales, maturities, or repayments of investments: | ||
Fixed maturity securities - available for sale | 1,421,976 | 886,573 |
Mortgage loans on real estate | 215,904 | 229,179 |
Derivative instruments | 15,859 | 452,212 |
Other investments | 11,597 | 10,930 |
Acquisition of investments: | ||
Fixed maturity securities - available for sale | (2,542,281) | (3,312,404) |
Mortgage loans on real estate | (229,328) | (239,408) |
Derivative instruments | (289,412) | (275,523) |
Other investments | (6,945) | (4,901) |
Purchases of property, furniture and equipment | (506) | (592) |
Net cash used in investing activities | (1,403,136) | (2,253,934) |
Financing activities | ||
Receipts credited to annuity and single premium universal life policyholder account balances | 4,181,709 | 3,095,837 |
Coinsurance deposits | (884,741) | (16,800) |
Return of annuity policyholder account balances | (1,168,302) | (1,022,667) |
Excess tax benefits realized from share-based compensation plans | 441 | 3,014 |
Proceeds from issuance of common stock | 3,779 | 5,399 |
Change in checks in excess of cash balance | (2,838) | (44,046) |
Net cash provided by financing activities | 2,130,048 | 2,020,737 |
Increase in cash and cash equivalents | 1,149,292 | 32,300 |
Cash and cash equivalents at beginning of period | 397,749 | 701,514 |
Cash and cash equivalents at end of period | 1,547,041 | 733,814 |
Cash paid during period for interest: | ||
Interest expense | 19,390 | 19,526 |
Cash paid during period for income taxes: | ||
Income taxes | 29,961 | 53,401 |
Non-cash operating activity: | ||
Deferral of sales inducements | 196,207 | 219,191 |
Common Stock Issued to Settle Warrants That Have Expired [Member] | ||
Non-cash financing activities: | ||
Common stock issued | $ 93 | $ 0 |
Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Consolidation and Basis of Presentation The accompanying consolidated financial statements of American Equity Investment Life Holding Company (“we”, “us” or “our”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by GAAP for complete financial statements. The consolidated financial statements reflect all adjustments, consisting only of normal recurring items, which are necessary to present fairly our financial position and results of operations on a basis consistent with the prior audited consolidated financial statements. Operating results for the three and six month periods ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ended December 31, 2016. All significant intercompany accounts and transactions have been eliminated. The preparation of financial statements requires the use of management estimates. For further information related to a description of areas of judgment and estimates and other information necessary to understand our financial position and results of operations, refer to the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2015. Adopted Accounting Pronouncements In April 2015, the Financial Accounting Standards Board ("FASB") issued an accounting standards update ("ASU") which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Subsequently, in August 2015, the FASB issued an ASU that states that the Securities and Exchange Commission staff would not object to an entity deferring and presenting debt issuance costs related to line-of-credit arrangements as an asset and expensing those costs ratably over the term of the line of credit arrangement. These ASU's became effective for us on January 1, 2016, and retroactive application is required. They did not have a material impact on our consolidated financial statements. New Accounting Pronouncements In January 2016, the FASB issued an ASU that, among other aspects of recognition, measurement, presentation and disclosure of financial instruments, primarily requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Additionally, it changes the accounting for financial liabilities measured at fair value under the fair value option and eliminates some disclosures regarding fair value of financial assets and liabilities measured at amortized cost. This ASU will be effective for us on January 1, 2018, and we have not determined the effect it will have on our consolidated financial statements. In February 2016, the FASB issued an ASU that will require recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU affects accounting and disclosure more dramatically for lessees as accounting for lessors is mainly unchanged. This ASU will be effective for us on January 1, 2019, with early adoption permitted, and we have not determined the effect it will have on our consolidated financial statements. In March 2016, the FASB issued an ASU related to the accounting for share-based payment transactions. The aspects of accounting guidance affected by this ASU are income taxes, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU will be effective for us on January 1, 2017, with early adoption permitted, and we have not determined the effect it will have on our consolidated financial statements. In June 2016, the FASB issued an ASU that significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model that requires these assets be presented at the net amount expected to be collected. In addition, credit losses on available for sale debt securities should be recorded through an allowance account. This ASU will be effective for us on January 1, 2020, with early adoption permitted, and we have not yet determined the impact this updated guidance will have on our consolidated financial statements. |
Fair Values of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Values of Financial Instruments | Fair Values of Financial Instruments The following sets forth a comparison of the carrying amounts and fair values of our financial instruments:
Fair value is the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The objective of a fair value measurement is to determine that price for each financial instrument at each measurement date. We meet this objective using various methods of valuation that include market, income and cost approaches. We categorize our financial instruments into three levels of fair value hierarchy based on the priority of inputs used in determining fair value. The hierarchy defines the highest priority inputs (Level 1) as quoted prices in active markets for identical assets or liabilities. The lowest priority inputs (Level 3) are our own assumptions about what a market participant would use in determining fair value such as estimated future cash flows. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. We categorize financial assets and liabilities recorded at fair value in the consolidated balance sheets as follows:
Transfers of securities among the levels occur at times and depend on the type of inputs used to determine fair value of each security. There were no transfers between levels during any period presented. Our assets and liabilities which are measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015 are presented below based on the fair value hierarchy levels:
The following methods and assumptions were used in estimating the fair values of financial instruments during the periods presented in these consolidated financial statements. Fixed maturity securities and equity securities The fair values of fixed maturity securities and equity securities in an active and orderly market are determined by utilizing independent pricing services. The independent pricing services incorporate a variety of observable market data in their valuation techniques, including:
The independent pricing services also take into account perceived market movements and sector news, as well as a security's terms and conditions, including any features specific to that issue that may influence risk and marketability. Depending on the security, the priority of the use of observable market inputs may change as some observable market inputs may not be relevant or additional inputs may be necessary. The independent pricing services provide quoted market prices when available. Quoted prices are not always available due to market inactivity. When quoted market prices are not available, the third parties use yield data and other factors relating to instruments or securities with similar characteristics to determine fair value for securities that are not actively traded. We generally obtain one value from our primary external pricing service. In situations where a price is not available from this service, we may obtain further quotes or prices from additional parties as needed. In addition, for our callable United States Government sponsored agencies, we obtain multiple broker quotes and take the average of the broker prices received. Market indices of similar rated asset class spreads are considered for valuations and broker indications of similar securities are compared. Inputs used by the broker include market information, such as yield data and other factors relating to instruments or securities with similar characteristics. Valuations and quotes obtained from third party commercial pricing services are non-binding and do not represent quotes on which one may execute the disposition of the assets. We validate external valuations at least quarterly through a combination of procedures that include the evaluation of methodologies used by the pricing services, analytical reviews and performance analysis of the prices against trends, and maintenance of a securities watch list. Additionally, as needed we utilize discounted cash flow models or perform independent valuations on a case-by-case basis using inputs and assumptions similar to those used by the pricing services. Although we do identify differences from time to time as a result of these validation procedures, we did not make any significant adjustments as of June 30, 2016 and December 31, 2015. Mortgage loans on real estate Mortgage loans on real estate are not measured at fair value on a recurring basis. The fair values of mortgage loans on real estate are calculated using discounted expected cash flows using current competitive market interest rates currently being offered for similar loans. The fair values of impaired mortgage loans on real estate that we have considered to be collateral dependent are based on the fair value of the real estate collateral (based on appraised values) less estimated costs to sell. The inputs utilized to determine fair value of all mortgage loans are unobservable market data (competitive market interest rates and appraised property values); therefore, fair value of mortgage loans falls into Level 3 in the fair value hierarchy. Derivative instruments The fair values of derivative instruments, primarily call options, are based upon the amount of cash that we will receive to settle each derivative instrument on the reporting date. These amounts are determined by our investment team using industry accepted valuation models and are adjusted for the nonperformance risk of each counterparty net of any collateral held. Inputs include market volatility and risk free interest rates and are used in income valuation techniques in arriving at a fair value for each option contract. The nonperformance risk for each counterparty is based upon its credit default swap rate. We have no performance obligations related to the call options purchased to fund our fixed index annuity policy liabilities. Other investments None of the financial instruments included in other investments are measured at fair value on a recurring basis. Financial instruments included in other investments are policy loans, equity method investments and company owned life insurance (COLI). We have not attempted to determine the fair values associated with our policy loans, as we believe any differences between carrying value and the fair values afforded these instruments are immaterial to our consolidated financial position and, accordingly, the cost to provide such disclosure does not justify the benefit to be derived. The fair value of our equity method investments qualify as Level 3 fair values and were determined by calculating the present value of future cash flows discounted by a risk free rate, a risk spread and a liquidity discount. The risk spread and liquidity discount are rates determined by our investment professionals and are unobservable market inputs. The fair value of our COLI approximates the cash surrender value of the policies and whose fair values fall within Level 2 of the fair value hierarchy. Cash and cash equivalents Amounts reported in the consolidated balance sheets for these instruments are reported at their historical cost which approximates fair value due to the nature of the assets assigned to this category. Interest rate swap and caps The fair values of our pay fixed/receive variable interest rate swap and our interest rate caps are obtained from third parties and are determined by discounting expected future cash flows using projected LIBOR rates for the term of the swap and caps. Counterparty collateral Amounts reported in other assets on the consolidated balance sheets for these instruments are reported at their historical cost which approximates fair value due to the nature of the assets assigned to this category. Policy benefit reserves, coinsurance deposits and SPIA benefit reserves The fair values of the liabilities under contracts not involving significant mortality or morbidity risks (principally deferred annuities), are stated at the cost we would incur to extinguish the liability (i.e., the cash surrender value) as these contracts are generally issued without an annuitization date. The coinsurance deposits related to the annuity benefit reserves have fair values determined in a similar fashion. For period-certain annuity benefit contracts, the fair value is determined by discounting the benefits at the interest rates currently in effect for newly purchased immediate annuity contracts. We are not required to and have not estimated the fair value of the liabilities under contracts that involve significant mortality or morbidity risks, as these liabilities fall within the definition of insurance contracts that are exceptions from financial instruments that require disclosures of fair value. Policy benefit reserves, coinsurance deposits and SPIA benefit reserves are not measured at fair value on a recurring basis. All of the fair values presented within these categories fall within Level 3 of the fair value hierarchy as most of the inputs are unobservable market data. Notes payable The fair values of our senior unsecured notes are based upon pricing matrices developed by a third party pricing service when quoted market prices are not available and are categorized as Level 2 within the fair value hierarchy. Notes payable are not remeasured at fair value on a recurring basis. Subordinated debentures Fair values for subordinated debentures are estimated using discounted cash flow calculations based principally on observable inputs including our incremental borrowing rates, which reflect our credit rating, for similar types of borrowings with maturities consistent with those remaining for the debt being valued. These fair values are categorized as Level 2 within the fair value hierarchy. Subordinated debentures are not measured at fair value on a recurring basis. Fixed index annuities - embedded derivatives We estimate the fair value of the embedded derivative component of our fixed index annuity policy benefit reserves at each valuation date by (i) projecting policy contract values and minimum guaranteed contract values over the expected lives of the contracts and (ii) discounting the excess of the projected contract value amounts at the applicable risk free interest rates adjusted for our nonperformance risk related to those liabilities. The projections of policy contract values are based on our best estimate assumptions for future policy growth and future policy decrements. Our best estimate assumptions for future policy growth include assumptions for the expected index credit on the next policy anniversary date which are derived from the fair values of the underlying call options purchased to fund such index credits and the expected costs of annual call options we will purchase in the future to fund index credits beyond the next policy anniversary. The projections of minimum guaranteed contract values include the same best estimate assumptions for policy decrements as were used to project policy contract values. Within this determination we have the following significant unobservable inputs: 1) the expected cost of annual call options we will purchase in the future to fund index credits beyond the next policy anniversary and 2) our best estimates for future policy decrements, primarily lapse, partial withdrawal and mortality rates. As of both June 30, 2016 and December 31, 2015, we utilized an estimate of 3.10% for the expected cost of annual call options, which are based on estimated account value growth and a historical review of our actual option costs. Our best estimate assumptions for lapse, partial withdrawal and mortality rates are based on our actual experience and our outlook as to future expectations for such assumptions. These assumptions, which are consistent with the assumptions used in calculating deferred policy acquisition costs and deferred sales inducements, are reviewed on a quarterly basis and are revised as our experience develops and/or as future expectations change. Our mortality rate assumptions are based on 65% of the 1983 Basic Annuity Mortality Tables. The following table presents average lapse rate and partial withdrawal rate assumptions, by contract duration, used in estimating the fair value of the embedded derivative component of our fixed index annuity policy benefit reserves at each reporting date:
Lapse rates are generally expected to increase as surrender charge percentages decrease. Lapse expectations reflect a significant increase in the year in which the surrender charge period on a contract ends. The following tables provide a reconciliation of the beginning and ending balances for our Level 3 assets and liabilities, which are measured at fair value on a recurring basis using significant unobservable inputs for the three and six months ended June 30, 2016 and 2015:
The Level 3 assets included in the table above are not material to our financial position, results of operations or cash flows, and it is management's opinion that the sensitivity of the inputs used in determining the fair value of these assets is not material as well.
Change in fair value, net for each period in our embedded derivatives are included in change in fair value of embedded derivatives in the unaudited consolidated statements of operations. Certain derivatives embedded in our fixed index annuity contracts are our most significant financial instrument measured at fair value that are categorized as Level 3 in the fair value hierarchy. The contractual obligations for future annual index credits within our fixed index annuity contracts are treated as a "series of embedded derivatives" over the expected life of the applicable contracts. We estimate the fair value of these embedded derivatives at each valuation date by the method described above under fixed index annuities - embedded derivatives. The projections of minimum guaranteed contract values include the same best estimate assumptions for policy decrements as were used to project policy contract values. The most sensitive assumption in determining policy liabilities for fixed index annuities is the rates used to discount the excess projected contract values. As indicated above, the discount rate reflects our nonperformance risk. If the discount rates used to discount the excess projected contract values at June 30, 2016, were to increase by 100 basis points, the fair value of the embedded derivatives would decrease by $462.7 million recorded through operations as a decrease in the change in fair value of embedded derivatives and there would be a corresponding decrease of $274.1 million to our combined balance for deferred policy acquisition costs and deferred sales inducements recorded through operations as an increase in amortization of deferred policy acquisition costs and deferred sales inducements. A decrease by 100 basis points in the discount rate used to discount the excess projected contract values would increase the fair value of the embedded derivatives by $518.8 million recorded through operations as an increase in the change in fair value of embedded derivatives and there would be a corresponding increase of $303.6 million to our combined balance for deferred policy acquisition costs and deferred sales inducements recorded through operations as a decrease in amortization of deferred policy acquisition costs and deferred sales inducements. |
Investments |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments At June 30, 2016 and December 31, 2015, the amortized cost and fair value of fixed maturity securities and equity securities were as follows:
At June 30, 2016, 35% of our fixed income securities have call features, of which 0.2% ($77.2 million) were subject to call redemption and another 2.9% ($1.1 billion) will become subject to call redemption during the next twelve months. Approximately 68% of our fixed income securities that have call features are not callable until within six months of their stated maturities. The amortized cost and fair value of fixed maturity securities at June 30, 2016, by contractual maturity, are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. All of our mortgage and other asset backed securities provide for periodic payments throughout their lives and are shown below as separate lines.
Net unrealized gains on available for sale fixed maturity securities and equity securities reported as a separate component of stockholders' equity were comprised of the following:
The National Association of Insurance Commissioners (“NAIC”) assigns designations to fixed maturity securities. These designations range from Class 1 (highest quality) to Class 6 (lowest quality). In general, securities are assigned a designation based upon the ratings they are given by the Nationally Recognized Statistical Rating Organizations (“NRSRO’s”). The NAIC designations are utilized by insurers in preparing their annual statutory statements. NAIC Class 1 and 2 designations are considered “investment grade” while NAIC Class 3 through 6 designations are considered “non-investment grade.” Based on the NAIC designations, we had 97% and 98% of our fixed maturity portfolio rated investment grade at June 30, 2016 and December 31, 2015, respectively. The following table summarizes the credit quality, as determined by NAIC designation, of our fixed maturity portfolio as of the dates indicated:
The following table shows our investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities (consisting of 411 and 1,246 securities, respectively) have been in a continuous unrealized loss position, at June 30, 2016 and December 31, 2015:
Based on the results of our process for evaluating available for sale securities in unrealized loss positions for other than temporary impairments, which is discussed in detail later in this footnote, we have determined that the unrealized losses on the securities in the preceding table are temporary. The unrealized losses at June 30, 2016 are principally related to select sectors of the credit markets with spreads that remain wide due to specific market concerns around metals, mining and energy. The commodity related sectors had a high concentration of gross unrealized losses in our corporate fixed income securities portfolio as of June 30, 2016 and December 31, 2015. Commodity prices, specifically oil, gas and base metals, declined significantly in late 2015, but prices have risen in 2016 to levels that appear sustainable and should support prices and NRSRO ratings longer term. The value of oil has been significantly depressed as the amount of supply from new production has exceeded demand. In addition, iron ore and other key industrial metals have depressed prices as investors perceive the economic slowdown in Asia Pacific will curb demand as supply remains high. The companies in the metal and mining sectors experienced the largest decline in values of their debt in late 2015. In the above table, oil and metals and mining exposure is reflected within the foreign government; manufacturing, construction and mining; and utilities and related sectors. Within these sectors, we continue to monitor the impact to our investment portfolio for those companies that may be adversely affected, both directly and indirectly. Even though the energy holdings and a majority of the metals and mining holdings have seen significant improvements in values as oil and iron ore prices have increased, they could continue to see price volatility and possible downgrades in credit ratings. If oil and commodity prices fall lower and remain at depressed levels for an extended period of time or decline further, certain issuers and investments may come under further stress. At this time, we believe the unrealized losses are temporary due to the fact that the price decline is driven by an over-supply of oil in the energy sector, which we feel is unsustainable long term. Our exposure is in companies that we believe have more financial flexibility and significant operational scale to manage through the downturn. In addition, price declines in the metal and mining sector have been heavily influenced by excess production and softer demand. Companies in the mining sector are more susceptible to rating downgrades and we believe companies will be under continued financial strain if prices decline again. We believe company issuers in our portfolio will be able to meet their debt service obligations. Approximately 56% and 84% of the unrealized losses on fixed maturity securities shown in the above table for June 30, 2016 and December 31, 2015, respectively, are on securities that are rated investment grade, defined as being the highest two NAIC designations. All of the fixed maturity securities with unrealized losses are current with respect to the payment of principal and interest. Changes in net unrealized gains on investments for the three and six months ended June 30, 2016 and 2015 are as follows:
Proceeds from sales of available for sale securities for the six months ended June 30, 2016 and 2015 were $186.1 million and $242.8 million, respectively. Scheduled principal repayments, calls and tenders for available for sale securities for the six months ended June 30, 2016 and 2015 were $1.2 billion and $643.8 million, respectively. Realized gains and losses on sales are determined on the basis of specific identification of investments based on the trade date. Net realized gains (losses) on investments, excluding net OTTI losses for the three and six months ended June 30, 2016 and 2015, are as follows:
Losses on available for sale fixed maturity securities were realized primarily due to strategies to reposition the fixed maturity security portfolio that result in improved net investment income, credit risk or duration profiles as they pertain to our asset liability management. We review and analyze all investments on an ongoing basis for changes in market interest rates and credit deterioration. This review process includes analyzing our ability to recover the amortized cost basis of each investment that has a fair value that is materially lower than its amortized cost and requires a high degree of management judgment and involves uncertainty. The evaluation of securities for other than temporary impairments is a quantitative and qualitative process, which is subject to risks and uncertainties. We have a policy and process to identify securities that could potentially have impairments that are other than temporary. This process involves monitoring market events and other items that could impact issuers. The evaluation includes but is not limited to such factors as:
We determine whether other than temporary impairment losses should be recognized for debt and equity securities by assessing all facts and circumstances surrounding each security. Where the decline in fair value of debt securities is attributable to changes in market interest rates or to factors such as market volatility, liquidity and spread widening, and we anticipate recovery of all contractual or expected cash flows, we do not consider these investments to be other than temporarily impaired because we do not intend to sell these investments and it is not more likely than not we will be required to sell these investments before a recovery of amortized cost, which may be maturity. For equity securities, we recognize an impairment charge in the period in which we do not have the intent and ability to hold the securities until recovery of cost or we determine that the security will not recover to book value within a reasonable period of time. We determine what constitutes a reasonable period of time on a security-by-security basis by considering all the evidence available to us, including the magnitude of any unrealized loss and its duration. Other than temporary impairment losses on equity securities are recognized in operations. If we intend to sell a debt security or if it is more likely than not that we will be required to sell a debt security before recovery of its amortized cost basis, other than temporary impairment has occurred and the difference between amortized cost and fair value will be recognized as a loss in operations. If we do not intend to sell and it is not more likely than not we will be required to sell the debt security but also do not expect to recover the entire amortized cost basis of the security, an impairment loss would be recognized in operations in the amount of the expected credit loss. We determine the amount of expected credit loss by calculating the present value of the cash flows expected to be collected discounted at each security's acquisition yield based on our consideration of whether the security was of high credit quality at the time of acquisition. The difference between the present value of expected future cash flows and the amortized cost basis of the security is the amount of credit loss recognized in operations. The remaining amount of the other than temporary impairment is recognized in other comprehensive income (loss). The determination of the credit loss component of a mortgage or asset backed security is based on a number of factors. The primary consideration in this evaluation process is the issuer's ability to meet current and future interest and principal payments as contractually stated at time of purchase. Our review of these securities includes an analysis of the cash flow modeling under various default scenarios considering independent third party benchmarks, the seniority of the specific tranche within the structure of the security, the composition of the collateral and the actual default, loss severity and prepayment experience exhibited. With the input of third party assumptions for default projections, loss severity and prepayment expectations, we evaluate the cash flow projections to determine whether the security is performing in accordance with its contractual obligation. We utilize the models from a leading structured product software specialist serving institutional investors. These models incorporate each security's seniority and cash flow structure. In circumstances where the analysis implies a potential for principal loss at some point in the future, we use the "best estimate" cash flow projection discounted at the security's effective yield at acquisition to determine the amount of our potential credit loss associated with this security. The discounted expected future cash flows equates to our expected recovery value. Any shortfall of the expected recovery when compared to the amortized cost of the security will be recorded as the credit loss component of other than temporary impairment. The cash flow modeling is performed on a security-by-security basis and incorporates actual cash flows on the residential mortgage backed securities through the current period, as well as the projection of remaining cash flows using a number of assumptions including default rates, prepayment rates and loss severity rates. The default curves we use are tailored to the Prime or Alt-A residential mortgage backed securities that we own, which assume lower default rates and loss severity for Prime securities versus Alt-A securities. These default curves are scaled higher or lower depending on factors such as current underlying mortgage loan performance, rating agency loss projections, loan to value ratios, geographic diversity, as well as other appropriate considerations. The following table presents the range of significant assumptions used to determine the credit loss component of other than temporary impairments we have recognized on residential mortgage backed securities for the six months ended June 30, 2016 and 2015, which are all senior level tranches within the structure of the securities:
The determination of the credit loss component of a corporate bond (including redeemable preferred stocks) is based on the underlying financial performance of the issuer and their ability to meet their contractual obligations. Considerations in our evaluation include, but are not limited to, credit rating changes, financial statement and ratio analysis, changes in management, significant changes in credit spreads, breaches of financial covenants and a review of the economic outlook for the industry and markets in which they trade. In circumstances where an issuer appears unlikely to meet its future obligation, or the security's price decline is deemed other than temporary, an estimate of credit loss is determined. Credit loss is calculated using default probabilities as derived from the credit default swaps markets in conjunction with recovery rates derived from independent third party analysis or a best estimate of credit loss. This credit loss rate is then incorporated into a present value calculation based on an expected principal loss in the future discounted at the yield at the date of purchase and compared to amortized cost to determine the amount of credit loss associated with the security. In addition, for debt securities which we do not intend to sell and it is not more likely than not we will be required to sell, but our intent changes due to changes or events that could not have been reasonably anticipated, an other than temporary impairment charge is recognized in net income and amortized cost is written down to fair value. Once an impairment charge has been recorded, we then continue to review the other than temporarily impaired securities for appropriate valuation on an ongoing basis. Unrealized losses may be recognized in future periods through a charge to earnings, should we later conclude that the decline in fair value below amortized cost is other than temporary pursuant to our accounting policy described above. The use of different methodologies and assumptions to determine the fair value of investments and the timing and amount of impairments may have a material effect on the amounts presented in our consolidated financial statements. The following table summarizes other than temporary impairments for the three and six months ended June 30, 2016 and 2015, by asset type:
The cumulative portion of other than temporary impairments determined to be credit losses which have been recognized in operations for debt securities are summarized as follows:
The following table summarizes the cumulative noncredit portion of OTTI and the change in fair value since recognition of OTTI, both of which were recognized in other comprehensive income (loss), by major type of security, for securities that are part of our investment portfolio at June 30, 2016 and December 31, 2015:
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Mortgage Loans on Real Estate |
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Mortgage Loans on Real Estate | Mortgage Loans on Real Estate Our mortgage loan portfolio is summarized in the following table. There were commitments outstanding of $66.5 million at June 30, 2016.
The portfolio consists of commercial mortgage loans collateralized by the related properties and diversified as to property type, location and loan size. Our mortgage lending policies establish limits on the amount that can be loaned to one borrower and other criteria to attempt to reduce the risk of default. The mortgage loan portfolio is summarized by geographic region and property type as follows:
Our financing receivables currently consist of one portfolio segment which is our commercial mortgage loan portfolio. These are mortgage loans with collateral consisting of commercial real estate and borrowers consisting mostly of limited liability partnerships or limited liability corporations. We evaluate our mortgage loan portfolio for the establishment of a loan loss allowance by specific identification of impaired loans and the measurement of an estimated loss for each individual loan identified. A mortgage loan is impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. If we determine that the value of any specific mortgage loan is impaired, the carrying amount of the mortgage loan will be reduced to its fair value, based upon the present value of expected future cash flows from the loan discounted at the loan's effective interest rate, or the fair value of the underlying collateral less estimated costs to sell. In addition, we analyze the mortgage loan portfolio for the need of a general loan allowance for probable losses on all other loans on a quantitative and qualitative basis. The amount of the general loan allowance is based upon management's evaluation of the collectability of the loan portfolio, historical loss experience, delinquencies, credit concentrations, underwriting standards and national and local economic conditions. We rate each of the mortgage loans in our portfolio based on factors such as historical operating performance, loan to value ratio and economic outlook, among others. We calculate a loss factor to apply to each rating based on historical losses we have recognized in our mortgage loan portfolio. We apply the loss factors to the total principal outstanding within each rating category to determine an appropriate estimate of the general loan loss allowance. We also assess the portfolio qualitatively and apply a loss rate to all loans without a specific allowance based on management's assessment of economic conditions, and we apply an additional amount of loss allowance to a group of loans that we have identified as having higher risk of loss. The following table presents a rollforward of our specific and general loss allowances for mortgage loans on real estate:
The specific allowance represents the total credit loss allowances on loans which are individually evaluated for impairment. The general allowance is for the group of loans discussed above which are collectively evaluated for impairment. The following table presents the total outstanding principal of loans evaluated for impairment by basis of impairment method:
Charge-offs include allowances that have been established on loans that were satisfied either by taking ownership of the collateral or by some other means such as discounted pay-off or loan sale. When ownership of the property is taken it is recorded at the lower of the mortgage loan's carrying value or the property's fair value (based on appraised values) less estimated costs to sell. The real estate owned is recorded as a component of other investments and the mortgage loan is recorded as fully paid, with any allowance for credit loss that has been established charged off. Fair value of the real estate is determined by third party appraisal. Recoveries are situations where we have received a payment from the borrower in an amount greater than the carrying value of the loan (principal outstanding less specific allowance). During the three and six months ended June 30, 2016 and 2015, no mortgage loans were satisfied by taking ownership of any real estate serving as collateral. The following table summarizes the activity in the real estate owned, included in Other investments, which was obtained in satisfaction of mortgage loans on real estate:
We analyze credit risk of our mortgage loans by analyzing all available evidence on loans that are delinquent and loans that are in a workout period.
The loans that are categorized as "in workout" consist of loans that we have agreed to lower or no mortgage payments for a period of time while the borrowers address cash flow and/or operational issues. The key features of these workouts have been determined on a loan-by-loan basis. Most of these loans are in a period of low cash flow due to tenants vacating their space or tenants requesting rent relief during difficult economic periods. Generally, we have allowed the borrower a six month interest only period and in some cases a twelve month period of interest only. Interest only workout loans are expected to return to their regular debt service payments after the interest only period. Interest only loans that are not fully amortizing will have a larger balance at their balloon date than originally contracted. Fully amortizing loans that are in interest only periods will have larger debt service payments for their remaining term due to lost principal payments during the interest only period. In limited circumstances we have allowed borrowers to pay the principal portion of their loan payment into an escrow account that can be used for capital and tenant improvements for a period of not more than twelve months. In these situations new loan amortization schedules are calculated based on the principal not collected during this twelve month workout period and larger payments are collected for the remaining term of each loan. In all cases, the original interest rate and maturity date have not been modified, and we have not forgiven any principal amounts. Mortgage loans are considered delinquent when they become 60 days or more past due. In general, when loans become 90 days past due, become collateral dependent or enter a period with no debt service payments required we place them on non-accrual status and discontinue recognizing interest income. If payments are received on a delinquent loan, interest income is recognized to the extent it would have been recognized if normal principal and interest would have been received timely. If payments are received to bring a delinquent loan back to current we will resume accruing interest income on that loan. Outstanding principal of loans in a non-accrual status at June 30, 2016 and December 31, 2015 totaled $7.8 million and $0.0 million, respectively. We define collateral dependent loans as those mortgage loans for which we will depend on the value of the collateral real estate to satisfy the outstanding principal of the loan. All of our commercial mortgage loans depend on the cash flow of the borrower to be at a sufficient level to service the principal and interest payments as they come due. In general, cash inflows of the borrowers are generated by collecting monthly rent from tenants occupying space within the borrowers' properties. Our borrowers face collateral risks such as tenants going out of business, tenants struggling to make rent payments as they become due, and tenants canceling leases and moving to other locations. We have a number of loans where the real estate is occupied by a single tenant. Our borrowers sometimes face both a reduction in cash flow on their mortgage property as well as a reduction in the fair value of the real estate collateral. If borrowers are unable to replace lost rent revenue and increases in the fair value of their property do not materialize we could potentially incur more losses than what we have allowed for in our specific and general loan loss allowances. Aging of financing receivables is summarized in the following table, with loans in a "workout" period as of the reporting date considered current if payments are current in accordance with agreed upon terms:
Financing receivables summarized in the following two tables represent all loans that we are either not currently collecting, or those we feel it is probable we will not collect all amounts due according to the contractual terms of the loan agreements (all loans that we have worked with the borrower to alleviate short-term cash flow issues, loans delinquent for 60 days or more at the reporting date, loans we have determined to be collateral dependent and loans that we have recorded specific impairments on that we feel may continue to have performance issues).
A Troubled Debt Restructuring ("TDR") is a situation where we have granted a concession to a borrower for economic or legal reasons related to the borrower's financial difficulties that we would not otherwise consider. A mortgage loan that has been granted new terms, including workout terms as described previously, would be considered a TDR if it meets conditions that would indicate a borrower is experiencing financial difficulty and the new terms constitute a concession on our part. We analyze all loans where we have agreed to workout terms and all loans that we have refinanced to determine if they meet the definition of a TDR. We consider the following factors in determining whether or not a borrower is experiencing financial difficulty:
If the borrower is determined to be in financial difficulty, we consider the following conditions to determine if the borrower was granted a concession:
Mortgage loan workouts, refinances or restructures that are classified as TDRs are individually evaluated and measured for impairment. A summary of mortgage loans on commercial real estate with outstanding principal at June 30, 2016 and December 31, 2015 that we determined to be TDRs are as follows:
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Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments None of our derivatives qualify for hedge accounting, thus, any change in the fair value of the derivatives is recognized immediately in the consolidated statements of operations. The fair value of our derivative instruments, including derivative instruments embedded in fixed index annuity contracts, presented in the consolidated balance sheets are as follows:
The changes in fair value of derivatives included in the unaudited consolidated statements of operations are as follows:
The amounts presented as "Other changes in difference between policy benefit reserves computed using derivative accounting vs. long-duration contracts accounting" represents the total change in the difference between policy benefit reserves for fixed index annuities computed under the derivative accounting standard and the long-duration contracts accounting standard at each balance sheet date, less the change in fair value of our fixed index annuities embedded derivatives that is presented as Level 3 liabilities in Note 2. We have fixed index annuity products that guarantee the return of principal to the policyholder and credit interest based on a percentage of the gain in a specified market index. When fixed index annuity deposits are received, a portion of the deposit is used to purchase derivatives consisting of call options on the applicable market indices to fund the index credits due to fixed index annuity policyholders. Substantially all such call options are one year options purchased to match the funding requirements of the underlying policies. The call options are marked to fair value with the change in fair value included as a component of revenues. The change in fair value of derivatives includes the gains or losses recognized at the expiration of the option term or upon early termination and the changes in fair value for open positions. On the respective anniversary dates of the index policies, the index used to compute the annual index credit is reset and we purchase new one-year call options to fund the next annual index credit. We manage the cost of these purchases through the terms of our fixed index annuities, which permit us to change caps, participation rates, and/or asset fees, subject to guaranteed minimums on each policy's anniversary date. By adjusting caps, participation rates, or asset fees, we can generally manage option costs except in cases where the contractual features would prevent further modifications. Our strategy attempts to mitigate any potential risk of loss due to the nonperformance of the counterparties to these call options through a regular monitoring process which evaluates the program's effectiveness. We do not purchase call options that would require payment or collateral to another institution and our call options do not contain counterparty credit-risk-related contingent features. We are exposed to risk of loss in the event of nonperformance by the counterparties and, accordingly, we purchase our option contracts from multiple counterparties and evaluate the creditworthiness of all counterparties prior to purchase of the contracts. All of these options have been purchased from nationally recognized financial institutions with a Standard and Poor's credit rating of A- or higher at the time of purchase and the maximum credit exposure to any single counterparty is subject to concentration limits. We also have credit support agreements that allow us to request the counterparty to provide collateral to us when the fair value of our exposure to the counterparty exceeds specified amounts. The notional amount and fair value of our call options by counterparty and each counterparty's current credit rating are as follows:
As of June 30, 2016 and December 31, 2015, we held $369.5 million and $349.8 million, respectively, of cash and cash equivalents and other securities from counterparties for derivative collateral, which is included in other liabilities on our consolidated balance sheets. This derivative collateral limits the maximum amount of economic loss due to credit risk that we would incur if parties to the call options failed completely to perform according to the terms of the contracts to $205.3 million and $36.9 million at June 30, 2016 and December 31, 2015, respectively. The future annual index credits on our fixed index annuities are treated as a "series of embedded derivatives" over the expected life of the applicable contract. We do not purchase call options to fund the index liabilities which may arise after the next policy anniversary date. We must value both the call options and the related forward embedded options in the policies at fair value. We entered into an interest rate swap and interest rate caps to manage interest rate risk associated with the floating rate component on certain of our subordinated debentures. See Note 10 in our Annual Report on Form 10-K for the year ended December 31, 2015 for more information on our subordinated debentures. The terms of the interest rate swap provide that we pay a fixed rate of interest and receive a floating rate of interest. The terms of the interest rate caps limit the three month London Interbank Offered Rate ("LIBOR") to 2.50%. The interest rate swap and caps are not effective hedges under accounting guidance for derivative instruments and hedging activities. Therefore, we record the interest rate swap and caps at fair value and any net cash payments received or paid are included in the change in fair value of derivatives in the unaudited consolidated statements of operations. Details regarding the interest rate swap are as follows:
Details regarding the interest rate caps are as follows:
The interest rate swap converts floating rates to fixed rates for seven years which began in March 2014. The interest rate caps cap our interest rates for seven years which began in July 2014. As of June 30, 2016, we deposited $5.7 million of collateral with the counterparty to the swap. In September 2010, concurrently with the issuance of $200.0 million principal amount of 3.50% Convertible Senior Notes due September 15, 2015 (the "2015 notes"), we entered into hedge transactions (the "2015 notes hedges") with two counterparties whereby we would receive the cash equivalent of the conversion spread on 16.0 million shares of our common stock based upon a strike price of $12.50 per share, subject to certain conversion rate adjustments in the 2015 notes. The 2015 notes hedges were accounted for as derivative assets and were included in other assets in our consolidated balance sheets. The 2015 notes hedges and the 2015 notes embedded conversion derivative liability were settled with the extinguishment of the 2015 notes in 2015. The 2015 notes hedges and 2015 notes embedded conversion derivative were adjusted to fair value each reporting period and unrealized gains and losses are reflected in our consolidated statements of operations. In separate transactions, we sold warrants (the "2015 warrants") to the 2015 notes hedges counterparties for the purchase of up to 16.0 million shares of our common stock at a price of $16.00 per share. We received $15.6 million in cash proceeds from the sale of the 2015 warrants, which was recorded as an increase in additional paid-in capital. The number of shares and strike price of the warrants were subject to adjustment based on dividends we paid subsequent to selling the warrants. The warrants expired on various dates from December 2015 through June 2016. Changes in the fair value of these warrants were not recognized in our consolidated financial statements as the instruments remained classified as equity. In December 2015, we began settling the 2015 warrants in net shares on a weekly basis, and as of June 30, 2016, 140,866 shares of our common stock had been delivered to holders of the expiring warrants, of which 92,998 shares were issued during the six months ended June 30, 2016. As of June 30, 2016, all of the 2015 warrants have been settled. 2015 warrants remained outstanding on 1.6 million shares of our common stock at a strike price of $15.59 per share at December 31, 2015. The average price of our common stock exceeded the strike price of the 2015 warrants for the six months ended June 30, 2016, and the three and six months ended June 30, 2015, and the effect has been included in diluted earnings per share for the three periods. |
Notes Payable |
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Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Notes Payable | Notes Payable We have a $140 million unsecured revolving line of credit agreement with five banks that terminates on November 22, 2017. The interest rate is floating at a rate based on our election that will be equal to the alternate base rate (as defined in the credit agreement) plus the applicable margin or the adjusted LIBOR rate (as defined in the credit agreement) plus the applicable margin. We also pay a commitment fee based on the available unused portion of the credit facility. The applicable margin and commitment fee rate are based on our credit rating and can change throughout the period of the credit facility. Based upon our current credit rating, the applicable margin is 0.75% for alternate base rate borrowings and 1.75% for adjusted LIBOR rate borrowings, and the commitment fee is 0.30%. Under this agreement, we are required to maintain a minimum risk-based capital ratio at our subsidiary, American Equity Investment Life Insurance Company ("American Equity Life"), of 275%, a maximum ratio of adjusted debt to total adjusted capital of 0.35, and a minimum level of statutory surplus at American Equity Life equal to the sum of 1) 80% of statutory surplus at September 30, 2013, 2) 50% of the statutory net income for each fiscal quarter ending after September 30, 2013, and 3) 50% of all capital contributed to American Equity Life after September 30, 2013. The agreement contains an accordion feature that allows us, on up to three occasions and subject to credit availability, to increase the credit facility by an additional $50 million in the aggregate. We also have the ability to extend the maturity date by an additional one year past the initial maturity date of November 22, 2017 with the consent of the extending banks. There are currently no guarantors of the credit facility, but certain of our subsidiaries must guarantee our obligations under the credit agreement if such subsidiaries guarantee other material amounts of our debt. No amounts were outstanding at June 30, 2016 and December 31, 2015. As of June 30, 2016, $311.0 million is unrestricted and could be distributed to shareholders and still be in compliance with all covenants under this credit agreement. As part of our investment strategy, we enter into securities repurchase agreements (short-term collateralized borrowings). The maximum amount borrowed was $40.6 million during the six months ended June 30, 2015. When we do borrow cash on these repurchase agreements, we pledge collateral in the form of debt securities with fair values approximately equal to the amount due and we use the cash to purchase debt securities ahead of the time we collect the cash from selling annuity policies to avoid a lag between the investment of funds and the obligation to credit interest to policyholders. We earn investment income on the securities purchased with these borrowings at a rate in excess of the cost of these borrowings. Such borrowings averaged $0.9 million for the six months ended June 30, 2015. We had no borrowings under repurchase agreements during the three and six months ended June 30, 2016 and the three months ended June 30, 2015. The weighted average interest rate on amounts due under repurchase agreements was 0.39% for the six months ended June 30, 2015. |
Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We are occasionally involved in litigation, both as a defendant and as a plaintiff. In addition, state regulatory bodies, such as state insurance departments, the Securities and Exchange Commission, Financial Industry Regulatory Authority, the Department of Labor, and other regulatory bodies regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, the Employee Retirement Income Security Act of 1974, as amended, and laws governing the activities of broker-dealers. In accordance with applicable accounting guidelines, we establish an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. As a litigation or regulatory matter is developing we, in conjunction with outside counsel, evaluate on an ongoing basis whether the matter presents a loss contingency that meets conditions indicating the need for accrual and/or disclosure, and if not the matter will continue to be monitored for further developments. If and when the loss contingency related to litigation or regulatory matters is deemed to be both probable and estimable, we will establish an accrued liability with respect to that matter and will continue to monitor the matter for further developments that may affect the amount of the accrued liability. Companies in the life insurance and annuity business have faced litigation, including class action lawsuits, alleging improper product design, improper sales practices and similar claims. We were a defendant in a purported class action, McCormack, et al. v. American Equity Investment Life Insurance Company, et al., in the United States District Court for the Central District of California, Western Division and Anagnostis v. American Equity, et al., coordinated in the Central District, entitled, In Re: American Equity Annuity Practices and Sales Litigation (complaint filed September 7, 2005) (the "Los Angeles Case"), involving allegations of improper sales practices and similar claims. The Los Angeles Case was a consolidated action involving several lawsuits filed by putative class members seeking class action status for a national class of purchasers of annuities issued by us. On July 30, 2013, the parties entered into a settlement agreement and stipulated to certification of the case as a class action for settlement purposes only. A class member filed an appeal with the United States Court of Appeals for the Ninth Circuit on February 28, 2014. On February 17, 2016, the United States Court of Appeals for the Ninth Circuit affirmed the terms of the settlement agreement and on April 6, 2016, the class member’s subsequent request for a rehearing en banc was denied. All remaining opportunities for appeal have passed. We estimate our litigation liability in this matter to be $11.1 million based on our best estimate of probable loss. There can be no assurance that any other pending or future litigation will not have a material adverse effect on our business, financial condition, or results of operations. In addition to our commitments to fund mortgage loans, we have unfunded commitments at June 30, 2016 to limited partnerships of $36.5 million and to secured bank loans of $13.5 million. |
Earnings (Loss) Per Share and Stockholders' Equity |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (Loss) Per Share and Stockholders' Equity | Earnings (Loss) Per Share and Stockholders' Equity Earnings (Loss) Per Share The following table sets forth the computation of earnings (loss) per common share and earnings (loss) per common share - assuming dilution:
Options to purchase shares of our common stock that were outstanding during the respective periods indicated but were not included in the computation of diluted earnings (loss) per share because the options' exercise price was greater than the average market price of the common shares are as follows:
Stockholders' Equity In August 2015, we completed an underwritten public offering of 8,600,000 shares of our common stock at a public offering price of $25.25 per share, of which 4,300,000 shares remained subject to a forward sale agreement as of June 30, 2016. The underwriters exercised in full their option to purchase 1,290,000 additional shares of common stock, which was subject to a separate forward sale agreement. Settlement of the forward sale agreements occurred on August 1, 2016 as we issued 5,590,000 shares of our common stock and received $134.7 million in net proceeds. We contributed the net proceeds from the settlement to the capital and surplus of American Equity Life. The forward sale agreements had no initial fair value since they were entered into at the then market price of the common stock. The forward sale agreements are equity instruments and qualify for an exception from derivative and fair value accounting. |
Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
New Accounting Pronouncements, Policy | Adopted Accounting Pronouncements In April 2015, the Financial Accounting Standards Board ("FASB") issued an accounting standards update ("ASU") which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Subsequently, in August 2015, the FASB issued an ASU that states that the Securities and Exchange Commission staff would not object to an entity deferring and presenting debt issuance costs related to line-of-credit arrangements as an asset and expensing those costs ratably over the term of the line of credit arrangement. These ASU's became effective for us on January 1, 2016, and retroactive application is required. They did not have a material impact on our consolidated financial statements. New Accounting Pronouncements In January 2016, the FASB issued an ASU that, among other aspects of recognition, measurement, presentation and disclosure of financial instruments, primarily requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Additionally, it changes the accounting for financial liabilities measured at fair value under the fair value option and eliminates some disclosures regarding fair value of financial assets and liabilities measured at amortized cost. This ASU will be effective for us on January 1, 2018, and we have not determined the effect it will have on our consolidated financial statements. In February 2016, the FASB issued an ASU that will require recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This ASU affects accounting and disclosure more dramatically for lessees as accounting for lessors is mainly unchanged. This ASU will be effective for us on January 1, 2019, with early adoption permitted, and we have not determined the effect it will have on our consolidated financial statements. In March 2016, the FASB issued an ASU related to the accounting for share-based payment transactions. The aspects of accounting guidance affected by this ASU are income taxes, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU will be effective for us on January 1, 2017, with early adoption permitted, and we have not determined the effect it will have on our consolidated financial statements. In June 2016, the FASB issued an ASU that significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model that requires these assets be presented at the net amount expected to be collected. In addition, credit losses on available for sale debt securities should be recorded through an allowance account. This ASU will be effective for us on January 1, 2020, with early adoption permitted, and we have not yet determined the impact this updated guidance will have on our consolidated financial statements. |
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Fair Values of Financial Instruments, Policy | Fair value is the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The objective of a fair value measurement is to determine that price for each financial instrument at each measurement date. We meet this objective using various methods of valuation that include market, income and cost approaches. We categorize our financial instruments into three levels of fair value hierarchy based on the priority of inputs used in determining fair value. The hierarchy defines the highest priority inputs (Level 1) as quoted prices in active markets for identical assets or liabilities. The lowest priority inputs (Level 3) are our own assumptions about what a market participant would use in determining fair value such as estimated future cash flows. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. We categorize financial assets and liabilities recorded at fair value in the consolidated balance sheets as follows:
Transfers of securities among the levels occur at times and depend on the type of inputs used to determine fair value of each security. |
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Investments, Policy | We review and analyze all investments on an ongoing basis for changes in market interest rates and credit deterioration. This review process includes analyzing our ability to recover the amortized cost basis of each investment that has a fair value that is materially lower than its amortized cost and requires a high degree of management judgment and involves uncertainty. The evaluation of securities for other than temporary impairments is a quantitative and qualitative process, which is subject to risks and uncertainties. We have a policy and process to identify securities that could potentially have impairments that are other than temporary. This process involves monitoring market events and other items that could impact issuers. The evaluation includes but is not limited to such factors as:
We determine whether other than temporary impairment losses should be recognized for debt and equity securities by assessing all facts and circumstances surrounding each security. Where the decline in fair value of debt securities is attributable to changes in market interest rates or to factors such as market volatility, liquidity and spread widening, and we anticipate recovery of all contractual or expected cash flows, we do not consider these investments to be other than temporarily impaired because we do not intend to sell these investments and it is not more likely than not we will be required to sell these investments before a recovery of amortized cost, which may be maturity. For equity securities, we recognize an impairment charge in the period in which we do not have the intent and ability to hold the securities until recovery of cost or we determine that the security will not recover to book value within a reasonable period of time. We determine what constitutes a reasonable period of time on a security-by-security basis by considering all the evidence available to us, including the magnitude of any unrealized loss and its duration. Other than temporary impairment losses on equity securities are recognized in operations. If we intend to sell a debt security or if it is more likely than not that we will be required to sell a debt security before recovery of its amortized cost basis, other than temporary impairment has occurred and the difference between amortized cost and fair value will be recognized as a loss in operations. If we do not intend to sell and it is not more likely than not we will be required to sell the debt security but also do not expect to recover the entire amortized cost basis of the security, an impairment loss would be recognized in operations in the amount of the expected credit loss. We determine the amount of expected credit loss by calculating the present value of the cash flows expected to be collected discounted at each security's acquisition yield based on our consideration of whether the security was of high credit quality at the time of acquisition. The difference between the present value of expected future cash flows and the amortized cost basis of the security is the amount of credit loss recognized in operations. The remaining amount of the other than temporary impairment is recognized in other comprehensive income (loss). The determination of the credit loss component of a mortgage or asset backed security is based on a number of factors. The primary consideration in this evaluation process is the issuer's ability to meet current and future interest and principal payments as contractually stated at time of purchase. Our review of these securities includes an analysis of the cash flow modeling under various default scenarios considering independent third party benchmarks, the seniority of the specific tranche within the structure of the security, the composition of the collateral and the actual default, loss severity and prepayment experience exhibited. With the input of third party assumptions for default projections, loss severity and prepayment expectations, we evaluate the cash flow projections to determine whether the security is performing in accordance with its contractual obligation. We utilize the models from a leading structured product software specialist serving institutional investors. These models incorporate each security's seniority and cash flow structure. In circumstances where the analysis implies a potential for principal loss at some point in the future, we use the "best estimate" cash flow projection discounted at the security's effective yield at acquisition to determine the amount of our potential credit loss associated with this security. The discounted expected future cash flows equates to our expected recovery value. Any shortfall of the expected recovery when compared to the amortized cost of the security will be recorded as the credit loss component of other than temporary impairment. The cash flow modeling is performed on a security-by-security basis and incorporates actual cash flows on the residential mortgage backed securities through the current period, as well as the projection of remaining cash flows using a number of assumptions including default rates, prepayment rates and loss severity rates. The default curves we use are tailored to the Prime or Alt-A residential mortgage backed securities that we own, which assume lower default rates and loss severity for Prime securities versus Alt-A securities. These default curves are scaled higher or lower depending on factors such as current underlying mortgage loan performance, rating agency loss projections, loan to value ratios, geographic diversity, as well as other appropriate considerations. The determination of the credit loss component of a corporate bond (including redeemable preferred stocks) is based on the underlying financial performance of the issuer and their ability to meet their contractual obligations. Considerations in our evaluation include, but are not limited to, credit rating changes, financial statement and ratio analysis, changes in management, significant changes in credit spreads, breaches of financial covenants and a review of the economic outlook for the industry and markets in which they trade. In circumstances where an issuer appears unlikely to meet its future obligation, or the security's price decline is deemed other than temporary, an estimate of credit loss is determined. Credit loss is calculated using default probabilities as derived from the credit default swaps markets in conjunction with recovery rates derived from independent third party analysis or a best estimate of credit loss. This credit loss rate is then incorporated into a present value calculation based on an expected principal loss in the future discounted at the yield at the date of purchase and compared to amortized cost to determine the amount of credit loss associated with the security. In addition, for debt securities which we do not intend to sell and it is not more likely than not we will be required to sell, but our intent changes due to changes or events that could not have been reasonably anticipated, an other than temporary impairment charge is recognized in net income and amortized cost is written down to fair value. Once an impairment charge has been recorded, we then continue to review the other than temporarily impaired securities for appropriate valuation on an ongoing basis. Unrealized losses may be recognized in future periods through a charge to earnings, should we later conclude that the decline in fair value below amortized cost is other than temporary pursuant to our accounting policy described above. The use of different methodologies and assumptions to determine the fair value of investments and the timing and amount of impairments may have a material effect on the amounts presented in our consolidated financial statements. |
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Mortgage Loans on Real Estate, Allowance for Loan Losses, Policy | We evaluate our mortgage loan portfolio for the establishment of a loan loss allowance by specific identification of impaired loans and the measurement of an estimated loss for each individual loan identified. A mortgage loan is impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. If we determine that the value of any specific mortgage loan is impaired, the carrying amount of the mortgage loan will be reduced to its fair value, based upon the present value of expected future cash flows from the loan discounted at the loan's effective interest rate, or the fair value of the underlying collateral less estimated costs to sell. In addition, we analyze the mortgage loan portfolio for the need of a general loan allowance for probable losses on all other loans on a quantitative and qualitative basis. The amount of the general loan allowance is based upon management's evaluation of the collectability of the loan portfolio, historical loss experience, delinquencies, credit concentrations, underwriting standards and national and local economic conditions. We rate each of the mortgage loans in our portfolio based on factors such as historical operating performance, loan to value ratio and economic outlook, among others. We calculate a loss factor to apply to each rating based on historical losses we have recognized in our mortgage loan portfolio. We apply the loss factors to the total principal outstanding within each rating category to determine an appropriate estimate of the general loan loss allowance. We also assess the portfolio qualitatively and apply a loss rate to all loans without a specific allowance based on management's assessment of economic conditions, and we apply an additional amount of loss allowance to a group of loans that we have identified as having higher risk of loss. |
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Mortgage Loans on Real Estate, Real Estate Acquired Through Foreclosure, Policy | Charge-offs include allowances that have been established on loans that were satisfied either by taking ownership of the collateral or by some other means such as discounted pay-off or loan sale. When ownership of the property is taken it is recorded at the lower of the mortgage loan's carrying value or the property's fair value (based on appraised values) less estimated costs to sell. The real estate owned is recorded as a component of other investments and the mortgage loan is recorded as fully paid, with any allowance for credit loss that has been established charged off. Fair value of the real estate is determined by third party appraisal. Recoveries are situations where we have received a payment from the borrower in an amount greater than the carrying value of the loan (principal outstanding less specific allowance). |
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Mortgage Loans on Real Estate, Non-Accrual Loan Status, Policy | The loans that are categorized as "in workout" consist of loans that we have agreed to lower or no mortgage payments for a period of time while the borrowers address cash flow and/or operational issues. The key features of these workouts have been determined on a loan-by-loan basis. Most of these loans are in a period of low cash flow due to tenants vacating their space or tenants requesting rent relief during difficult economic periods. Generally, we have allowed the borrower a six month interest only period and in some cases a twelve month period of interest only. Interest only workout loans are expected to return to their regular debt service payments after the interest only period. Interest only loans that are not fully amortizing will have a larger balance at their balloon date than originally contracted. Fully amortizing loans that are in interest only periods will have larger debt service payments for their remaining term due to lost principal payments during the interest only period. In limited circumstances we have allowed borrowers to pay the principal portion of their loan payment into an escrow account that can be used for capital and tenant improvements for a period of not more than twelve months. In these situations new loan amortization schedules are calculated based on the principal not collected during this twelve month workout period and larger payments are collected for the remaining term of each loan. In all cases, the original interest rate and maturity date have not been modified, and we have not forgiven any principal amounts. Mortgage loans are considered delinquent when they become 60 days or more past due. In general, when loans become 90 days past due, become collateral dependent or enter a period with no debt service payments required we place them on non-accrual status and discontinue recognizing interest income. If payments are received on a delinquent loan, interest income is recognized to the extent it would have been recognized if normal principal and interest would have been received timely. If payments are received to bring a delinquent loan back to current we will resume accruing interest income on that loan. |
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Mortgage Loans on Real Estate, Troubled Debt Restructuring, Policy | A Troubled Debt Restructuring ("TDR") is a situation where we have granted a concession to a borrower for economic or legal reasons related to the borrower's financial difficulties that we would not otherwise consider. A mortgage loan that has been granted new terms, including workout terms as described previously, would be considered a TDR if it meets conditions that would indicate a borrower is experiencing financial difficulty and the new terms constitute a concession on our part. We analyze all loans where we have agreed to workout terms and all loans that we have refinanced to determine if they meet the definition of a TDR. We consider the following factors in determining whether or not a borrower is experiencing financial difficulty:
If the borrower is determined to be in financial difficulty, we consider the following conditions to determine if the borrower was granted a concession:
Mortgage loan workouts, refinances or restructures that are classified as TDRs are individually evaluated and measured for impairment. |
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Commitments and Contingencies, Policy | In accordance with applicable accounting guidelines, we establish an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. As a litigation or regulatory matter is developing we, in conjunction with outside counsel, evaluate on an ongoing basis whether the matter presents a loss contingency that meets conditions indicating the need for accrual and/or disclosure, and if not the matter will continue to be monitored for further developments. If and when the loss contingency related to litigation or regulatory matters is deemed to be both probable and estimable, we will establish an accrued liability with respect to that matter and will continue to monitor the matter for further developments that may affect the amount of the accrued liability. |
Fair Values of Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amounts and Fair Values of Financial Instruments | The following sets forth a comparison of the carrying amounts and fair values of our financial instruments:
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Assets and Liabilities Measured at Fair Value on a Recurring Basis, By Fair Value Hierarchy Level | Our assets and liabilities which are measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015 are presented below based on the fair value hierarchy levels:
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Schedule of Assumptions Used in Estimating Fair Value | The following table presents average lapse rate and partial withdrawal rate assumptions, by contract duration, used in estimating the fair value of the embedded derivative component of our fixed index annuity policy benefit reserves at each reporting date:
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Assets Measured at Fair Value on Recurring Basis, Level 3 Reconciliation |
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Liabilities Measured at Fair Value on Recurring Basis, Level 3 Reconciliation |
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Investments (Tables) |
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Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fixed Maturity and Equity Securities | At June 30, 2016 and December 31, 2015, the amortized cost and fair value of fixed maturity securities and equity securities were as follows:
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Schedule of Fixed Maturity Securities by Contractual Maturity Date | The amortized cost and fair value of fixed maturity securities at June 30, 2016, by contractual maturity, are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. All of our mortgage and other asset backed securities provide for periodic payments throughout their lives and are shown below as separate lines.
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Schedule of Components of Net Unrealized Gains on Available for Sale Fixed Maturity and Equity Securities Reported as Separate Component of Stockholders' Equity | Net unrealized gains on available for sale fixed maturity securities and equity securities reported as a separate component of stockholders' equity were comprised of the following:
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Schedule of Credit Quality of Fixed Maturity Security Portfolio by NAIC Designation | The following table summarizes the credit quality, as determined by NAIC designation, of our fixed maturity portfolio as of the dates indicated:
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Schedule of Gross Unrealized Losses on Investments, By Category and Length of Time | The following table shows our investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities (consisting of 411 and 1,246 securities, respectively) have been in a continuous unrealized loss position, at June 30, 2016 and December 31, 2015:
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Schedule of Changes in Net Unrealized Gains/Losses on Investments | Changes in net unrealized gains on investments for the three and six months ended June 30, 2016 and 2015 are as follows:
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Net Realized Gains (Losses) on Investments | Net realized gains (losses) on investments, excluding net OTTI losses for the three and six months ended June 30, 2016 and 2015, are as follows:
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Significant Assumptions Used to Determine the Credit Loss Component of Other Than Temporary Impairment on Residential Mortgage Backed Securities | The following table presents the range of significant assumptions used to determine the credit loss component of other than temporary impairments we have recognized on residential mortgage backed securities for the six months ended June 30, 2016 and 2015, which are all senior level tranches within the structure of the securities:
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Other Than Temporary Impairment by Asset Type | The following table summarizes other than temporary impairments for the three and six months ended June 30, 2016 and 2015, by asset type:
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Other Than Temporary Impairment, Credit Losses Recognized in Earnings | The cumulative portion of other than temporary impairments determined to be credit losses which have been recognized in operations for debt securities are summarized as follows:
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Schedule of Other Than Temporary Impairment Losses, Investments | The following table summarizes the cumulative noncredit portion of OTTI and the change in fair value since recognition of OTTI, both of which were recognized in other comprehensive income (loss), by major type of security, for securities that are part of our investment portfolio at June 30, 2016 and December 31, 2015:
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Mortgage Loans on Real Estate (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage Loans on Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Mortgage Loan Portfolio | Our mortgage loan portfolio is summarized in the following table. There were commitments outstanding of $66.5 million at June 30, 2016.
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Mortgage Loan Portfolio Summarized by Geographic Region and Property Type | The mortgage loan portfolio is summarized by geographic region and property type as follows:
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Rollforward of Allowance for Credit Losses | The following table presents a rollforward of our specific and general loss allowances for mortgage loans on real estate:
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Impaired Mortgage Loans on Real Estate by Basis of Impairment | The following table presents the total outstanding principal of loans evaluated for impairment by basis of impairment method:
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Real Estate Acquired Via Foreclosure or Deed In Lieu | The following table summarizes the activity in the real estate owned, included in Other investments, which was obtained in satisfaction of mortgage loans on real estate:
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Mortgage Loans By Credit Quality Indicator | We analyze credit risk of our mortgage loans by analyzing all available evidence on loans that are delinquent and loans that are in a workout period.
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Aging of Financing Receivables | Aging of financing receivables is summarized in the following table, with loans in a "workout" period as of the reporting date considered current if payments are current in accordance with agreed upon terms:
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Impaired Financing Receivables | Financing receivables summarized in the following two tables represent all loans that we are either not currently collecting, or those we feel it is probable we will not collect all amounts due according to the contractual terms of the loan agreements (all loans that we have worked with the borrower to alleviate short-term cash flow issues, loans delinquent for 60 days or more at the reporting date, loans we have determined to be collateral dependent and loans that we have recorded specific impairments on that we feel may continue to have performance issues).
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Troubled Debt Restructurings on Financing Receivables | Mortgage loan workouts, refinances or restructures that are classified as TDRs are individually evaluated and measured for impairment. A summary of mortgage loans on commercial real estate with outstanding principal at June 30, 2016 and December 31, 2015 that we determined to be TDRs are as follows:
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Derivative Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Derivative Instruments as Presented in the Consolidated Balance Sheets | The fair value of our derivative instruments, including derivative instruments embedded in fixed index annuity contracts, presented in the consolidated balance sheets are as follows:
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Schedule of Changes in Fair Value of Derivative Instruments | The changes in fair value of derivatives included in the unaudited consolidated statements of operations are as follows:
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Schedule of Call Options by Counterparty | The notional amount and fair value of our call options by counterparty and each counterparty's current credit rating are as follows:
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Schedule of Interest Rate Derivatives | Details regarding the interest rate swap are as follows:
Details regarding the interest rate caps are as follows:
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Earnings (Loss) Per Share and Stockholders' Equity (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings (Loss) Per Share, Basic and Diluted | The following table sets forth the computation of earnings (loss) per common share and earnings (loss) per common share - assuming dilution:
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Schedule of Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share | Options to purchase shares of our common stock that were outstanding during the respective periods indicated but were not included in the computation of diluted earnings (loss) per share because the options' exercise price was greater than the average market price of the common shares are as follows:
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Fair Values of Financial Instruments (Narrative) (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2016
USD ($)
Basis_Points
|
Jun. 30, 2015
USD ($)
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Jun. 30, 2016
USD ($)
Basis_Points
|
Jun. 30, 2015
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Assets, Level 1 to Level 2 transfers, amount | $ 0 | $ 0 | $ 0 | ||
Liabilities, Level 1 to Level 2 transfers, amount | 0 | 0 | 0 | ||
Assets, Level 2 to Level 1 transfers, amount | 0 | 0 | 0 | ||
Liabilities, Level 2 to Level 1 transfers, amount | 0 | 0 | 0 | ||
Assets, transfers into Level 3, amount | 0 | $ 0 | 0 | $ 0 | |
Liabilities, transfers into Level 3, amount | 0 | 0 | 0 | 0 | |
Assets, transfers out of Level 3, amount | 0 | 0 | 0 | 0 | |
Liabilities, transfers out of Level 3, amount | 0 | $ 0 | 0 | $ 0 | |
Other investments | $ 292,776 | $ 292,776 | $ 291,530 | ||
Expected cost of annual call options | 3.10% | 3.10% | 3.10% | ||
Mortality rate assumption | 65.00% | 65.00% | |||
Fair Value, Measurements, Recurring [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Other investments | $ 0 | $ 0 | |||
Fair Value, Sensitivity, Increase in Discount Rate by 10 Percent [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Fair value, sensitivity, discount rate adjustment (basis points) | Basis_Points | 100 | 100 | |||
Fixed index annuities embedded derivative, adjustment due to change in discount rate | $ (462,700) | ||||
Deferred policy scquisition costs and deferred sales inducements, combined balance, adjustment due to change in discount rate | $ (274,100) | ||||
Fair Value, Sensitivity, Decrease in Discount Rate by 10 Percent [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Fair value, sensitivity, discount rate adjustment (basis points) | Basis_Points | 100 | 100 | |||
Fixed index annuities embedded derivative, adjustment due to change in discount rate | $ 518,800 | ||||
Deferred policy scquisition costs and deferred sales inducements, combined balance, adjustment due to change in discount rate | $ 303,600 |
Fair Values of Financial Instruments (Fair Values and Carrying Amounts of Financial Instruments) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Assets | ||
Held for investment | $ 68,542 | $ 65,377 |
Other investments | 292,776 | 291,530 |
Coinsurance deposits | 4,120,911 | 3,187,470 |
Liabilities | ||
Policy benefit reserves | 49,432,481 | 45,495,431 |
Carrying Amount [Member] | ||
Assets | ||
Mortgage loans on real estate | 2,451,375 | 2,435,257 |
Derivative instruments | 576,262 | 337,256 |
Other investments | 292,776 | 285,044 |
Cash and cash equivalents | 1,547,041 | 397,749 |
Coinsurance deposits | 4,120,911 | 3,187,470 |
Counterparty collateral | 91,457 | 82,312 |
Liabilities | ||
Policy benefit reserves | 49,086,249 | 45,151,460 |
Single premium immediate annuity (SPIA) benefit reserves | 304,365 | 324,264 |
Notes payable | 393,739 | 393,227 |
Subordinated debentures | 241,650 | 241,452 |
Carrying Amount [Member] | Interest Rate Caps [Member] | ||
Assets | ||
Interest rate derivative assets | 427 | 1,410 |
Carrying Amount [Member] | Interest Rate Swap [Member] | ||
Liabilities | ||
Interest rate derivative liabilities | 5,971 | 3,139 |
Carrying Amount [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 39,863,803 | 36,421,839 |
Held for investment | 76,722 | 76,622 |
Carrying Amount [Member] | Equity Securities [Member] | ||
Assets | ||
Available for sale securities | 7,813 | 7,828 |
Fair Value [Member] | ||
Assets | ||
Mortgage loans on real estate | 2,478,023 | 2,471,864 |
Derivative instruments | 576,262 | 337,256 |
Other investments | 291,107 | 290,075 |
Cash and cash equivalents | 1,547,041 | 397,749 |
Coinsurance deposits | 3,700,449 | 2,860,882 |
Counterparty collateral | 91,457 | 82,312 |
Liabilities | ||
Policy benefit reserves | 41,155,256 | 38,435,515 |
Single premium immediate annuity (SPIA) benefit reserves | 315,420 | 336,066 |
Notes payable | 424,804 | 417,752 |
Subordinated debentures | 229,881 | 216,933 |
Fair Value [Member] | Interest Rate Caps [Member] | ||
Assets | ||
Interest rate derivative assets | 427 | 1,410 |
Fair Value [Member] | Interest Rate Swap [Member] | ||
Liabilities | ||
Interest rate derivative liabilities | 5,971 | 3,139 |
Fair Value [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 39,863,803 | 36,421,839 |
Held for investment | 68,542 | 65,377 |
Fair Value [Member] | Equity Securities [Member] | ||
Assets | ||
Available for sale securities | $ 7,813 | $ 7,828 |
Fair Values of Financial Instruments (Assets and Liabilities Measured on a Recurring Basis by Fair Value Hierarchy) (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Assets | ||
Derivative assets | $ 576,262 | $ 337,256 |
Cash and cash equivalents | 1,547,041 | 397,749 |
Counterparty collateral | 91,457 | 82,312 |
Assets | 42,086,803 | 37,248,394 |
Liabilities | ||
Fixed index annuities - embedded derivatives | 6,499,015 | 5,983,622 |
Liabilities | 6,504,986 | 5,986,761 |
Interest Rate Caps [Member] | ||
Assets | ||
Interest rate derivative assets | 427 | 1,410 |
Interest Rate Swap [Member] | ||
Liabilities | ||
Interest rate derivative liabilities | 5,971 | 3,139 |
Equity Securities [Member] | ||
Assets | ||
Available for sale securities | 7,813 | 7,828 |
United States Government Full Faith and Credit [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 449,439 | 471,256 |
United States Government Sponsored Agencies [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 1,380,266 | 1,398,611 |
United States Municipalities, States and Territories [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 3,975,544 | 3,755,367 |
Foreign Government Obligations [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 253,990 | 212,565 |
Corporate Securities [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 26,383,116 | 23,802,394 |
Residential Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 1,392,441 | 1,462,072 |
Commercial Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 4,735,210 | 4,174,396 |
Other Asset Backed Securities [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 1,293,797 | 1,145,178 |
Quoted Prices in Active Markets (Level 1) [Member] | ||
Assets | ||
Derivative assets | 0 | 0 |
Cash and cash equivalents | 1,547,041 | 397,749 |
Counterparty collateral | 0 | 0 |
Assets | 1,989,274 | 836,468 |
Liabilities | ||
Fixed index annuities - embedded derivatives | 0 | 0 |
Liabilities | 0 | 0 |
Quoted Prices in Active Markets (Level 1) [Member] | Interest Rate Caps [Member] | ||
Assets | ||
Interest rate derivative assets | 0 | 0 |
Quoted Prices in Active Markets (Level 1) [Member] | Interest Rate Swap [Member] | ||
Liabilities | ||
Interest rate derivative liabilities | 0 | 0 |
Quoted Prices in Active Markets (Level 1) [Member] | Equity Securities [Member] | ||
Assets | ||
Available for sale securities | 0 | 0 |
Quoted Prices in Active Markets (Level 1) [Member] | United States Government Full Faith and Credit [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 442,226 | 438,598 |
Quoted Prices in Active Markets (Level 1) [Member] | United States Government Sponsored Agencies [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 0 | 0 |
Quoted Prices in Active Markets (Level 1) [Member] | United States Municipalities, States and Territories [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 0 | 0 |
Quoted Prices in Active Markets (Level 1) [Member] | Foreign Government Obligations [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 0 | 0 |
Quoted Prices in Active Markets (Level 1) [Member] | Corporate Securities [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 7 | 121 |
Quoted Prices in Active Markets (Level 1) [Member] | Residential Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 0 | 0 |
Quoted Prices in Active Markets (Level 1) [Member] | Commercial Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 0 | 0 |
Quoted Prices in Active Markets (Level 1) [Member] | Other Asset Backed Securities [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 0 | 0 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Assets | ||
Derivative assets | 576,262 | 337,256 |
Cash and cash equivalents | 0 | 0 |
Counterparty collateral | 91,457 | 82,312 |
Assets | 40,097,529 | 36,411,926 |
Liabilities | ||
Fixed index annuities - embedded derivatives | 0 | 0 |
Liabilities | 5,971 | 3,139 |
Significant Other Observable Inputs (Level 2) [Member] | Interest Rate Caps [Member] | ||
Assets | ||
Interest rate derivative assets | 427 | 1,410 |
Significant Other Observable Inputs (Level 2) [Member] | Interest Rate Swap [Member] | ||
Liabilities | ||
Interest rate derivative liabilities | 5,971 | 3,139 |
Significant Other Observable Inputs (Level 2) [Member] | Equity Securities [Member] | ||
Assets | ||
Available for sale securities | 7,813 | 7,828 |
Significant Other Observable Inputs (Level 2) [Member] | United States Government Full Faith and Credit [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 7,213 | 32,658 |
Significant Other Observable Inputs (Level 2) [Member] | United States Government Sponsored Agencies [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 1,380,266 | 1,398,611 |
Significant Other Observable Inputs (Level 2) [Member] | United States Municipalities, States and Territories [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 3,975,544 | 3,755,367 |
Significant Other Observable Inputs (Level 2) [Member] | Foreign Government Obligations [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 253,990 | 212,565 |
Significant Other Observable Inputs (Level 2) [Member] | Corporate Securities [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 26,383,109 | 23,802,273 |
Significant Other Observable Inputs (Level 2) [Member] | Residential Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 1,392,441 | 1,462,072 |
Significant Other Observable Inputs (Level 2) [Member] | Commercial Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 4,735,210 | 4,174,396 |
Significant Other Observable Inputs (Level 2) [Member] | Other Asset Backed Securities [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 1,293,797 | 1,145,178 |
Significant Unobservable Inputs (Level 3) [Member] | ||
Assets | ||
Derivative assets | 0 | 0 |
Cash and cash equivalents | 0 | 0 |
Counterparty collateral | 0 | 0 |
Assets | 0 | 0 |
Liabilities | ||
Fixed index annuities - embedded derivatives | 6,499,015 | 5,983,622 |
Liabilities | 6,499,015 | 5,983,622 |
Significant Unobservable Inputs (Level 3) [Member] | Interest Rate Caps [Member] | ||
Assets | ||
Interest rate derivative assets | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | Interest Rate Swap [Member] | ||
Liabilities | ||
Interest rate derivative liabilities | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | Equity Securities [Member] | ||
Assets | ||
Available for sale securities | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | United States Government Full Faith and Credit [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | United States Government Sponsored Agencies [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | United States Municipalities, States and Territories [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | Foreign Government Obligations [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | Corporate Securities [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | Residential Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | Commercial Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | Other Asset Backed Securities [Member] | Fixed Maturity Securities [Member] | ||
Assets | ||
Available for sale securities | $ 0 | $ 0 |
Fair Values of Financial Instruments (Assumptions Used in Estimating Fair Value) (Details) - Fixed Index Annuities [Member] |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Minimum [Member] | Contract Duration (Years), Group 1 [Member] | ||
Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items] | ||
Contract duration (years) | 1 year | 1 year |
Minimum [Member] | Contract Duration (Years), Group 2 [Member] | ||
Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items] | ||
Contract duration (years) | 6 years | 6 years |
Minimum [Member] | Contract Duration (Years), Group 3 [Member] | ||
Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items] | ||
Contract duration (years) | 11 years | 11 years |
Minimum [Member] | Contract Duration (Years), Group 4 [Member] | ||
Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items] | ||
Contract duration (years) | 16 years | 16 years |
Minimum [Member] | Contract Duration (Years), Group 5 [Member] | ||
Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items] | ||
Contract duration (years) | 20 years | 20 years |
Maximum [Member] | Contract Duration (Years), Group 1 [Member] | ||
Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items] | ||
Contract duration (years) | 5 years | 5 years |
Maximum [Member] | Contract Duration (Years), Group 2 [Member] | ||
Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items] | ||
Contract duration (years) | 10 years | 10 years |
Maximum [Member] | Contract Duration (Years), Group 3 [Member] | ||
Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items] | ||
Contract duration (years) | 15 years | 15 years |
Maximum [Member] | Contract Duration (Years), Group 4 [Member] | ||
Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items] | ||
Contract duration (years) | 20 years | 20 years |
Average [Member] | Contract Duration (Years), Group 1 [Member] | ||
Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items] | ||
Average lapse rates | 1.77% | 1.58% |
Average partial withdrawal rates | 3.30% | 3.08% |
Average [Member] | Contract Duration (Years), Group 2 [Member] | ||
Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items] | ||
Average lapse rates | 6.59% | 8.55% |
Average partial withdrawal rates | 3.30% | 3.55% |
Average [Member] | Contract Duration (Years), Group 3 [Member] | ||
Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items] | ||
Average lapse rates | 11.25% | 12.01% |
Average partial withdrawal rates | 3.31% | 3.59% |
Average [Member] | Contract Duration (Years), Group 4 [Member] | ||
Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items] | ||
Average lapse rates | 12.04% | 12.99% |
Average partial withdrawal rates | 3.17% | 3.22% |
Average [Member] | Contract Duration (Years), Group 5 [Member] | ||
Long-Duration Contracts, Assumptions by Product and Guarantee [Line Items] | ||
Average lapse rates | 11.69% | 12.54% |
Average partial withdrawal rates | 3.17% | 3.22% |
Fair Values of Financial Instruments (Reconciliation of Beginning and Ending Balances of Level 3 Assets) (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | $ 0 | $ 342 | $ 0 | $ 375 |
Principal returned | 0 | (9) | 0 | (21) |
Amortization of premium/accretion of discount | 0 | (409) | 0 | (466) |
Total gains (losses) (realized/unrealized): included in other comprehensive income (loss) | 0 | 240 | 0 | 276 |
Total gains (losses) (realized/unrealized): included in operations | 0 | (138) | 0 | (138) |
Ending balance | $ 0 | $ 26 | $ 0 | $ 26 |
Fair Values of Financial Instruments (Reconciliation of Beginning and Ending Balances of Level 3 Liabilities) (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning balance | $ 6,254,466 | $ 5,865,171 | $ 5,983,622 | $ 5,574,653 |
Premiums less benefits | 44,632 | 453,317 | 135,761 | 813,712 |
Change in fair value, net | 199,917 | (334,481) | 379,632 | (404,358) |
Ending balance | $ 6,499,015 | $ 5,984,007 | $ 6,499,015 | $ 5,984,007 |
Investments (Narrative) (Details) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2016
USD ($)
Securities
|
Jun. 30, 2015
USD ($)
|
Dec. 31, 2015
Securities
|
|
Investments [Abstract] | |||
Fixed income securities with call features, percentage | 35.00% | ||
Fixed income securities with call features, currently callable, percentage | 0.20% | ||
Fixed income securities with call features, currently callable, amount | $ 77,200 | ||
Fixed income securities with call features, callable during next 12 months, percentage | 2.90% | ||
Fixed income securities with call features, callable during next 12 months, amount | $ 1,100,000 | ||
Fixed income securities with call features, not callable until within 6 months of stated maturity, percentage | 68.00% | ||
Percentage of fixed maturity portfolio rated investment grade based on NAIC designations | 97.00% | 98.00% | |
Number of individual securities with unrealized losses | Securities | 411 | 1,246 | |
Percentage of unrealized losses on fixed maturity securities where securities are rated investment grade | 56.00% | 84.00% | |
Investment Holdings [Line Items] | |||
Scheduled principal repayments, calls and tenders for available for sale securities | $ 1,421,976 | $ 886,573 | |
Fixed Maturity Securities [Member] | |||
Investment Holdings [Line Items] | |||
Scheduled principal repayments, calls and tenders for available for sale securities | 1,200,000 | 643,800 | |
Available For Sale Securities [Member] | |||
Investment Holdings [Line Items] | |||
Proceeds from sales of available for sale securities | $ 186,100 | $ 242,800 |
Investments (Schedule of Amortized Cost and Fair Value of Fixed Maturity and Equity Securities) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Investment Holdings [Line Items] | ||
Held for investment, amortized cost | $ 76,722 | $ 76,622 |
Held for investment | 68,542 | 65,377 |
Fixed Maturity Securities [Member] | Available For Sale Securities [Member] | ||
Investment Holdings [Line Items] | ||
Available for sale, amortized cost | 36,982,728 | 35,823,710 |
Available for sale, gross unrealized gains | 3,157,716 | 1,443,474 |
Available for sale, gross unrealized losses | (276,641) | (845,345) |
Available for sale, fair value | 39,863,803 | 36,421,839 |
Equity Securities [Member] | Available For Sale Securities [Member] | ||
Investment Holdings [Line Items] | ||
Available for sale, amortized cost | 7,518 | 7,515 |
Available for sale, gross unrealized gains | 295 | 313 |
Available for sale, gross unrealized losses | 0 | 0 |
Available for sale, fair value | 7,813 | 7,828 |
United States Government Full Faith and Credit [Member] | Fixed Maturity Securities [Member] | Available For Sale Securities [Member] | ||
Investment Holdings [Line Items] | ||
Available for sale, amortized cost | 446,560 | 470,567 |
Available for sale, gross unrealized gains | 2,879 | 988 |
Available for sale, gross unrealized losses | 0 | (299) |
Available for sale, fair value | 449,439 | 471,256 |
United States Government Sponsored Agencies [Member] | Fixed Maturity Securities [Member] | Available For Sale Securities [Member] | ||
Investment Holdings [Line Items] | ||
Available for sale, amortized cost | 1,319,088 | 1,386,219 |
Available for sale, gross unrealized gains | 61,728 | 26,801 |
Available for sale, gross unrealized losses | (550) | (14,409) |
Available for sale, fair value | 1,380,266 | 1,398,611 |
United States Municipalities, States and Territories [Member] | Fixed Maturity Securities [Member] | Available For Sale Securities [Member] | ||
Investment Holdings [Line Items] | ||
Available for sale, amortized cost | 3,459,913 | 3,422,667 |
Available for sale, gross unrealized gains | 516,314 | 341,328 |
Available for sale, gross unrealized losses | (683) | (8,628) |
Available for sale, fair value | 3,975,544 | 3,755,367 |
Foreign Government Obligations [Member] | Fixed Maturity Securities [Member] | Available For Sale Securities [Member] | ||
Investment Holdings [Line Items] | ||
Available for sale, amortized cost | 234,382 | 210,953 |
Available for sale, gross unrealized gains | 25,063 | 12,547 |
Available for sale, gross unrealized losses | (5,455) | (10,935) |
Available for sale, fair value | 253,990 | 212,565 |
Corporate Securities [Member] | Fixed Maturity Securities [Member] | Available For Sale Securities [Member] | ||
Investment Holdings [Line Items] | ||
Available for sale, amortized cost | 24,393,498 | 23,597,530 |
Available for sale, gross unrealized gains | 2,201,998 | 887,288 |
Available for sale, gross unrealized losses | (212,380) | (682,424) |
Available for sale, fair value | 26,383,116 | 23,802,394 |
Corporate Securities [Member] | Fixed Maturity Securities [Member] | Held For Investment Securities [Member] | ||
Investment Holdings [Line Items] | ||
Held for investment, amortized cost | 76,722 | 76,622 |
Held for investment, gross unrealized gains | 0 | 0 |
Held for investment, gross unrealized losses | (8,180) | (11,245) |
Held for investment | 68,542 | 65,377 |
Residential Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member] | Available For Sale Securities [Member] | ||
Investment Holdings [Line Items] | ||
Available for sale, amortized cost | 1,257,634 | 1,366,985 |
Available for sale, gross unrealized gains | 136,085 | 98,576 |
Available for sale, gross unrealized losses | (1,278) | (3,489) |
Available for sale, fair value | 1,392,441 | 1,462,072 |
Commercial Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member] | Available For Sale Securities [Member] | ||
Investment Holdings [Line Items] | ||
Available for sale, amortized cost | 4,600,531 | 4,238,265 |
Available for sale, gross unrealized gains | 173,501 | 41,412 |
Available for sale, gross unrealized losses | (38,822) | (105,281) |
Available for sale, fair value | 4,735,210 | 4,174,396 |
Other Asset Backed Securities [Member] | Fixed Maturity Securities [Member] | Available For Sale Securities [Member] | ||
Investment Holdings [Line Items] | ||
Available for sale, amortized cost | 1,271,122 | 1,130,524 |
Available for sale, gross unrealized gains | 40,148 | 34,534 |
Available for sale, gross unrealized losses | (17,473) | (19,880) |
Available for sale, fair value | $ 1,293,797 | $ 1,145,178 |
Investments (Fixed Maturity Securities by Contractual Maturity) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract] | ||
Available for sale securities, due in one year or less, amortized cost | $ 320,122 | |
Available for sale securities, due after one year through five years, amortized cost | 2,673,105 | |
Available for sale securities, due after five years through ten years, amortized cost | 10,956,902 | |
Available for sale securities, due after ten years through twenty years, amortized cost | 8,357,708 | |
Available for sale securities, due after twenty years, amortized cost | 7,545,605 | |
Available for sale securities, securities with a single maturity date, amortized cost | 29,853,442 | |
Available for sale securities, amortized cost | 36,982,728 | $ 35,823,710 |
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract] | ||
Available for sale securities, due in one year or less, fair value | 325,370 | |
Available for sale securities, due after one year through five years, fair value | 2,836,994 | |
Available for sale securities, due after five years through ten years, fair value | 11,483,761 | |
Available for sale securities, due after ten years through twenty years, fair value | 9,305,285 | |
Available for sale securities, due after twenty years, fair value | 8,490,945 | |
Available for sale securities, securities with a single maturity date, fair value | 32,442,355 | |
Available for sale securities, fair value | 39,863,803 | 36,421,839 |
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract] | ||
Held for investment securities, due in one year or less, amortized cost | 0 | |
Held for investment securities, due after one year through five years, amortized cost | 0 | |
Held for investment securities, due after five years through ten years, amortized cost | 0 | |
Held for investment securities, due after ten years through twenty years, amortized cost | 0 | |
Held for investment securities, due after twenty years, amortized cost | 76,722 | |
Held for investment securities, securities with a single maturity date, amortized cost | 76,722 | |
Held for investment, amortized cost | 76,722 | 76,622 |
Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract] | ||
Held for investment securities, due in one year or less, fair value | 0 | |
Held for investment securities, due after one year through five years, fair value | 0 | |
Held for investment securities, due after five years through ten years, fair value | 0 | |
Held for investment securities, due after ten years through twenty years, fair value | 0 | |
Held for investment securities, due after twenty years, fair value | 68,542 | |
Held for investment securities, securities with a single maturity date, fair value | 68,542 | |
Held for investment | 68,542 | $ 65,377 |
Residential Mortgage Backed Securities [Member] | ||
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract] | ||
Available for sale securities, securities without a single maturity date, amortized cost | 1,257,633 | |
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract] | ||
Available for sale securities, securities without a single maturity date, fair value | 1,392,441 | |
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract] | ||
Held for investment securities, securities without a single maturity date, amortized cost | 0 | |
Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract] | ||
Held for investment securities, securities without a single maturity date, fair value | 0 | |
Commercial Mortgage Backed Securities [Member] | ||
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract] | ||
Available for sale securities, securities without a single maturity date, amortized cost | 4,600,531 | |
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract] | ||
Available for sale securities, securities without a single maturity date, fair value | 4,735,210 | |
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract] | ||
Held for investment securities, securities without a single maturity date, amortized cost | 0 | |
Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract] | ||
Held for investment securities, securities without a single maturity date, fair value | 0 | |
Other Asset Backed Securities [Member] | ||
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract] | ||
Available for sale securities, securities without a single maturity date, amortized cost | 1,271,122 | |
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract] | ||
Available for sale securities, securities without a single maturity date, fair value | 1,293,797 | |
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract] | ||
Held for investment securities, securities without a single maturity date, amortized cost | 0 | |
Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract] | ||
Held for investment securities, securities without a single maturity date, fair value | $ 0 |
Investments (Net Unrealized Gains on Available for Sale Fixed Maturity Securities and Equity Securities Reported as a Separate Component of Stockholders' Equity) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Investments [Abstract] | ||
Net unrealized gains on available for sale fixed maturity securities and equity securities | $ 2,881,370 | $ 598,442 |
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements | (1,541,834) | (322,859) |
Deferred income tax valuation allowance reversal | 22,534 | 22,534 |
Deferred income tax expense | (468,838) | (96,454) |
Net unrealized gains reported as accumulated other comprehensive income | $ 893,232 | $ 201,663 |
Investments (Schedule of Credit Quality of Fixed Maturity Portfolio by NAIC Designation) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Investment Holdings [Line Items] | ||
Amortized cost | $ 37,059,450 | $ 35,900,332 |
Fair value | 39,932,345 | 36,487,216 |
NAIC, Class 1 Designation [Member] | ||
Investment Holdings [Line Items] | ||
Amortized cost | 23,685,524 | 23,363,259 |
Fair value | 25,965,937 | 24,207,801 |
NAIC, Class 2 Designation [Member] | ||
Investment Holdings [Line Items] | ||
Amortized cost | 12,154,249 | 11,709,730 |
Fair value | 12,860,194 | 11,589,325 |
NAIC, Class 3 Designation [Member] | ||
Investment Holdings [Line Items] | ||
Amortized cost | 1,045,123 | 758,531 |
Fair value | 972,142 | 643,293 |
NAIC, Class 4 Designation [Member] | ||
Investment Holdings [Line Items] | ||
Amortized cost | 141,552 | 60,480 |
Fair value | 107,753 | 44,312 |
NAIC, Class 5 Designation [Member] | ||
Investment Holdings [Line Items] | ||
Amortized cost | 19,384 | 0 |
Fair value | 12,180 | 0 |
NAIC, Class 6 Designation [Member] | ||
Investment Holdings [Line Items] | ||
Amortized cost | 13,618 | 8,332 |
Fair value | $ 14,139 | $ 2,485 |
Investments (Gross Unrealized Losses on Investments, By Category and Length of Time) (Details) - Fixed Maturity Securities [Member] - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value | $ 2,479,740 | $ 13,944,810 |
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses | (100,817) | (646,288) |
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value | 1,621,441 | 676,956 |
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses | (175,824) | (199,057) |
Available for sale securities, continuous unrealized loss position, total, fair value | 4,101,181 | 14,621,766 |
Available for sale securities, continuous unrealized loss position, total, unrealized losses | (276,641) | (845,345) |
United States Government Full Faith and Credit [Member] | ||
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value | 37,730 | |
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses | (299) | |
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value | 0 | |
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses | 0 | |
Available for sale securities, continuous unrealized loss position, total, fair value | 37,730 | |
Available for sale securities, continuous unrealized loss position, total, unrealized losses | (299) | |
United States Government Sponsored Agencies [Member] | ||
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value | 61,450 | 957,053 |
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses | (550) | (14,409) |
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value | 0 | 0 |
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses | 0 | 0 |
Available for sale securities, continuous unrealized loss position, total, fair value | 61,450 | 957,053 |
Available for sale securities, continuous unrealized loss position, total, unrealized losses | (550) | (14,409) |
United States Municipalities, States and Territories [Member] | ||
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value | 0 | 261,823 |
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses | 0 | (8,474) |
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value | 6,752 | 2,846 |
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses | (683) | (154) |
Available for sale securities, continuous unrealized loss position, total, fair value | 6,752 | 264,669 |
Available for sale securities, continuous unrealized loss position, total, unrealized losses | (683) | (8,628) |
Foreign Government Obligations [Member] | ||
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value | 0 | 42,966 |
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses | 0 | (1,762) |
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value | 19,141 | 15,463 |
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses | (5,455) | (9,173) |
Available for sale securities, continuous unrealized loss position, total, fair value | 19,141 | 58,429 |
Available for sale securities, continuous unrealized loss position, total, unrealized losses | (5,455) | (10,935) |
Corporate Securities [Member] | Finance, Insurance and Real Estate Sectors [Member] | ||
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value | 168,620 | 2,077,223 |
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses | (8,462) | (59,607) |
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value | 172,731 | 49,912 |
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses | (7,056) | (14,855) |
Available for sale securities, continuous unrealized loss position, total, fair value | 341,351 | 2,127,135 |
Available for sale securities, continuous unrealized loss position, total, unrealized losses | (15,518) | (74,462) |
Corporate Securities [Member] | Manufacturing, Construction and Mining [Member] | ||
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value | 354,576 | 3,517,967 |
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses | (24,505) | (246,456) |
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value | 764,467 | 376,229 |
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses | (107,685) | (131,003) |
Available for sale securities, continuous unrealized loss position, total, fair value | 1,119,043 | 3,894,196 |
Available for sale securities, continuous unrealized loss position, total, unrealized losses | (132,190) | (377,459) |
Corporate Securities [Member] | Utilities and Related Sectors [Member] | ||
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value | 209,329 | 2,240,652 |
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses | (6,837) | (138,940) |
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value | 345,800 | 97,184 |
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses | (28,023) | (22,565) |
Available for sale securities, continuous unrealized loss position, total, fair value | 555,129 | 2,337,836 |
Available for sale securities, continuous unrealized loss position, total, unrealized losses | (34,860) | (161,505) |
Corporate Securities [Member] | Wholesale/Retail Trade [Member] | ||
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value | 80,220 | 473,050 |
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses | (2,736) | (17,863) |
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value | 62,330 | 38,682 |
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses | (7,574) | (8,125) |
Available for sale securities, continuous unrealized loss position, total, fair value | 142,550 | 511,732 |
Available for sale securities, continuous unrealized loss position, total, unrealized losses | (10,310) | (25,988) |
Corporate Securities [Member] | Services, Media and Other [Member] | ||
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value | 97,145 | 1,037,011 |
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses | (7,014) | (39,937) |
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value | 151,222 | 32,050 |
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses | (12,488) | (3,073) |
Available for sale securities, continuous unrealized loss position, total, fair value | 248,367 | 1,069,061 |
Available for sale securities, continuous unrealized loss position, total, unrealized losses | (19,502) | (43,010) |
Corporate Securities [Member] | Insurance [Member] | ||
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract] | ||
Held for investment securities, continuous unrealized loss position, less than 12 months, fair value | 0 | 65,377 |
Held for investment securities, continuous unrealized loss position, less than 12 months, unrealized losses | 0 | (11,245) |
Held for investment securities, continuous unrealized loss position, 12 months or longer, fair value | 68,542 | 0 |
Held for investment securities, continuous unrealized loss position, 12 months or longer, unrealized losses | (8,180) | 0 |
Held for investment securities, continuous unrealized loss position, total, fair value | 68,542 | 65,377 |
Held for investment securities, continuous unrealized loss position, total, unrealized losses | (8,180) | (11,245) |
Residential Mortgage Backed Securities [Member] | ||
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value | 39,184 | 162,770 |
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses | (1,258) | (2,958) |
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value | 653 | 6,438 |
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses | (20) | (531) |
Available for sale securities, continuous unrealized loss position, total, fair value | 39,837 | 169,208 |
Available for sale securities, continuous unrealized loss position, total, unrealized losses | (1,278) | (3,489) |
Commercial Mortgage Backed Securities [Member] | ||
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value | 1,164,578 | 2,679,510 |
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses | (38,822) | (105,002) |
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value | 0 | 11,495 |
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses | 0 | (279) |
Available for sale securities, continuous unrealized loss position, total, fair value | 1,164,578 | 2,691,005 |
Available for sale securities, continuous unrealized loss position, total, unrealized losses | (38,822) | (105,281) |
Other Asset Backed Securities [Member] | ||
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract] | ||
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value | 304,638 | 457,055 |
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses | (10,633) | (10,581) |
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value | 98,345 | 46,657 |
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses | (6,840) | (9,299) |
Available for sale securities, continuous unrealized loss position, total, fair value | 402,983 | 503,712 |
Available for sale securities, continuous unrealized loss position, total, unrealized losses | $ (17,473) | $ (19,880) |
Investments (Changes in Net Unrealized Gains on Investments) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Investment Holdings [Line Items] | ||||
Fixed maturity securities held for investment carried at amortized cost | $ 820 | $ (17,326) | $ 3,065 | $ (10,227) |
Investments carried at fair value, available for sale | 1,167,860 | (1,547,144) | 2,282,928 | (1,026,936) |
Adjustment for effect on other balance sheet accounts: | ||||
Deferred policy acquisition costs and deferred sales inducements | (609,224) | 770,285 | (1,218,975) | 515,209 |
Deferred income tax asset/liability | (195,523) | 271,900 | (372,384) | 179,105 |
Total adjustment for effect on other balance sheet accounts | (804,747) | 1,042,185 | (1,591,359) | 694,314 |
Change in net unrealized gains on investments carried at fair value | 363,113 | (504,959) | 691,569 | (332,622) |
Fixed Maturity Securities [Member] | ||||
Investment Holdings [Line Items] | ||||
Investments carried at fair value, available for sale | 1,167,861 | (1,547,155) | 2,282,946 | (1,026,989) |
Equity Securities [Member] | ||||
Investment Holdings [Line Items] | ||||
Investments carried at fair value, available for sale | $ (1) | $ 11 | $ (18) | $ 53 |
Investments (Net Realized Gains (Losses) on Invesments, Excluding Other Than Temporary Impairments) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Gain (Loss) on Investments [Line Items] | ||||
Net realized gains (losses) on investments, excluding other than temporary impairment (OTTI) losses | $ 2,737 | $ 4,324 | $ 5,424 | $ 9,203 |
Fixed Maturity Securities [Member] | ||||
Gain (Loss) on Investments [Line Items] | ||||
Gross realized gains | 4,604 | 2,212 | 6,091 | 4,500 |
Gross realized losses | (1,368) | (511) | (2,599) | (800) |
Gross realized gains (losses), excluding other than temporary impairments | 3,236 | 1,701 | 3,492 | 3,700 |
Other Investments [Member] | ||||
Gain (Loss) on Investments [Line Items] | ||||
Gain on sale of real estate | 705 | 195 | 836 | 1,033 |
Loss on sale of real estate | (1) | (193) | (93) | (575) |
Impairment losses on real estate | 0 | 0 | 0 | (629) |
Gain (loss) on other investments | 704 | 2 | 743 | (171) |
Mortgage Loans on Real Estate [Member] | ||||
Gain (Loss) on Investments [Line Items] | ||||
Decrease (increase) in allowance for credit losses | (2,885) | (499) | (3,833) | 1,299 |
Recovery of specific allowance | 1,682 | 3,120 | 5,022 | 4,375 |
Change in allowance for credit losses and recoveries | $ (1,203) | $ 2,621 | $ 1,189 | $ 5,674 |
Investments (Significant Assumptions in Determining Credit Loss Component of Other Than Temporary Impairment on Residential Mortgage Backed Securities) (Details) - Residential Mortgage Backed Securities [Member] |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Prime Sector [Member] | Vintage Year 2005 [Member] | Minimum [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Discount rate | 7.70% | |
Default rate | 14.00% | |
Loss severity | 50.00% | |
Prime Sector [Member] | Vintage Year 2005 [Member] | Maximum [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Discount rate | 7.70% | |
Default rate | 14.00% | |
Loss severity | 50.00% | |
Prime Sector [Member] | Vintage Year 2006 [Member] | Minimum [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Discount rate | 7.30% | 6.50% |
Default rate | 13.00% | 14.00% |
Loss severity | 50.00% | 40.00% |
Prime Sector [Member] | Vintage Year 2006 [Member] | Maximum [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Discount rate | 7.30% | 6.50% |
Default rate | 13.00% | 14.00% |
Loss severity | 50.00% | 40.00% |
Prime Sector [Member] | Vintage Year 2007 [Member] | Minimum [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Discount rate | 6.20% | 6.40% |
Default rate | 18.00% | 15.00% |
Loss severity | 50.00% | 55.00% |
Prime Sector [Member] | Vintage Year 2007 [Member] | Maximum [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Discount rate | 6.40% | 7.00% |
Default rate | 31.00% | 19.00% |
Loss severity | 55.00% | 55.00% |
Alt-A Sector [Member] | Vintage Year 2005 [Member] | Minimum [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Discount rate | 7.40% | 5.60% |
Default rate | 11.00% | 99.00% |
Loss severity | 60.00% | 2.00% |
Alt-A Sector [Member] | Vintage Year 2005 [Member] | Maximum [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Discount rate | 7.40% | 5.60% |
Default rate | 11.00% | 99.00% |
Loss severity | 60.00% | 2.00% |
Investments (Other Than Temporary Impairments by Asset Type) (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016
USD ($)
Securities
|
Jun. 30, 2015
USD ($)
Securities
|
Jun. 30, 2016
USD ($)
Securities
|
Jun. 30, 2015
USD ($)
Securities
|
|
Other than Temporary Impairment Losses, Investments [Abstract] | ||||
Other than temporary impairment, number of securities | Securities | 5 | 16 | ||
Total OTTI losses | $ (762) | $ 0 | $ (6,780) | $ (132) |
Portion of OTTI losses recognized in (from) other comprehensive income | (3,684) | (828) | (3,360) | (828) |
Net OTTI losses recognized in operations | $ (4,446) | $ (828) | $ (10,140) | $ (960) |
Corporate Securities [Member] | Energy [Member] | ||||
Other than Temporary Impairment Losses, Investments [Abstract] | ||||
Other than temporary impairment, number of securities | Securities | 2 | |||
Total OTTI losses | $ (642) | |||
Portion of OTTI losses recognized in (from) other comprehensive income | 0 | |||
Net OTTI losses recognized in operations | $ (642) | |||
Corporate Securities [Member] | Telecommunications [Member] | ||||
Other than Temporary Impairment Losses, Investments [Abstract] | ||||
Other than temporary impairment, number of securities | Securities | 1 | |||
Total OTTI losses | $ (4,462) | |||
Portion of OTTI losses recognized in (from) other comprehensive income | 562 | |||
Net OTTI losses recognized in operations | $ (3,900) | |||
Corporate Securities [Member] | Utilities [Member] | ||||
Other than Temporary Impairment Losses, Investments [Abstract] | ||||
Other than temporary impairment, number of securities | Securities | 1 | |||
Total OTTI losses | $ (136) | |||
Portion of OTTI losses recognized in (from) other comprehensive income | 0 | |||
Net OTTI losses recognized in operations | $ (136) | |||
Residential Mortgage Backed Securities [Member] | ||||
Other than Temporary Impairment Losses, Investments [Abstract] | ||||
Other than temporary impairment, number of securities | Securities | 2 | 3 | 6 | 4 |
Total OTTI losses | $ 0 | $ 0 | $ 0 | $ (132) |
Portion of OTTI losses recognized in (from) other comprehensive income | (202) | (828) | (440) | (828) |
Net OTTI losses recognized in operations | $ (202) | $ (828) | $ (440) | $ (960) |
Commercial Mortgage Backed Securities [Member] | ||||
Other than Temporary Impairment Losses, Investments [Abstract] | ||||
Other than temporary impairment, number of securities | Securities | 2 | 5 | ||
Total OTTI losses | $ (762) | $ (1,540) | ||
Portion of OTTI losses recognized in (from) other comprehensive income | 0 | 0 | ||
Net OTTI losses recognized in operations | $ (762) | $ (1,540) | ||
Other Asset Backed Securities [Member] | ||||
Other than Temporary Impairment Losses, Investments [Abstract] | ||||
Other than temporary impairment, number of securities | Securities | 1 | 1 | ||
Total OTTI losses | $ 0 | $ 0 | ||
Portion of OTTI losses recognized in (from) other comprehensive income | (3,482) | (3,482) | ||
Net OTTI losses recognized in operations | $ (3,482) | $ (3,482) |
Investments (Cumulative Credit Loss Portion of Other Than Temporary Impairment Recognized in Operations) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Investments [Abstract] | ||||
Cumulative credit loss at beginning of period | $ (151,518) | $ (127,182) | $ (145,824) | $ (127,050) |
Credit losses on securities for which OTTI has not previously been recognized | (762) | 0 | (6,218) | (132) |
Additional credit losses on securities for which OTTI has previously been recognized | (3,684) | (828) | (3,922) | (828) |
Accumulated losses on securities that were disposed of during the period | 1,556 | 0 | 1,556 | 0 |
Cumulative credit loss at end of period | $ (154,408) | $ (128,010) | $ (154,408) | $ (128,010) |
Investments (Cumulative Noncredit Portion of Other Than Temporary Impairment Recognized in Other Comprehensive Income and Change in Fair Value Since Other Than Temporary Impairment) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Investment Holdings [Line Items] | ||
Amortized cost | $ 446,879 | $ 481,421 |
OTTI recognized in other comprehensive income | (175,464) | (178,824) |
Change in fair value since OTTI was recognized | 206,642 | 198,605 |
Fair value | 478,057 | 501,202 |
Fixed Maturity Securities [Member] | Corporate Securities [Member] | ||
Investment Holdings [Line Items] | ||
Amortized cost | 8,764 | 6,396 |
OTTI recognized in other comprehensive income | (3,537) | (2,975) |
Change in fair value since OTTI was recognized | 7,234 | 9 |
Fair value | 12,461 | 3,430 |
Fixed Maturity Securities [Member] | Residential Mortgage Backed Securities [Member] | ||
Investment Holdings [Line Items] | ||
Amortized cost | 416,615 | 466,871 |
OTTI recognized in other comprehensive income | (170,284) | (170,724) |
Change in fair value since OTTI was recognized | 200,735 | 199,149 |
Fair value | 447,066 | 495,296 |
Fixed Maturity Securities [Member] | Commercial Mortgage Backed Securities [Member] | ||
Investment Holdings [Line Items] | ||
Amortized cost | 16,646 | |
OTTI recognized in other comprehensive income | 0 | |
Change in fair value since OTTI was recognized | 206 | |
Fair value | 16,852 | |
Fixed Maturity Securities [Member] | Other Asset Backed Securities [Member] | ||
Investment Holdings [Line Items] | ||
Amortized cost | 4,854 | 8,154 |
OTTI recognized in other comprehensive income | (1,643) | (5,125) |
Change in fair value since OTTI was recognized | (1,533) | (553) |
Fair value | $ 1,678 | $ 2,476 |
Mortgage Loans on Real Estate (Narrative) (Details) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2016
USD ($)
loans
portfolio_segment
|
Jun. 30, 2015
loans
|
Jun. 30, 2016
USD ($)
loans
portfolio_segment
|
Jun. 30, 2015
loans
|
Dec. 31, 2015
USD ($)
|
|
Mortgage Loans on Real Estate [Abstract] | |||||
Commitments outstanding | $ 66.5 | $ 66.5 | |||
Number of portfolio segments that make up financing receivables | portfolio_segment | 1 | 1 | |||
Number of mortgage loans satisfied by foreclosure | loans | 0 | 0 | 0 | 0 | |
Impaired mortgage loans, workout terms, interest only payments, six month terms | 6 months | ||||
Impaired mortgage loans, workout terms, interest only payments, twelve month terms | 12 months | ||||
Impaired mortgage loans, workout terms, cash flow sweep, number of months | 12 months | ||||
Number of days past due, non-accrual status | 90 days | ||||
Outstanding principal of loans in a non-accrual status | $ 7.8 | $ 7.8 | $ 0.0 | ||
Minimum [Member] | |||||
Mortgage Loans on Real Estate [Line Items] | |||||
Number of days past due, delinquent status | 60 days |
Mortgage Loans on Real Estate (Summary of Mortgage Loan Portfolio) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Mortgage Loans on Real Estate [Abstract] | ||
Principal outstanding | $ 2,463,412 | $ 2,449,909 |
Loan loss allowance | (10,852) | (14,142) |
Deferred prepayment fees | (1,185) | (510) |
Mortgage loans on real estate | $ 2,451,375 | $ 2,435,257 |
Mortgage Loans on Real Estate (Mortgage Loan Portfolio Summarized by Geographic Region and Property Type) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Mortgage Loans on Real Estate [Line Items] | ||
Principal outstanding | $ 2,463,412 | $ 2,449,909 |
Percent | 100.00% | 100.00% |
Office [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
Principal outstanding | $ 341,209 | $ 396,154 |
Percent | 13.90% | 16.20% |
Medical Office [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
Principal outstanding | $ 72,087 | $ 77,438 |
Percent | 2.90% | 3.20% |
Retail [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
Principal outstanding | $ 815,013 | $ 790,158 |
Percent | 33.10% | 32.20% |
Industrial/Warehouse [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
Principal outstanding | $ 690,503 | $ 686,400 |
Percent | 28.00% | 28.00% |
Hotel [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
Principal outstanding | $ 3,255 | $ 3,361 |
Percent | 0.10% | 0.10% |
Apartment [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
Principal outstanding | $ 372,459 | $ 352,971 |
Percent | 15.10% | 14.40% |
Mixed Use/Other [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
Principal outstanding | $ 168,886 | $ 143,427 |
Percent | 6.90% | 5.90% |
East [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
Principal outstanding | $ 672,512 | $ 698,113 |
Percent | 27.30% | 28.50% |
Middle Atlantic [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
Principal outstanding | $ 160,283 | $ 160,261 |
Percent | 6.50% | 6.60% |
Mountain [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
Principal outstanding | $ 234,568 | $ 252,442 |
Percent | 9.50% | 10.30% |
New England [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
Principal outstanding | $ 12,944 | $ 13,161 |
Percent | 0.60% | 0.50% |
Pacific [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
Principal outstanding | $ 385,306 | $ 355,268 |
Percent | 15.60% | 14.50% |
South Atlantic [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
Principal outstanding | $ 472,253 | $ 456,227 |
Percent | 19.20% | 18.60% |
West North Central [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
Principal outstanding | $ 325,402 | $ 313,120 |
Percent | 13.20% | 12.80% |
West South Central [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
Principal outstanding | $ 200,144 | $ 201,317 |
Percent | 8.10% | 8.20% |
Mortgage Loans on Real Estate (Allowance for Loan Losses Rollforward) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Financing Receivable, Allowance for Credit Losses [Roll Forward] | ||||
Beginning allowance balance | $ (14,142) | |||
Ending allowance balance | $ (10,852) | (10,852) | ||
Specific Allowance [Member] | ||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | ||||
Beginning allowance balance | (5,750) | $ (12,452) | (7,842) | $ (12,333) |
Charge-offs | 2,101 | 15 | 2,101 | 143 |
Recoveries | 1,682 | 3,120 | 5,022 | 4,375 |
Change in provision for credit losses | (2,585) | 1 | (3,833) | (1,501) |
Ending allowance balance | (4,552) | (9,316) | (4,552) | (9,316) |
General Allowance [Member] | ||||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | ||||
Beginning allowance balance | (6,000) | (7,000) | (6,300) | (10,300) |
Charge-offs | 0 | 0 | 0 | 0 |
Recoveries | 0 | 0 | 0 | 0 |
Change in provision for credit losses | (300) | (500) | 0 | 2,800 |
Ending allowance balance | $ (6,300) | $ (7,500) | $ (6,300) | $ (7,500) |
Mortgage Loans on Real Estate (Impaired Mortgage Loans on Real Estate by Basis of Impairment) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Mortgage Loans on Real Estate [Abstract] | ||
Individually evaluated for impairment | $ 10,342 | $ 21,277 |
Collectively evaluated for impairment | 2,453,070 | 2,428,632 |
Principal outstanding | $ 2,463,412 | $ 2,449,909 |
Mortgage Loans on Real Estate (Real Estate Owned) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Mortgage Loans on Real Estate [Abstract] | ||||
Real estate owned at beginning of period | $ 5,356 | $ 14,611 | $ 6,485 | $ 20,238 |
Real estate acquired in satisfaction of mortgage loans | 0 | 0 | 0 | 0 |
Sales | (5,338) | (1,581) | (6,444) | (6,480) |
Impairments | 0 | 0 | 0 | (629) |
Depreciation | (18) | (72) | (41) | (171) |
Real estate owned at end of period | $ 0 | $ 12,958 | $ 0 | $ 12,958 |
Mortgage Loans on Real Estate (Mortgage Loans by Credit Quality Indicator) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Mortgage Loans on Real Estate [Abstract] | ||
Performing | $ 2,453,915 | $ 2,438,341 |
In workout | 1,648 | 11,568 |
Delinquent | 0 | 0 |
Collateral dependent | 7,849 | 0 |
Principal outstanding | $ 2,463,412 | $ 2,449,909 |
Mortgage Loans on Real Estate (Schedule of Financing Receivables Past Due) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Commercial mortgage loans, past due | $ 0 | $ 0 |
Commercial mortgage loans, current | 2,455,563 | 2,449,909 |
Commercial mortgage loans, collateral dependent receivables | 7,849 | 0 |
Principal outstanding | 2,463,412 | 2,449,909 |
30 to 59 Days [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Commercial mortgage loans, past due | 0 | 0 |
60 to 89 Days [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Commercial mortgage loans, past due | 0 | 0 |
90 Days and Over [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Commercial mortgage loans, past due | $ 0 | $ 0 |
Mortgage Loans on Real Estate (Schedule of Impaired Financing Receivables) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Financing Receivable, Impaired [Line Items] | |||||
Mortgage loans with an allowance, recorded investment | $ 5,790 | $ 5,790 | $ 13,435 | ||
Mortgage loans with no related allowance, recorded investment | 4,723 | 4,723 | 8,859 | ||
Impaired mortgage loans, recorded investment | 10,513 | 10,513 | 22,294 | ||
Mortgage loans with an allowance, unpaid principal balance | 10,342 | 10,342 | 21,277 | ||
Mortgage loans with no related allowance, unpaid principal balance | 4,723 | 4,723 | 8,859 | ||
Impaired mortgage loans, unpaid principal balance | 15,065 | 15,065 | 30,136 | ||
Mortgage loans with an allowance, related allowance | (4,552) | (4,552) | $ (7,842) | ||
Mortgage loans with an allowance, average recorded investment | 6,921 | $ 15,518 | 7,166 | $ 15,893 | |
Mortgage loans with no related allowance, average recorded investment | 4,737 | 11,856 | 4,793 | 11,873 | |
Impaired mortgage loans, average recorded investment | 11,658 | 27,374 | 11,959 | 27,766 | |
Mortgage loans with an allowance, interest income recognized | 164 | 394 | 329 | 738 | |
Mortgage loans with no related allowance, interest income recognized | 74 | 180 | 150 | 372 | |
Impaired mortgage loans, interest income reoognized | $ 238 | $ 574 | $ 479 | $ 1,110 |
Mortgage Loans on Real Estate (Troubled Debt Restructurings) (Details) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2016
USD ($)
loans
|
Dec. 31, 2015
USD ($)
loans
|
|
Financing Receivable, Modifications [Line Items] | ||
Number of TDRs | loans | 3 | 9 |
Principal balance outstanding | $ 5,942 | $ 20,374 |
Specific loan loss allowance | (928) | (3,459) |
Net carrying amount | $ 5,014 | $ 16,915 |
South Atlantic [Member] | ||
Financing Receivable, Modifications [Line Items] | ||
Number of TDRs | loans | 2 | 6 |
Principal balance outstanding | $ 3,881 | $ 11,155 |
Specific loan loss allowance | (461) | (2,992) |
Net carrying amount | $ 3,420 | $ 8,163 |
East North Central [Member] | ||
Financing Receivable, Modifications [Line Items] | ||
Number of TDRs | loans | 1 | 2 |
Principal balance outstanding | $ 2,061 | $ 3,306 |
Specific loan loss allowance | (467) | (467) |
Net carrying amount | $ 1,594 | $ 2,839 |
West North Central [Member] | ||
Financing Receivable, Modifications [Line Items] | ||
Number of TDRs | loans | 1 | |
Principal balance outstanding | $ 5,913 | |
Specific loan loss allowance | 0 | |
Net carrying amount | $ 5,913 |
Derivative Instruments (Narrative) (Details) $ / shares in Units, $ in Millions |
1 Months Ended | 6 Months Ended | 7 Months Ended | 12 Months Ended |
---|---|---|---|---|
Sep. 30, 2010
USD ($)
counterparties
$ / shares
shares
|
Jun. 30, 2016
USD ($)
shares
|
Jun. 30, 2016
USD ($)
shares
|
Dec. 31, 2015
USD ($)
$ / shares
shares
|
|
Derivative [Line Items] | ||||
Derivative collateral | $ 369.5 | $ 369.5 | $ 349.8 | |
Credit risk, maximum exposure | $ 205.3 | $ 36.9 | ||
Shares of common stock issued to settle warrants that have reached their expiration | shares | 92,998 | 140,866 | ||
2015 Notes Hedges [Member] | ||||
Derivative [Line Items] | ||||
Number of counterparties | counterparties | 2 | |||
Derivative, conversion spread, shares of common stock | shares | 16,000,000 | |||
Derivative asset, strike price | $ / shares | $ 12.50 | |||
2015 Warrants [Member] | ||||
Derivative [Line Items] | ||||
Warrants, number of securities called by warrants | shares | 16,000,000 | 1,600,000 | ||
Warrants, strike price | $ / shares | $ 16.00 | $ 15.59 | ||
Proceeds from issuance of warrants | $ 15.6 | |||
September 2015 Notes [Member] | ||||
Derivative [Line Items] | ||||
Principal amount of convertible senior notes payable at issuance | $ 200.0 | |||
Debt instrument, interest rate, stated percentage | 3.50% | |||
SunTrust [Member] | Not Designated as Hedging Instrument [Member] | ||||
Derivative [Line Items] | ||||
Interest rate swaps and caps, duration | 7 years | |||
Collateral on deposit | $ 5.7 | $ 5.7 | ||
SunTrust [Member] | Three Month London Interbank Offered Rate (LIBOR) [Member] | Not Designated as Hedging Instrument [Member] | ||||
Derivative [Line Items] | ||||
Derivative, cap interest rate | 2.50% | 2.50% | ||
Call Options [Member] | ||||
Derivative [Line Items] | ||||
Investment maturity period | 1 year |
Derivative Instruments (Fair Value of Derivative Instruments as Presented in the Consolidated Balance Sheets) (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Derivative assets | $ 576,262 | $ 337,256 |
Not Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 576,689 | 338,666 |
Derivative liabilities | 6,504,986 | 5,986,761 |
Call Options [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 576,262 | 337,256 |
Interest Rate Caps [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets | 427 | 1,410 |
Fixed Index Annuities - Embedded Derivatives [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities | 6,499,015 | 5,983,622 |
Interest Rate Swap [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities | $ 5,971 | $ 3,139 |
Derivative Instruments (Change in Fair Value of Derivatives Included in the Consolidated Statement of Operations) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Change in fair value of derivatives | $ 39,099 | $ (23,024) | $ (34,966) | $ (54,124) |
Change in fair value of embedded derivatives | 284,303 | (219,601) | 550,160 | (168,388) |
Call Options [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Change in fair value of derivatives | 40,394 | (20,141) | (30,357) | (49,361) |
2015 Notes Hedges [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Change in fair value of derivatives | 0 | (3,942) | 0 | (3,375) |
Interest Rate Swap [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Change in fair value of derivatives | (982) | 827 | (3,626) | (934) |
Interest Rate Caps [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Change in fair value of derivatives | (313) | 232 | (983) | (454) |
Fixed Index Annuities - Embedded Derivatives [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Change in fair value of embedded derivatives | 199,917 | (334,481) | 379,632 | (404,358) |
Other Changes in Difference Between Policy Benefit Reserves Computed Using Derivative Accounting Vs. Long-Duration Contracts Accounting [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Change in fair value of embedded derivatives | 84,386 | 118,822 | 170,528 | 239,345 |
2015 Notes Embedded Conversion Derivative [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Change in fair value of embedded derivatives | $ 0 | $ (3,942) | $ 0 | $ (3,375) |
Derivative Instruments (Derivative Call Options, Notional Amount and Fair Value, by Counterparty) (Details) - Call Options [Member] - Not Designated as Hedging Instrument [Member] - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Derivative [Line Items] | ||
Notional amount | $ 30,148,735 | $ 29,277,569 |
Derivative instruments | 576,262 | 337,256 |
Bank of America [Member] | ||
Derivative [Line Items] | ||
Notional amount | 6,555,160 | 6,257,861 |
Derivative instruments | 124,871 | 67,662 |
Barclays [Member] | ||
Derivative [Line Items] | ||
Notional amount | 2,677,943 | 2,463,768 |
Derivative instruments | 58,261 | 35,273 |
BNP Paribas [Member] | ||
Derivative [Line Items] | ||
Notional amount | 1,154,557 | 1,520,710 |
Derivative instruments | 25,532 | 16,944 |
Citibank, N.A. [Member] | ||
Derivative [Line Items] | ||
Notional amount | 3,667,666 | 3,786,498 |
Derivative instruments | 46,160 | 23,587 |
Credit Suisse [Member] | ||
Derivative [Line Items] | ||
Notional amount | 1,573,916 | 1,278,492 |
Derivative instruments | 29,563 | 12,508 |
Deutsche Bank [Member] | ||
Derivative [Line Items] | ||
Notional amount | 557,990 | 1,349,002 |
Derivative instruments | 6,167 | 10,704 |
J.P. Morgan [Member] | ||
Derivative [Line Items] | ||
Notional amount | 1,308,604 | 838,982 |
Derivative instruments | 24,114 | 5,283 |
Morgan Stanley [Member] | ||
Derivative [Line Items] | ||
Notional amount | 3,322,720 | 3,465,457 |
Derivative instruments | 38,833 | 33,171 |
Royal Bank of Canada [Member] | ||
Derivative [Line Items] | ||
Notional amount | 3,260,997 | 2,820,410 |
Derivative instruments | 76,346 | 48,654 |
SunTrust [Member] | ||
Derivative [Line Items] | ||
Notional amount | 1,542,351 | 1,308,434 |
Derivative instruments | 38,407 | 20,028 |
Wells Fargo [Member] | ||
Derivative [Line Items] | ||
Notional amount | 4,426,882 | 4,187,955 |
Derivative instruments | 105,968 | 63,442 |
Exchange Traded [Member] | ||
Derivative [Line Items] | ||
Notional amount | 99,949 | 0 |
Derivative instruments | $ 2,040 | $ 0 |
Derivative Instruments (Interest Rate Swap) (Details) - Interest Rate Swap [Member] - Interest Rate Swap, Maturity Date, March 15, 2021, 2.415% [Member] - SunTrust [Member] - Not Designated as Hedging Instrument [Member] - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Derivative [Line Items] | ||
Notional amount | $ 85,500 | |
Pay rate | 2.415% | |
Derivative liabilities | $ (5,971) | $ (3,139) |
Derivative Instruments (Interest Rate Caps) (Details) - Interest Rate Caps [Member] - SunTrust [Member] - Not Designated as Hedging Instrument [Member] - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Derivative [Line Items] | ||
Notional amount | $ 79,000 | |
Derivative assets | 427 | $ 1,410 |
Interest Rate Caps, Maturity Date, July 7, 2021, 2.50% [Member] | ||
Derivative [Line Items] | ||
Notional amount | $ 40,000 | |
Cap rate | 2.50% | |
Derivative assets | $ 213 | 708 |
Interest Rate Caps, Maturity Date, July 8, 2021, 2.50% [Member] | ||
Derivative [Line Items] | ||
Notional amount | $ 12,000 | |
Cap rate | 2.50% | |
Derivative assets | $ 64 | 212 |
Interest Rate Caps, Maturity Date, July 29, 2021, 2.50% [Member] | ||
Derivative [Line Items] | ||
Notional amount | $ 27,000 | |
Cap rate | 2.50% | |
Derivative assets | $ 150 | $ 490 |
Notes Payable (Line of Credit Narrative) (Details) - 2013 Line of Credit [Member] $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2016
USD ($)
banks
occasions
guarantor
|
Dec. 31, 2015
USD ($)
|
|
Line of Credit Facility [Line Items] | ||
Line of credit, maximum borrowing capacity | $ 140,000 | |
Line of credit, number of banks in agreement | banks | 5 | |
Line of credit, interest rate, floating, applicable margin | 0.75% | |
Line of credit, interest rate, floating, adjusted LIBOR | 1.75% | |
Line of credit, unused capacity, commitment fee percentage | 0.30% | |
Minimum risk-based capital ratio | 275.00% | |
Maximum debt to capital ratio | 0.35 | |
Minimum capital to be retained | 80.00% | |
Minimum portion of net income to be retained | 50.00% | |
Minimum capital contributions to be retained | 50.00% | |
Line of credit, number of occasions borrowing capacity can be increased | occasions | 3 | |
Line of credit, additional borrowing capacity, aggregate amount | $ 50,000 | |
Line of credit, maturity date extension available, years | 1 year | |
Line of credit, number of guarantors | guarantor | 0 | |
Line of credit, amount outstanding | $ 0 | $ 0 |
Cash in excess of amount required by covenants | $ 311,000 |
Notes Payable (Repurchase Agreements Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Debt Disclosure [Abstract] | ||||
Repurchase agreement, maximum amount borrowed | $ 40,600 | |||
Repurchase agreement, average borrowings | $ 0 | $ 0 | $ 0 | $ 900 |
Repurchase agreement, weighted average interest rate | 0.39% |
Commitments and Contingencies (Narrative) (Details) $ in Millions |
Jun. 30, 2016
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Estimated litigation liability | $ 11.1 |
Unfunded commitments to limited partnerships | 36.5 |
Unfunded commitments to secured bank loans | $ 13.5 |
Earnings (Loss) Per Share and Stockholders' Equity (Schedule of Earnings (Loss) Per Share, Basic and Diluted) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|||
Earnings Per Share, Basic and Diluted [Line Items] | ||||||
Net income (loss) - numerator for earnings (loss) per common share | $ 14,708 | $ 82,845 | $ (30,133) | $ 88,748 | ||
Weighted average common shares outstanding (shares) | [1] | 82,516,927 | 77,237,200 | 82,322,919 | 77,139,992 | |
Effect of dilutive securities: 2015 warrants (shares) | 0 | 779,926 | 30,439 | 793,132 | ||
Denominator for earnings (loss) per common share - assuming dilution | 83,184,137 | 79,227,317 | 83,072,816 | 79,173,143 | ||
Earnings (loss) per common share | $ 0.18 | $ 1.07 | $ (0.37) | $ 1.15 | ||
Earnings (loss) per common share - assuming dilution | $ 0.18 | $ 1.05 | $ (0.37) | $ 1.12 | ||
Stock Options and Deferred Compensation Agreements [Member] | ||||||
Earnings Per Share, Basic and Diluted [Line Items] | ||||||
Effect of dilutive securities: share-based payment arrangements (shares) | 353,052 | 1,087,893 | 422,809 | 1,123,614 | ||
Restricted Stock and Restricted Stock Units [Member] | ||||||
Earnings Per Share, Basic and Diluted [Line Items] | ||||||
Effect of dilutive securities: share-based payment arrangements (shares) | 314,158 | 122,298 | 296,649 | 116,405 | ||
|
Earnings (Loss) Per Share and Stockholders' Equity (Schedule of Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share) (Details) - Stock Options [Member] - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Number of shares | 1,061,541 | 0 | 1,061,541 | 0 |
Minimum [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Range of exercise prices | $ 24.79 | $ 0.00 | $ 24.79 | $ 0.00 |
Maximum [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Range of exercise prices | $ 24.79 | $ 0.00 | $ 24.79 | $ 0.00 |
Earnings (Loss) Per Share and Stockholders' Equity (Stockholders' Equity Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Aug. 01, 2016 |
Aug. 31, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Forward Contract Indexed to Issuer's Equity [Line Items] | ||||
Public offering related to equity forward transaction, shares | 8,600,000 | |||
Forward rate per share | $ 25.25 | |||
Shares subject to forward sale agreement | 4,300,000 | |||
Optional shares available to underwriters | 1,290,000 | |||
Proceeds from issuance of common stock | $ 3,779 | $ 5,399 | ||
Subsequent Event [Member] | ||||
Forward Contract Indexed to Issuer's Equity [Line Items] | ||||
Shares of common stock issued | 5,590,000 | |||
Proceeds from issuance of common stock | $ 134,700 |