BUSINESS SEGMENTS

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

BUSINESS SEGMENTS

BUSINESS SEGMENTS

The Company manages its business through the following operating segments: Bankers Life, Washington National and Colonial Penn, which are defined on the basis of product distribution; and corporate operations, comprised of holding company activities and certain noninsurance company businesses. In the fourth quarter of 2016, we began reporting the long-term care block recaptured from BRe as an additional business segment.

We measure segment performance by excluding the loss on the sale of a subsidiary, gain (loss) on reinsurance transactions and transition expenses, the earnings of CLIC prior to being sold on July 1, 2014, net realized investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), fair value changes and amendment in the agent deferred compensation plan, loss on extinguishment or modification of debt, income taxes and other non-operating items consisting primarily of equity in earnings of certain non-strategic investments and earnings attributable to VIEs ("pre-tax operating earnings") because we believe that this performance measure is a better indicator of the ongoing business and trends in our business.  Our primary investment focus is on investment income to support our liabilities for insurance products as opposed to the generation of net realized investment gains (losses), and a long-term focus is necessary to maintain profitability over the life of the business.

The loss on the sale of CLIC, gain (loss) on reinsurance transactions and transition expenses, the earnings of CLIC prior to being sold, net realized investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), fair value changes and amendment in the agent deferred compensation plan, loss on extinguishment or modification of debt and other non-operating items consisting primarily of equity in earnings of certain non-strategic investments and earnings attributable to VIEs depend on market conditions or represent unusual items that do not necessarily relate to the underlying business of our segments.  Net realized investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) may affect future earnings levels since our underlying business is long-term in nature and changes in our investment portfolio may impact our ability to earn the assumed interest rates needed to maintain the profitability of our business.

Operating information by segment was as follows (dollars in millions):

	2016		2015		2014
Revenues:
Bankers Life:
Insurance policy income:
Annuities	$	22.0	$	22.4	$	26.0
Health	1,244.1		1,251.0		1,287.1
Life	393.0		375.3		338.6
Net investment income (a)	936.8		884.7		957.3
Fee revenue and other income (a)	34.4		27.7		29.3
Total Bankers Life revenues	2,630.3		2,561.1		2,638.3
Washington National:
Insurance policy income:
Annuities	2.9		3.0		4.0
Health	627.9		615.4		597.6
Life	25.0		25.4		24.4
Net investment income (a)	259.3		253.6		276.1
Fee revenue and other income (a)	1.3		1.3		1.1
Total Washington National revenues	916.4		898.7		903.2
Colonial Penn:
Insurance policy income:
Health	2.6		3.0		3.6
Life	278.8		260.5		242.4
Net investment income (a)	44.2		43.0		41.7
Fee revenue and other income (a)	1.1		1.0		1.0
Total Colonial Penn revenues	326.7		307.5		288.7
Long-term care in run-off:
Insurance policy income - health	4.8		—		—
Net investment income (a)	9.4		—		—
Total Long-term care in run-off revenues	14.2		—		—
Corporate operations:
Net investment income	16.6		11.3		14.9
Fee revenue and other income	10.0		8.6		6.7
Total corporate revenues	26.6		19.9		21.6
Total revenues	3,914.2		3,787.2		3,851.8

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	2016			2015			2014
Expenses:
Bankers Life:
Insurance policy benefits	$	1,620.6		$	1,588.4		$	1,667.6
Amortization	176.5			187.1			174.7
Interest expense on investment borrowings	13.2			8.8			7.9
Other operating costs and expenses	422.1			407.2			401.2
Total Bankers Life expenses	2,232.4			2,191.5			2,251.4
Washington National:
Insurance policy benefits	561.7			546.6			536.2
Amortization	59.1			55.2			64.6
Interest expense on investment borrowings	3.7			2.0			1.7
Other operating costs and expenses	189.0			183.4			189.5
Total Washington National expenses	813.5			787.2			792.0
Colonial Penn:
Insurance policy benefits	201.9			189.0			173.2
Amortization	15.3			14.4			15.3
Interest expense on investment borrowings	.6			.1			—
Other operating costs and expenses	107.2			98.4			99.4
Total Colonial Penn expenses	325.0			301.9			287.9
Long-term care in run-off:
Insurance policy benefits	17.6			—			—
Other operating costs and expenses	.5			—			—
Total Long-term care in run-off expenses	18.1			—			—
Corporate operations:
Interest expense on corporate debt	45.8			45.0			43.9
Interest expense on investment borrowings	—			.2			.1
Other operating costs and expenses	69.1			38.6			49.1
Total corporate expenses	114.9			83.8			93.1
Total expenses	3,503.9			3,364.4			3,424.4
Pre-tax operating earnings by segment:
Bankers Life	397.9			369.6			386.9
Washington National	102.9			111.5			111.2
Colonial Penn	1.7			5.6			.8
Long-term care in run-off	(3.9		)	—			—
Corporate operations	(88.3		)	(63.9		)	(71.5		)
Pre-tax operating earnings	$	410.3		$	422.8		$	427.4

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(a) It is not practicable to provide additional components of revenue by product or services.

A reconciliation of segment revenues and expenses to consolidated revenues and expenses and net income is as follows (dollars in millions):

	2016			2015			2014
Total segment revenues	$	3,914.2		$	3,787.2		$	3,851.8
Net realized investment gains (losses)	8.3			(36.6		)	33.9
Revenues related to certain non-strategic investments and earnings attributable to VIEs	52.6			36.3			33.2
Fee revenue related to transition and support services agreements	10.0			25.0			15.0
Revenues of CLIC prior to being sold	—			—			210.8
Consolidated revenues	3,985.1			3,811.9			4,144.7
Total segment expenses	3,503.9			3,364.4			3,424.4
Insurance policy benefits - fair value changes in embedded derivative liabilities	(11.3		)	(15.7		)	48.5
Amortization related to fair value changes in embedded derivative liabilities	1.7			3.8			(12.5		)
Amortization related to net realized investment gains (losses)	.7			(.5		)	1.0
Expenses related to certain non-strategic investments and expenses (earnings) attributable to VIEs	54.6			43.0			41.2
Fair value changes and amendment related to agent deferred compensation plan	(3.1		)	(15.1		)	26.8
Loss on extinguishment or modification of debt	—			32.8			.6
Loss on sale of subsidiary, (gain) loss on reinsurance transactions and transition expenses	75.4			9.0			239.8
Expenses related to transition and support services agreements	10.0			22.5			12.4
Expenses of CLIC prior to being sold	—			—			187.4
Consolidated expenses	3,631.9			3,444.2			3,969.6
Income before tax	353.2			367.7			175.1
Income tax expense:
Tax expense on period income	127.8			129.5			159.2
Valuation allowance for deferred tax assets and other tax items	(132.8		)	(32.5		)	(35.5		)
Net income	$	358.2		$	270.7		$	51.4

Segment balance sheet information was as follows (dollars in millions):

	2016		2015
Assets:
Bankers Life	$	19,876.4	$	19,067.8
Washington National	7,555.7		7,948.5
Colonial Penn	1,022.9		985.4
Long-term care in run-off	656.2		—
Corporate operations	2,864.0		3,123.4
Total assets	$	31,975.2	$	31,125.1
Liabilities:
Bankers Life	$	17,144.9	$	16,612.0
Washington National	6,096.9		6,665.1
Colonial Penn	898.5		869.3
Long-term care in run-off	562.2		—
Corporate operations	2,785.8		2,840.2
Total liabilities	$	27,488.3	$	26,986.6

The following table presents selected financial information of our segments (dollars in millions):

Segment	Present value of future profits		Deferred acquisition costs		Insurance liabilities
2016
Bankers Life	$	95.5	$	646.2	$	15,702.8
Washington National	266.8		299.9		5,586.7
Colonial Penn	39.5		98.6		809.6
Long-term care in run-off	—		—		554.7
Total	$	401.8	$	1,044.7	$	22,653.8
2015
Bankers Life	$	114.9	$	718.2	$	15,234.1
Washington National	290.2		280.0		6,126.2
Colonial Penn	43.9		85.1		782.9
Total	$	449.0	$	1,083.3	$	22,143.2