10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2020

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 000-55522

NATIONAL WESTERN LIFE GROUP, INC.

(Exact name of Registrant as specified in its charter)

Delaware	47-3339380
(State or Other Jurisdiction of Incorporation)	(IRS Employer Identification No.)

10801 N. Mopac Expy Bldg 3
Austin,	Texas
78759		(512)	836-1010
(Address of Principal Executive Offices) (Zip Code)		(Telephone Number, including area code)

Securities registered pursuant to Section 12 (b) of the Act:

Title of each class to be so registered:	Trading Symbol	Name of each exchange on which each class is to be registered:
Class A Common Stock, $0.01 par value	NWLI	The NASDAQ Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:   Yes ☒   No ☐ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). : Yes ☒   No ☐ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See definition of "accelerated filer." "large accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☒  Accelerated filer  ☐    Non-accelerated filer (Do not check if a smaller reporting company)  ☐  Smaller reporting company ☐  Emerging growth company ☐ 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐    No ☒

As of November 5, 2020, the number of shares of Registrant's common stock outstanding was: Class A – 3,436,020 and  Class B - 200,000.

TABLE OF CONTENTS
	Page
Part I.  Financial Information:	3
Item 1.  Financial Statements	3
Condensed Consolidated Balance Sheets September 30, 2020 (Unaudited) and December 31, 2019	3
Condensed Consolidated Statements of Earnings (Loss) For the Three Months Ended September 30, 2020 and 2019 (Unaudited)	5
Condensed Consolidated Statements of Earnings (Loss) For the Nine Months Ended September 30, 2020 and 2019 (Unaudited)	6
Condensed Consolidated Statements of Comprehensive Income (Loss) For the Three Months Ended September 30, 2020 and 2019 (Unaudited)	7
Condensed Consolidated Statements of Comprehensive Income (Loss) For the Nine Months Ended September 30, 2020 and 2019 (Unaudited)	8
Condensed Consolidated Statements of Changes in Stockholders' Equity For the Three Months Ended September 30, 2020 and 2019 (Unaudited)	9
Condensed Consolidated Statements of Changes in Stockholders' Equity For the Nine Months Ended September 30, 2020 and 2019 (Unaudited)	11
Condensed Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2020 and 2019 (Unaudited)	13
Notes to Condensed Consolidated Financial Statements (Unaudited)	15
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations	62
Item 3.  Quantitative and Qualitative Disclosures About Market Risk	106
Item 4.  Controls and Procedures	106
Part II.  Other Information:	107
Item 1.  Legal Proceedings	107
Item 1A.  Risk Factors	107
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	108
Item 4.  Removed and Reserved	109
Item 6.  Exhibits	109
Signatures	110

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NATIONAL WESTERN LIFE GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	(Unaudited)
ASSETS	September 30, 2020		December 31, 2019
Investments:
Debt securities held to maturity, at amortized cost, net of allowance for credit losses ($5,086 and $0; fair value: $7,378,399 and $7,407,703)	$	6,822,053	7,106,245
Debt securities available for sale, at fair value (cost: $3,156,486 and $3,206,120)	3,410,656		3,356,945
Mortgage loans, net of allowance for credit losses ($2,357 and $675)	302,715		272,422
Policy loans	75,714		80,008
Derivatives, index options	93,367		157,588
Equity securities, at fair value (cost: $15,157 and $16,894)	18,610		23,594
Other long-term investments	78,579		62,090
Total investments	10,801,694		11,058,892
Cash and cash equivalents	507,025		253,525
Deferred policy acquisition costs	633,349		723,972
Deferred sales inducements	86,104		104,359
Value of business acquired	132,426		138,071
Accrued investment income	93,330		93,298
Federal income tax receivable	802		—
Other assets	166,256		181,330
Total assets	$	12,420,986	12,553,447

See accompanying notes to Condensed Consolidated Financial Statements (unaudited).

3

NATIONAL WESTERN LIFE GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	(Unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY	September 30, 2020		December 31, 2019
LIABILITIES:
Future policy benefits:
Universal life and annuity contracts (Note 1)	$	9,013,661	9,303,233
Traditional life reserves	848,515		838,738
Other policyholder liabilities	136,392		127,607
Deferred Federal income tax liability (Note 1)	53,055		36,767
Federal income tax payable	—		3,748
Other liabilities	154,133		126,924
Total liabilities	10,205,756		10,437,017
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS’ EQUITY:
Common stock:
Class A - $0.01 par value; 7,500,000 shares authorized; 3,436,020 issued and outstanding in 2020 and 2019	34		34
Class B - $0.01 par value; 200,000 shares authorized, issued, and outstanding in 2020 and 2019	2		2
Additional paid-in capital	41,716		41,716
Accumulated other comprehensive income (loss)	104,764		60,108
Retained earnings (Note 1)	2,068,714		2,014,570
Total stockholders’ equity	2,215,230		2,116,430
Total liabilities and stockholders' equity	$	12,420,986	12,553,447

Note:  The Condensed Consolidated Balance Sheet at December 31, 2019 has been derived from the audited Consolidated Financial Statements as of that date.

See accompanying notes to Condensed Consolidated Financial Statements (unaudited).

4

NATIONAL WESTERN LIFE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

For the Three Months Ended September 30, 2020 and 2019

(Unaudited)

(In thousands, except per share amounts)

	2020		2019
Premiums and other revenues:
Universal life and annuity contract charges	$	40,303	37,840
Traditional life premiums	22,693		24,099
Net investment income (loss)	129,679		108,456
Other revenues	3,977		3,273
Net realized investment gains (losses):
Total other-than-temporary impairment (“OTTI”) gains (losses)	1		(1,943)
Portion of OTTI (gains) losses recognized in other comprehensive income	(1)		(2)
Net OTTI losses recognized in earnings	—		(1,945)
Other net investment gains (losses)	6,050		1,443
Total net realized investment gains (losses)	6,050		(502)
Total revenues	202,702		173,166
Benefits and expenses:
Life and other policy benefits	26,940		39,918
Amortization of deferred policy acquisition costs and value of business acquired	50,800		22,998
Universal life and annuity contract interest	85,879		59,445
Other operating expenses	25,754		25,813
Total benefits and expenses	189,373		148,174
Earnings before Federal income taxes	13,329		24,992
Federal income taxes	2,504		5,003
Net earnings	$	10,825	19,989
Basic earnings per share:
Class A	$	3.06	$	5.65
Class B	$	1.53	$	2.83
Diluted earnings per share:
Class A	$	3.06	$	5.65
Class B	$	1.53	$	2.83

See accompanying notes to Condensed Consolidated Financial Statements (unaudited).

5

NATIONAL WESTERN LIFE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

For the Nine Months Ended September 30, 2020 and 2019

(Unaudited)

(In thousands, except per share amounts)

	2020		2019
Premiums and other revenues:
Universal life and annuity contract charges	$	112,478	112,703
Traditional life premiums	68,956		65,492
Net investment income	261,894		388,211
Other revenues	15,217		13,652
Net realized investment gains (losses):
Total other-than-temporary impairment (“OTTI”) gains (losses)	5		(7,840)
Portion of OTTI (gains) losses recognized in other comprehensive income	(5)		(7)
Net OTTI losses recognized in earnings	—		(7,847)
Other net investment gains (losses)	12,660		11,549
Total net realized investment gains (losses)	12,660		3,702
Total revenues	471,205		583,760
Benefits and expenses:
Life and other policy benefits	94,005		101,764
Amortization of deferred policy acquisition costs and value of business acquired	111,937		86,573
Universal life and annuity contract interest	119,625		200,500
Other operating expenses	74,730		77,196
Total benefits and expenses	400,297		466,033
Earnings before Federal income taxes	70,908		117,727
Federal income taxes	13,732		23,844
Net earnings	$	57,176	93,883
Basic earnings per share:
Class A	$	16.17	$	26.55
Class B	$	8.08	$	13.28
Diluted earnings per share:
Class A	$	16.17	$	26.55
Class B	$	8.08	$	13.28

See accompanying notes to Condensed Consolidated Financial Statements (unaudited).

6

NATIONAL WESTERN LIFE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Three Months Ended September 30, 2020 and 2019

(Unaudited)

(In thousands)

	2020		2019
Net earnings	$	10,825	19,989
Other comprehensive income (loss), net of effects of deferred costs and taxes:
Unrealized gains (losses) on securities:
Net unrealized holding gains (losses) arising during period	24,357		15,586
Net unrealized liquidity gains (losses)	1		1
Reclassification adjustment for net amounts included in net earnings	(702)		1,380
Net unrealized gains (losses) on securities	23,656		16,967
Foreign currency translation adjustments	85		52
Benefit plans:
Amortization of net prior service cost and net gain (loss)	(2,066)		(504)
Other comprehensive income (loss)	21,675		16,515
Comprehensive income (loss)	$	32,500	36,504

See accompanying notes to Condensed Consolidated Financial Statements (unaudited).

7

NATIONAL WESTERN LIFE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the Nine Months Ended September 30, 2020 and 2019

(Unaudited)

(In thousands)

	2020		2019
Net earnings	$	57,176	93,883
Other comprehensive income, net of effects of deferred costs and taxes:
Unrealized gains (losses) on securities:
Net unrealized holding gains (losses) arising during period	53,569		93,730
Net unrealized liquidity gains (losses)	2		3
Reclassification adjustment for net amounts included in net earnings	(2,670)		4,252
Net unrealized gains (losses) on securities	50,901		97,985
Foreign currency translation adjustments	(46)		519
Benefit plans:
Amortization of net prior service cost and net gain (loss)	(6,199)		(1,512)
Other comprehensive income (loss)	44,656		96,992
Comprehensive income (loss)	$	101,832	190,875

See accompanying notes to Condensed Consolidated Financial Statements (unaudited).

8

NATIONAL WESTERN LIFE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the Three Months Ended September 30, 2020 and 2019
(Unaudited)
(In thousands)

	2020		2019
Common stock:
Balance at beginning of period	$	36	36
Shares exercised under stock option plan	—		—
Balance at end of period	36		36
Additional paid-in capital:
Balance at beginning of period	41,716		41,716
Shares exercised under stock option plan	—		—
Balance at end of period	41,716		41,716
Accumulated other comprehensive income (loss):
Unrealized gains (losses) on non-impaired securities:
Balance at beginning of period	97,909		50,730
Change in unrealized gains (losses) during period, net of tax	23,655		16,966
Balance at end of period	121,564		67,696
Unrealized losses on impaired held to maturity securities:
Balance at beginning of period	(3)		(5)
Cumulative effect of change in accounting principle	—		—
Amortization	1		2
Other-than-temporary impairments, non-credit, net of tax	—		—
Additional credit loss on previously impaired securities	—		—
Change in shadow deferred policy acquisition costs	—		(1)
Balance at end of period	(2)		(4)
Unrealized losses on impaired available for sale securities:
Balance at beginning of period	(2)		(2)
Other-than-temporary impairments, non-credit, net of tax	—		—
Change in shadow deferred policy acquisition costs	—		—
Recoveries, net of tax	—		—
Balance at end of period	(2)		(2)
	Continued on Next Page

9

NATIONAL WESTERN LIFE GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (continued) For the Three Months Ended September 30, 2020 and 2019 (Unaudited) (In thousands)
	2020		2019
Foreign currency translation adjustments:
Balance at beginning of period	4,970		5,044
Change in translation adjustments during period	85		52
Balance at end of period	5,055		5,096
Benefit plan liability adjustment:
Balance at beginning of period	(19,785)		(12,305)
Amortization of net prior service cost and net loss, net of tax	(2,066)		(504)
Balance at end of period	(21,851)		(12,809)
Accumulated other comprehensive income (loss) at end of period	104,764		59,977
Retained earnings:
Balance at beginning of period	2,057,889		1,969,934
Cumulative effect of change in accounting principle, net of tax	—		—
Net earnings	10,825		19,989
Balance at end of period	2,068,714		1,989,923
Total stockholders' equity	$	2,215,230	2,091,652

See accompanying notes to Condensed Consolidated Financial Statements (unaudited).

10

NATIONAL WESTERN LIFE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the Nine Months Ended September 30, 2020 and 2019
(Unaudited)
(In thousands)

	2020		2019
Common stock:
Balance at beginning of period	$	36	36
Shares exercised under stock option plan	—		—
Balance at end of period	36		36
Additional paid-in capital:
Balance at beginning of period	41,716		41,716
Shares exercised under stock option plan	—		—
Balance at end of period	41,716		41,716
Accumulated other comprehensive income:
Unrealized gains (losses) on non-impaired securities:
Balance at beginning of period	70,665		(30,286)
Change in unrealized gains (losses) during period, net of tax	50,899		97,982
Cumulative effect of change in accounting principle, net of tax	—		—
Balance at end of period	121,564		67,696
Unrealized losses on impaired held to maturity securities:
Balance at beginning of period	(4)		(7)
Amortization	4		6
Other-than-temporary impairments, non-credit, net of tax	—		—
Additional credit loss on previously impaired securities	—		—
Change in shadow deferred policy acquisition costs	(2)		(3)
Balance at end of period	(2)		(4)
Unrealized losses on impaired available for sale securities:
Balance at beginning of period	(2)		(2)
Other-than-temporary impairments, non-credit, net of tax	—		—
Change in shadow deferred policy acquisition costs	—		—
Recoveries, net of tax	—		—
Balance at end of period	(2)		(2)
	Continued on Next Page

11

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (continued) For the Nine Months Ended September 30, 2020 and 2019 (Unaudited) (In thousands)
	2020		2019
Foreign currency translation adjustments:
Balance at beginning of period	5,101		4,577
Change in translation adjustments during period	(46)		519
Balance at end of period	5,055		5,096
Benefit plan liability adjustment:
Balance at beginning of period	(15,652)		(11,297)
Amortization of net prior service cost and net loss, net of tax	(6,199)		(1,512)
Balance at end of period	(21,851)		(12,809)
Accumulated other comprehensive income (loss) at end of period	104,764		59,977
Retained earnings:
Balance at beginning of period	2,014,570		1,896,040
Cumulative effect of change in accounting principle, net of tax (Note 2)	(3,032)		—
Net earnings	57,176		93,883
Balance at end of period (Note 1)	2,068,714		1,989,923
Total stockholders' equity	$	2,215,230	2,091,652

See accompanying notes to Condensed Consolidated Financial Statements (unaudited).

12

NATIONAL WESTERN LIFE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2020 and 2019

(Unaudited)

(In thousands)

	2020		2019
Cash flows from operating activities:
Net earnings	$	57,176	93,883
Adjustments to reconcile net earnings to net cash from operating activities:
Universal life and annuity contract interest	119,625		200,500
Surrender charges and other policy revenues	(21,219)		(25,608)
Realized (gains) losses on investments	(12,660)		(3,702)
Accretion/amortization of discounts and premiums, investments	1,580		1,798
Depreciation and amortization	8,892		8,501
Increase (decrease) in estimated credit losses on investments	2,930		—
(Increase) decrease in value of equity securities	3,107		(2,639)
(Increase) decrease in value of derivatives	34,866		(63,127)
(Increase) decrease in deferred policy acquisition and sales inducement costs, and value of business acquired	75,604		53,837
(Increase) decrease in accrued investment income	(32)		3,837
(Increase) decrease in other assets	8,746		1,831
Increase (decrease) in liabilities for future policy benefits	(5,288)		6,960
Increase (decrease) in other policyholder liabilities	8,785		(19,847)
Increase (decrease) in Federal income tax liability	(4,550)		6,486
Increase (decrease) in deferred Federal income tax	5,224		(17,502)
Increase (decrease) in other liabilities	(3,391)		(1,045)
Net cash provided by operating activities	279,395		244,163
Cash flows from investing activities:
Proceeds from sales of:
Debt securities available for sale	—		80,528
Other investments	5,786		29,960
Proceeds from maturities, redemptions, and prepayments of:
Debt securities held to maturity	619,984		486,344
Debt securities available for sale	240,398		189,944
Other investments	9,753		5,911
Derivatives, index options	84,778		28,457
Purchases of:
Debt securities held to maturity	(318,138)		(161,617)
Debt securities available for sale	(181,162)		(127,811)
Equity securities	(1,019)		(977)
Derivatives, index options	(51,318)		(57,443)
Other investments	(23,268)		(7,314)
Property, equipment, and other productive assets	(7,223)		(4,364)
Payment to acquire businesses, net of cash acquired	—		(189,121)

13

	Continued on Next Page
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) For the Nine Months Ended September 30, 2020 and 2019 (Unaudited) (In thousands)
	2020		2019
Principal payments on mortgage loans	6,022		22,384
Cost of mortgage loans acquired	(41,530)		(47,744)
Decrease (increase) in policy loans	4,294		2,580
Net cash provided by (used in) investing activities	347,357		249,717
Cash flows from financing activities:
Deposits to account balances for universal life and annuity contracts	348,583		292,551
Return of account balances on universal life and annuity contracts	(721,496)		(747,260)
Borrowings under line of credit agreement	—		75,000
Principal payments on line of credit borrowings	—		(75,000)
Principal payments under finance lease obligation	(280)		(295)
Net cash provided by (used in) financing activities	(373,193)		(455,004)
Effect of foreign exchange	(59)		657
Net increase (decrease) in cash, cash equivalents, and restricted cash	253,500		39,533
Cash, cash equivalents, and restricted cash at beginning of period	253,525		131,976
Cash, cash equivalents and restricted cash at end of period	$	507,025	171,509
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest	$	56	252
Income taxes	$	13,229	34,758
Noncash operating activities:
Net deferral and amortization of sales inducements	$	(12,755)	(13,501)
Noncash investing and financing activities:
Contingent consideration to acquire businesses	$	—	3,700

See accompanying notes to Condensed Consolidated Financial Statements (unaudited).

14

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(1) CONSOLIDATION AND BASIS OF PRESENTATION

The accompanying unaudited Condensed Consolidated Financial Statements 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 of the information and footnotes required by GAAP for annual financial statements. In the opinion of management, the accompanying Condensed Consolidated Financial Statements contain all adjustments necessary to present fairly the financial position of National Western Life Group, Inc. ("NWLGI") and its wholly owned subsidiaries (“Company”) as of September 30, 2020, and the results of its operations and its cash flows for the three and nine months ended September 30, 2020 and September 30, 2019. Such adjustments are of a normal recurring nature. The results of operations for the nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the full year. It is recommended that these Condensed Consolidated Financial Statements be read in conjunction with the audited consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 which is accessible free of charge through the Company's internet site at www.nwlgi.com or the Securities and Exchange Commission internet site at www.sec.gov. The Condensed Consolidated Balance Sheet at December 31, 2019 has been derived from the audited consolidated financial statements as of that date.

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of NWLGI and its wholly owned subsidiaries: National Western Life Insurance Company ("NWLIC" or "National Western"), Regent Care San Marcos Holdings, LLC, NWL Services, Inc., and N.I.S. Financial Services, Inc. ("NIS"). National Western's wholly owned subsidiaries include The Westcap Corporation, NWL Financial, Inc., NWLSM, Inc., Braker P III, LLC, and Ozark National Life Insurance Company ("Ozark National"). The results of operations for Ozark National and NIS include their respective business activity subsequent to their acquisition effective January 31, 2019 and all references herein to results for the nine months ended September 30, 2019 for Ozark National and NIS refer to their eight month activity February 1, 2019 through September 30, 2019. All significant intercorporate transactions and accounts have been eliminated in consolidation.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates in the accompanying Condensed Consolidated Financial Statements include: (1) liabilities for future policy benefits, (2) valuation of derivative instruments, (3) recoverability and amortization of deferred policy acquisition costs ("DPAC"), deferred sales inducements ("DSI") and the value of business acquired ("VOBA"), (4) valuation allowances for deferred tax assets, (5) goodwill, (6) allowances for credit losses and other-than-temporary impairment losses on debt securities, (7) commitments and contingencies, and (8) credit loss and valuation allowances for mortgage loans and real estate. During the first quarter of 2019, the Company incorporated accounting estimates for business combinations, value of business acquired, and fair value measurement as a result of its acquisition of Ozark National and NIS.

Revision of Prior Period Consolidated Financial Statements

During the first quarter of 2020, management identified an understatement of an excess benefit reserve on a specific block of policies that dated back to the first quarter of 2004 with the adoption of the Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts (SOP 03-1). Management concluded that this error was not material to previously issued consolidated financial statements and would be corrected through a revision to the comparative consolidated balance sheet presented for the year ended December 31, 2019. The impact of this revision as of December 31, 2019 was an increase to the future policy benefits liability of $15.0 million, a decrease to deferred federal income tax liability of $3.2 million, and a decrease to retained earnings of $11.8 million.

15

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The table below shows the unrealized gains and losses on available-for-sale securities that were reclassified out of accumulated other comprehensive income for the three and nine months ended September 30, 2020 and September 30, 2019.

Affected Line Item in the Statements of Earnings	Amount Reclassified From Accumulated Other Comprehensive Income
	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Other net investment gains (losses)	$	889	198	3,380	2,465
Net OTTI losses recognized in earnings	—		(1,945)	—	(7,847)
Earnings before Federal income taxes	889		(1,747)	3,380	(5,382)
Federal income taxes	187		(367)	710	(1,130)
Net earnings	$	702	(1,380)	2,670	(4,252)

16

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(2) NEW ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements not yet adopted

In August 2018, the FASB issued ASU 2018-12 Financial Services-Insurance (Topic 944) - Targeted Improvements to the Accounting for Long-Duration Contracts. This update is aimed at improving the Codification as it relates to long-duration contracts which will improve the timeliness of recognizing changes in the liability for future policy benefits, simplify accounting for certain market-based options, simplify the amortization of deferred acquisition costs, and improve the effectiveness of required disclosures. Amendments include the following:

A. Require insurance entity to (1) review and update assumptions used to measure cash flows at least annually (with changes recognized in net income) and (2) update discount rate assumption at each reporting date (with changes recognized in other comprehensive income).

B. Require insurance entity to measure all market risk benefits associated with deposit (i.e. account balance) contracts at fair value, with change in fair value attributable to change in instrument-specific credit risk recognized in other comprehensive income.

C. Simplify amortization of deferred acquisition costs and other balances amortized in proportion to premiums, gross profits, or gross margins and require those balances be amortized on constant level basis over expected term of related contract. Deferred acquisition costs are required to be written off for unexpected contract terminations but are not subject to impairment test.

D. Require insurance entity to add disclosures of disaggregated rollforwards of beginning to ending balances of the liability for future policy benefits, policyholder account balances, market risk benefits, separate account liabilities, and deferred acquisition costs. Insurance entity must also disclose information about significant inputs, judgments, assumptions, and methods used in measurement, including changes in those inputs, judgments, and assumptions, and the effect of those changes on measurement.

These updates are required to be applied retrospectively to the earliest period presented in the financial statements for fiscal periods beginning after December 15, 2022, with early adoption permitted. The Company has performed a preliminary gap analysis and created a roadmap for implementation of this standard by the effective date and is evaluating the impact of the new guidance on its Consolidated Financial Statements.

In December 2019, the FASB issued ASU 2019-12 Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740), which simplifies various aspects of the income tax accounting guidance and will be applied using different approaches depending on the specific amendment. The amendments will be effective for fiscal periods beginning after December 15, 2020. Early adoption is permitted. The Company does not expect this guidance to have a material impact on the Consolidated Financial Statements and related disclosures upon adoption.

17

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Accounting pronouncements adopted

In June 2016, the FASB released ASU 2016-13, Financial Instruments-Credit Losses, which revises the credit loss recognition criteria for certain financial assets measured at amortized cost. The new guidance replaces the existing incurred loss recognition model with an expected loss recognition model (“CECL”). The objective of the CECL model is for the reporting entity to recognize its estimate of current expected credit losses for affected financial assets in a valuation allowance deducted from the amortized cost basis of the related financial assets that results in presenting the net carrying value of the financial assets at the amount expected to be collected. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The amendments in this Update add clarification and correction to ASU 2016-13 around accrued interest, transfers between classifications or categories for loans and debt securities, consideration of recoveries in estimating allowances, reinsurance recoveries, consideration of prepayments and estimated costs to sell when foreclosure is probable. In November, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. The amendments in this Update add clarification and correction to ASU 2016-13 around expected recoveries for purchased financial assets with credit deterioration, transition relief for troubled debt restructurings, disclosures related to accrued interest receivables, and financial assets secured by collateral maintenance provisions. The guidance for these pronouncements was effective for interim and annual periods beginning after December 15, 2019, and for most affected instruments must be adopted using a modified retrospective approach, with a cumulative effect adjustment recorded to beginning retained earnings. Effective January 1, 2020, the Company adopted the expected loss recognition model related to mortgage loans, debt securities held to maturity and reinsurance recoverable. The change in accounting, net of tax, of $3.0 million was recorded as a charge to retained earnings in the first quarter of 2020 reflecting initial allowance for estimated credit losses balances of $1.2 million on mortgage loans and $3.3 million on debt securities held to maturity. The estimated credit losses for the reinsurance recoverable were immaterial to the financial statements, but are monitored on a quarterly basis for any changes. Refer to Note (9) Investments for more information. Certain disclosures required by ASU 2016-13 are not included in the Consolidated Financial Statements as the impact of this standard was not material.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on the Company’s present or future Consolidated Financial Statements.

18

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(3) STOCKHOLDERS' EQUITY

Robert L. Moody, Sr., through the Robert L. Moody Revocable Trust, controls 99.0% of the total outstanding shares of the Company's Class B common stock as of September 30, 2020. Holders of the Company's Class A common stock elect one-third of the Board of Directors of the Company, and holders of the Class B common stock elect the remainder. Any cash or in-kind dividends paid on each share of Class B common stock are to be only one-half of the cash or in-kind dividends paid on each share of Class A common stock. In the event of liquidation of the Company, the Class A stockholders will receive the par value of their shares; then the Class B stockholders shall receive the par value of their shares; and the remaining net assets of the Company shall be divided between the stockholders of both Class A and Class B stock based upon the number of shares held.

National Western is restricted by state insurance laws as to dividend amounts which may be paid to stockholders without prior approval from the Colorado Division of Insurance. The restrictions are based on the lesser of statutory earnings from operations, excluding capital gains, or 10% of statutory surplus of National Western as of the previous year-end. Under these guidelines the maximum dividend payment which may be made without prior approval in 2020 is $152.8 million. As the sole owner of NWLIC, all dividends declared by National Western are payable entirely to NWLGI and are eliminated in consolidation.

Ozark National is similarly restricted under the state insurance laws of Missouri as to dividend amounts which may be paid to stockholders without prior approval to the greater of 10.0% of the statutory surplus of the company from the preceding year-end or the company's net gain from operations, excluding capital gains, from the prior calendar year. Based upon this restriction, the maximum dividend payment which may be made in 2020 without prior approval is $17.2 million.

As part of the Stock Purchase Agreement dated October 3, 2018, by and between NWLIC and Ozark National's previous owner, the Missouri Department of Commerce and Insurance granted approval for an extraordinary dividend of $102.7 million to be paid to the prior owner concurrent with the closing of the transaction effective January 31, 2019. All dividends declared by Ozark National thereafter are payable entirely to NWLIC as the sole owner and are eliminated in consolidation.

National Western did not declare or pay cash dividends to NWLGI in the nine months ended September 30, 2020. In the first quarter of 2019, National Western declared and paid a $32.0 million dividend to NWLGI, the proceeds of which were used as part of the cash purchase of NIS. In the third quarter of 2019, National Western declared a $4.0 million dividend to NWLGI which was subsequently paid on October 17, 2019.

NWLGI did not declare or pay cash dividends on its common shares during the nine months ended September 30, 2020 and 2019.

19

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(4) EARNINGS PER SHARE

Basic earnings per share of common stock are computed by dividing net earnings available to each class of common stockholders on an as if distributed basis by the weighted-average number of common shares outstanding for the period. Diluted earnings per share, by definition, reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock, that then shared in the distributed earnings of each class of common stock. U.S. GAAP requires a two-class presentation for the Company's two classes of common stock. The Company currently has no share-based compensation awards outstanding that could be redeemed for shares of common stock.

Net earnings for the periods shown below is allocated between Class A shares and Class B shares based upon (1) the proportionate number of shares issued and outstanding as of the end of the period, and (2) the per share dividend rights of the two classes under the Company's Restated Certificate of Incorporation (the Class B dividend per share is equal to one-half the Class A dividend per share).

	Three Months Ended September 30,
	2020			2019
	Class A		Class B	Class A	Class B
	(In thousands except per share amounts)
Numerator for Basic and Diluted Earnings Per Share:
Net earnings	$	10,825		19,989
Dividends - Class A shares	—			—
Dividends - Class B shares	—			—
Undistributed earnings	$	10,825		19,989
Allocation of net earnings:
Dividends	$	—	—	—	—
Allocation of undistributed earnings	10,519		306	19,424	565
Net earnings	$	10,519	306	19,424	565
Denominator:
Basic earnings per share - weighted-average shares	3,436		200	3,436	200
Effect of dilutive stock options	—		—	—	—
Diluted earnings per share - adjusted weighted-average shares for assumed conversions	3,436		200	3,436	200
Basic earnings per share	$	3.06	1.53	5.65	2.83
Diluted earnings per share	$	3.06	1.53	5.65	2.83

20

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Nine Months Ended September 30,
	2020			2019
	Class A		Class B	Class A	Class B
	(In thousands except per share amounts)
Numerator for Basic and Diluted Earnings Per Share:
Net earnings	$	57,176		93,883
Dividends - Class A shares	—			—
Dividends - Class B shares	—			—
Undistributed earnings	$	57,176		93,883
Allocation of net earnings:
Dividends	$	—	—	—	—
Allocation of undistributed earnings	55,560		1,616	91,228	2,655
Net earnings	$	55,560	1,616	91,228	2,655
Denominator:
Basic earnings per share - weighted-average shares	3,436		200	3,436	200
Effect of dilutive stock options	—		—	—	—
Diluted earnings per share - adjusted weighted-average shares for assumed conversions	3,436		200	3,436	200
Basic Earnings Per Share	$	16.17	8.08	26.55	13.28
Diluted Earnings Per Share	$	16.17	8.08	26.55	13.28

21

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(5) PENSION AND OTHER POSTRETIREMENT PLANS

(A)Defined Benefit Pension Plans

National Western sponsors a qualified defined benefit pension plan covering employees enrolled prior to 2008. The plan provides benefits based on the participants' years of service and compensation. The Company makes annual contributions to the plan that comply with the minimum funding provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). On October 19, 2007, National Western's Board of Directors approved an amendment to freeze the pension plan as of December 31, 2007. The freeze ceased future benefit accruals to all participants and closed the plan to any new participants. In addition, all participants became immediately 100% vested in their accrued benefits as of that date. As participants are no longer earning a credit for service, future qualified defined benefit plan expense is projected to be minimal. Fair values of plan assets and liabilities are measured as of the prior December 31 for each year. The following table summarizes the components of net periodic benefit cost.

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2020		2019	2020	2019
	(In thousands)
Service cost	$	27	24	81	72
Interest cost	168		210	505	630
Expected return on plan assets	(315)		(271)	(946)	(815)
Amortization of prior service cost	—		—	—	—
Amortization of net loss	145		165	435	495
Net periodic benefit cost	$	25	128	75	382

The service cost shown above for each period represents plan expenses expected to be paid out of plan assets. Under the clarified rules of the Pension Protection Act, plan expenses paid from plan assets are to be included in the plan's service cost component.

The Company's minimum required contribution for the 2020 plan year is $0.0 million. There were no planned contributions remaining for the 2019 plan year as of September 30, 2020. As of September 30, 2020, the Company has made $0.2 million in contributions to the plan for the 2020 plan year.

The components of net periodic benefit cost including service cost are reported in the line item “Other operating expenses” in the Condensed Consolidated Statements of Earnings (Loss).

22

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

National Western also sponsors three non-qualified defined benefit pension plans. The first plan covers certain senior officers and provides benefits based on the participants' years of service and compensation. The primary pension obligations and administrative responsibilities of the plan are maintained by a pension administration firm, which is a subsidiary of American National Group, Inc. ("American National"), a related party. American National has guaranteed the payment of pension obligations under the plan. However, the Company has a contingent liability with respect to the plan should these entities be unable to meet their obligations under the existing agreements. Also, the Company has a contingent liability with respect to the plan in the event that a plan participant continues employment with National Western beyond age seventy, the aggregate average annual participant salary increases exceed 10% per year, or any additional employees become eligible to participate in the plan. If any of these conditions are met, the Company would be responsible for any additional pension obligations resulting from these items. Amendments were made to the plan to allow an additional employee to participate and to change the benefit formula for the then Chairman of the Company. As previously mentioned, these additional obligations are a liability to the Company. Effective December 31, 2004, this plan was frozen with respect to the continued accrual of benefits of the then Chairman and the then President of the Company in order to comply with law changes under the American Jobs Creation Act of 2004 ("Act").

Effective July 1, 2005, National Western established a second non-qualified defined benefit plan for the benefit of the then Chairman of the Company. This plan is intended to provide for post-2004 benefit accruals that mirror and supplement the pre-2005 benefit accruals under the previously discussed non-qualified plan, while complying with the requirements of the Act.

Effective November 1, 2005, National Western established a third non-qualified defined benefit plan for the benefit of the then President of the Company. This plan is intended to provide for post-2004 benefit accruals that supplement the pre-2005 benefit accruals under the first non-qualified plan as previously discussed, while complying with the requirements of the Act.

The following table summarizes the components of net periodic benefit costs for the non-qualified defined benefit plans.

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2020		2019	2020	2019
	(In thousands)
Service cost	$	302	126	907	377
Interest cost	337		256	1,012	768
Amortization of prior service cost	14		14	44	44
Amortization of net loss	1,446		348	4,336	1,044
Net periodic benefit cost	$	2,099	744	6,299	2,233

As the plans are not funded, there is no expected return on plan assets shown in the net periodic benefit cost table above. The Company expects to contribute $2.0 million to these plans in 2020. As of September 30, 2020, the Company has contributed $1.6 million to the plans.

The components of net periodic benefit cost including service cost are reported in the line item “Other operating expenses” in the Condensed Consolidated Statements of Earnings (Loss).

Ozark National and NIS have no defined benefit plans.

23

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(B)Postretirement Employment Plans Other Than Pension

National Western sponsors two healthcare plans that were amended in 2004 to provide postretirement benefits to certain fully-vested individuals. The plans are unfunded. The following table summarizes the components of net periodic benefit costs.

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2020		2019	2020	2019
	(In thousands)
Interest cost	$	41	49	124	148
Amortization of prior service cost	—		13	—	39
Amortization of net loss	40		61	119	183
Net periodic benefit cost	$	81	123	243	370

As the plans are not funded, there is no expected return on plan assets shown in the net periodic benefit cost table above. The Company expects to contribute minimal amounts to the plans in 2020. Ozark National and NIS do not offer postemployment benefits.

The components of net periodic benefit cost including service cost are reported in the line item “Other operating expenses” in the Condensed Consolidated Statements of Earnings (Loss).

24

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(6)SEGMENT AND OTHER OPERATING INFORMATION

The Company defines its reportable operating segments as domestic life insurance, international life insurance, annuities, and acquired businesses. These segments are organized based on product types, geographic marketing areas, and business groupings. Ozark National and NIS have been combined into the segment "Acquired Businesses" given its inter-related marketing and sales approach which consists of a coordinated sale of a non-participating whole life insurance product (Ozark National) and a mutual fund investment product (NIS). A fifth category "All Others" primarily includes investments and earnings of non-operating subsidiaries as well as other remaining investments and assets not otherwise supporting specific segment operations.

A summary of segment information as of September 30, 2020 and December 31, 2019 for the Condensed Consolidated Balance Sheet items and for the three and nine months ended September 30, 2020 and September 30, 2019 for the Condensed Consolidated Statements of Earnings (Loss) is provided below.

Condensed Consolidated Balance Sheet Items:

	September 30, 2020
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Deferred policy acquisition costs, sales inducements, and value of business acquired	$	127,124	183,318	402,072	139,365	—	851,879
Total segment assets	1,467,577		1,049,371	7,797,137	1,030,162	367,605	11,711,852
Future policy benefits	1,275,476		798,665	7,068,118	719,917	—	9,862,176
Other policyholder liabilities	17,190		12,214	91,818	15,170	—	136,392

	December 31, 2019
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Deferred policy acquisition costs, sales inducements, and value of business acquired	$	127,557	209,858	486,553	142,434	—	966,402
Total segment assets	1,399,818		1,153,105	8,198,730	978,243	362,900	12,092,796
Future policy benefits (1)	1,198,103		870,461	7,366,894	706,513	—	10,141,971
Other policyholder liabilities	18,016		14,903	80,002	14,686	—	127,607

(1) Revised to correct for an adjustment related to an understatement of reserve liabilities of $15.0 million. Refer to Note 1.

25

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Condensed Consolidated Statements of Earnings (Loss):

	Three Months Ended September 30, 2020
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Premiums and contract revenues	$	17,734	21,551	4,187	19,524	—	62,996
Net investment income (loss)	21,201		10,354	87,889	6,434	3,801	129,679
Other revenues	10		6	84	2,628	1,249	3,977
Total revenues	38,945		31,911	92,160	28,586	5,050	196,652
Life and other policy benefits	3,785		2,278	3,383	17,494	—	26,940
Amortization of deferred policy acquisition costs and value of business acquired	10,540		6,496	31,794	1,970	—	50,800
Universal life and annuity contract interest	20,352		(14,023)	79,550	—	—	85,879
Other operating expenses	5,185		5,434	9,205	4,498	1,432	25,754
Federal income taxes (benefit)	(161)		5,169	(5,294)	963	556	1,233
Total expenses	39,701		5,354	118,638	24,925	1,988	190,606
Segment earnings (loss)	$	(756)	26,557	(26,478)	3,661	3,062	6,046

26

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Nine Months Ended September 30, 2020
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Premiums and contract revenues	$	40,971	67,479	13,536	59,448	—	181,434
Net investment income	23,293		12,507	196,187	19,284	10,623	261,894
Other revenues	40		54	80	7,369	7,674	15,217
Total revenues	64,304		80,040	209,803	86,101	18,297	458,545
Life and other policy benefits	13,831		9,293	20,452	50,429	—	94,005
Amortization of deferred policy acquisition costs and value of business acquired	16,322		19,392	70,159	6,064	—	111,937
Universal life and annuity contract interest	17,831		(15,368)	117,162	—	—	119,625
Other operating expenses	15,123		13,047	28,787	13,361	4,412	74,730
Federal income taxes (benefit)	199		8,907	(4,440)	4,103	2,304	11,073
Total expenses	63,306		35,271	232,120	73,957	6,716	411,370
Segment earnings (loss)	$	998	44,769	(22,317)	12,144	11,581	47,175

	Three Months Ended September 30, 2019
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Premiums and contract revenues	$	11,387	25,065	5,336	20,151	—	61,939
Net investment income	12,885		6,872	78,000	6,300	4,399	108,456
Other revenues	49		25	8	2,318	873	3,273
Total revenues	24,321		31,962	83,344	28,769	5,272	173,668
Life and other policy benefits	6,099		5,074	12,550	16,195	—	39,918
Amortization of deferred acquisition costs and value of business acquired	2,181		(3,047)	21,688	2,176	—	22,998
Universal life and annuity contract interest	11,267		14,637	33,541	—	—	59,445
Other operating expenses	5,297		5,493	8,596	4,772	1,655	25,813
Federal income taxes (benefit)	(107)		1,970	1,388	1,133	725	5,109
Total expenses	24,737		24,127	77,763	24,276	2,380	153,283
Segment earnings (loss)	$	(416)	7,835	5,581	4,493	2,892	20,385

27

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Nine Months Ended September 30, 2019
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Premiums and contract revenues	$	32,897	74,905	16,061	54,332	—	178,195
Net investment income	51,379		30,165	270,727	16,283	19,657	388,211
Other revenues	113		79	80	6,049	7,331	13,652
Total revenues	84,389		105,149	286,868	76,664	26,988	580,058
Life and other policy benefits	13,850		10,195	33,856	43,863	—	101,764
Amortization of deferred acquisition costs and value of business acquired	8,898		11,195	60,150	6,330	—	86,573
Universal life and annuity contract interest	45,693		33,967	120,840	—	—	200,500
Other operating expenses	14,437		14,278	25,478	12,348	10,655	77,196
Federal income taxes (benefit)	306		7,192	9,426	2,836	3,307	23,067
Total expenses	83,184		76,827	249,750	65,377	13,962	489,100
Segment earnings (loss)	$	1,205	28,322	37,118	11,287	13,026	90,958

Reconciliations of segment information to the Company's Condensed Consolidated Financial Statements are provided below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Premiums and Other Revenues:
Premiums and contract revenues	$	62,996	61,939	181,434	178,195
Net investment income (loss)	129,679		108,456	261,894	388,211
Other revenues	3,977		3,273	15,217	13,652
Realized gains (losses) on investments	6,050		(502)	12,660	3,702
Total condensed consolidated premiums and other revenues	$	202,702	173,166	471,205	583,760

28

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Federal Income Taxes:
Total segment Federal income taxes	$	1,233	5,109	11,073	23,067
Taxes on realized gains (losses) on investments	1,271		(106)	2,659	777
Total condensed consolidated Federal income taxes	$	2,504	5,003	13,732	23,844

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Net Earnings:
Total segment earnings	$	6,046	20,385	47,175	90,958
Realized gains (losses) on investments, net of taxes	4,779		(396)	10,001	2,925
Total condensed consolidated net earnings	$	10,825	19,989	57,176	93,883

	September 30,		December 31,
	2020		2019
	(In thousands)
Assets:
Total segment assets	$	11,711,852	12,092,796
Other unallocated assets	709,134		460,651
Total condensed consolidated assets	$	12,420,986	12,553,447

(7) SHARE-BASED PAYMENTS

Effective June 20, 2008, the Company's shareholders approved a 2008 Incentive Plan (“2008 Plan”) which provided for the grant of any or all of the following types of awards to eligible employees: (1) stock options, including incentive stock options and nonqualified stock options; (2) stock appreciation rights ("SARs"), in tandem with stock options or freestanding; (3) restricted stock or restricted stock units; and, (4) performance awards. The number of shares of Class A, $1.00 par value, common stock which were allowed to be issued under the 2008 Plan, or as to which SARs or other awards were allowed to be granted, could not exceed 300,000. This plan was assumed by NWLGI from National Western pursuant to the terms of the holding company reorganization in 2015. On June 15, 2016, stockholders of NWLGI approved an amended and restated 2008 Plan ("Incentive Plan"), which extended the term of the 2008 Plan for ten years from the date of stockholder approval. The Incentive Plan includes additional provisions, most notably regarding the definition of performance objectives which could be used in the issuance of the fourth type of award noted above (performance awards).

29

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

All of the employees of the Company and its subsidiaries are eligible to participate in the current Incentive Plan. In addition, directors of the Company are eligible to receive the same types of awards as employees except that they are not eligible to receive incentive stock options. Company directors, including members of the Compensation and Stock Option Committee, are eligible for nondiscretionary stock options. At the end of 2018, all stock options granted under the 2008 Plan had been exercised, forfeited, or expired. SARs granted prior to 2016 vest 20% annually following three years of service following the grant date. Employee SARs granted 2016 and thereafter vest 33.3% annually following one year of service from the date of the grant. Directors' SARs grants vest 20% annually following one year of service from the date of grant.

Effective during August 2008, the Company adopted and implemented a limited stock buy-back program with respect to the 2008 Plan which provided stock option holders the additional alternative of selling shares acquired through the exercise of options directly back to the Company. Option holders could elect to sell such acquired shares back to the Company at any time within ninety (90) days after the exercise of options at the prevailing market price as of the date of notice of election. The buy-back program did not alter the terms and conditions of the 2008 Plan. This plan was assumed as well by NWLGI from National Western pursuant to the terms of the holding company reorganization. There are currently no stock options issued and outstanding.

The Incentive Plan allows for certain other share or unit awards which are solely paid out in cash based on the value of the Company's shares, or changes therein, as well as the financial performance of the Company under pre-determined target performance metrics. Certain awards, such as restricted stock units ("RSUs") provide solely for cash settlement based upon the market price of the Company's Class A common shares, often referred to as "phantom stock-based awards" in equity compensation plans. Unlike share-settled awards, which have a fixed grant-date fair value, the fair value of unsettled or unvested liability awards is remeasured at the end of each reporting period based on the change in fair value of a share. The liability and corresponding expense are adjusted accordingly until the award is settled. For employees, the vesting period for RSUs is 100% at the end of 3 years from the grant date. RSUs granted prior to 2019 are payable in cash at the vesting date equal to the closing price of the Company's Class A common share on the three years anniversary date. RSUs granted in 2019 are payable in cash at the 3 years vesting date equal to the 20-day moving average closing price of the Company’s Class A common share at that time.

Other awards may involve performance share units ("PSUs") which are units granted at a specified dollar amount per unit, typically linked to the Company's Class A common share price, that are subsequently multiplied by an attained performance factor to derive the number of PSUs to be paid as cash compensation at the vesting date. PSUs also vest three years from the date of grant. For PSUs, the performance period begins the first day of the calendar year for which the PSUs are granted and runs three calendar years. At that time, the three-year performance outcome will be measured against the pre-defined target amounts to determine the number of PSUs earned as compensation. PSUs granted prior to 2019 are paid at the closing price of the Company's Class A common share on the vesting date. PSUs granted in 2019 are payable at the 20-day moving average closing price of the Company’s Class A common share at the vesting date.

PSU awards covering the three year measurement period ended December 31, 2018 were paid out in the first quarter of 2019. The performance factor during the measurement period used to determine compensation payouts was 93.86% of the pre-defined metric target.

PSU awards covering the three year measurement period ended December 31, 2019 were paid out in the first quarter of 2020. The performance factor during the measurement period used to determine compensation payouts was 101.19% of the pre-defined metric target.

Directors of the Company are eligible to receive RSUs under the Incentive Plan. Unlike RSUs granted to officers, the RSUs granted to directors vest one year from the date of grant. RSUs granted prior to 2019 are payable in cash at the vesting date equal to the closing price of the Company's Class A common share at that time. RSUs granted in 2019 are payable in cash at the vesting date equal to the 20-day moving average closing price of the Company’s Class A common share at that time.

No awards were granted to officers and directors during the nine months ended September 30, 2020 and 2019.

The Company uses the current fair value method to measure compensation costs for awards granted under the share-based plans.

30

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

As of September 30, 2020 and December 31, 2019, the liability balance was $5.0 million and $11.2 million, respectively. A summary of awards by type and related activity is detailed below.

		Options Outstanding
	Shares Available For Grant	Shares	Weighted- Average Exercise Price
Stock Options:
Balance at January 1, 2020	291,000	—	$	—
Exercised	—	—	$	—
Forfeited	—	—	$	—
Expired	—	—	$	—
Stock options granted	—	—	$	—
Balance at September 30, 2020	291,000	—	$	—

	Liability Awards
	SAR	RSU	PSU
Other Share/Unit Awards:
Balance at January 1, 2020	107,517	14,352	19,108
Exercised	(1,372)	(2,357)	(4,150)
Forfeited	(1,797)	(259)	—
Granted	—	—	—
Balance at September 30, 2020	104,348	11,736	14,958

SARs, RSUs, and PSUs shown as forfeited in the above tables represent vested and unvested awards not exercised by plan participants upon their termination from the Company in accordance with the expiration provisions of the awards.

The total intrinsic value of share-based compensation exercised was $1.9 million and $2.5 million for the nine months ended September 30, 2020 and 2019, respectively. The total share-based compensation paid was $1.9 million and $2.5 million for the nine months ended September 30, 2020 and 2019, respectively. The total fair value of SARs, RSUs, and PSUs vested during the nine months ended September 30, 2020 and 2019 was $1.8 million and $3.0 million, respectively. No cash amounts were received from the exercise of stock options under the Plans during the periods reported.

31

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table summarizes information about SARs outstanding at September 30, 2020. There were no options outstanding as of September 30, 2020.

	SARs Outstanding
	Number Outstanding		Weighted- Average Remaining Contractual Life	Number Exercisable
Exercise prices:
$132.56	19,118		1.2 years	19,118
$210.22	23,550		3.2 years	19,600
$216.48	11,149		5.4 years	11,149
$311.16	9,797		6.2 years	9,797
$310.55	203		6.6 years	203
$334.34	9,264		7.0 years	6,254
$303.77	11,462		8.0 years	3,967
$252.91	19,805		9.1 years	249
Totals	104,348			70,337
Aggregate intrinsic value (in thousands)	$	960		$	960

The aggregate intrinsic value in the table above is based on the closing Class A stock price of $182.77 per share on September 30, 2020.

In estimating the fair value of the SARs outstanding at September 30, 2020 and December 31, 2019, the Company employed the Black-Scholes option pricing model with assumptions detailed below.

	September 30, 2020	December 31, 2019
Expected term	1.2 to 9.1 years	1.9 to 10 years
Expected volatility weighted-average	32.85 %	22.19	%
Expected dividend yield	0.20 %	0.12	%
Risk-free rate weighted-average	0.17 %	1.61	%

The Company reviewed the contractual term relative to the SARs as well as perceived future behavior patterns of exercise. Volatility is based on the Company’s historical volatility over the expected term of the SARs by expected exercise date.

The pre-tax compensation cost/(benefit) recognized in the financial statements related to these plans was $(0.5) million and $(4.4) million for the three and nine months ended September 30, 2020 and $1.5 million and $0.1 million for the three and nine months ended September 30, 2019, respectively. The related tax expense/(benefit) recognized was $0.1 million and $0.9 million for the three and nine months ended September 30, 2020 and $(0.3) million and $0.0 million for the three and nine months ended September 30, 2019.

32

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

As of September 30, 2020, the total pre-tax compensation expense related to non-vested share-based awards not yet recognized was $2.6 million. This amount is expected to be recognized over a weighted-average period of 1.3 years. The Company recognizes compensation cost over the graded vesting periods.

(8) COMMITMENTS AND CONTINGENCIES

(A)  Legal Proceedings

In the normal course of business, the Company is involved or may become involved in various legal actions in which claims for alleged economic and punitive damages have been or may be asserted, some for substantial amounts. In recent years, carriers offering life insurance and annuity products have faced litigation, including class action lawsuits, alleging improper product design, improper sales practices, and similar claims. As previously disclosed, the Company has been a defendant in prior years in such class action lawsuits. Given the uncertainty involved in these types of actions, the ability to make a reliable evaluation of the likelihood of an unfavorable outcome or an estimate of the amount of or range of potential loss is endemic to the particular circumstances and evolving developments of each individual matter on its own merits.

On September 28, 2017, a purported shareholder derivative lawsuit was filed in the 122nd District Court of Galveston County, State of Texas entitled Robert L. Moody, Jr. derivatively on behalf of National Western Life Insurance Company and National Western Life Group, Inc. v. Ross Rankin Moody, et al., naming certain current and former directors and current officers as defendants. The complaint challenged the directors’ oversight of insurance sales to non-U.S. residents and alleged that the defendants breached their fiduciary duties in the conduct of their duties as board members by failing to act (i) on an informed basis and (ii) in good faith or with the honest belief that their actions were in the best interests of the Company. The complaint sought an undetermined amount of damages, attorneys’ fees and costs, and equitable relief, including the removal of the Company’s Chairman and Chief Executive Officer and other board members and/or officers of the Company. The Company believes that the claims in the complaint were baseless and without merit, will continue to vigorously defend this lawsuit, and was awarded reimbursement of legal costs and expenses from plaintiff as detailed below. The Company believes, based on information currently available, that the final outcome of this lawsuit will not have a material adverse effect on the Company’s business, results of operations, or consolidated financial position. The companies and directors filed their respective Pleas to the Jurisdiction ("Pleas") contesting the plaintiff's standing to even pursue this action, along with their Answers, on October 27, 2017. On December 14, 2017, plaintiff filed a Response to the Pleas and on December 21, 2017, the Court heard oral argument on the Pleas. Plaintiff then filed a First Amended Petition on January 11, 2018. The companies and directors filed a Supplement to the Pleas on January 30, 2018, to which plaintiff responded on February 1, 2018, and the companies and directors replied on February 9, 2018. On May 3, 2018, the Court issued a memorandum to all attorneys of record stating that the Court would grant the defendants' Pleas and asked the attorney for defendants to prepare and submit proposed orders/judgments granting the requested relief for consideration by the Court. The defendants filed such proposed order granting the Pleas on May 7, 2018. On May 16, 2018 the Court issued an Order granting the Pleas and dismissing Robert L. Moody, Jr.’s claims with prejudice, and plaintiff then filed a Motion to Transfer Venue (“MTTV”). Defendants filed an Application for Fees, seeking to recover defendants’ legal costs and expenses from plaintiff, and a Response to the MTTV on June 8, 2018. In response plaintiff filed a Motion to Vacate, a Response to the Application for Fees, and his own Request for Attorney’s Fees on July 5, 2018. Defendants filed a Response to the Motion to Vacate and to plaintiff’s Request for Attorney’s Fees on July 11, 2018, and the Court heard oral arguments on July 16, 2018. Plaintiff filed supplemental briefing in support of his July 5, 2018 filings on July 25, 2018, and defendants filed their response to plaintiff's supplemental briefing on July 27, 2018. On August 8, 2018 the Court issued an Order denying plaintiff's Motion to Vacate. Pursuant to the Court’s instructions, on October 5, 2018, defendants filed an Order Granting Application for Expenses. Defendants then filed a Motion for Entry of Final Judgment and a Request for Submission Date on Motion for Entry of Final Judgment on October 11, 2018, which the Court set as October 30, 2018. Plaintiff filed his Objection to Proposed Final Judgment and Objection to Proposed Order on Attorneys’ Fees on October 25, 2018, to which defendants filed a response on October 30, 2018. On November 11, 2018, the Court issued its Final Judgment: ordering Plaintiff to pay the companies $1,314,054 for reasonable and necessary fees and expenses; denying Plaintiff’s Motion to Transfer Venue, and; dismissing Plaintiff’s counterclaim. Plaintiff has appealed the Court’s Final Judgment and that appeal is pending before the First District Court of Appeals in Houston, Texas.

33

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In April of 2019, National Western defended a two-week jury trial in which it was alleged that it committed actionable Financial Elder Abuse in its issuance of a $100,000 equity indexed annuity to the Plaintiff in the case of Williams v Pantaleoni et al, Case No. 17CV03462, Butte County California Superior Court. The Court entered an Amended Judgment on the Jury Verdict on July 27, 2019 against National Western in the amount of $14,949 for economic damages and $2.9 million in non-economic and punitive damages. National Western vigorously disputes the verdicts and the amounts awarded, and in furtherance of such, filed a Motion for Judgment Notwithstanding Jury Verdict and a Motion for New Trial, both of which were rejected by the Court. On September 9, 2019, NWLIC filed its Notice of Appeal. On November 11, 2019, the judge awarded the Plaintiff attorney’s fees in the amount of $1.3 million. Both the Plaintiff and NWLIC have appealed this ruling.

Although there can be no assurances, at the present time, the Company does not anticipate that the ultimate liability arising from such other potential, pending, or threatened legal actions will have a material adverse effect on the financial condition or operating results of the Company.

Separately, Brazilian authorities commenced an investigation into possible violations of Brazilian criminal law in connection with the issuance of National Western insurance policies to Brazilian residents, and in assistance of such investigation a Commissioner appointed by the U.S. District Court for the Western District of Texas issued a subpoena in March of 2015 upon NWLIC to provide information relating to such possible violations. No conclusion can be drawn at this time as to its outcome or how such outcome may impact the Company’s business, results of operations or financial condition. National Western has been cooperating with the relevant governmental authorities in regard to this matter.

(B) Financial Instruments

In order to meet the financing needs of its customers in the normal course of business, the Company is a party to financial instruments with off-balance sheet risk. These financial instruments are commitments to extend credit which involve elements of credit and interest rate risk in excess of the amounts recognized in the Condensed Consolidated Balance Sheets.

The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amounts, assuming that the amounts are fully advanced and that collateral or other security is of no value. Commitments to extend credit are legally binding agreements to lend to a customer that generally have fixed expiration dates or other termination clauses and may require payment of a fee. Commitments do not necessarily represent future liquidity requirements, as some could expire without being drawn upon. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The Company controls the credit risk of these transactions through credit approvals, limits, and monitoring procedures.

The Company had no commitments to fund new loans and $7.2 million of commitments to extend credit relating to existing loans at September 30, 2020. The Company evaluates each customer's creditworthiness on a case-by-case basis. The Company had commitments to make capital contributions to investment funds of $52.2 million as of September 30, 2020.

34

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(9)INVESTMENTS

(A)Investment Gains and Losses

The Company uses the specific identification method in computing realized gains and losses. The table below presents realized gains and losses, excluding impairment losses, for the periods indicated.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Available for sale debt securities:
Realized gains on disposal	$	888	197	3,379	2,548
Realized losses on disposal	—		—	—	(84)
Held to maturity debt securities:
Realized gains on disposal	2,501		1,246	6,620	2,197
Realized losses on disposal	—		—	—	—
Real estate gains (losses)	2,661		—	2,661	6,888
Other	—		—	—	—
Totals	$	6,050	1,443	12,660	11,549

Disposals in the held to maturity category during the periods shown represent calls initiated by the credit issuer of the debt security. It is the Company's policy to initiate disposals of debt securities in the held to maturity category only in instances in which the credit status of the issuer comes into question and the realization of all or a significant portion of the investment principal of the holding is deemed to be in jeopardy.

In the third quarter of 2020, the Company sold an investment real estate property for a realized gain of $2.7 million. Net real estate gains for the nine months ended September 30, 2019 primarily pertain to the Company's sale of its nursing home operations in Reno, Nevada and San Marcos, Texas as well as a property sold located in Austin, Texas. The sale of the Reno nursing home was completed effective during the first quarter of 2019 and a gain of $5.7 million was realized on the sale of the land and building associated with the operation. The sale of the San Marcos nursing home was concluded during the second quarter of 2019 and the Company recorded a loss of $(2.0) million associated with the sale of the land and building of this operation. The sale of the Company's prior home office was also completed during the second quarter of 2019 and realized a gain on the sale of $3.2 million.

For the three months ended September 30, 2020 and 2019 the percentage of total gains on bonds due to the call of securities was 99.9% and 99.6%, respectively. This includes calls out of the Company's available for sale portfolio of debt securities. For the nine months ended September 30, 2020 and 2019 the percentage of gains on bonds due to the call of securities was 99.8% and 81.0%, respectively.

35

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(B)Debt Securities

The table below presents amortized costs and fair values of debt securities held to maturity at September 30, 2020.

	Debt Securities Held to Maturity
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value	Allowance for Credit Losses
	(In thousands)
U.S. agencies	$	73,153	2,934	—	76,087	(81)
U.S. Treasury	3,798		156	—	3,954	—
States and political subdivisions	437,620		24,976	(124)	462,472	(176)
Foreign governments	1,128		150	—	1,278	—
Public utilities	812,251		71,098	—	883,349	(718)
Corporate	4,549,262		401,764	(7,620)	4,943,406	(4,111)
Commercial mortgage-backed	3,019		34	—	3,053	—
Residential mortgage-backed	944,838		57,854	(1)	1,002,691	—
Asset-backed	2,070		39	—	2,109	—
Totals	$	6,827,139	559,005	(7,745)	7,378,399	(5,086)

The table below presents amortized costs and fair values of debt securities available for sale at September 30, 2020.

	Debt Securities Available for Sale
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value	Allowance for Credit Losses
	(In thousands)
States and political subdivisions	$	89,168	8,384	(2)	97,550	—
Foreign governments	9,990		235	—	10,225	—
Public utilities	62,413		5,194	—	67,607	—
Corporate	2,895,799		256,716	(20,349)	3,132,166	—
Commercial mortgage-backed	27,124		1,187	—	28,311	—
Residential mortgage-backed	10,653		1,247	(159)	11,741	—
Asset-backed	61,339		1,759	(42)	63,056	—
Totals	$	3,156,486	274,722	(20,552)	3,410,656	—

36

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The table below presents amortized costs and fair values of debt securities held to maturity at December 31, 2019.

	Debt Securities Held to Maturity
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(In thousands)
U.S. agencies	$	100,910	1,686	—	102,596
U.S. Treasury	3,782		140	—	3,922
States and political subdivisions	431,433		19,440	(84)	450,789
Foreign governments	1,144		55	—	1,199
Public utilities	888,444		36,638	(83)	924,999
Corporate	4,607,826		212,281	(718)	4,819,389
Commercial mortgage-backed	3,032		52	—	3,084
Residential mortgage-backed	1,066,899		32,706	(716)	1,098,889
Asset-backed	2,775		62	(1)	2,836
Totals	$	7,106,245	303,060	(1,602)	7,407,703

The table below presents amortized costs and fair values of debt securities available for sale at December 31, 2019.

	Debt Securities Available for Sale
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(In thousands)
States and political subdivisions	$	98,037	4,495	(3)	102,529
Foreign governments	9,983		203	—	10,186
Public utilities	67,895		3,476	—	71,371
Corporate	2,921,431		141,705	(2,479)	3,060,657
Commercial mortgage-backed	28,871		1,071	—	29,942
Residential mortgage-backed	12,815		1,077	(117)	13,775
Asset-backed	67,088		1,397	—	68,485
Totals	$	3,206,120	153,424	(2,599)	3,356,945

Unrealized losses for debt securities held to maturity and debt securities available for sale increased at September 30, 2020 from comparable balances at December 31, 2019 primarily due to the widening in interest rate spreads that occurred during the period as a result of COVID-19 effects on financial markets.

37

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Debt securities balances at September 30, 2020 and December 31, 2019 include Ozark National holdings of $335.3 million and $307.2 million in held to maturity and $416.0 million and $415.7 million in available for sale. As part of the acquisition effective January 31, 2019 the Company employed purchase accounting procedures in accordance with GAAP which revalued the acquired investment portfolio to their fair values as of the date of the acquisition. These fair values became the book values for Ozark National from that point going forward. Accordingly, unrealized gains and losses for the Ozark National debt securities represent the changes subsequent to the purchase accounting book values established at the acquisition.

The following table shows the gross unrealized losses and fair values of the Company's held to maturity debt securities by investment category and length of time the individual securities have been in a continuous unrealized loss position at September 30, 2020.

	Debt Securities Held to Maturity
	Less than 12 Months			12 Months or Greater		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
	(In thousands)
States and political subdivisions	$	13,687	(55)	1,757	(69)	15,444	(124)
Public utilities	—		—	—	—	—	—
Corporate	148,574		(7,464)	5,817	(156)	154,391	(7,620)
Commercial mortgage-backed	—		—	—	—	—	—
Residential mortgage-backed	1,004		(1)	—	—	1,004	(1)
Asset-backed	—		—	—	—	—	—
Totals	$	163,265	(7,520)	7,574	(225)	170,839	(7,745)

The following table shows the gross unrealized losses and fair values of the Company's available for sale debt securities by investment category and length of time the individual securities have been in a continuous unrealized loss position at September 30, 2020.

	Debt Securities Available for Sale
	Less than 12 Months			12 Months or Greater		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
	(In thousands)
States and political subdivisions	$	558	(2)	—	—	558	(2)
Public utilities	—		—	—	—	—	—
Corporate	179,742		(17,784)	28,389	(2,565)	208,131	(20,349)
Commercial mortgage-backed	—		—	—	—	—	—
Residential mortgage-backed	—		—	572	(159)	572	(159)
Asset-backed	15,131		(42)	—	—	15,131	(42)
Totals	$	195,431	(17,828)	28,961	(2,724)	224,392	(20,552)

38

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table shows the gross unrealized losses and fair values of the Company's held to maturity debt securities by investment category and length of time the individual securities have been in a continuous unrealized loss position at December 31, 2019.

	Debt Securities Held to Maturity
	Less than 12 Months			12 Months or Greater		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
	(In thousands)
States and political subdivisions	$	5,013	(33)	1,712	(51)	6,725	(84)
Public utilities	2,345		(83)	—	—	2,345	(83)
Corporate	31,419		(337)	17,191	(381)	48,610	(718)
Residential mortgage-backed	25,859		(63)	43,498	(653)	69,357	(716)
Asset-backed	1,349		(1)	—	—	1,349	(1)
Totals	$	65,985	(517)	62,401	(1,085)	128,386	(1,602)

The following table shows the gross unrealized losses and fair values of the Company's available for sale debt securities by investment category and length of time that the individual securities have been in a continuous unrealized loss position at December 31, 2019.

	Debt Securities Available for Sale
	Less than 12 Months			12 Months or Greater		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
	(In thousands)
States and political subdivisions	$	470	(3)	—	—	470	(3)
Public utilities	—		—	—	—	—	—
Corporate	40,080		(105)	28,582	(2,374)	68,662	(2,479)
Residential mortgage-backed	—		—	710	(117)	710	(117)
Totals	$	40,550	(108)	29,292	(2,491)	69,842	(2,599)

Debt securities. The gross unrealized losses for debt securities are made up of 68 individual issues, or 5.0% of the total debt securities held by the Company at September 30, 2020. The market value of these bonds as a percent of amortized cost approximates 93.3%. Of the 68 securities, 8, or 11.8%, fall in the 12 months or greater aging category; and 45 were rated investment grade at September 30, 2020.

39

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The amortized cost and fair value of investments in debt securities at September 30, 2020, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Debt Securities Available for Sale			Debt Securities Held to Maturity
	Amortized Cost		Fair Value	Amortized Cost	Fair Value
	(In thousands)
Due in 1 year or less	$	179,359	182,907	579,550	587,799
Due after 1 year through 5 years	1,361,831		1,450,221	3,004,262	3,204,761
Due after 5 years through 10 years	1,178,727		1,291,931	1,474,459	1,656,357
Due after 10 years	337,453		382,489	818,941	921,629
	3,057,370		3,307,548	5,877,212	6,370,546
Mortgage and asset-backed securities	99,116		103,108	949,927	1,007,853
Totals before allowance for credit losses	3,156,486		3,410,656	6,827,139	7,378,399
Allowance for credit losses	—		—	(5,086)	—
Totals	$	3,156,486	3,410,656	6,822,053	7,378,399

As disclosed in Note (2) New Accounting Pronouncements in the Notes to Condensed Consolidated Financial Statements, the Company adopted new accounting guidance as of January 1, 2020 for credit loss recognition of certain financial assets, including debt securities classified in the held to maturity category. The Company employs a cohort cumulative loss rate method in estimating current expected credit losses with respect to its held to maturity debt securities. This method applies publicly available industry wide statistics of default incidence by defined segmentations of debt security investments combined with future assumptions regarding economic conditions (i.e. GDP forecasts) both in the near term and the long term. The Company utilizes Moody's loss rates by industry type and credit ratings and applies them to each major bond category. These bond categories are further segmented by credit ratings and by maturities of two years and less and more than two years. The following table presents the allowance for credit losses for the three and nine months ended September 30, 2020 and 2019.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	Debt Securities Held to Maturity		Debt Securities Available for Sale	Debt Securities Held to Maturity	Debt Securities Available for Sale
	(In thousands)
Balance, beginning of period	$	4,940	—	—	—
Provision January 1, 2020 for adoption of new accounting guidance	—		—	3,334	—
(Releases)/provision during period	146		—	1,752	—
Balance, end of period	$	5,086	—	5,086	—

40

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Provisions to and releases from the allowance for credit losses are recorded in net investment income in the Condensed Consolidated Statements of Earnings (Loss). Previous accounting guidance required the Company to review its portfolio for potential other-than-temporary impairments which would require that affected securities be written down to an adjusted cost basis with the amount of the writedown recorded as part of net realized gains and losses in the Condensed Consolidated Statements of Earnings (Loss).

The Company determines current expected credit losses for available-for-sale debt securities in accordance with FASB ASC Subtopic 326-30 when fair value is less than amortized cost, interest payments are missed and the security is experiencing credit issues. At September 30, 2020, the Company performed additional analyses on certain available-for-sale securities whose market values were negatively impacted by the change in the economic environment precipitated by the COVID-19 pandemic crisis. Based on its review, the Company determined none of these investments required an allowance for credit loss at September 30, 2020. Under the previous guidance, debt securities were not considered to be other-than-temporarily impaired when a decline in market value was attributable to factors such as market volatility, liquidity, spread widening and credit quality in which it was anticipated that a recovery of all amounts due under the contractual terms of the security would occur and the Company had the intent and ability to hold the security until recovery or maturity. There was a $1.9 million and $7.8 million other-than-temporary impairment recorded on a single debt security during the three and nine months ended September 30, 2019, respectively. The Company's operating procedures include monitoring the investment portfolio on an ongoing basis for any changes in issuer facts and circumstances that might lead to future need for a credit loss allowance.

In the table below, held to maturity securities and their corresponding allowance for credit losses are represented according to credit ratings by nationally recognized statistical rating organizations.

	Debt Securities Held to Maturity
	Amortized Cost		Allowance for Credit Losses	Carrying Value
	(In thousands)
AAA	$	95,861	—	95,861
AA	1,639,976		(379)	1,639,597
A	2,224,126		(939)	2,223,187
BBB	2,737,258		(3,292)	2,733,966
BB and other below investment	129,918		(476)	129,442
Bonds Total	$	6,827,139	(5,086)	6,822,053

(C)Transfer of Securities

During the three and nine months ended September 30, 2020 the Company made no transfers from the held to maturity category to securities available for sale.

(D) Mortgage Loans and Real Estate

A financing receivable is a contractual right to receive money on demand or on fixed or determinable dates that is recognized as an asset in a company's statement of financial position. The Company's mortgage, participation and mezzanine loans on real estate are the only financing receivables included in the Condensed Consolidated Balance Sheets.

Credit and default risk are minimized through strict underwriting guidelines and diversification of underlying property types and geographic locations. In addition to being secured by the property, mortgage loans with leases on the underlying property are often guaranteed by the lease payments. This approach has proved to result in quality mortgage loans with few defaults. Mortgage loan interest income is recognized on an accrual basis with any premium or discount amortized over the life of the loan. Prepayment and late fees are recorded on the date of collection.

41

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Loans in foreclosure, loans considered impaired or loans past due 90 days or more are placed on a non-accrual status. If a mortgage loan is determined to be on non-accrual status, the mortgage loan does not accrue any revenue into the Condensed Consolidated Statements of Earnings (Loss). The loan is independently monitored and evaluated as to potential impairment or foreclosure. If delinquent payments are made and the loan is brought current, then the Company returns the loan to active status and accrues income accordingly. The Company had no mortgage loans past due 90 days or more at September 30, 2020 or 2019 and as a result all interest income was recognized at September 30, 2020 and 2019. As a result of the economic climate change induced by the COVID-19 virus, various mortgage loan borrowers of the Company have requested a temporary forbearance of principal payments on loans in the range of three to nine months. During the nine months ended September 30, 2020 there were eight loans representing an aggregate principal balance of $29.2 million with borrowers meeting specified criteria of the Company that forbearance terms were agreed to.

The following table represents the mortgage loan portfolio by loan-to-value ratio.

	September 30, 2020			December 31, 2019
	Amount		%	Amount		%
	(In thousands)			(In thousands)
Mortgage Loans by Loan-to-Value Ratio (1):
Less than 50%	$	52,987	17.4	$	52,778	19.3
50% to 60%	57,744		18.9	56,929		20.8
60% to 70%	148,694		48.7	117,377		43.0
70% to 80%	45,647		15.0	46,013		16.9
80% to 90%	—		—	—		—
Greater than 90%	—		—	—		—
Gross balance	305,072		100.0	273,097		100.0
Allowance for credit losses	(2,357)		(0.8)	(675)		(0.2)
Totals	$	302,715	99.2	$	272,422	99.8

(1) Loan-to-Value Ratio is determined using the most recent appraised value. Appraisals are required at the time of funding and may be updated if a material change occurs from the original loan agreement.

All mortgage loans are analyzed quarterly in order to monitor the financial quality of these assets. Based on ongoing monitoring, mortgage loans with a likelihood of becoming delinquent are identified and placed on an internal “watch list.” Among the criteria that may indicate a potential problem include: major tenant vacancies or bankruptcies, late payments, and loan relief/restructuring requests. The mortgage loan portfolio is analyzed for the need for a valuation allowance on any loan that is on the internal watch list, in the process of foreclosure or that currently has a valuation allowance.

Prior to January 1, 2020, mortgage loans were considered impaired when, based on current information and events, it was probable that the Company would be unable to collect all amounts due according to the contractual terms of the loan agreement. When it was determined that a loan was impaired, a loss was recognized for the difference between the carrying amount of the mortgage loan and the estimated value reduced by the cost to sell. Estimated value was typically based on the loan's observable market price or the fair value of the collateral less cost to sell. Impairments and changes in the valuation allowance were reported in net realized investment gains (losses) in the Condensed Consolidated Statements of Earnings (Loss). The Company held a valuation allowance of $0.7 million at December 31, 2019.

42

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Effective January 1, 2020, the Company implemented FASB ASU 2016-13, Financial Instruments-Credit Losses, which revises the credit loss recognition criteria for certain financial assets measured at amortized cost. The new guidance replaces the existing incurred loss recognition model with an expected loss recognition model (“CECL”). The objective of the CECL model is for the reporting entity to recognize its estimate of current expected credit losses for affected financial assets in a valuation allowance deducted from the amortized cost basis of the related financial assets that results in presenting the net carrying value of the financial assets at the amount expected to be collected. For mortgage loan investments the Company is using the Weighted Average Remaining Maturity ("WARM") method, which uses an average annual charge-off rate applied to each mortgage loan risk category. Under this new accounting guidance, at January 1, 2020 a balance of $1.2 million was recorded which incorporated the previous year-end balance under the prior accounting method. The adjustment resulted in a charge to retained earnings as a change in accounting, net of tax, of $0.4 million. Subsequent changes in the allowance for current expected credit losses are reported in net investment income in the Condensed Consolidated Statements of Earnings (Loss).

The following table represents the mortgage loan allowance for credit losses.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Balance, beginning of the period	$	2,227	675	675	675
Provision January 1, 2020 for adoption of new accounting guidance	—		—	504	—
Provision during the period	130		—	1,178	—
Releases	—		—	—	—
Total ending allowance for credit losses	$	2,357	675	2,357	675

The Company's direct investments in real estate are not a significant portion of its total investment portfolio and totaled approximately $33.9 million and $34.6 million at September 30, 2020 and December 31, 2019, respectively. The Company recognized operating income on real estate properties of approximately $2.2 million and $2.1 million for the first nine months of 2020 and 2019, respectively. In the third quarter of 2020, the Company sold a property located in Travis County, Texas for a realized gain of $2.7 million.

43

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(10) FAIR VALUES OF FINANCIAL INSTRUMENTS

For financial instruments, the FASB provides guidance which defines fair value, establishes a framework for measuring fair value under GAAP, and requires additional disclosures about fair value measurements. In compliance with this GAAP guidance, the Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into a three level hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities ("Level 1") and the lowest priority to unobservable inputs ("Level 3"). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

Financial assets and liabilities recorded at fair value on the Condensed Consolidated Balance Sheets are categorized as follows:

Level 1: Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. These generally provide the most reliable evidence and are used to measure fair value whenever available. The Company's Level 1 assets are equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets.

Level 2:  Fair value is based upon significant inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable for substantially the full term of the asset or liability through corroboration with observable market data as of the reporting date. Level 2 inputs include quoted market prices in active markets for similar assets and liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities, model-derived valuations whose inputs are observable or whose significant value drivers are observable and other observable inputs. The Company’s Level 2 assets include fixed maturity debt securities (corporate and private bonds, government or agency securities, asset-backed and mortgage-backed securities). Valuations are generally obtained from third party pricing services for identical or comparable assets or determined through use of valuation methodologies using observable market inputs.

Level 3:  Fair value is based on significant unobservable inputs which reflect the entity’s or third party pricing service’s assumptions about the assumptions market participants would use in pricing an asset or liability. The Company’s Level 3 assets are over-the-counter derivative contracts. The Company’s Level 3 liabilities consist of share-based compensation obligations, certain product-related embedded derivatives, and contingent consideration in the acquisition of businesses. Valuations are estimated based on non-binding broker prices or internally developed valuation models or methodologies, discounted cash flow models and other similar techniques.

44

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following tables set forth the Company’s assets and liabilities that are measured at fair value on a recurring basis as of the date indicated:

	September 30, 2020
	Total		Level 1	Level 2	Level 3
	(In thousands)
Debt securities, available for sale	$	3,410,656	—	3,410,656	—
Equity securities	18,610		18,610	—	—
Derivatives, index options	93,367		—	—	93,367
Other invested assets	1		1	—	—
Total assets	$	3,522,634	18,611	3,410,656	93,367
Policyholder account balances (a)	$	116,802	—	—	116,802
Other liabilities (b)	4,951		—	—	4,951
Total liabilities	$	121,753	—	—	121,753

During the three and nine months ended September 30, 2020, the Company made no transfers into or out of Levels 1, 2 or 3.

	December 31, 2019
	Total		Level 1	Level 2	Level 3
	(In thousands)
Debt securities, available for sale	$	3,356,945	—	3,356,945	—
Equity securities	23,594		23,594	—	—
Derivatives, index options	157,588		—	—	157,588
Other invested assets	2		2	—	—
Total assets	$	3,538,129	23,596	3,356,945	157,588
Policyholder account balances (a)	$	155,902	—	—	155,902
Other liabilities (c)	15,301		—	—	15,301
Total liabilities	$	171,203	—	—	171,203

(a)  Represents the fair value of certain product-related embedded derivatives that were recorded at fair value.

(b)  Represents the liability for share-based compensation.

(c)  Represents the liability for share-based compensation and the contingent consideration for businesses acquired.

45

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following tables present, by pricing source and fair value hierarchy level, the Company's assets that are measured at fair value on a recurring basis:

	September 30, 2020
	Total			Level 1		Level 2		Level 3
	(In thousands)
Debt securities, available for sale:
Priced by third-party vendors	$	3,410,656		—		3,410,656		—
Priced internally	—			—		—		—
Subtotal	3,410,656			—		3,410,656		—
Equity securities, available for sale:
Priced by third-party vendors	18,610			18,610		—		—
Priced internally	—			—		—		—
Subtotal	18,610			18,610		—		—
Derivatives, index options:
Priced by third-party vendors	93,367			—		—		93,367
Priced internally	—			—		—		—
Subtotal	93,367			—		—		93,367
Other invested assets:
Priced by third-party vendors	1			1		—		—
Priced internally	—			—		—		—
Subtotal	1			1		—		—
Total	$	3,522,634		18,611		3,410,656		93,367
Percent of total	100.0		%	0.5	%	96.8	%	2.7	%

46

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	December 31, 2019
	Total			Level 1		Level 2		Level 3
	(In thousands)
Debt securities, available for sale:
Priced by third-party vendors	$	3,356,945		—		3,356,945		—
Priced internally	—			—		—		—
Subtotal	3,356,945			—		3,356,945		—
Equity securities, available for sale:
Priced by third-party vendors	23,594			23,594		—		—
Priced internally	—			—		—		—
Subtotal	23,594			23,594		—		—
Derivatives, index options:
Priced by third-party vendors	157,588			—		—		157,588
Priced internally	—			—		—		—
Subtotal	157,588			—		—		157,588
Other invested assets:
Priced by third-party vendors	2			2		—		—
Priced internally	—			—		—		—
Subtotal	2			2		—		—
Total	$	3,538,129		23,596		3,356,945		157,588
Percent of total	100.0		%	0.7	%	94.8	%	4.5	%

47

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following tables provide additional information about fair value measurements for which significant unobservable (Level 3) inputs were utilized to determine fair value.

	For the Three Months Ended September 30, 2020
	Assets				Other Liabilities
		Derivatives, Index Options		Total Assets	Policyholder Account Balances	Stock Options	Contingent Consideration	Total Other Liabilities
	(In thousands)
Beginning balance, July 1, 2020		$	66,738	66,738	87,573	5,497	—	93,070
Total realized and unrealized gains (losses):
Included in net earnings		31,520		31,520	34,119	(546)	—	33,573
Included in other comprehensive income		—		—		—	—	—
Purchases, sales, issuances and settlements, net:
Purchases		11,426		11,426	11,427	—	—	11,427
Sales		—		—	—	—	—	—
Issuances		—		—	—	—	—	—
Settlements		(16,317)		(16,317)	(16,317)	—	—	(16,317)
Transfers into (out of) Level 3		—		—	—	—	—	—
Balance at end of period		$	93,367	93,367	116,802	4,951	—	121,753
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:
Net investment income		$	50,636	50,636	—	—	—	—
Benefits and expenses		—		—	50,636	(546)	—	50,090
Total		$	50,636	50,636	50,636	(546)	—	50,090

48

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	For the Three Months Ended September 30, 2019
	Assets				Other Liabilities
		Derivatives, Index Options		Total Assets	Policyholder Account Balances	Stock Options	Contingent Consideration	Total Other Liabilities
	(In thousands)
Beginning balance, July 1, 2019		$	89,900	89,900	100,638	7,991	3,871	112,500
Total realized and unrealized gains (losses):
Included in net earnings		3,296		3,296	(3,534)	1,462	94	(1,978)
Included in other comprehensive income		—		—	—	—	—	—
Purchases, sales, issuances and settlements, net:
Purchases		19,872		19,872	19,872	—	—	19,872
Sales		—		—	—	—	—	—
Issuances		—		—	—	—	—	—
Settlements		(6,704)		(6,704)	(6,704)	—	—	(6,704)
Transfers into (out of) Level 3		—		—	—	—	—	—
Balance at end of period		$	106,364	106,364	110,272	9,453	3,965	123,690
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:
Net investment income		$	(2,020)	(2,020)	—	—	—	—
Benefits and expenses		—		—	(2,020)	1,462	94	(464)
Total		$	(2,020)	(2,020)	(2,020)	1,462	94	(464)

49

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	For the Nine Months Ended September 30, 2020
	Assets				Other Liabilities
		Derivatives, Index Options		Total Assets	Policyholder Account Balances	Stock Options	Contingent Consideration	Total Other Liabilities
	(In thousands)
Beginning balance, January 1, 2020		$	157,588	157,588	155,902	11,225	4,076	171,203
Total realized and unrealized gains (losses):
Included in net earnings		(34,865)		(34,865)	(9,744)	(4,395)	(4,076)	(18,215)
Included in other comprehensive income		—		—	—	—	—	—
Purchases, sales, issuances and settlements, net:
Purchases		50,287		50,287	50,287	—	—	50,287
Sales		—		—	—	—	—	—
Issuances		—		—	—	—	—	—
Settlements		(79,643)		(79,643)	(79,643)	(1,879)	—	(81,522)
Transfers into (out of) Level 3		—		—	—	—	—	—
Balance at end of period		$	93,367	93,367	116,802	4,951	—	121,753
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:
Net investment income		$	6,966	6,966	—	—	—	—
Benefits and expenses		—		—	6,966	(4,395)	(4,076)	(1,505)
Total		$	6,966	6,966	6,966	(4,395)	(4,076)	(1,505)

50

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	For the Nine Months Ended September 30, 2019
	Assets				Other Liabilities
		Derivatives, Index Options		Total Assets	Policyholder Account Balances	Stock Options	Contingent Consideration	Total Other Liabilities
	(In thousands)
Beginning balance, January 1, 2019		$	14,684	14,684	44,781	11,923	—	56,704
Total realized and unrealized gains (losses):
Included in net earnings		63,127		63,127	36,938	52	265	37,255
Included in other comprehensive income		—		—	—	—	—	—
Purchases, sales, issuances and settlements, net:
Purchases		56,494		56,494	56,494	—	—	56,494
Sales		—		—	—	—	—	—
Issuances		—		—	—	—	3,700	3,700
Settlements		(27,941)		(27,941)	(27,941)	(2,522)	—	(30,463)
Transfers into (out of) Level 3		—		—	—	—	—	—
Balance at end of period		$	106,364	106,364	110,272	9,453	3,965	123,690
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:
Net investment income		$	42,794	42,794	—	—	—	—
Benefits and expenses		—		—	42,794	52	265	43,111
Total		$	42,794	42,794	42,794	52	265	43,111

51

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table presents the valuation method for financial assets and liabilities categorized as level 3, as well as the unobservable inputs used in the valuation of those financial instruments:

	September 30, 2020
	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Average)
	(In thousands)
Assets:
Derivatives, index options	$	93,367	Broker prices	Implied volatility	12.96% - 53.69% (19.74%)
Total assets	$	93,367
Liabilities:
Policyholder account balances	$	116,802	Deterministic cash flow model	Projected option cost	0.0% - 38.69% (5.18%)
Share based compensation	4,951		Black-Scholes model	Expected term	1.2 to 9.1 years
				Expected volatility	32.85%
Total liabilities	$	121,753

	December 31, 2019
	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Average)
	(In thousands)
Assets:
Derivatives, index options	$	157,588	Broker prices	Implied volatility	13.10% - 19.90% (15.25%)
Total assets	$	157,588
Liabilities:
Policyholder account balances	$	155,902	Deterministic cash flow model	Projected option cost	0.0% - 17.55% (3.14%)
Share based compensation	11,225		Black-Scholes model	Expected term	1.9 to 10 years
				Expected volatility	22.19%
Contingent consideration on businesses acquired	4,076		Probabilistic Method	Discount rate	10.0%
				Projected renewal premium	$57.2 - $82.4 million ($71.9)
Total liabilities	$	171,203

52

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Realized gains (losses) on debt securities are reported in the Condensed Consolidated Statements of Earnings (Loss) as net investment gains (losses) with liabilities reported as expenses. Unrealized gains (losses) on available for sale debt securities are reported as other comprehensive income (loss) within the stockholders' equity section of the Condensed Consolidated Balance Sheet.

The fair value hierarchy classifications are reviewed each reporting period. Reclassification of certain financial assets and liabilities may result based on changes in the observability of valuation attributes. Reclassifications are reported as transfers into and out of Level 3 at the beginning fair value for the reporting period in which the changes occur.

The carrying amounts and fair values of the Company's financial instruments are as follows:

	September 30, 2020
				Fair Value Hierarchy Level
	Carrying Values		Fair Values	Level 1	Level 2	Level 3
	(In thousands)
ASSETS
Debt securities held to maturity	$	6,822,053	7,378,399	—	7,378,399	—
Debt securities available for sale	3,410,656		3,410,656	—	3,410,656	—
Cash and cash equivalents	507,025		507,025	507,025	—	—
Mortgage loans	302,715		303,910	—	—	303,910
Real estate	33,927		48,547	—	—	48,547
Policy loans	75,714		128,615	—	—	128,615
Other loans	19,712		20,004	—	—	20,004
Derivatives, index options	93,367		93,367	—	—	93,367
Equity securities	18,610		18,610	18,610	—	—
Life interest in Libbie Shearn Moody Trust	9,230		12,775	—	—	12,775
Other investments	4,514		22,581	1	—	22,580
LIABILITIES
Deferred annuity contracts	$	6,697,569	5,422,599	—	—	5,422,599
Immediate annuity and supplemental contracts	417,663		449,676	—	—	449,676
Contingent consideration on businesses acquired	—		—	—	—	—

53

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	December 31, 2019
				Fair Value Hierarchy Level
	Carrying Values		Fair Values	Level 1	Level 2	Level 3
	(In thousands)
ASSETS
Debt securities held to maturity	$	7,106,245	7,407,703	—	7,407,703	—
Debt securities available for sale	3,356,945		3,356,945	—	3,356,945	—
Cash and cash equivalents	253,524		253,524	253,524	—	—
Mortgage loans	272,422		270,931	—	—	270,931
Real estate	34,588		57,204	—	—	57,204
Policy loans	80,008		123,650	—	—	123,650
Other loans	13,547		13,698	—	—	13,698
Derivatives, index options	157,588		157,588	—	—	157,588
Equity securities	23,594		23,594	23,594	—	—
Life interest in Libbie Shearn Moody Trust	9,230		12,775	—	—	12,775
Other investments	197		16,182	2	—	16,180
LIABILITIES
Deferred annuity contracts (1)	$	7,014,833	5,931,352	—	—	5,931,352
Immediate annuity and supplemental contracts	400,465		422,931	—	—	422,931
Contingent consideration on businesses acquired	4,076		4,076	—	—	4,076

(1) Revised to correct for an adjustment related to the understatement of reserve liabilities of $15.0 million. See Note 1.

Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

(11)  DERIVATIVE INVESTMENTS

Fixed-index products provide traditional fixed annuities and universal life contracts with the option to have credited interest rates linked in part to an underlying equity index or a combination of equity indices. The equity return component of such policy contracts is identified separately and accounted for in future policy benefits as embedded derivatives on the Condensed Consolidated Balance Sheets. The remaining portions of these policy contracts are considered the host contracts and are recorded separately as fixed annuity or universal life contracts. The host contracts are accounted for under debt instrument type accounting in which future policy benefits are recorded as discounted debt instruments and accreted, using the effective yield method, to their minimum account values at their projected maturities or termination dates.

54

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company purchases over-the-counter index options, which are derivative financial instruments, to hedge the equity return component of its fixed-index annuity and life products. The index options act as hedges to match closely the returns on the underlying index or indices. The amounts which may be credited to policyholders are linked, in part, to the returns of the underlying index or indices. As a result, changes to policyholders' liabilities are substantially offset by changes in the value of the options. Cash is exchanged upon purchase of the index options and no principal or interest payments are made by either party during the option periods. Upon maturity or expiration of the options, cash may be paid to the Company depending on the performance of the underlying index or indices and terms of the contract.

The Company does not elect hedge accounting relative to these derivative instruments. The index options are reported at fair value in the accompanying Condensed Consolidated Financial Statements. The changes in the values of the index options and the changes in the policyholder liabilities are both reflected in the Condensed Consolidated Statements of Earnings (Loss). Any changes relative to the embedded derivatives associated with policy contracts are reflected in contract interest in the Condensed Consolidated Statements of Earnings (Loss). Any gains or losses from the sale or expiration of the options, as well as period-to-period changes in values, are reflected as net investment income in the Condensed Consolidated Statements of Earnings (Loss).

Although there is credit risk in the event of nonperformance by counterparties to the index options, the Company does not expect any of its counterparties to fail to meet their obligations, given their high credit ratings. In addition, credit support agreements are in place with all counterparties for option holdings in excess of specific limits, which may further reduce the Company's credit exposure.

The tables below present the fair value of derivative instruments as of September 30, 2020 and December 31, 2019, respectively.

	September 30, 2020
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
		(In thousands)			(In thousands)
Derivatives not designated as hedging instruments
Equity index options	Derivatives, Index Options	$	93,367
Fixed-index products				Universal Life and Annuity Contracts	$	116,802
Total		$	93,367		$	116,802

55

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	December 31, 2019
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
		(In thousands)			(In thousands)
Derivatives not designated as hedging instruments
Equity index options	Derivatives, Index Options	$	157,588
Fixed-index products				Universal Life and Annuity Contracts	$	155,902
Total		$	157,588		$	155,902

The table below presents the effect of derivative instruments in the Condensed Consolidated Statements of Earnings (Loss) for the three months ended September 30, 2020 and 2019.

		September 30, 2020		September 30, 2019
Derivatives Not Designated As Hedging Instruments	Location of Gain or (Loss) Recognized In Income on Derivatives	Amount of Gain or (Loss) Recognized in Income on Derivatives
		(In thousands)
Equity index options	Net investment income (loss)	$	31,520	3,296
Fixed-index products	Universal life and annuity contract interest	(34,119)		3,533
		$	(2,599)	6,829

The table below presents the effect of derivative instruments in the Condensed Consolidated Statements of Earnings (Loss) for the nine months ended September 30, 2020 and 2019.

		September 30, 2020		September 30, 2019
Derivatives Not Designated As Hedging Instruments	Location of Gain or (Loss) Recognized In Income on Derivatives	Amount of Gain or (Loss) Recognized in Income on Derivatives
		(In thousands)
Equity index options	Net investment income	$	(34,865)	63,127
Fixed-index products	Universal life and annuity contract interest	9,744		(36,937)
		$	(25,121)	26,190

56

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The embedded derivative liability, the change of which is recorded in universal life and annuity contract interest in the Condensed Consolidated Statements of Earnings (Loss), includes projected interest credits that are offset by the expected collectability by the Company of asset management fees on fixed-index products. The anticipated asset management fees to be collected increases or decreases based upon the most recent performance of index options and adds to or reduces the offset applied to the embedded derivative liability (increasing or decreasing contract interest expense). For the three months ended September 30, 2020 and 2019, the change in the embedded derivative liability due to the expected collectability of asset management fees increased/(decreased) contract interest expense by $3.7 million and $(6.8) million, respectively. For the nine months ended September 30, 2020 and 2019, contract interest expense was increased/(decreased) by $29.3 million and $(27.1) million, respectively, for the expected collectability of asset management fees. Beginning in the second quarter of 2020, the Company changed its budget for purchasing options to match the collection of asset management fees with the payoff from out of the money options, thereby removing the option premium currently being paid for the probability or expectation of collecting asset management fees ("out of the money" hedging). As the current one year options outstanding expire and are replaced by out of the money hedges, the embedded derivative liability component due to the projected collectability of asset management fees will be eliminated.

(12) BUSINESS COMBINATIONS

Effective January 31, 2019, the Company acquired Ozark National and NIS following the receipt of regulatory approvals. NWLGI and National Western paid cash in an aggregate amount of approximately $205.4 million in exchange for all of the outstanding stock of Ozark National (wholly owned by National Western) and NIS (wholly owned by NWLGI). In addition to the cash price paid, National Western recorded a contingent liability for an "earn-out payment" based upon the subsequent persistency of Ozark National's acquired in force business achieving thresholds as specified in the Stock Purchase Agreement ("Agreement"). The earn-out payment to the seller per the Agreement had a maximum limit of $5.0 million. Using a probabilistic method for valuing contingent consideration, the Company at January 31, 2019 recorded a liability of $3.7 million representing the estimated fair value of the additional consideration estimated to be paid as part of the acquisition. The contingent consideration was revalued during the earn-out term using the same probabilistic method and had a fair value of $4.1 million as of December 31, 2019. Changes in the fair value during year ended December 31, 2019 were recorded through Other operating expenses.

During the quarter ended June 30, 2020, the Company and and the Seller executed an agreement under which the parties agreed that the Company had fulfilled its payment obligation under the Stock Purchase Agreement executed October 3, 2018. As a result, the Company reversed the contingent earn-out liability balance of $4.2 million recorded at March 31, 2020 and reflected this amount in Other revenues.

In addition to the purchase price, the Company incurred $3.3 million of acquisition-related costs. In accordance with GAAP, these costs are included in Other operating expenses in the Condensed Consolidated Statements of Earnings (Loss) for the nine months ended September 30, 2019 and are not considered part of the purchase price.

The acquisition has been accounted for in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Purchase accounting, as defined by ASC 805, requires that the assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The fair values shown below were determined based on management’s best estimates, employing fair valuation methodologies commonly utilized in preparing financial statements in accordance with GAAP, and are subject to revision for one year following the acquisition date. The excess of the purchase price paid above net tangible assets acquired has been assigned to identifiable intangible assets and goodwill. The following table presents the fair values of the net assets acquired as of January 31, 2019.

57

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	January 31, 2019
	Fair value
Assets	(In thousands)
Debt securities held to maturity	$	261,059
Debt securities available for sale	400,719
Policy loans	28,128
Real estate	4,600
Cash and cash equivalents	16,275
Accrued investment income	6,116
Value of business acquired	145,768
Reinsurance recoverables	21,895
Other intangible assets	9,600
Other assets acquired	12,075
Total assets acquired	906,235
Liabilities
Traditional life reserves	691,297
Other policyholder liabilities	13,867
Other liabilities acquired	5,840
	711,004
Net identifiable assets acquired	195,231
Goodwill	13,864
Net assets acquired	$	209,095

Identifiable Intangible Assets

The following table presents the fair value of identifiable intangible assets acquired at January 31, 2019:

	Fair Value		Weighted-Average Amortization Period
	(In thousands)
Trademarks / trade names	$	2,800	15
Internally developed software	3,800		7
Insurance licenses	3,000		NA
	$	9,600

58

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The gross carrying amounts and accumulated amortization for each specifically identifiable intangible asset were as follows.

	September 30, 2020				December 31, 2019
	Weighted-Average Amortization Period	Gross Carrying Amount		Accumulated Amortization	Gross Carrying Amount	Accumulated Amortization
		(In thousands)
Trademarks/trade names	15	$	2,800	(311)	2,800	(171)
Internally developed software	7	3,800		(905)	3,800	(498)
Insurance licenses	N/A	3,000		—	3,000	—
		$	9,600	(1,216)	9,600	(669)

The value of trademarks was estimated using the relief from royalty method, based on the assumption that in lieu of ownership, an organization would be willing to pay a royalty in order to receive the related benefits of using the brand. The value of insurance licenses was estimated using the market approach to value, based on values paid for licenses in recent shell company transactions. The value of internally developed software was estimated using the replacement cost method. Trademarks, trade names and internally developed software are amortized using a straight-line method over the estimated useful lives. These intangible assets will be evaluated for impairment if indicators of impairment arise. Insurance licenses were determined to have an indefinite useful life. The Company evaluates the useful life insurance licenses at each reporting period to determine whether the useful life remains indefinite.

59

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Value of Business Acquired ("VOBA")

VOBA is a purchase accounting convention for life insurance companies in business combinations based upon an actuarial determination of the difference between the fair value of policyholder liabilities acquired and the same policyholder liabilities measured in accordance with the acquiring company's accounting policies. The difference, referred to as VOBA, is an intangible asset subject to periodic amortization. As of the January 31, 2019 acquisition date, the VOBA balance recorded was $145.8 million. Changes in VOBA were as follows for the periods shown:

	September 30,		December 31,
	2020		2019
	(In thousands)
Balance, beginning of year	$	138,071	—
Business acquired	—		145,768
Amortization:
Amortization, excluding unlocking	(5,645)		(7,697)
Balance as of end of period	$	132,426	138,071

Estimated future amortization of VOBA, net of interest (in thousands), as of September 30, 2020, is as follows:

	Expected Amortization
	(In thousands)
Remainder of 2020	$	1,844
2021	$	7,002
2022	$	6,646
2023	$	6,337
2024	$	6,060

Goodwill

The changes in the carrying amount of goodwill (in thousands) were as follows:

	September 30,		December 31,
	2020		2019
	(In thousands)
Gross goodwill as of beginning of year	$	13,864	—
Goodwill resulting from business acquisition	—		13,864
Gross goodwill, before impairments	13,864		13,864
Accumulated impairment as of beginning of year	—		—
Current year impairments	—		—
Net goodwill as of end of period	$	13,864	13,864

60

NATIONAL WESTERN LIFE GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Due to the severe change in economic climate as a result of the COVID-19 pandemic, the Company evaluated the goodwill balance for potential impairment as of September 30, 2020 and determined that there was evidence to support not impairing the balance.

Financial Information

Subsequent to the acquisition date of January 31, 2019, Ozark National and NIS total revenues of $77.1 million and net earnings of $11.7 million were included in Condensed Consolidated Statements of Earnings (Loss) for the nine month period ended September 30, 2019. Their results for segment reporting purposes are combined in the Acquired Businesses segment.

The following unaudited comparative pro forma total revenues and net earnings represent Condensed Consolidated Results of Operations for the Company which assume amounts estimated had the acquisition of Ozark National and NIS by the Company been effective January 1, 2018.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Total revenues	$	202,702	173,166	471,205	593,402
Net earnings (loss)	$	10,825	19,989	57,176	95,341

The pro forma amounts shown above include the estimated total revenues and net earnings of the acquired businesses for each period incorporating amortization of identifiable intangible assets acquired and fair value adjustments to acquired invested assets and traditional life insurance reserves.

(13) SUBSEQUENT EVENTS

Subsequent events have been evaluated through the date of filing and no reportable items were identified.

61

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information contained herein or in other written or oral statements made by or on behalf of National Western Life Group, Inc. and its subsidiaries (the "Company") are or may be viewed as forward-looking. Although the Company has taken appropriate care in developing any such information, forward-looking information involves risks and uncertainties that could significantly impact actual results. These risks and uncertainties include, but are not limited to, matters described in the Company's Securities and Exchange Commission (SEC) filings such as exposure to market risks, anticipated cash flows or operating performance, future capital needs, and statutory or regulatory related issues. However, as a matter of policy, the Company does not make any specific projections as to future earnings, nor does it endorse any projections regarding future performance that may be made by others. Whether or not actual results differ materially from forward-looking statements may depend on numerous foreseeable and unforeseeable events or developments. Also, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments, or otherwise.

Management's discussion and analysis of the financial condition and results of operations (“MD&A”) of National Western Life Group, Inc. ("NWLGI") for the three and nine months ended September 30, 2020 follows. Where appropriate, discussion specific to the insurance operations of National Western Life Insurance Company is denoted by "National Western" or "NWLIC". This discussion should be read in conjunction with the Company's Condensed Consolidated Financial Statements and related notes beginning on page 3 of this report and with the 2019 Annual Report filed on Form 10-K with the SEC.

Effective January 31, 2019, the Company completed its previously announced acquisition of Ozark National Life Insurance Company ("Ozark National") and N.I.S. Financial Services, Inc. ("NIS") following the receipt of regulatory approvals. NWLGI and National Western paid cash in an aggregate amount of approximately $205.4 million in exchange for all of the outstanding stock of Ozark National (wholly owned by National Western) and NIS (wholly owned by NWLGI). The results of Ozark National and NIS are included in the Company's Condensed Consolidated Financial Statements for their respective business activity subsequent to the acquisition date and reference to each is made in this MD&A where appropriate.

Overview

National Western provides life insurance products for the savings and protection needs of policyholders and annuity contracts for the asset accumulation and retirement needs of contract holders. The Company accepts funds from policyholders or contract holders and establishes a liability representing future obligations to pay the policy or contract holders and their beneficiaries. To ensure the Company will be able to pay these future commitments, the funds received as premium payments and deposits are invested in high quality investments, primarily fixed income securities. The Company maintains its home office in Austin, Texas where substantially all of its approximately 300 employees are located.

62

Due to the business of accepting funds to pay future obligations in later years and the underlying economics, the relevant factors affecting the Company’s overall business and profitability include the following:

 ● the level of sales and premium revenues collected

 ● the volume of life insurance and annuity business in force

 ● persistency of policies and contracts

 ● the ability to price products to earn acceptable margins over benefit costs and expenses

 ● return on investments sufficient to produce acceptable spread margins over interest crediting rates

 ● investment credit quality which minimizes the risk of default or impairment

 ● levels of policy benefits and costs to acquire business

 ● the ability to manage the level of operating expenses

 ● effect of interest rate changes on revenues and investments including asset and liability matching

 ● maintaining adequate levels of capital and surplus

 ● corporate tax rates and the treatment of financial statement items under tax rules and accounting

 ● actual levels of surrenders, withdrawals, claims and interest spreads

 ● changes in assumptions for amortization of deferred policy acquisition expenses and deferred sales inducements

 ● changes in the fair value of derivative index options and embedded derivatives pertaining to fixed-index life and annuity products

 ● pricing and availability of adequate counterparties for reinsurance and index option contracts

 ● litigation subject to unfavorable judicial development, including the time and expense of litigation

The Company monitors these factors continually as key business indicators. The discussion that follows in this Item 2 includes these indicators and presents information useful to an overall understanding of the Company's business performance for the nine months ended September 30, 2020, incorporating required disclosures in accordance with the rules and regulations of the SEC.

Insurance Operations - Domestic

National Western is currently licensed to do business in all states, except New York, and the District of Columbia. Products marketed are annuities, universal life insurance, fixed-index universal life, and traditional life insurance, which include both term and whole life products. Domestic sales in terms of premium levels have historically been more heavily weighted toward annuities. Most of these annuities can be sold either as tax qualified or non-qualified products. More recently, a greater proportion of sales activity has been derived from single premium life insurance products, predominantly those with an equity-index crediting mechanism. Presently, nearly all of National Western's domestic life premium sales come from single premium life products. At September 30, 2020, National Western maintained approximately 114,500 annuity contracts in force and 47,000 domestic life insurance policies in force representing nearly $3.5 billion in face amount of coverage.

National Western markets and distributes its domestic products primarily through independent national marketing organizations ("NMOs"). These NMOs assist the Company in recruiting, contracting, and managing independent agents. National Western's agents are independent contractors who are compensated on a commission basis. It currently has approximately 28,300 domestic independent agents contracted.

Although reported separately for segment disclosure purposes, effective January 31, 2019, domestic insurance operations include the activities of Ozark National. Ozark National is a Missouri domiciled, stock life insurance company currently licensed to conduct business in thirty states. Organized and incorporated in 1964, its largest markets by state are Missouri, Iowa, Minnesota, Nebraska, and Kansas. Ozark National utilizes a unique distribution system to market its flagship Balanced Program which consists of a coordinated sale of a non-participating whole life insurance product with a mutual fund investment product offered through its affiliated broker-dealer, NIS. Due to Ozark National's coordinated sale, their agents hold a securities license in addition to an insurance license. At September 30, 2020, Ozark National maintained approximately 180,000 life insurance policies in force representing $6.1 billion in face amount of coverage. It maintains its home office facility in Kansas City, Missouri where its approximately 70 employees are located.

63

Insurance Operations - International

National Western's international operations had generally focused on foreign nationals in upper socioeconomic classes of other countries. The Company did not conduct business or maintain offices or employees in any other country, but historically did accept applications at its home office in Austin, Texas, and issued policies from there to non-U.S. residents. Insurance products issued were primarily to residents of countries in South America consisting of product offerings not available in the local markets. International life insurance products issued to international residents were almost entirely universal life and traditional life insurance products.

Issuing universal life and traditional life insurance policies to residents of countries in these different regions had provided diversification that helped to minimize large fluctuations that could arise due to various economic, political, and competitive pressures occurring from one country to another. These policies also provided diversification of earnings relative to the Company's domestic life insurance segment. The Company continues to service and maintain a block of international policies in force. At September 30, 2020, National Western had approximately 46,500 international life insurance policies in force representing nearly $12.7 billion in face amount of coverage.

There were some inherent risks of accepting international applications which are not present within the domestic market that were reduced substantially by the Company in several ways. As previously described, National Western accepted applications from foreign nationals of other countries in upper socioeconomic classes who had substantial financial resources. This targeted customer base, coupled with National Western's conservative underwriting practices, have historically resulted in claims experience, due to natural causes, similar to that in the United States. The Company has minimized exposure to foreign currency risks by requiring payment of premiums and claims in United States dollars. In addition, the Company adopted an extensive anti-money laundering compliance program in order to fully comply with all applicable U.S. monitoring and reporting requirements pertaining to money laundering and other illegal activities. All of the above served to minimize risks.

SALES

Life Insurance

The following table sets forth information regarding life insurance sales activity as measured by total premium for single premium life insurance products and annualized first year premiums for all other life insurance products. While the figures shown below are in accordance with industry practice and represent the amount of new business sold during the periods indicated, they are considered a non-GAAP financial measure. The Company believes sales are a measure of distribution productivity and are a leading indicator of future revenue trends. However, revenues are driven by sales in prior periods as well as in the current period and therefore, a reconciliation of sales to revenues is not meaningful or determinable.

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2020		2019	2020	2019
	(In thousands)
Single premium life	$	56,610	51,929	141,557	127,496
Traditional life	798		1,189	2,139	3,840
Universal life	—		20	6	113
Totals	$	57,408	53,138	143,702	131,449

64

Life insurance sales, as measured by total and annualized first year premiums, increased 8% in the third quarter of 2020 as compared to the third quarter of 2019 reflecting the current recovery in new sales activity from the contraction earlier in 2020 due to the COVID-19 pandemic. Sales for the three months ended September 30, 2020, included $0.8 million from Ozark National representing their traditional life sales activity. This amount is a decline from $1.2 million in sales achieved in the third quarter of 2019 indicative of Ozark National's business model which is heavily dependent upon in person contact for agent recruiting and obtaining applications for coverage from prospective policyholders. For the nine months ended September 30, 2020, total life insurance sales increased 9% from the level in 2019 representative of the strong sales momentum in the first quarter prior to the impacts of the COVID-19 social distancing protocols and the subsequent resumption in sales activity as states opened up their sheltering requirements. Included in these nine month amounts were $2.1 million and $3.7 million in sales from Ozark National for 2020 and 2019, respectively.

National Western's life insurance product portfolio includes single premium universal life ("SPUL") and equity-index universal life ("EIUL") products as well as hybrids of the EIUL and SPUL products, combining features of these core products. Equity-index universal life products have been the predominant product sold in the domestic life market for a number of years. Most of these sales are single premium mode products (one year, five year, or ten year) designed for transferring accumulated wealth tax efficiently into life insurance policies with limited underwriting due to lesser net insurance amounts at risk (face amount of the insurance policy less cash premium contributed). These products were designed and implemented years ago targeting the accumulated savings of the segment of the population entering their retirement years. The wealth transfer life products have been valuable offerings for the Company's distributors as evidenced by their comprising over 98% of total life sales in the first nine months of 2020.

The average new policy face amounts, excluding insurance riders, since 2016 are as shown in the following table.

	Average New Policy Face Amount
	NWLIC Domestic	Ozark National	NWLIC International
Year ended December 31, 2016	149,200	—	327,300
Year ended December 31, 2017	148,100	—	299,300
Year ended December 31, 2018	162,600	—	290,900
Year ended December 31, 2019	179,900	45,200	—
Nine Months Ended September 30, 2020	186,600	44,800	—

Contracts issued to international residents historically had larger face amounts of life insurance coverage per policy compared to those issued to domestic policyholders. The Company's efforts were directed toward accepting applications from upper socioeconomic residents of international countries. National Western's average face amount of insurance coverage per policy for domestic life insurance contracts has exhibited an upward trend reflecting the shift in sales toward single premium life products, primarily fixed-index, as part of its wealth transfer strategy for domestic life sales.

65

The table below sets forth information regarding life insurance in force for each date presented.

	Insurance In Force as of
	September 30,		December 31,
	2020		2019
	($ in thousands)
National Western
Universal life:
Number of policies	31,720		33,760
Face amounts	$	4,435,110	4,746,100
Traditional life:
Number of policies	26,670		28,400
Face amounts	$	2,446,590	2,671,120
Fixed-index life:
Number of policies	35,120		36,170
Face amounts	$	9,226,100	9,635,810
Total life insurance:
Number of policies	93,510		98,330
Face amounts	$	16,107,800	17,053,030
Ozark National
Total life insurance (all traditional):
Number of policies	180,050		183,380
Face amounts	$	6,079,480	6,246,800

At September 30, 2020, National Western’s face amount of life insurance in force was comprised of $12.6 billion from the international line of business and $3.5 billion from the domestic line of business. At December 31, 2019, these amounts were $13.7 billion and $3.4 billion for the international and domestic lines of business, respectively.

Annuities

The following table sets forth information regarding the Company's annuity sales activity as measured by single and annualized first year premiums. Similar to life insurance sales, these figures are considered a non-GAAP financial measure but are shown in accordance with industry practice and depict National Western's sales productivity.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Fixed-index annuities	$	76,255	55,865	221,992	171,483
Other deferred annuities	1,875		3,898	5,475	11,747
Immediate annuities	2,270		140	10,991	1,873
Totals	$	80,400	59,903	238,458	185,103

66

Annuity sales increased 34% in the third quarter of 2020 compared to 2019 and were 29% higher in the nine months ended September 30, 2020 relative to the comparable period in 2019. The increased sales activity, in the midst of the COVID-19 pandemic, reflects National Western's expansion of its sales and marketing personnel beginning in the second half of 2019 and a related expansion of sales and marketing initiatives in this line of business.

The Company's mix of annuity sales has historically shifted with interest rate levels and the relative performance of the equity market. With the decline in interest rates subsequent to the subprime crisis, fixed-index products have comprised the majority of annuity sales generally accounting for 90% or more of all annuity sales the past several years. During the first nine months of 2020, this percentage approximated 93% reflecting both the historically low levels in interest rates and the overall upward trend in equities since bottoming out in 2009 during the financial crisis at that time. For all fixed-index products, the Company purchases over the counter call options to hedge the equity return feature. The options are purchased relative to the issuance of the annuity contracts in such a manner to minimize timing risk. Generally, the index return during the indexing period (if the underlying index increases) becomes a component in a formula (set forth in the annuity), the result of which is credited as interest to contract holders electing the index formula crediting method at the beginning of the indexing period. The formula result can never be less than zero with these products. The Company does not deliberately mismatch or under hedge for the equity feature of the products. Fixed-index products also provide the contract holder the alternative to elect a fixed interest rate crediting option.

With the advent of a low interest rate policy engineered by the Federal Reserve in response to the subprime financial crisis, Company management evaluated the potential ramifications of continuing a high level of annuity sales in a depressed interest rate environment. Under the auspices of the Company's enterprise risk management ("ERM") processes, taking into consideration the Federal Reserve's announced intention to maintain interest rates at historically reduced levels over a prolonged period of time, the decision was made to curtail new sales to desired levels in order to minimize the level of assets added at low yield rates. While National Western does not subsidize its interest crediting rates on new policies in order to obtain market share, the Company's ERM considerations determined that managing to a lower level of annuity sales was prudent given the environment.

In addition to the above, National Western, similar to other annuity product providers, faced a scenario of declining yields on its investment portfolio as securities backing annuity policies and their credited rates were subsequently reinvested at substantially lower yields in the depressed interest rate environment. The compression on interest rate margins resulted in decrements to fixed interest rate renewal rates provided to annuity contractholders often to the minimum interest rate guarantee levels prescribed by state insurance regulators under non-forfeiture laws. The low renewal interest crediting rates discouraged repeat sales to existing clients and prompted a movement toward competitor annuities that offered multi-year interest rate guarantees.

As a result of the foregoing, the Company initiated rebuilding of sales momentum in its annuity sales. In the latter half of 2019, it added to its marketing staff individuals with extensive experience and expertise in annuity production in the life insurance industry and began developing products targeting new channels of distribution in addition to its current partnerships with national marketing organizations.

The level of annuity business in force requires a focused discipline on asset/liability analysis. The Company monitors its asset/liability matching within the self-constraints of desired capital levels and risk tolerance. National Western's capital level remains substantially above industry averages and regulatory targets. Management has performed analyses of the capital strain associated with incrementally higher levels of annuity new business and determined that National Western's capital position is more than sufficient to handle an increase in sales activity.

67

The following table sets forth information regarding annuities in force for each date presented.

	Annuities In Force as of
	September 30,		December 31,
	2020		2019
	($ in thousands)
Fixed-index annuities
Number of policies	68,590		70,790
GAAP annuity reserves	$	5,260,656	5,467,786
Other deferred annuities
Number of policies	33,960		36,550
GAAP annuity reserves	$	1,297,869	1,420,237	(1)
Immediate annuities
Number of policies	11,940		12,530
GAAP annuity reserves	$	368,333	349,389
Total annuities
Number of policies	114,490		119,870
GAAP annuity reserves	$	6,926,858	7,237,412

(1) Revised to correct for an adjustment related to the understatement of reserve liabilities of $15.0 million. See Note (1) Consolidation and Basis of Presentation in the accompanying Notes to Condensed Consolidated Financial Statements included in this report.

Impact of Recent Business Environment

The Company's business is generally aided by an economic environment experiencing growth, whether moderate or vibrant, characterized by improving employment data and increases in personal income. Important metrics indicating sustained economic growth over the longer term principally revolve around employment and confidence, both consumer and business sentiment.

While the morbidity exposure of COVID-19 to the life insurance industry is uncertain at this point, it is not expected to result in significant excess mortality claims. The Company (National Western and Ozark National) has incurred approximately $3.6 million in net death claims for which COVID-19 was identified as the cause of death. The biggest near-term risk to life insurance companies has been the decline in value of invested assets due to downgrades in credit market securities, derivative investments experiencing fair value declines resulting in unrealized losses, impairment-related losses or sizable additions being made to the allowance for current credit expected losses in financial statements. Consequently, there has been balance sheet asset deterioration, charges to capital, and lower reported earnings.

In recent years, in the attempt to acquire additional investment yield in the low rate environment, life insurers substantially increased allocations to BBB- rated bonds. In a recession, many of these investment grade corporate credits are at risk for downgrades, as well as the potential to default. Risk-based capital (RBC) formulas assess higher required capital charges as investment quality declines. A meaningful shift of BBB- rated debt securities to non-investment grade categories could have significant implications in terms of required capital levels which would depress RBC ratios of impacted insurers. Life insurance companies also have a large exposure to real estate in its investment portfolios through commercial mortgage, direct real estate investment, and mortgage-backed securities. These investments are highly dependent upon occupancy and payment of rent and lease obligations. The quarantine and shelter-at-home lockdown affect the ability to meet these payment obligations.

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Life insurance revenues are driven more by renewal premiums than sales. Most state insurance departments have issued directives instructing insurers to allow premium payments to fall into arrears. New life insurance sales face the challenge of having to forego face-to-face consultation with agents and distributors. In addition, full medical underwriting which is a cornerstone of evaluating risk in an insurer making the decision to offer coverage and at what level of coverage will likely be unavailable or difficult to complete as medical test for life insurance applications will not be considered as "essential" in the pandemic environment.

With regard to the credit market, although not probable in the current environment, industry analysts and observers generally agree that a sudden jump in interest rate levels would be harmful to life insurers with interest-sensitive products as it could provide an impetus for abnormal levels of product surrenders and withdrawals at the same time fixed debt securities held by insurers declined in market value. Ultimately, a mix of monetary policy adjustments, fiscal policy, and economic fundamentals will determine the future direction of interest rate movements and the speed of such shifts. It is uncertain at what pace interest rate movements may occur in the future and what impact, if any, such movements would have on the Company's business, results of operations, cash flows, or financial condition.

In an environment such as this, the need for a strong capital position that can cushion against unexpected bumps is critical for stability and ongoing business activity. The Company's operating strategy continues to be focused on maintaining capital levels substantially above regulatory and rating agency requirements. Our business model is predicated upon steady growth in invested assets while managing the block of business within profitability objectives. A key premise of our financial management is maintaining a high quality investment portfolio, well matched in terms of duration with policyholder obligations, that continues to outperform the industry with respect to adverse impairment experience. This discipline enables the Company to sustain resources more than adequate to fund future growth and absorb abnormal periods of cash outflows.

RESULTS OF OPERATIONS

The Company's Condensed Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In addition, the Company regularly evaluates operating performance using non-GAAP financial measures which exclude or segregate derivative and realized investment gains and losses from operating revenues. Similar measures are commonly used in the insurance industry in order to assess profitability and results from ongoing operations. The Company believes that the presentation of these non-GAAP financial measures enhances the understanding of the Company's results of operations by highlighting the results from ongoing operations and the underlying profitability factors of the Company's business. The Company excludes or segregates derivative and realized investment gains and losses because such items are often the result of events which may or may not be at the Company's discretion and the fluctuating effects of these items could distort trends in the underlying profitability of the Company's business. Therefore, in the following sections discussing condensed consolidated operations and segment operations, appropriate reconciliations have been included to report information management considers useful in enhancing an understanding of the Company's operations to reportable GAAP balances reflected in the Condensed Consolidated Financial Statements.

Consolidated Operations

Premiums and other revenues. The following details Company revenues.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Universal life and annuity contract charges	$	40,303	37,840	112,478	112,703
Traditional life premiums	22,693		24,099	68,956	65,492
Net investment income (excluding derivatives)	98,159		105,160	296,759	325,084
Other revenues	3,977		3,273	15,217	13,652
Derivative gain (loss)	31,520		3,296	(34,865)	63,127
Net realized investment gains (losses)	6,050		(502)	12,660	3,702
Total revenues	$	202,702	173,166	471,205	583,760

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Universal life and annuity contract charges - Revenues for universal life and annuity contracts were lower for the first nine months in 2020 compared to 2019 with the component sources shown below. Revenues for universal life and annuity products consist of policy charges for the cost of insurance, administration charges, surrender charges assessed against policyholder account balances, and amortization of deferred premium loads less reinsurance premiums, as shown in the following table.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Contract Revenues:
Cost of insurance and administrative charges	$	30,975	31,788	93,122	94,119
Surrender charges	6,192		8,633	21,219	25,608
Other charges	7,668		1,831	11,007	6,268
Gross contract revenues	44,835		42,252	125,348	125,995
Reinsurance premiums	(4,532)		(4,412)	(12,870)	(13,292)
Net contract revenues	$	40,303	37,840	112,478	112,703

Cost of insurance charges were $24.6 million in the quarter ended September 30, 2020 compared to $25.4 million in the third quarter of 2019, and were $74.2 million for the nine months ended September 30, 2020 compared to $76.7 million for the same period in 2019. Cost of insurance charges typically trend with the size of the universal life insurance block in force and the amount of new business issued during the period. The volume of universal life insurance in force at September 30, 2020 declined to $13.7 billion from approximately $14.4 billion at December 31, 2019 and $15.6 billion at December 31, 2018. Administrative charges pertaining to new business issued were $6.4 million for the three months ended September 30, 2020 and $6.4 million for the same period in 2019, and increased to $18.9 million for the first nine months of 2020 compared to $17.4 million for the first nine months of 2019, reflecting higher sales activity in the current periods.

Surrender charges assessed against policyholder account balances upon withdrawal decreased in the three and nine months ended September 30, 2020 versus the comparable prior year periods. While the Company earns surrender charge income that is assessed upon policy terminations, the Company's overall profitability is enhanced when policies remain in force and additional contract revenues are realized and the Company continues to make an interest rate spread equivalent to the difference it earns on its investments and the amount that it credits to policyholders. In the three and nine months ended September 30, 2020, lapse rates on annuity products were higher than the prior year periods. However, surrender charge income recognized is also dependent upon the duration of policies at the time of surrender (i.e. later duration policy surrenders have lower surrender charges assessed and earlier policy surrenders having a higher surrender charge assessed). The lower surrender charge revenue reflects later duration policies terminating having lower surrender charges.

Other charges include the net amortization into income of the premium load on single premium life insurance products which is deferred at the inception of the policy. As these products have become a substantial portion of domestic life insurance sales, the amortization of accumulated deferrals has surpassed current period premium loads deferred. As part of the Company's annual unlocking analysis performed in the third calendar quarter, a prospective unlocking of the unearned revenue reserve was done in both 2020 and 2019. The effect of the unlocking in the three and nine months ended September 30, 2020 was an increase of $5.9 million in other charges revenue while the effect in the three and nine months ended September 30, 2019 was an increase of $0.5 million. Refer to the Amortization of Deferred Policy Acquisition Costs and Value of New Business Acquired later in this section for further discussion of the Company's unlocking process.

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Traditional life premiums - Traditional life premiums include the activity of Ozark National. Ozark National's principal product is a non-participating whole life insurance policy with premiums remitted primarily on a monthly basis. The product is sold in tandem with a mutual fund investment product offered through its broker-dealer affiliate, NIS. Traditional life insurance premiums for products such as whole life and term life are recognized as revenues over the premium-paying period. A sizable portion of National Western's traditional life business resided in the International Life segment. However, National Western's overall life insurance sales focus has historically been primarily centered around universal life products. The addition of Ozark National's business of repetitive paying permanent life insurance adds an important complement to National Western's life insurance sales. Included in the amount for the quarter ended September 30, 2020 is $18.5 million of life insurance renewal premium from Ozark National compared to $18.7 million in the third quarter of 2019. For the nine months ended September 30, 2020 and 2019, the Ozark National life insurance renewal premium amounts were $56.1 million and $50.3 million, respectively. Universal life products, especially National Western's equity indexed universal life products, which offer the opportunity for consumers to acquire life insurance protection and receive credited interest linked in part to an outside market index, have been the more popular product offerings in the Company's markets.

Net investment income - To ensure the Company will be able to honor future commitments to policyholders and provide a financial return, the funds received as premium payments and deposits are invested in high quality investments, primarily fixed maturity debt securities. The income from these investments is closely monitored by the Company due to its significant impact on the business. A detail of net investment income (with and without index option gains and losses) is provided below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Gross investment income:
Debt and equities	$	92,892	99,204	276,971	304,755
Mortgage loans	3,350		2,922	8,974	9,097
Policy loans	812		883	2,447	2,590
Short-term investments	261		845	1,959	2,054
Other invested assets	1,610		1,897	8,555	8,479
Total investment income	98,925		105,751	298,906	326,975
Less: investment expenses	766		591	2,147	1,891
Net investment income (excluding derivatives)	98,159		105,160	296,759	325,084
Derivative gain (loss)	31,520		3,296	(34,865)	63,127
Net investment income (loss)	$	129,679	108,456	261,894	388,211

For the nine months ended September 30, 2020, debt and equity securities generated approximately 93% of total net investment income, excluding derivative gain (loss). The Company's strategy is to invest substantially all of its cash flows in fixed debt securities within its guidelines for credit quality, duration, and diversification. National Western's debt and equity securities investment income continues to experience higher yielding debt securities maturing or being called by borrowers and being replaced with lower yielding securities in the current interest rate environment. Investment yields on new bond purchases during the first nine months of 2020 approximated 3.47% as compared to the 4.06% yield achieved during the full year 2019. During the third quarter of 2020, interest rate levels were relatively level with the ten-year treasury bond increasing a few basis points. While credit spreads narrowed during the third quarter, the ongoing strategy of purchasing slightly longer duration securities helped to partially offset the low rate rate environment. National Western's weighted average portfolio yield was 3.72% at September 30, 2020 declining from 3.74% at June 30, 2020 and 3.78% at December 31, 2019. Ozark National's weighted average portfolio yield at September 30, 2020 was 3.69%.

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Changes in fair values of equity securities are included in net investment income in the Condensed Consolidated Statements of Earnings (Loss). For the three months ended September 30, 2020 and 2019, unrealized gains of $0.9 million and $0.2 million, respectively, are included in investment income. For the nine months ended September 30, unrealized losses of $3.2 million in 2020 are netted in investment income while unrealized gains of $2.2 million are included in investment income in the same period for 2019. The carrying value of the Company's portfolio of equity securities was $18.6 million at September 30, 2020.

The Company's mortgage loan activity in the first nine months of 2020 was initially impacted by the pandemic crisis and the low interest rate levels which subsequently materialized. This environment slowed down the underwriting of new loan applications until clarity regarding the impacts of closing down the economy upon commercial real estate became available. The portfolio balance has increased to $302.7 million at September 30, 2020 from $272.4 million at December 31, 2019. During the nine months ended September 30, 2020 the Company originated new mortgage loans in the amount of $41.5 million compared to $47.7 million in the comparable period of 2019.

As disclosed in the accompanying Notes to Condensed Consolidated Financial Statements included in this report, the Company adopted new accounting guidance pertaining to current expected credit losses on financial instruments ("CECL"). The adoption as of January 1, 2020 was reported as a change in accounting with initial balances recorded and charged to retained earnings. Remeasurement of the CECL allowance as of September 30, 2020 resulted in an increase in the allowance of $2.9 million for the nine months ended September 30, 2020 and an increase in allowance of $0.3 million for the three months ended September 30, 2020 which are included in gross investment income. The year-to-date allowance increase is allocated nearly $1.8 million for debt securities held to maturity and slightly under $1.2 million for mortgage loans.

In order to evaluate underlying profitability and results from ongoing operations, net investment income performance is analyzed excluding derivative gain (loss), which is a common practice in the insurance industry. Although this is considered a non-GAAP financial measure, Company management believes this financial measure provides useful supplemental information by removing the swings associated with fair value changes in derivative instruments. Net investment income and average invested assets shown below includes cash and cash equivalents. Net investment income performance is summarized as follows:

	Nine Months Ended September 30,
	2020			2019
	(In thousands)
Excluding derivatives:
Net investment income (loss)	$	296,759		325,084
Average invested assets, at amortized cost	$	10,982,593		10,902,847
Annual yield on average invested assets	3.60		%	3.98	%
Including derivatives:
Net investment income (loss)	$	261,894		388,211
Average invested assets, at amortized cost	$	11,108,071		10,963,371
Annual yield on average invested assets	3.14		%	4.72	%

The decline in average invested asset yield, excluding derivatives, for the first nine months of 2020 is due to the Company continuing to obtain low yields on newly invested cash flows as higher yielding assets mature or are called, the current period mark-to-market unrealized loss on equity securities, and the current period allowance for expected credit losses.

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The average yield on bond purchases during the nine months ended September 30, 2020 to fund National Western insurance operations was 3.47% representing a 2.18% spread over treasury rates. The weighted average quality of new purchases during the first nine months of 2020 was "BBB+" which was slightly higher than the "BBB" average quality of new investments in 2019 but consistent with periods prior to 2019. The composite duration of purchases during the first nine months of 2020 was longer than that of purchases made in previous years as the Company purchased a higher proportion of investments for its life insurance line of business which has a longer liability duration than that of the annuity line of business. The Company's general investment strategy is to purchase debt securities with maturity dates approximating ten years in the future. Accordingly, an appropriate measure for benchmarking the direction of interest rate levels for the Company's debt security purchases is the ten year treasury bond rate. After ending 2019 at a rate of 1.92%, the daily closing yield of the ten-year treasury bond ranged as low as 0.51% during the first nine months of 2020 finishing the period at 0.69%.

The pattern in average invested asset yield, including derivatives, incorporates increases and decreases in the fair value of index options purchased by National Western to support its fixed-index products. Fair values of the purchased call options recorded a net loss during the first nine months of 2020 while a net gain was recorded during the first nine months of 2019, corresponding to the movement in the S&P 500 Index during these periods (the primary index the fixed-index products employ). Refer to the derivatives discussion below for a more detailed explanation.

Other revenues - Other revenues pertain to NIS, the broker-dealer affiliate of Ozark National; the operations of Braker P III ("BP III"), a subsidiary created at the end of 2016 to own and manage a commercial office building BP III acquired; and the Company's previously owned two nursing home operations in Reno, Nevada and San Marcos, Texas.

Revenues associated with NIS were $2.6 million and $2.3 million in the quarter ended September 30, 2020 and 2019, respectively. For the nine months ended September 30, 2020 and 2019, NIS revenues were $7.2 million and $5.9 million, respectively. NIS revenues in the first nine months of 2019 were for the period subsequent to its acquisition effective January 31, 2019.

Revenues associated with BP III were $1.1 million and $1.0 million in the quarter ended September 30, 2020 and 2019, respectively, and $3.4 million and $3.0 million in the first nine months of 2020 and 2019, respectively. The increased revenues in 2020 reflect tenant leases that were subsequently entered into. The facility is currently fully leased.

The Company closed on the sale of its Reno nursing home operations effective February 1, 2019 and on the sale of its San Marcos nursing home operations effective May 1, 2019. Revenues of $4.3 million in the first nine months of 2019 include Reno and San Marcos operating revenues up to their respective sales dates. In addition, net gains from the sale of personal property and equipment at the Reno facility of $1.4 million are included in 2019 revenues.

The Company's acquisition of Ozark National (by National Western) included a contingent payment provision that was dependent upon the subsequent persistency of Ozark National's in force block of business that was acquired. The Company had been progressively accruing for this potential obligation in its financial statements. Prior to the end of the quarter ended June 30, 2020, the Company executed an agreement with the seller under which both parties agreed that the Company had fulfilled its payment obligation under the Stock Purchase Agreement executed October 3, 2018. Consequently, the Company reversed the contingent payment amounts previously accrued and recognized as Other revenues $4.1 million in the nine months ended September 30, 2020.

Derivative gain (loss) - Index options are derivative financial instruments used to hedge the equity return component of National Western's fixed-index products. Derivative gain or loss includes the amounts realized from the sale or expiration of the options. Since the index options do not meet the requirements for hedge accounting under GAAP, they are marked to fair value on each reporting date and the resulting unrealized gain or loss is reflected as a component of net investment income. As the options hedging the notional amount of policyholder contract obligations are purchased as close as possible to like amounts, the amount of the option returns tends to correlate closely with indexed interest credited.

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Gains and losses from index options are substantially due to changes in equity market conditions. Index options are intended to act as hedges to match the returns on the product's underlying reference index and the rise or decline in the index relative to the index level at the time of the option purchase which causes option values to likewise rise or decline. As income from index options fluctuates with the underlying index, the contract interest expense to policyholder accounts for the Company's fixed-index products also fluctuates in a similar manner and direction. For the three and nine months ended September 30, 2020 and 2019, the Company recorded realized and unrealized gains/(losses) from index options as shown below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Derivatives:
Unrealized gain (loss)	$	35,075	15,619	(58,077)	98,490
Realized gain (loss)	(3,555)		(12,323)	23,212	(35,363)
Total gain (loss) included in net investment income	$	31,520	3,296	(34,865)	63,127
Total contract interest	$	85,879	59,445	119,625	200,500

The economic impact of option performance in the Company's financial statements is not generally determined solely by the option gain or loss included in net investment income as there is a corresponding amount recorded in the contract interest expense line. The Company's profitability with respect to these options is largely dependent upon the purchase cost of the option remaining within the financial budget for acquiring options embedded in the product pricing. Option prices vary with interest rates, volatility, and dividend yields among other things. As option prices vary, the Company manages for the variability by making offsetting adjustments to product caps, participation rates, and management fees. For the periods shown, the Company's option costs have been close to or within the product pricing budgets.

The financial statement investment spread, the difference between investment income and interest credited to contractholders, is subject to variations from option performance during any given period. For example, many of the Company's equity-index annuity products provide for the collection of asset management fees. These asset management fees are assessed when returns on expiring options are positive, and they are collected prior to passing any additional returns above the assessed management fees to the policy contractholders. During periods of positive returns, the collected asset management fees serve to increase the financial statement spread by increasing option realized gains reported as investment income in an amount greater than interest credited to policy contractholders which is reported as contract interest expense. Asset management fees collected in the first nine months of 2020 and 2019 were approximately $24.7 million and $8.1 million, respectively. For the three months ended September 30, 2020 and 2019, asset management fees collected were $6.7 million and $0.5 million, respectively.

Net realized investment gains (losses) - Realized gains (losses) on investments include proceeds from bond calls, sales and impairment write-downs as well as gains and losses on the sale of real estate property. The net gains reported for the nine months ended September 30, 2020 consisted of gross gains of $12.7 million offset by gross losses of $0.0 million. The net gains reported for the nine months ended September 30, 2019 consisted of gross gains of $13.7 million offset by gross losses of $10.0 million.

In the third quarter of 2020, the Company sold a real estate investment property realizing a gain of $2.7 million. Included in gross gains in 2019 is $5.7 million from the sale of land and building associated with the nursing home in Reno, Nevada and a $3.2 million gain on the sale of the Company's former home office facility. Gross losses during the first nine months of 2019 include a $7.8 million other-than-temporary impairment of a debt security and a $2.0 million loss on the building pertaining to the San Marcos, Texas nursing home which was sold during the period.

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Prior to January 1, 2020 and the adoption of the new accounting guidance on current expected credit losses, the Company recorded impairment write-downs when a decline in value was considered to be other-than-temporary and full recovery of the investment was not expected. Impairments due to credit factors were recorded in the Company's Condensed Consolidated Statements of Earnings (Loss) while non-credit (liquidity) impairment losses were included in Condensed Consolidated Statements of Comprehensive Income (Loss). Under the new accounting guidance, credit loss allowances for available for sale debt securities are recorded following the same process previously applied for impairment accounting. Credit loss allowances are recorded through net investment income in the Condensed Consolidated Statements of Earnings (Loss). Impairment or valuation write-downs recorded prior to January 1, 2020 in the Company’s Condensed Consolidated Statement of Earnings (Loss) were completed under accounting guidance prior to the adoption of the accounting standard update 2016-13, Financial Instruments-Credit Losses. Such impairments related to bonds and totaled $1.9 million and $7.8 million for the three and nine months ended September 30, 2019.

The Company had recorded an impairment of $2.2 million during the first quarter of 2019 on real estate property associated with its nursing home operations in San Marcos, Texas based upon a pending agreement to sell the operations. Upon closing of the sale in the second quarter of 2019, a realized loss of $2.0 million was recognized and the impairment allowance reversed.

Benefits and Expenses. The following table details benefits and expenses.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Life and other policy benefits	$	26,940	39,918	94,005	101,764
Amortization of deferred policy acquisition costs and value of business acquired	50,800		22,998	111,937	86,573
Universal life and annuity contract interest	85,879		59,445	119,625	200,500
Other operating expenses	25,754		25,813	74,730	77,196
Totals	$	189,373	148,174	400,297	466,033

Life and other policy benefits - Death claim benefits, the largest component of policy benefits, were $50.9 million in the first nine months of 2020 compared to $50.3 million for the first nine months of 2019. Of the amount included in the nine months ended September 30, 2020, $25.1 million was associated with National Western business and $25.8 million pertained to Ozark National. In the nine months of 2019, these amounts were $27.7 million and $22.6 million for National Western and Ozark National, respectively, (Ozark National for the eight months subsequent to the January 31, 2019 acquisition date). Death claim amounts are subject to variation from period to period. For the first nine months of 2020, the number of National Western life insurance claims increased 20% from the comparable period in 2019 while the average dollar amount per net claim decreased to $40,000 from approximately $50,000. The increase in number of claims reflects additional claims reported through National Western's periodic search of the Social Security Administration's Master Death Claim database which was conducted in the first quarter of 2020. National Western's overall mortality experience has generally been consistent with or better than its product pricing assumptions. The average net claim for Ozark National during the 2020 and 2019 nine month periods was $15,300 and $16,100, respectively. Mortality exposure is managed through reinsurance treaties under which National Western's retained maximum net amount at risk on any one life is capped at $500,000. Ozark National's retained maximum net amount at risk is capped at $200,000 under its reinsurance treaties with limited exceptions related to the conversion of child protection and guaranteed insurability riders.

Both National Western and Ozark National have established specific coding to track the death claim experience associated with COVID-19. During the nine months ended September 30, 2020, National Western had incurred 51 death claims on life insurance policies in which the reported cause of death was due to the coronavirus (COVID-19) totaling a net claim amount (after reinsurance) of $2.4 million. During the same period, Ozark National incurred 76 confirmed COVID-19 death claims aggregating to a net claim amount of approximately $1.2 million. The COVID-19 claim activity is included in the claim disclosures made in the preceding paragraph.

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Life and other policy benefits also includes policy liabilities held associated with the Company's traditional life products, policies with life contingencies, and riders such as the guaranteed minimum withdrawal benefit rider ("WBR"), a popular rider to National Western's equity-indexed annuity products. Prior to unlocking adjustments, the increases in these liabilities for National Western were $6.2 million and $7.5 million in the quarters ended September 30, 2020 and 2019, respectively, and $16.9 million and $17.0 million, respectively, for the nine months then ended. In the third quarter of 2020, the Company unlocked its assumptions pertaining to the WBR benefit as well as mortality experience on payout annuities with life contingencies. The effect of the prospective unlocking in the three and nine months ended September 30, 2020 was a reduction in the policy liability balance in the amount of $11.9 million. In the three and nine months ended September 30, 2019 the Company also performed a prospective unlocking the effect of which was a $0.7 million increase in the policy liability balance.

Life and other policy benefits in the quarters ended September 30, 2020 and 2019 includes changes in traditional life reserves and miscellaneous benefit payments associated with Ozark National's operations of $7.6 million and $8.5 million, respectively, and $24.6 million and $21.3 million, respectively, for the nine months then ended. The amounts for the first nine months of 2019 reflect activity subsequent to the acquisition date of January 31, 2019.

Amortization of deferred policy acquisition costs and value of business acquired - Life insurance companies are required to defer certain expenses that vary with, and are primarily related to, the cost of acquiring new business. The majority of these acquisition expenses consist of commissions paid to agents, underwriting costs, and certain marketing expenses. Recognition of these deferred policy acquisition costs (“DPAC”) as an expense in the Condensed Consolidated Financial Statements occurs over future periods in relation to the expected emergence of profits priced into the products sold. This emergence of profits is based upon assumptions regarding premium payment patterns, mortality, persistency, investment performance, and expense patterns. Companies are required to review universal life and annuity contract assumptions periodically to ascertain whether actual experience has deviated significantly from that assumed. If it is determined that a significant deviation has occurred, the emergence of profits pattern is to be "unlocked" and reset based upon actual experience. DPAC balances are also adjusted each period to reflect current policy lapse or termination rates, expense levels and credited rates on policies compared to anticipated experience (“true-up”) with the adjustment reflected in current period amortization expense. In accordance with GAAP guidance, the Company must also write-off deferred acquisition costs and unearned revenue liabilities upon internal replacement of certain contracts as well as annuitizations of deferred annuities.

The following table identifies the effects of unlocking adjustments on DPAC balances recorded through amortization expense separate from recurring amortization expense components for the three and nine months ended September 30, 2020 and 2019.

Amortization of DPAC	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Unlocking adjustments	$	22,358	(8,643)	22,358	(8,643)
Other amortization components	26,597		29,680	83,933	89,348
Totals	$	48,955	21,037	106,291	80,705

Amortization expense for the three and nine months ended September 30, 2020 was comprised of DPAC amortization by National Western of $48.9 million and $105.9 million, respectively, and by Ozark National of $0.1 million and $0.4 million, respectively. Ozark National's deferred policy acquisition cost balance was initiated February 1, 2019 following its acquisition by National Western.

The Company's practice is to annually review during the third quarter its actuarial assumptions regarding the emergence of profits pertaining to its blocks of businesses and to update or "unlock" those assumptions which deviate significantly from actual experience. During the quarter ended September 30, 2020, the Company unlocked DPAC balances associated with its Life and Annuity segments the effect of which was to decrease DPAC balances by $22.4 million (and increase amortization expense). The Life DPAC balance was unlocked for assumptions involving lapse rates, mortality, and investment portfolio yield rates and related interest spreads. The Annuity DPAC balance was unlocked for assumptions concerning surrender rates, annuitization rates, investment portfolio yield rates, withdrawal benefit rider election rates, and mortality experience on payout annuities.

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During the quarter ended September 30, 2019, the Company unlocked DPAC balances associated with its Life and Annuity segments the effect of which was to increase DPAC balances by $8.6 million (and reduce amortization expense). The Life DPAC balance was unlocked for assumptions involving mortality, lapse rates, maintenance expenses, and investment portfolio yields and related interest spreads. The Annuity DPAC balance was unlocked for assumptions concerning surrender rates, annuitization rates, the election rate of the Company's withdrawal benefit rider, and the investment portfolio yield supporting annuity contract amounts.

The Company is required to evaluate its emergence of profits continually and management believes that the current amortization patterns of deferred policy acquisition costs are reflective of actual experience. It is the Company's practice, absent intervening events or experience, to annually perform any necessary DPAC balance unlockings in the third calendar quarter of each year.

As the DPAC balance is an asset on the Company's Condensed Consolidated Balance Sheets, GAAP provides for an earned interest return on the unamortized balance each period. The earned interest serves to increase the DPAC balance and reduce other amortization component expense. The rate at which the DPAC balance earns interest is the average credited interest rate on the Company's universal life and annuity policies in force, including credited interest on equity-indexed policies. The amount of earned interest on DPAC balances recorded for the three months ended September 30, 2020 and 2019 was $2.7 million and $2.6 million, respectively, decreasing other amortization component expense. The amount of interest earned on DPAC balances for the nine months ended September 30, 2020 and 2019 was $13.3 million and $8.2 million, respectively. The increased interest amount in the first nine months of 2020 reflects higher returns on equity-index products, particularly life insurance products..

As part of the purchase accounting required with the acquisition of Ozark National effective January 31, 2019, the Company recorded an intangible asset of $145.8 million referred to as the value of business acquired ("VOBA"). VOBA represents the difference between the acquired assets and liabilities of Ozark National measured in accordance with the Company's accounting policies and the fair value of these same assets and liabilities. The VOBA balance sheet amount is amortized following a methodology similar to that used for amortizing deferred policy acquisition costs. In the quarters ended September 30, 2020 and 2019, the Company's VOBA amortization expense was $1.8 million and $2.0 million, respectively, and $5.6 million and $5.9 million, respectively, for the nine months then ended. The amount for the first nine months of 2019 reflects eight months of amortization subsequent to the acquisition date of January 31, 2019.

Universal life and annuity contract interest - The Company closely monitors its credited interest rates on interest sensitive policies (National Western products), taking into consideration such factors as profitability goals, policyholder benefits, product marketability, and economic market conditions. As long term interest rates change, the Company's credited interest rates are often adjusted accordingly, taking into consideration the factors described above. The difference between yields earned on investments over policy credited rates is often referred to as the "interest spread".

National Western's approximated average credited rates through the first nine months, excluding and including equity-indexed products, were as follows:

	September 30,				September 30,
	2020		2019		2020		2019
	(Excluding fixed-index products)				(Including fixed-index products)
Annuity	1.93	%	1.94	%	2.04	%	2.02	%
Interest sensitive life	3.37	%	3.37	%	0.83	%	6.26	%

Contract interest reported in financial statements also encompasses the performance of the index options associated with the Company's fixed-index products. As previously noted, the market value changes of these derivative features resulted in net realized and unrealized gains/(losses) of $(34.9) million and $63.1 million for the nine months ended September 30, 2020 and 2019, respectively. These amounts consisted of realized gains of $23.2 million and unrealized losses of $(58.1) million for the year-to-date 2020 period, and realized losses of $(35.4) million and unrealized gains of $98.5 million for the comparable 2019 time frame. In the third quarter of 2020, this figure was comprised of realized losses of $(3.6) million and unrealized gains of $35.1 million. In the third quarter of 2019, the amount was made up of realized losses of $(12.3) million and unrealized gains of $15.6 million. These returns similarly increased/(decreased) the computed average credited rates for the periods shown above. Policyholders of equity-indexed products cannot receive an interest credit below 0% according to the policy contract terms.

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Contract interest expense includes other items which may increase or decrease reported contract interest in a particular reporting period. For the three and nine months ended September 30, 2020 and 2019, these other items include the amounts shown in the table below.

Contract Interest Expense	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Reserve changes	$	4,052	7,722	16,405	22,928
Unlocking adjustments	17,180		10,274	17,180	10,274
Asset management fees collected	(6,740)		(497)	(24,682)	(8,063)
Projected asset management fees	3,657		(6,811)	29,292	(27,138)
Other embedded derivative components	822		39	(6,455)	5,908
Totals	$	18,971	10,727	31,740	3,909

Contract interest expense includes reserve changes for immediate annuities, two tier annuities, excess death benefit reserves, excess annuitizations, and amortization of deferred sales inducement balances. These items are offset by policy charges assessed for policies having the withdrawal benefit rider (WBR). As changes in these items collectively impact contract interest expense, financial statement interest spread is also affected. Netted against reserve changes for the first nine months of 2020 is $18.0 million for assessed WBR policy charges compared to $17.0 million in the same period for 2019.

Generally, the impact of the market value change of index options on asset values aligns closely with the movement of the embedded derivative liability held for the Company's fixed-index products such that the net effect upon pretax earnings is negligible (i.e. net realized and unrealized gains/(losses) included in net investment income approximate the change in contract interest associated with the corresponding embedded derivative liability change). However, other aspects of the embedded derivatives can cause deviations to occur between the change in index option asset values included in net investment income and the change in the embedded derivative liability included in contract interest. As noted in the discussion of net investment income, the collection of asset management fees in a period can cause investment income to increase marginally higher than contract interest expense since these collected fees are deducted from indexed interest credited to policyholders. The increase in collected asset management fees for the three and nine months ended September 30, 2020 relative to their comparable periods in 2019 reflects the level of realized option gains incurred during these periods.

Accounting rules require the embedded derivative liability to include a projection of asset management fees estimated to be collected in the succeeding fiscal year due to the Company's historical practice of purchasing options priced to incorporate an expected probability of collecting asset management fees (referred to as "at the money hedging"). This projection for the embedded derivative liability is based upon the most recent performance of the reference equity index. Increases in projected asset management fees to be collected reduce contract interest expense while decreases in projected asset management fees to be collected increase contract interest expense. In the nine month periods ended September 30, 2020 and 2019 contract interest was increased by $29.3 million and decreased by $(27.1) million, respectively, for the projected change in asset management fees to be collected. In the second quarter of 2020, the Company changed its embedded derivative hedging process to incorporate "out of the money" hedging which reduces option costs and eliminates probability projections of collected asset management fees going forward. As the current inventory of annual hedges roll over during the next six months, the embedded derivative liability component for projected asset management fees to be collected will be phased out.

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Other embedded derivative components include changes pertaining to other modeling differences, changes in future interest adjustments, and the change in the host contract component of the embedded derivative products. In the first quarter of 2020, the Company incurred an additional charge to contract interest pertaining to an assumption regarding the embedded derivative option budget which was made several years ago when the Company's investment portfolio yield was higher. The combination of the embedded derivative option budget being out of date relative to the Company's current investment portfolio yield and the historically low interest rate levels introduced an embedded derivative floor which prevented the Company's contract interest expense from declining in tandem with the option value decreases recorded in net investment income. The additional contract interest charge in the quarter ended March 31, 2020 for this occurrence was $12.1 million. In the quarter ended June 30, 2020, the Company unlocked for this out of date embedded derivative option budget assumption to reflect the Company's current investment portfolio yield. This unlocking had the effect of removing the embedded derivative floor and reversing the $12.1 million contract interest charge recorded in the first quarter of 2020. As these amounts offset each other, contract interest for the three and nine month periods ended September 30, 2020 reflect no effect for this occurrence.

Another contract interest expense component is the amortization of deferred sales inducements. Similar to deferred policy acquisition costs, the Company defers sales inducements in the form of first year credited interest bonuses on annuity products that are directly related to the production of new business. These bonus interest charges are deferred and amortized using the same methodology and assumptions used to amortize other capitalized acquisition costs and the amortization is included in contract interest. In addition, deferred sales inducement balances are also reviewed periodically to ascertain whether actual experience has deviated significantly from that assumed (unlock) and are adjusted to reflect current policy lapse or termination rates, expense levels and credited rates on policies compared to anticipated experience (true-up). These adjustments, plus or minus, are included in contract interest expense. As previously discussed in the amortization of deferred policy acquisition costs section, the Company unlocked its assumptions for the annuity line of business in the third quarters of 2020 and 2019 including the deferred sales inducement balance. The effect of these prospective unlockings was to decrease the deferred sales inducement balance by $4.4 million and $0.7 million (and increase contract interest expense) during the three and nine month periods ended September 30, 2020 and 2019, respectively. These amounts are included in the previous table in the Unlocking adjustments line.

Other operating expenses - Other operating expenses consist of general administrative expenses, licenses and fees, commissions not subject to deferral, nursing home expenses, real estate expenses, brokerage expenses, and compensation costs. These expenses for the three and nine months ended September 30, 2020 and 2019 are summarized in the table that follows.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
General insurance expenses	$	9,553	7,980	30,670	30,669
Nursing home expenses	36		32	77	3,272
Compensation expenses	7,629		9,307	19,855	21,299
Commission expenses	2,927		3,110	8,502	7,483
Real estate expenses	1,395		1,323	4,335	3,833
Brokerage expenses (NIS)	1,372		1,196	3,745	3,108
Taxes, licenses and fees	2,842		2,865	7,546	7,532
Totals	$	25,754	25,813	74,730	77,196

General insurance expenses include software amortization expense associated with National Western's proprietary policy administration system which was phased into production over the past few years as well as other acquired software. Expenses pertaining to these items were $3.0 million and $2.9 million in the third quarter of 2020 and 2019, respectively, and $9.1 million and $9.0 million in the first nine months of 2020 and 2019, respectively. This category of expenses also includes employee benefit plan expenses for the various employee health and retirement plans the Company sponsors. Related expenses for the third quarter of 2020 and 2019 were $3.3 million and $2.1 million, respectively, and for the first nine months of 2020 and 2019 were $9.8 million and $6.0 million. Refer to Note (5) Pension and Other Postretirement Plans in the accompanying Notes to Condensed Consolidated Financial Statements in this report for discussion of the financial statement expenses of the Company's defined benefit pension plans. For the nine months ended September 30, 2019, general insurance expenses include a $3.3 million broker fee paid in connection with the acquisition of Ozark National and NIS which closed during this period.

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Nursing home expenses reflect the operations of the Company's two nursing home operations which were sold during 2019. The Reno, Nevada nursing home was sold effective February 1, 2019 while the San Marcos, Texas nursing home sale closed effective May 1, 2019. The Company must maintain the entities for a specified time period subsequent to each sale and incur various record safekeeping and other administrative expenses in the interim.

Compensation expenses include share-based compensation costs related to outstanding vested and nonvested stock appreciation rights ("SARs"), restricted stock units ("RSUs") and performance share units ("PSUs"). The related share-based compensation costs move in tandem not only with the number of awards outstanding but also with the movement in the market price of the Company's Class A common stock as a result of marking the SARs, RSUs, and PSUs to fair value under the liability method of accounting. Consequently, the related expense amount varies positive or negative in any given period. In the amounts shown above, share-based compensation expense totaled $(0.5) million in the third quarter of 2020 and $1.5 million in the third quarter of 2019. For the nine-month periods shown, share-based compensation expense was $(4.4) million in 2020 and $0.1 million in 2019. The negative expense levels reflect a change in the Company's Class A common share price from $290.88 at December 31, 2019 to $182.77 at September 30, 2020, and from $300.70 at December 31, 2018 to $268.37 at September 30, 2019. No performance share awards were granted in the first nine months of 2020 and 2019. Ozark National compensation expenses were $0.9 million and $0.8 million in the third quarter of 2020 and 2019, respectively, and $2.6 million and $1.9 million in the nine months ended September 30, 2020 and 2019, respectively.

Real estate expenses pertain to the commercial building operated by Braker P III. Expense increases in the 2020 periods relative to comparable 2019 periods reflect the addition of new tenants and associated operating expenses.

NIS brokerage expense in the first nine months of 2019 reflects its activity subsequent to the acquisition by the Company effective January 31, 2019.

Federal Income Taxes. Federal income taxes on earnings from operations reflect an effective tax rate of 19.4% for the nine months ended September 30, 2020 compared to 20.3% for the nine months ended September 30, 2019. The Federal corporate tax rate decreased to 21% effective in 2018 under the Tax Cuts and Jobs Act ("Tax Act") passed in December 2017. The Company's effective tax rate is typically lower than the Federal statutory rate due to tax-exempt investment income related to municipal securities and dividends-received deductions on income from stocks, absent other permanent tax items.

While the Company's overall effective tax rate remains close to the statutory rate level, the Company's current tax expense is elevated due to a provision of the Tax Act which imposed a limitation on the amount of tax reserves a life insurer is able to deduct in arriving at its taxable income. The limitation is the greater of net surrender value or 92.81% of the reserve method prescribed by the National Association of Insurance Commissioners. Implementation of this provision was required as of January 1, 2018 and the Company ultimately determined that the resultant tax reserve adjustment was a decrease of $332.9 million. The Tax Act provided that this tax reserve adjustment could be brought into taxable income ratably over a period of eight (8) years. Based upon the tax reserve adjustment derived, the effect of the Tax Act limiting the tax reserve deductible in the current tax computation serves to increase the Company's taxable income by approximately $41.6 million per year through 2025. At the Federal statutory rate of 21%, the impact upon current tax expense is an increase of approximately $8.7 million per year or approximately $2.2 million each quarter.

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Segment Operations

Summary of Segment Earnings

A summary of segment earnings/(losses) for the three and nine months ended September 30, 2020 and 2019 is provided below. The segment earnings/(losses) exclude realized gains and losses on investments, net of taxes. The 2019 amounts shown for Acquired Businesses represent results subsequent to their January 31, 2019 acquisition date.

	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Segment earnings (losses):
Three months ended:
September 30, 2020	$	(756)	26,557	(26,478)	3,661	3,062	6,046
September 30, 2019	$	(416)	7,835	5,581	4,493	2,892	20,385
Nine months ended:
September 30, 2020	$	998	44,769	(22,317)	12,144	11,581	47,175
September 30, 2019	$	1,205	28,322	37,118	11,287	13,026	90,958

Domestic Life Insurance Operations

A comparative analysis of results of operations for the Company's domestic life insurance segment is detailed below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Premiums and other revenues:
Premiums and contract revenues	$	17,734	11,387	40,971	32,897
Net investment income (loss)	21,201		12,885	23,293	51,379
Other revenues	10		49	40	113
Total premiums and other revenues	38,945		24,321	64,304	84,389
Benefits and expenses:
Life and other policy benefits	3,785		6,099	13,831	13,850
Amortization of deferred policy acquisition costs	10,540		2,181	16,322	8,898
Universal life insurance contract interest	20,352		11,267	17,831	45,693
Other operating expenses	5,185		5,297	15,123	14,437
Total benefits and expenses	39,862		24,844	63,107	82,878
Segment earnings (loss) before Federal income taxes	(917)		(523)	1,197	1,511
Provision (benefit) for Federal income taxes	(161)		(107)	199	306
Segment earnings (loss)	$	(756)	(416)	998	1,205

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Revenues from domestic life insurance operations include life insurance premiums on traditional type products and contract revenues from universal life insurance. Revenues from traditional products are simply premiums collected, while revenues from universal life insurance consist of policy charges for the cost of insurance, policy administration fees, and surrender charges assessed during the period. A comparative detail of premiums and contract revenues is provided below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Universal life insurance revenues	$	19,739	13,150	46,426	37,947
Traditional life insurance premiums	894		1,125	2,790	3,268
Reinsurance premiums	(2,899)		(2,888)	(8,245)	(8,318)
Totals	$	17,734	11,387	40,971	32,897

National Western's domestic life insurance in force, in terms of policy count, has been declining for some time. The pace of new policies issued has lagged the number of policies terminated from death or surrender causing a declining level of policies in force from which contract revenue is received. Consequently, the number of domestic life insurance policies in force has declined from 49,000 at December 31, 2018 to 47,900 at December 31, 2019, and to 47,000 at September 30, 2020. Policy lapse rates in the first nine months of 2020 approximated 6.5% compared to 6.0% and 6.5% in 2019 and 2018, respectively. The lapse rate in the first nine months of 2020 includes the effect of the pandemic induced economic crisis which caused consumers to access available sources of liquidity. While policy count rates have declined, the face amount of life insurance in force has increased from $3.2 billion at December 31, 2018 to less than $3.4 billion at December 31, 2019 and to more than $3.4 billion at September 30, 2020.

Universal life insurance revenues are also generated with the issuance of new business based upon amounts per application and percentages of the face amount (volume) of insurance issued. The number of domestic life policies issued in the first nine months of 2020 was 2% lower than in the comparable period for 2019 and the volume of insurance issued was 1% higher than that in 2019.

Universal life insurance revenues also include surrender charge income realized on terminating policies and, in the case of domestic universal life, amortization into income of the premium load on single premium policies which is deferred. The net premium load amortization was $11.0 million and $6.3 million in the nine months ended September 30, 2020 and 2019, respectively. The net amortization amount in 2020 includes $5.8 million from the Company's annual unlocking of actuarial assumptions during the third quarter.

Premiums collected on universal life products are not reflected as revenues in the Company's Condensed Consolidated Statements of Earnings (Loss) in accordance with GAAP. Actual domestic universal life premiums collected are detailed below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Universal life insurance:
First year and single premiums	$	56,330	52,044	141,191	127,596
Renewal premiums	5,084		4,835	13,474	13,847
Totals	$	61,414	56,879	154,665	141,443

During the past several years, sales have been substantially weighted toward single premium policies which do not have much in the way of recurring premium payments. These products are targeting wealth transfer strategies involving the movement of accumulated wealth in alternative investment vehicles, including annuities, into life insurance products. As a result, renewal premium levels have not been exhibiting a corresponding level of increase.

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Net investment income for this segment of business, excluding derivative gain/(loss), has been gradually increasing due to the increased new business activity described above (single premium policies) and a higher level of investments needed to support the corresponding growth in policy obligations, especially those for single premium policies. The increase in net investment income has been partially muted by lower investment yields from debt security investment purchases during this time frame. Net investment income also includes the gains and losses on index options purchased to back the index crediting mechanism on fixed-index universal products.

A detail of net investment income (loss) for domestic life insurance operations is provided below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Net investment income (excluding derivatives)	$	11,760	11,550	34,040	33,073
Derivative gain (loss)	9,441		1,335	(10,747)	18,306
Net investment income (loss)	$	21,201	12,885	23,293	51,379

As seen in the above table, reported net investment income (loss) includes the gains and losses on index options purchased to back the index crediting mechanism on fixed-index universal life products. The gain or loss on index options follows the movement of the S&P 500 Index (the primary index for the Company's fixed-index products) with realized gains or losses being recognized on the anniversary of each index option based upon the S&P 500 Index level at each expiration date relative to the index level at the time the index option was purchased, and unrealized gains and losses being recorded for index options outstanding based upon the S&P 500 Index at the balance sheet reporting date as compared to the index level at the time each respective option was purchased.

Life and policy benefits for a smaller block of business are subject to variation from period to period. Claim count activity during the first nine months of 2020 increased 22% compared to the first nine months of 2019 while the average net claim amount (after reinsurance) decreased to $29,200 from $35,100. The increased amount of claims is the result of the Company performing a search during the 1st quarter of 2020 of the Social Security Administration's Master Death data base for past dated unreported death claims. The low face amount per claim relative to current issued amounts of insurance per policy reflects the older block of domestic life insurance policies sold consisting of final expense type products (i.e. purchased to cover funeral costs). Claims on these older blocks of policies are more susceptible to not being reported timely to the Company. GAAP reporting requires that claims be recorded net of any cash value amounts that have been accumulated in the policies. The Company's overall mortality experience for this segment has been consistent with pricing assumptions.

As noted previously in the discussion of Results of Operations, the Company records true-up adjustments to DPAC balances each period to reflect current policy lapse or termination rates, expense levels and credited rates on policies as compared to anticipated experience with the adjustment reflected in current period amortization expense. To the extent required, unlocking adjustments may also be recorded to DPAC balances. The following table identifies the effects of unlocking adjustments on domestic life insurance DPAC balances recorded through amortization expense separate from recurring amortization expense components for the three and nine months ended September 30, 2020 and 2019.

Amortization of DPAC	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Unlocking adjustments	$	7,391	(360)	7,391	(360)
Other amortization components	3,149		2,541	8,931	9,258
Totals	$	10,540	2,181	16,322	8,898

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During the quarter ended September 30, 2020, the Company unlocked DPAC balances associated with its Domestic Life segment for mortality, lapse rates, and investment spread. The effect of the prospective unlocking was to decrease DPAC balances by $7.4 million (and increase amortization expense). During the quarter ended September 30, 2019, the Company unlocked DPAC balances for the same assumptions noted above the effect of which was to increase DPAC balances by $0.4 million (and decrease amortization expense).

In the Consolidated Operations discussion of amortization of deferred acquisition costs it was noted that interest earned on DPAC balances serves to offset (decrease) amortization expense and that the interest rate used is the crediting rate experience during the period. The decrease in amortization expense in 2020 year-to-date relative to 2019 reflects higher interest earned on universal life DPAC balances due to increased crediting rates resulting from greater realized gains from index options.

Contract interest expense includes the fluctuations that are the result of the effect upon the embedded derivative for the performance of underlying equity indices associated with fixed-index universal life products. For liability purposes, the embedded option in the Company's policyholder obligations for this feature is bifurcated and reserved for separately. Accordingly, the impact for the embedded derivative component in the equity-index universal life product is reflected in contract interest expense for approximately the same amounts as in net investment income for each respective period.

International Life Insurance Operations

A comparative analysis of results of operations for the Company's international life insurance segment is detailed below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Premiums and other revenues:
Premiums and contract revenues	$	21,551	25,065	67,479	74,905
Net investment income (loss)	10,354		6,872	12,507	30,165
Other revenues (loss)	6		25	54	79
Total premiums and other revenues	31,911		31,962	80,040	105,149
Benefits and expenses:
Life and other policy benefits	2,278		5,074	9,293	10,195
Amortization of deferred policy acquisition costs	6,496		(3,047)	19,392	11,195
Universal life insurance contract interest	(14,023)		14,637	(15,368)	33,967
Other operating expenses	5,434		5,493	13,047	14,278
Total benefits and expenses	185		22,157	26,364	69,635
Segment earnings (losses) before Federal income taxes	31,726		9,805	53,676	35,514
Provision (benefit) for Federal income taxes	5,169		1,970	8,907	7,192
Segment earnings (loss)	$	26,557	7,835	44,769	28,322

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As with domestic life operations, revenues from the international life insurance segment include both premiums on traditional type products and contract revenues from universal life insurance. A comparative detail of premiums and contract revenues is provided below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Universal life insurance revenues	$	20,910	23,767	65,386	71,987
Traditional life insurance premiums	2,274		2,822	6,718	7,892
Reinsurance premiums	(1,633)		(1,524)	(4,625)	(4,974)
Totals	$	21,551	25,065	67,479	74,905

Universal life revenues and operating earnings are largely generated from the amount of life insurance in force. The volume of in force for this segment, primarily universal life, has contracted from $15.4 billion at December 31, 2018 to $13.7 billion at December 31, 2019 and to $12.7 billion at September 30, 2020.

Another component of international universal life revenues includes surrender charges assessed upon surrender of contracts by policyholders. While the termination rate has edged higher, the resulting additional surrender charge fee revenue has been less due to lower surrender charge fees assessed later in the contract term according to the policy contract provisions. The following table illustrates National Western's recent international life termination experience.

	Amount in $'s	Annualized Termination Rate
	(millions)
Volume In Force Terminations
Nine Months Ended September 30, 2020	1,044.4	10.2	%
Year ended December 31, 2019	1,671.5	10.9	%
Year ended December 31, 2018	1,706.3	10.0	%
Year ended December 31, 2017	2,309.7	12.2	%
Year ended December 31, 2016	2,340.6	11.6	%
Year ended December 31, 2015	2,659.1	12.3	%

As noted previously, premiums collected on universal life products are not reflected as revenues in the Company's Condensed Consolidated Statements of Earnings (Loss) in accordance with GAAP. Actual international universal life premiums collected are detailed below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Universal life insurance:
First year and single premiums	$	—	19	—	954
Renewal premiums	13,756		16,857	40,733	50,496
Totals	$	13,756	16,876	40,733	51,450

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National Western's most popular international products were its fixed-index universal life products in which the policyholder could elect to have the interest rate credited to their policy account values linked in part to the performance of an outside equity index. These products issued were not generally available in the local markets when sold. Included in the totals in the above table are collected premiums for fixed-index universal life products of approximately $23.9 million and $31.0 million for the first nine months of 2020 and 2019, respectively. The declining trend in renewal premiums during these periods corresponds with the decline in policies in force due to increased termination activity as discussed above.

As previously noted, net investment income and contract interest include period-to-period changes in fair values pertaining to call options purchased to hedge the interest crediting feature on the fixed-index universal life products. With the relatively large size of the fixed-index universal life block of business, the period-to-period changes in fair values of the underlying options have a significant effect on net investment income and universal life contract interest. A detail of net investment income for international life insurance operations is provided below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Net investment income (excluding derivatives)	$	6,761	7,260	20,407	22,960
Derivative gain (loss)	3,593		(388)	(7,900)	7,205
Net investment income (loss)	$	10,354	6,872	12,507	30,165

The gain or loss on index options follows the movement of the reference indice with realized gains or losses being recognized on the anniversary of each index option based upon the reference indice level at expiration date relative to the index level at the time the index option was purchased. Unrealized gains and losses are recorded for index options outstanding based upon their fair values, largely determined by the reference indice level, at the balance sheet reporting date as compared to the original purchase cost of each respective option.

Life and policy benefits primarily consist of death claims on policies. National Western's clientèle for international products are generally wealthy individuals with access to U.S. dollars and quality medical care. Consequently, the amounts of coverage purchased historically tended to be larger amounts. Life and policy benefit expense for the international life segment reflects the larger policies historically purchased, however mortality due to natural causes is comparable to that in the United States. The Company's maximum risk exposure per insured life is capped at $500,000 through reinsurance. The average international life net claim amount (after reinsurance) in the first nine months of 2020 decreased to $142,000 from $175,500 in the first nine months of 2019 while the number of claims incurred increased 11%. Measured over a period of years, the Company's international life mortality experience has generally been better than pricing assumptions.

The Company records true-up adjustments to DPAC balances each period to reflect current policy lapse or termination rates, expense levels, and credited rates on policies as compared to anticipated experience as well as unlocking adjustments as necessary. The following table identifies the effects of unlocking adjustments on international life insurance DPAC balances recorded through amortization expense separate from recurring amortization expense components for the three and nine months ended September 30, 2020 and 2019.

Amortization of DPAC	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Unlocking adjustments	$	(20)	(10,860)	(20)	(10,860)
Other amortization components	6,516		7,813	19,412	22,055
Totals	$	6,496	(3,047)	19,392	11,195

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During the quarter ended September 30, 2020, the Company unlocked DPAC balances associated with its International Life segment for lapse rates, mortality, and investment spread. The effect of the prospective unlocking was to marginally increase DPAC balances (and decrease amortization expense). In the quarter ended September 30, 2019, DPAC balances were unlocked for mortality, maintenance expenses, lapse rates, and investment spread the effect of which was to increase DPAC balances by $10.9 million and decrease amortization expense.

Contract interest expense includes fluctuations that are the result of the effect upon the embedded derivative for the performance of underlying equity indices associated with fixed-index universal life products. For liability purposes, the embedded option in the Company's policyholder obligations for this feature is bifurcated and reserved for separately. Accordingly, the impact of the embedded derivative component in the equity-index universal life product is reflected in the contract interest expense for approximately the same amounts as the purchased call options are reported in net investment income for each respective period. Amounts realized on purchase call options generally approximate the amounts credited to policyholders. As part of the mortality unlocking analysis done in the third quarter of 2020, the Company decreased its excess death benefit reserves by $22.8 million for favorable experience. The reduction in reserve is reported as an offset to contract interest expense in the three and nine months ended September 30, 2020. In the quarter and nine months ended September 30, 2019, the Company's mortality unlocking decreased its excess benefit reserve by $7.9 million.

Operating expenses are allocated to lines of business based upon a functional cost analysis of the activity by the business area giving rise to incurred expenses. A greater proportion of the Company's overall expenses have been allocated to the Domestic Life and Annuity segments and away from the International Life segment due to the decreased activity relative to the former two segments.

Annuity Operations

A comparative analysis of results of operations for National Western's annuity segment is detailed below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Premiums and other revenues:
Premiums and contract revenues	$	4,187	5,336	13,536	16,061
Net investment income	87,889		78,000	196,187	270,727
Other revenues	84		8	80	80
Total premiums and other revenues	92,160		83,344	209,803	286,868
Benefits and expenses:
Life and other policy benefits	3,383		12,550	20,452	33,856
Amortization of deferred policy acquisition costs	31,794		21,688	70,159	60,150
Annuity contract interest	79,550		33,541	117,162	120,840
Other operating expenses	9,205		8,596	28,787	25,478
Total benefits and expenses	123,932		76,375	236,560	240,324
Segment earnings (loss) before Federal income taxes	(31,772)		6,969	(26,757)	46,544
Provision (benefit) for Federal income taxes	(5,294)		1,388	(4,440)	9,426
Segment earnings (loss)	$	(26,478)	5,581	(22,317)	37,118

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Premiums and contract charges primarily consist of surrender charge income recognized on terminated policies. The amount of the surrender charge income recognized is determined by the volume of surrendered contracts as well as the duration of each contract at the time of surrender given the pattern of declining surrender charge rates over time that is common to most annuity contracts. The Company's lapse rate for annuity contracts in the first nine months of 2020 was 8.3% which was higher compared to the 7.7% rate during the same period in 2019. In the first nine months of 2020, an outcome of the COVID-19 pandemic crisis was a movement of consumers toward fortifying liquidity positions. This manifested in greater withdrawal and surrender activity. In addition, annuity contracts with fixed interest rates are more prone to terminate as contracts approach the end of their surrender charge period.

Deposits collected on annuity contracts are not reflected as revenues in the Company's Condensed Consolidated Statements of Earnings (Loss) in accordance with GAAP. Actual annuity deposits collected for the three and nine months ended September 30, 2020 and 2019 are detailed below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Fixed-index annuities	$	76,199	57,109	224,591	175,222
Other deferred annuities	2,210		4,496	6,293	13,173
Immediate annuities	2,348		1,604	15,423	5,384
Totals	$	80,757	63,209	246,307	193,779

Fixed-index products are more attractive for consumers when interest rate levels remain low and equity markets produce positive returns. Since National Western does not offer variable products or mutual funds, fixed-index products provide an important alternative to the Company's existing fixed interest rate annuity products. Fixed-index annuity deposits as a percentage of total annuity deposits were 91% and 90% for the nine months ended September 30, 2020 and 2019, respectively. The percentage of fixed-index products to total annuity sales reflects the low interest rate environment and the overall uptrend in the equities market.

Some of the Company's deferred products, including fixed-index annuity products, contain a first year interest bonus, in addition to the base first year interest rate, which is credited to the account balance when premiums are applied. These sales inducements are deferred in conjunction with other capitalized policy acquisition costs. The amounts currently deferred to be amortized over future periods amounted to approximately $5.7 million and $2.3 million during the first nine months of 2020 and 2019, respectively. Amortization of deferred sales inducements is included as a component of annuity contract interest as described later in this discussion of Annuity Operations.

A detail of net investment income for annuity operations is provided below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Net investment income (excluding derivatives)	$	69,403	75,651	212,405	233,111
Derivative gain (loss)	18,486		2,349	(16,218)	37,616
Net investment income	$	87,889	78,000	196,187	270,727

As seen in the above table, net investment income also includes the gains and losses on index options purchased to back the index crediting mechanism on fixed-index universal products. The gain or loss on index options follows the movement of the reference indice with realized gains or losses being recognized on the anniversary of each index option based upon the reference indice at the expiration date relative to the index level at the time the index option was purchased. Unrealized gains and losses are recorded for index options outstanding based upon their fair value, largely determined by the reference indice level, at the balance sheet reporting date as compared to the original purchase cost of each respective option.

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Since the embedded derivative option in the policies is bifurcated when determining the contract reserve liability, the impact of the market value change of index options on asset values generally aligns closely with the movement of the embedded derivative liability such that the net effect upon pretax earnings is negligible (i.e. net realized and unrealized gains/(losses) included in net investment income approximate the change in contract interest associated with the corresponding embedded derivative liability change). See further discussion below regarding contract interest activity.

Consistent with the domestic and international life segments, the Company records true-up adjustments to DPAC balances each period to reflect current policy lapse or termination rates, expense levels and credited rates on policies as compared to anticipated experience as well as unlocking adjustments as necessary. The following table identifies the effects of unlocking adjustments on annuity DPAC balances recorded through amortization expense separate from recurring amortization expense components for the three and nine months ended September 30, 2020 and 2019.

Amortization of DPAC	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Unlocking adjustments	$	14,987	2,577	14,987	2,577
Other amortization components	16,807		19,111	55,172	57,573
Totals	$	31,794	21,688	70,159	60,150

During the quarter ended September 30, 2020, the Company unlocked DPAC balances associated with its Annuity segment for assumptions pertaining to lapse rates, annuitization rates, and portfolio investment yield rates supporting the block of business. The effect of the prospective unlocking was to decrease DPAC balances by approximately $15.0 million (and increase amortization expense). The Company also unlocked its DPAC balances in the quarter ended September 30, 2019 the effect of which was to decrease DPAC balances by $2.6 million (and increase amortization expense).

Amortization of DPAC balances is proportional to estimated expected gross profits ("EGPs") for a line of business. The EGPs of the block of annuity policies that are not fixed-index have been steadily decreasing with the declining amount of policies in force, as well as DPAC unlocking in recent years for unfavorable experience. In addition, experience which deviates from the EGPs assumed can similarly increase or decrease the amortization of DPAC.

Annuity contract interest includes the equity component return associated with the call options purchased to hedge National Western's fixed-index annuities. The detail of fixed-index annuity contract interest as compared to contract interest for all other annuities is as follows:

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Fixed-index annuities	$	33,435	12,001	31,076	61,226
All other annuities	40,010		16,861	73,331	46,114
Gross contract interest	73,445		28,862	104,407	107,340
Bonus interest deferred and capitalized	(2,829)		(852)	(5,700)	(2,257)
Bonus interest amortization	8,934		5,531	18,455	15,757
Total contract interest	$	79,550	33,541	117,162	120,840

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The fluctuation in reported contract interest amounts for fixed-index annuities is driven by sales levels, the level of the business in force and the effect of positive or negative market returns of option values on projected interest credits. As noted in the net investment income discussion, the amounts shown for contract interest for fixed-index annuities generally align with the derivative gains/(losses) included in net investment income as due to the market change of index options aligning closely with the movement of the embedded derivative liability held for these products.

In addition to the unlocking adjustments discussed above impacting DPAC balances, the Company also unlocked its mortality assumptions in regards to payout annuities (contracts paying systematic benefits). Combined these unlocking assumptions during the third quarter of 2020 had the effect of increasing excess annuitization and excess death benefit reserves by $34.1 million. The increase in these reserves is reported as additional contract interest in the three and nine months ended September 30, 2020.

As noted in the discussion in the Consolidated Operations section, collection of asset management fees on positive returns of expiring options is subtracted from contract interest credited to policyholders. This offset serves to lessen the increase in contract interest expense relative to the option gains reported in the Company's net investment income. Asset management fees collected during the three and nine months ended September 30, 2020 were $6.7 million and $24.7 million, respectively, compared to $0.5 million and $8.1 million in the corresponding period of 2019.

As previously noted, accounting rules require the embedded derivative liability to include a projection of asset management fees estimated to be collected in the succeeding fiscal year as an offset to projected policyholder interest credits. The projections are based upon the recent performance of options as of balance sheet reporting dates. The change in this projection, plus or minus, is included in contract interest for the period being reported on. In the three month periods ended September 30, 2020 and 2019, contract interest was increased $3.7 million and decreased $(6.8) million, respectively, for these projection changes. For the nine months ended September 30, 2020 and 2019, contract interest was increased/(decreased) $29.3 million and $(27.1) million, respectively. The increase to contract interest expense reflects lower estimated asset management fees to be collected while the decrease to contract interest expense represents an increase to the amount of asset management fees estimated to be collected. The Annuity segment contains the products which charge asset management fees.

As noted in the discussion on the results of Consolidated Operations, other embedded derivative components include changes pertaining to other modeling differences, changes in future interest adjustments, and the change in the host contract component of the embedded derivative products. In the first quarter of 2020, the Company incurred an additional charge to contract interest pertaining to an assumption regarding the embedded derivative option budget which introduced an embedded derivative floor preventing the Company's contract interest expense from declining in tandem with the option value decreases recorded in net investment income. In the quarter ended June 30, 2020, the Company unlocked for this out of date embedded derivative option budget assumption to reflect the Company's current investment portfolio yield. This unlocking had the effect of removing the embedded derivative floor and reversed the $12.1 million contract interest charge recorded in the first quarter of 2020.

Annuity contract interest includes true-up adjustments for the deferred sales inducement balance which are done each period similar to that done with respect to DPAC balances with the adjustment reflected in current period contract interest expense. To the extent required, the Company may also record unlocking adjustments to deferred sales inducement balances in conjunction with DPAC balance unlockings. In conjunction with the unlocking adjustments previously discussed, the Company unlocked its deferred sales inducement balance in the third quarters of 2020 and 2019 the effect of which was to reduce the balance by $4.4 million and $0.6 million, respectively. These reductions increased contract interest expense by like amounts.

While the unlocking adjustments discussed above had the cumulative effect of increasing DPAC amortization expense and contract interest expense, they also had the effect of decreasing certain policy benefit liability balances, namely the liability for guaranteed minimum withdrawal benefits (GMWB) and the deferred profit liability. In the three and nine months ended September 30, 2020, these liability balances decreased by $11.9 million. This reduction in liability balances is similarly reflected as a reduction in life and other policy benefits expense. In the three and nine months ended September 30, 2019, the Company's unlockings also reduced the GMWB liability balance by $0.7 million.

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Acquired Businesses

Effective January 31, 2019, Ozark National and NIS were acquired and their results included in the Condensed Consolidated Financial Statements of the Company. Ozark National and NIS have been combined into a separate segment "Acquired Businesses" given their inter-related marketing and sales approach which consists of a coordinated sale of a non-participating whole life insurance product (Ozark National) and a mutual fund investment product (NIS). An analysis of results of operations for the Company's acquired businesses segment is detailed below. The results for the nine months ended September 30, 2019 include activity subsequent to the acquisition date.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Premiums and other revenues:
Premiums and contract charges	$	19,524	20,151	59,448	54,332
Net investment income	6,434		6,300	19,284	16,283
Other revenues	2,628		2,318	7,369	6,049
Total premiums and other revenues	28,586		28,769	86,101	76,664
Benefits and expenses:
Life and other policy benefits	17,494		16,195	50,429	43,863
Amortization of deferred policy acquisition costs and value of business acquired	1,970		2,176	6,064	6,330
Other operating expenses	4,498		4,772	13,361	12,348
Total benefits and expenses	23,962		23,143	69,854	62,541
Segment earnings (loss) before Federal income taxes	4,624		5,626	16,247	14,123
Provision (benefit) for Federal income taxes	963		1,133	4,103	2,836
Segment earnings (loss)	$	3,661	4,493	12,144	11,287

Revenues from acquired businesses principally include life insurance premiums on traditional type products. Unlike universal life, revenues from traditional products are simply life premiums recognized as income over the premium-paying period of the related policies. The detail of premiums is provided below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Traditional life insurance premiums	$	20,049	21,841	61,153	55,829
Other insurance premiums and considerations	105		100	328	304
Reinsurance premiums	(630)		(1,790)	(2,033)	(1,801)
Totals	$	19,524	20,151	59,448	54,332

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Ozark National's traditional life block of business at September 30, 2020 included approximately 180,050 policies in force representing nearly $6.1 billion of life insurance coverage. The repetitive pay nature of Ozark National's business promotes a higher level of persistency with an annualized lapse rate of 4.1% through September 30, 2020 which bettered the 4.6% rate experienced in the first nine months of 2019. Traditional life premiums by first year and renewal are detailed below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Traditional life insurance premiums:
First year premiums	$	905	1,476	3,151	3,940
Renewal premiums	19,144		20,365	58,002	51,889
Totals	$	20,049	21,841	61,153	55,829

Other revenues consists primarily of brokerage revenue of NIS. Brokerage revenues of $7.2 million and $5.9 million for the nine months ended September 30, 2020 and 2019, respectively, had associated brokerage expense of $3.7 million and $3.1 million which is included in Other operating expenses.

The average face value of Ozark National's policies in force at September 30, 2020 was approximately $33,800. Life and policy benefits for smaller face amounts are subject to variation from quarter to quarter. Incurred net death claims, after reinsurance, for the first nine months of 2020 were $25.8 million representing an average net claim of $15,300. Incurred net death claims in the nine month period ended September 30, 2019 were $22.6 million representing a net average claim of $16,100. Included in the activity for 2020 were confirmed COVID-19 net claims of approximately $1.2 million. Ozark National's maximum retention on any single insured life is $200,000 with limited exceptions related to the conversion of child protection and guaranteed insurability riders. The balance of life and policy benefits during the quarters and nine months ended September 30, 2020 and 2019 consisted of increases in insurance reserves and payments of other policy benefits.

As part of the purchase accounting required with the acquisition of Ozark National effective January 31, 2019, the Company recorded an intangible asset of $145.8 million referred to as the value of business acquired ("VOBA"). VOBA represents the difference between the acquired assets and liabilities of Ozark National measured in accordance with the Company's accounting policies and the fair value of these same assets and liabilities. The VOBA balance sheet amount is amortized following a methodology similar to that used for amortizing deferred policy acquisition costs.

Subsequent to its acquisition effective January 31, 2019, Ozark National began deferring policy acquisition costs and amortizing these deferrals similar to the methodology employed by National Western. The following table identifies the amortization expense of Ozark National's DPAC and VOBA for the three and nine months ended September 30, 2020 and 2019.

Amortization of DPAC and VOBA	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Unlocking	$	—	—	—	—
VOBA amortization expense	1,845		1,961	5,646	5868
DPAC amortization expense	125		215	418	462
Totals	$	1,970	2,176	6,064	6,330

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Other Operations

The Company's primary business encompasses its domestic and international life insurance operations, its annuity operations, and its acquired businesses. However, the Company also has real estate and other investment operations through its wholly owned subsidiaries, and owned nursing home operations through the early part of 2019.

Pre-tax operating amounts include the results of BP III, the entity owning and operating the Company's home office facility in Austin, Texas. BP III incurred pre-tax losses of $(0.9) million and $(0.8) million for the nine months ended September 30, 2020 and 2019, respectively. National Western maintains its home office in this facility leasing approximately 40% of the space available. The lease payments made by National Western to BP III have been eliminated in consolidation.

Nursing home operations generated $0.0 million and $1.1 million of pre-tax operating earnings in the first nine months of 2020 and 2019, respectively. As discussed in the Consolidated Operations section, the Company closed on the sale of its Reno, Nevada nursing home operations in the first quarter of 2019, and on the sale of its San Marcos, Texas nursing home operations in the second quarter of 2019. Pre-tax operating earnings in the first nine months of 2019 include operating results for each entity to the date of their respective sales and net gains from the sale of Reno personal property and equipment of $1.4 million.

The remaining pre-tax earnings of $14.8 million and $16.1 million in Other Operations during the nine-month periods includes investment income from real estate, municipal bonds, and common and preferred equities held in subsidiary company portfolios principally for tax-advantage purposes. Included in these amounts are semi-annual distributions from a life interest in the Libbie Shearn Moody Trust which is held in NWLSM, Inc. Pre-tax distributions from this trust were $2.8 million and $3.6 million in the nine-month periods ended September 30, 2020 and 2019, respectively. In addition, the Company holds a modest portfolio of equity securities, primarily in NWL Financial, Inc., whose fair value changes are recorded in net investment income. For the nine months ended September 30, 2020 and 2019, the market value changes for these securities were $(3.2) million and $2.2 million, respectively.

Pre-tax earnings in the nine months ended September 30, 2020 also includes $4.1 million pertaining to the release of a contingent purchase price liability associated with the Ozark National acquisition which the buyer and seller mutually agreed had been satisfied. Pre-tax earnings in the first nine months of 2019 also include expenses of $3.3 million related to the purchase of Ozark National and NIS which were not eligible for inclusion in the purchase price.

INVESTMENTS

General

The Company's investment philosophy emphasizes the careful handling of policyowners' and stockholders' funds to achieve security of principal, to obtain the maximum possible yield while maintaining security of principal, and to maintain liquidity in a measure consistent with current and long-term requirements of the Company.

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The Company's overall conservative investment philosophy is reflected in the allocation of its investments, which is detailed below. The Company emphasizes investment grade debt securities.

	September 30, 2020			December 31, 2019
	Carrying Value		%	Carrying Value		%
	(In thousands)			(In thousands)
Debt securities	$	10,232,709	94.7	$	10,463,190	94.7
Mortgage loans	302,715		2.8	272,422		2.5
Policy loans	75,714		0.7	80,008		0.7
Derivatives, index options	93,367		0.9	157,588		1.4
Real estate	33,927		0.3	34,588		0.3
Equity securities	18,610		0.2	23,594		0.2
Other	44,652		0.4	27,502		0.2
Totals	$	10,801,694	100.0	$	11,058,892	100.0

Invested assets at September 30, 2020 include Ozark National and NIS amounts as follows: Debt securities of $751.3 million; Policy loans of $26.0 million; and Real estate of $4.6 million. These invested asset amounts at December 31, 2019 were: Debt securities of $722.9 million; Policy loans of $27.1 million; and Real Estate of $4.6 million.

Debt Securities

The Company maintains a diversified portfolio which consists mostly of corporate, mortgage-backed, and public utility fixed income securities. Investments in mortgage-backed securities primarily include U.S. Government agency pass-through securities and collateralized mortgage obligations ("CMO"). The Company's investment guidelines prescribe limitations by type of security as a percent of the total investment portfolio and all holdings were within these threshold limits. As of September 30, 2020 and December 31, 2019, the Company's debt securities portfolio consisted of the following classes of securities:

	September 30, 2020			December 31, 2019
	Carrying Value		%	Carrying Value		%
	(In thousands)			(In thousands)
Corporate	$	7,677,317	75.0	$	7,668,483	73.3
Residential mortgage-backed securities	956,579		9.4	1,080,674		10.3
Public utilities	879,140		8.6	959,815		9.2
State and political subdivisions	534,994		5.2	533,962		5.1
U.S. agencies	73,072		0.7	100,910		1.0
Asset-backed securities	65,126		0.6	71,260		0.7
Commercial mortgage-backed	31,330		0.3	32,974		0.3
Foreign governments	11,353		0.1	11,330		0.1
U.S. Treasury	3,798		0.1	3,782		—
Totals	$	10,232,709	100.0	$	10,463,190	100.0

The Company holds minimal levels of U.S. Treasury securities due to their low yields and deposits most of these holdings with various state insurance departments in order to meet security deposit on hand requirements in these jurisdictions.

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The Company has deemphasized mortgage-backed securities for a number of years given the low interest rate environment and the lack of incremental yield relative to other classes of debt securities. Rating agencies generally view mortgage-backed securities as having additional risk for insurers holding interest sensitive liabilities given the potential for asset/liability disintermediation. Consequently, the Company holds predominantly agency mortgage-backed securities. Because mortgage-backed securities are subject to prepayment and extension risk, the Company has substantially reduced these risks by investing in collateralized mortgage obligations ("CMO"), which have more predictable cash flow patterns than pass-through securities. These securities, known as planned amortization class I ("PAC I"), very accurately defined maturity ("VADM"), and sequential tranches, are designed to amortize in a more predictable manner than other CMO classes or pass-throughs. The Company does not purchase tranches, such as PAC II and support tranches, that subject the portfolio to greater than average prepayment risk. Using this strategy, the Company can more effectively manage and reduce prepayment and extension risks, thereby helping to maintain the appropriate matching of the Company's assets and liabilities.

The majority of the Company's investable cash flows are directed toward the purchase of long-term debt securities. The Company's investment policy calls for investing in debt securities that are investment grade, meet quality and yield objectives, and provide adequate liquidity for obligations to policyholders. Particular attention is paid to avoiding concentration in any one industry classification or in large singular credit exposures. Debt securities with intermediate maturities are targeted by the Company as they more closely match the intermediate nature of the Company's policy liabilities and provide an appropriate strategy for managing cash flows. Long-term debt securities purchased to fund National Western insurance company operations are summarized below.

	Nine Months Ended September 30,			Year Ended December 31,
	2020			2019
	($ In thousands)
Cost of acquisitions	$	435,787		$	299,442
Average credit quality	BBB+			BBB
Effective annual yield	3.47		%	4.06		%
Spread to treasuries	2.18		%	1.79		%
Effective duration	12.3 years			12.0 years

Beginning in 2019, the Company began purchasing a greater proportion of longer maturity debt securities to match the increased duration of its growing life insurance policy liabilities. Purchases in prior periods were concentrated in effective durations between eight and nine years. The lower dollar amount of investment purchases in 2019 reflects the Company's $205.4 million acquisition of Ozark National and NIS, the purchase price of which was funded by otherwise investable cash flows.

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In addition to diversification, an important aspect of the Company's investment approach is managing the credit quality of its investment in debt securities. Thorough credit analysis is performed on potential corporate investments including examination of a company's credit and industry outlook, financial ratios and trends, and event risks. This emphasis is reflected in the high average credit rating of the Company's debt securities portfolio with 97.3%, as of September 30, 2020, held in investment grade securities. In the table below, investments in debt securities are classified according to credit ratings by nationally recognized statistical rating organizations.

	September 30, 2020			December 31, 2019
	Carrying Value		%	Carrying Value		%
	(In thousands)			(In thousands)
AAA	$	111,254	1.1	$	113,875	1.1
AA	1,764,419		17.2	2,112,238		20.2
A	3,123,227		30.5	3,347,199		32.0
BBB	4,960,692		48.5	4,806,181		45.9
BB and other below investment grade	273,117		2.7	83,697		0.8
Totals	$	10,232,709	100.0	$	10,463,190	100.0

Although the Company's investment guidelines, as well as state insurance law, allow for the purchase of below investment grade securities, it has been the Company's practice to only purchase debt securities which are investment grade at the time of acquisition. The investments held in debt securities below investment grade are the result of subsequent downgrades of the securities. These holdings are further summarized below.

	Below Investment Grade Debt Securities
	Amortized Cost		Carrying Value	Fair Value	% of Invested Assets
	(In thousands, except percentages)
September 30, 2020	$	282,550	273,117	267,268	2.5	%
December 31, 2019	$	85,493	83,697	84,516	0.8	%

The Company's percentage of below investment grade securities as of September 30, 2020 compared with the percentage at December 31, 2019 increased due to net downgrades of several credit issuers, most notably in the oil and gas/energy sector as well as certain retail industry issuers. These industries in particular were affected by the economic slowdown invoked by the global pandemic crisis. The Company's holdings of below investment grade securities are relatively small and as a percentage of total invested assets remain low compared to industry averages.

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Holdings in below investment grade securities as of September 30, 2020 are summarized below by category, including their comparable fair value as of December 31, 2019. The Company continually monitors developments in these industries for issues that may affect security valuation.

	Below Investment Grade Debt Securities
	Amortized Cost		Carrying Value	Fair Value	Fair Value
Industry Category	September 30, 2020		September 30, 2020	September 30, 2020	December 31, 2019
	(In thousands)
Retail	$	33,423	27,606	27,606	34,047
Asset-backed securities	4,019		4,105	4,143	4,156
Residential mortgage-backed	732		573	572	628
Oil & gas	113,507		108,626	103,941	93,399
Manufacturing	119,469		120,553	118,876	120,746
Other	11,876		12,130	12,130	12,211
Total before Allowance for credit losses	283,026		273,593	267,268	265,187
Allowance for credit losses	(476)		(476)	—	—
Totals	$	282,550	273,117	267,268	265,187

The Company closely monitors its below investment grade holdings by reviewing investment performance indicators, including information such as issuer operating performance, debt ratings, analyst reports and other economic factors that may affect these specific investments. As a result of the investment downgrades which occurred in the first nine months of 2020 due to the economic stresses caused by the COVID-19 pandemic, additional analyses were performed of the individual credits whose market values were most significantly impacted. While additional losses are not currently anticipated, based on the existing status and condition of these securities, continued credit deterioration of some securities or the markets in general is possible, which may result in future allowances or write-downs.

Generally accepted accounting principles through the end of 2019 required that investments in debt securities be written down to fair value when declines in value were judged to be other-than-temporary. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price methodology). Refer to Note 10, Fair Values of Financial Instruments, of the accompanying Condensed Consolidated Financial Statements for further discussion.

During the nine months ended September 30, 2019, the Company recorded a $7.8 million other-than-temporary impairment on a single debt security issuer. Under prior GAAP guidance pertaining to the recognition and accounting for other-than-temporary impairments and their classification as either a credit loss or non non-credit loss, the Company recognized a cumulative total of $8.5 million of other-than-temporary impairments of which $8.5 million was deemed credit related and recognized as realized investment losses in earnings, and $0.0 million, net of amortization, which was deemed non-credit related and recognized in other comprehensive income.

As disclosed in Note (2) New Accounting Pronouncements in the accompanying Notes to Condensed Consolidated Financial Statements in this report, the Company adopted new accounting guidance effective January 1, 2020 for credit loss recognition of certain financial assets, including debt securities classified in the "held to maturity" category. The Company employed a cohort cumulative loss rate method in estimating current expected credit losses with respect to its held to maturity debt securities as of January 1, 2020, June 30, 2020, and September 30, 2020. This method applies publicly available industry wide statistics of default incidence by defined segmentations of debt security investments combined with future assumptions regarding economic conditions (i.e. GDP forecasts) both in the near term and the long term. The following table presents the allowance for credit losses for the periods shown.

97

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Debt Securities Allowance for Credit Losses:
Balance, beginning of the period	$	4,940	—	—	—
Provision at January 1, 2020 for adoption of new accounting guidance	—		—	3,334	—
(Releases)/provision during the period	146		—	1,752	—
Balance, end of period	$	5,086	—	5,086	—

The $0.1 million allowance increase during the three months ended September 30, 2020 represents an increase in the balance from the allowance recorded at June 30, 2020.

The Company is required to classify its investments in debt securities into one of three categories: (a) trading securities; (b) securities available for sale; or (c) securities held to maturity. The Company purchases securities with the intent to hold to maturity and accordingly does not maintain a portfolio of trading securities. Of the remaining two categories, available for sale and held to maturity, the Company makes a determination on categorization based on various factors including the type and quality of the particular security and how it will be incorporated into the Company's overall asset/liability management strategy. As shown in the table below at September 30, 2020, 31.6% of the Company's total debt securities, based on fair values, were classified as securities available for sale. These holdings in available for sale provide flexibility to the Company to react to market opportunities and conditions and to practice active management within the portfolio to provide adequate liquidity to meet policyholder obligations and other cash needs.

	September 30, 2020
	Fair Value		Amortized Cost	Allowance for Credit Losses	Unrealized Gains (Losses)
	(In thousands)
Debt securities held to maturity	$	7,378,399	6,827,139	(5,086)	551,260
Debt securities available for sale	3,410,656		3,156,486	—	254,170
Totals	$	10,789,055	9,983,625	(5,086)	805,430

Mortgage Loans and Real Estate

The Company originates loans on high quality, income-producing properties such as shopping centers, freestanding retail stores, office buildings, industrial and sales or service facilities, selected apartment buildings, hotels, and health care facilities. The location of these properties is typically in major metropolitan areas that offer a potential for property value appreciation. Credit and default risk is minimized through strict underwriting guidelines and diversification of underlying property types and geographic locations. In addition to being secured by the property, mortgage loans with leases on the underlying property are often guaranteed by the lease payments. This approach has proved over time to result in quality mortgage loans with few defaults. Mortgage loan interest income is recognized on an accrual basis with any premium or discount amortized over the life of the loan. Prepayment and late fees are recorded on the date of collection.

The Company targets a minimum specified yield on mortgage loan investments determined by reference to currently available debt security instrument yields plus a desired amount of incremental basis points. During the past several years, the low interest rate environment, along with a competitive marketplace, resulted in fewer loan opportunities being available that met the Company's required rate of return. Mortgage loans originated by the Company totaled $121.4 million for the year ended December 31, 2019 but were $41.5 million for the nine months ended September 30, 2020 reflecting the uncertainty in risk assessment introduced by the pandemic crisis. Principal repayments on mortgage loans for the nine months ended September 30, 2020 were $6.0 million.

98

Loans in foreclosure, loans considered impaired, or loans past due 90 days or more are placed on a non-accrual status. If a mortgage loan is determined to be on non-accrual status, the mortgage loan does not accrue any revenue in the Condensed Consolidated Statements of Earnings (Loss). The loan is independently monitored and evaluated as to potential impairment or foreclosure. If delinquent payments are made and the loan is brought current, then the Company returns the loan to active status and accrues income accordingly. The Company currently has no loans past due 90 days. As a result of the economic climate change induced by the COVID-19 virus, various mortgage loan borrowers of the Company have requested a temporary forbearance of principal payments on loans in the range of three to nine months. During the nine months ended September 30, 2020 there were eight loans representing an aggregate principal balance of $29.2 million with borrowers meeting specified criteria of the Company that forbearance terms were agreed to.

The Company held net investments in mortgage loans, after allowances for possible losses, totaling $302.7 million and $272.4 million at September 30, 2020 and December 31, 2019, respectively. The diversification of the portfolio by geographic region and by property type was as follows:

	September 30, 2020			December 31, 2019
	Amount		%	Amount		%
	(In thousands)			(In thousands)
Mortgage Loans by Geographic Region:
West South Central	$	200,049	65.6	$	191,089	70.0
South Atlantic	34,991		11.5	35,698		13.1
East North Central	16,605		5.3	17,248		6.3
West North Central	12,422		4.1	12,505		4.6
East South Central	27,727		9.1	8,063		2.9
Pacific	6,282		2.1	6,436		2.4
Middle Atlantic	1,996		0.7	2,058		0.7
Mountain	5,000		1.6	—		—
Gross balance	305,072		100.0	273,097		100.0
Allowance for credit losses	(2,357)		(0.8)	(675)		(0.2)
Totals	$	302,715	99.2	$	272,422	99.8

99

	September 30, 2020			December 31, 2019
	Amount		%	Amount		%
	(In thousands)			(In thousands)
Mortgage Loans by Property Type:
Retail	$	93,684	30.7	$	91,790	33.6
Office	83,743		27.5	95,362		34.9
Storage facility	58,404		19.1	30,619		11.2
Apartments	29,872		9.8	30,000		11.0
Industrial	20,567		6.7	5,733		2.1
Hotel	8,496		2.8	8,997		3.3
Land/Lots	4,676		1.5	4,829		1.8
All other	5,630		1.9	5,767		2.1
Gross balance	305,072		100.0	273,097		100.0
Allowance for credit losses	(2,357)		(0.8)	(675)		(0.2)
Totals	$	302,715	99.2	$	272,422	99.8

As disclosed in Note (2) New Accounting Pronouncements in the accompanying Notes to Condensed Consolidated Financial Statements in this report, the Company adopted new accounting guidance for credit loss recognition of certain financial assets, including mortgage loans. The Company employed the Weighted Average Remaining Maturity ("WARM") method in estimating current expected credit losses with respect to mortgage loan investments as of January 1, 2020, June 30, 2020, and September 30, 2020. The WARM method applies publicly available data of default incidence of commercial real estate properties by several defined segmentations combined with future assumptions regarding economic conditions (i.e. GDP forecasts) both in the near term and the long term. The following table presents the allowance for credit losses for the periods shown.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Mortgage Loans Allowance for Credit Losses:
Balance, beginning of the period	$	2,227	675	675	675
Provision January 1, 2020 for adoption of new accounting guidance	—		—	504	—
Provision during the period	130		—	1,178	—
Releases	—		—	—	—
Balance, end of period	$	2,357	675	2,357	675

The Company's direct investments in real estate are not a significant portion of its total investment portfolio and consist primarily of income-producing properties which are being operated by a wholly owned subsidiary of National Western. The Company's real estate investments totaled approximately $33.9 million and $34.6 million at September 30, 2020 and December 31, 2019, respectively. In the third quarter of 2020, the Company sold a property located in Travis County Texas for realized gain of $2.7 million.

The Company recognized operating income of approximately $2.2 million and $2.1 million on real estate properties in the first nine months of 2020 and 2019, respectively. The Company monitors the conditions and market values of these properties on a regular basis and makes repairs and capital improvements to keep the properties in good condition.

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Market Risk

Market risk is the risk of change in market values of financial instruments due to changes in interest rates, currency exchange rates, commodity prices, or equity prices. The most significant market risk exposure for the Company is interest rate risk. Substantial and sustained increases and decreases in market interest rates can affect the profitability of insurance products and fair value of investments. The yield realized on new investments generally increases or decreases in direct relationship with interest rate changes. The fair values of fixed income debt securities correlate to external market interest rate conditions as market values typically increase when market interest rates decline and decrease when market interest rates rise. However, market values may fluctuate for other reasons, such as changing economic conditions, market dislocations, declination in credit quality, or increasing event-risk concerns.

Interest Rate Risk

A gradual increase in interest rates from current levels would generally be a positive development for the Company. Rate increases would be expected to provide incremental net investment income, produce increased sales of fixed rate products, and limit the potential erosion of the Company's interest rate spread on products due to minimum guaranteed crediting rates in products. Alternatively, a rise in interest rates would reduce the fair value of the Company's investment portfolio and if long-term rates rise dramatically within a relatively short time period the Company could be exposed to disintermediation risk. Disintermediation risk is the risk that policyholders will surrender their policies in a rising interest rate environment forcing the Company to liquidate assets when they are in an unrealized loss position.

A decline in interest rates could cause certain mortgage-backed securities in the Company's portfolio to be more likely to pay down or prepay. In this situation, the Company typically will be unable to reinvest the proceeds at comparable yields. Lower interest rates will likely also cause lower net investment income, subject the Company to reinvestment rate risks, and possibly reduce profitability through reduced interest rate margins associated with products with minimum guaranteed crediting rates. Alternatively, the fair value of the Company's investment portfolio will increase when interest rates decline.

The correlation between fair values and interest rates for debt securities is reflected in the tables below.

	September 30, 2020			June 30, 2020		December 31, 2019
	(In thousands except percentages)
Debt securities - fair value	$	10,789,055		10,805,815		10,764,648
Debt securities - amortized cost	$	9,983,625		10,069,988		10,312,365
Fair value as a percentage of amortized cost	108.07		%	107.31		104.39	%
Net unrealized gain (loss) balance	$	805,430		735,827		452,283
Ten-year U.S. Treasury bond – (decrease) increase in yield for the period	0.03		%	(0.01)	%	(0.77)	%

The Company's unrealized gain (loss) balance for debt securities held at September 30, 2020 and December 31, 2019 is shown in the following table.

	Net Unrealized Gain (Loss) Balance
	At September 30, 2020		At June 30, 2020	At December 31, 2019	Quarter Change in Unrealized Balance	Year-to-date Change in Unrealized Balance
	(In thousands)
Debt securities held to maturity	$	551,260	528,920	301,458	22,341	249,802
Debt securities available for sale	254,170		206,907	150,825	47,263	103,345
Totals	$	805,430	735,827	452,283	69,604	353,147

101

Debt securities held to maturity are recorded at their amortized cost. Accordingly, the unrealized amounts shown in the table above for Debt securities held to maturity are not incorporated into the Company's Condensed Consolidated Financial Statements at September 30, 2020 and December 31, 2019, respectively.

Changes in interest rates can have a sizable effect on the fair values of the Company's debt securities. The market interest rate of the ten-year U.S. Treasury bond decreased 123 basis points from 1.92% at year-end 2019 to 0.69% by the end of the first nine months of 2020. Therefore the increase in the unrealized gain balance position is an expected portfolio value movement. As noted in the Form 10-Q filing for the quarter ended March 31, 2020, the decline in the unrealized gain balance as of that date, in spite of the rapid drop in U.S. Treasury rates, was due to the widening in corporate bond spreads that occurred during that period as a result of COVID-19 effects on financial markets. In the quarter ended June 30, 2020, although U.S. Treasury rates were substantially unchanged, the prior quarter widening of corporate bond spreads largely reversed as market risk uncertainty declined significantly and corporate bond spreads decreased accordingly. Given that the majority of the Company's debt securities are classified as held to maturity, which are recorded at amortized cost, changes in fair values have a lesser effect on the Company's Condensed Consolidated Balance Sheet.

The Company manages interest rate risk principally through ongoing cash flow testing as required for insurance regulatory purposes. Computer models are used to perform cash flow testing under various commonly used stress test interest rate scenarios to determine if existing assets would be sufficient to meet projected liability outflows. Sensitivity analysis allows the Company to measure the potential gain or loss in fair value of its interest-sensitive instruments and to protect its economic value and achieve a predictable spread between what is earned on invested assets and what is paid on liabilities. The Company seeks to minimize the impact of interest risk through surrender charges that are imposed to discourage policy surrenders. Interest rate changes can be anticipated in computer models and the corresponding risk addressed by management actions affecting asset and liability instruments. However, potential changes in the values of financial instruments indicated by hypothetical interest rate changes will likely be different from actual changes experienced, and the differences could be significant.

The Company has the ability to adjust interest rates, participation rates, and asset management fees and caps, as applicable, in response to changes in investment portfolio yields for a substantial portion of its business in force. The ability to adjust these rates is subject to competitive forces in the market for the Company’s products. Surrender rates could increase and new sales could be negatively affected if crediting rates are not competitive with the rates on competing products offered by other insurance companies and financial service entities. The Company designs its interest sensitive and annuity products with features encouraging persistency, such as surrender and withdrawal penalty provisions. Typically, surrender charge rates gradually decrease each year the contract is in force.

The Company performed detailed sensitivity analysis as of December 31, 2019, for its interest rate-sensitive assets and liabilities. The changes in market values of the Company's debt securities in the first nine months of 2020 were reasonable given the expected range of results of this analysis.

Credit Risk

The Company is exposed to credit risk through counterparties and within its investment portfolio. Credit risk relates to the uncertainty associated with an obligor's continued ability to make timely payments of principal and interest in accordance with the contractual terms of an instrument or contract. As previously discussed, the Company manages credit risk through established investment credit policies and guidelines which address the quality of creditors and counterparties, concentration limits, diversification practices and acceptable risk levels. These policies and guidelines are regularly reviewed and approved by senior management and the Company's Board of Directors.

In connection with the Company’s use of call options to hedge the equity return component of its fixed-indexed annuity and life products, the Company is exposed to the risk that a counterparty fails to perform under terms of the option contract. The Company purchases one-year option contracts from multiple counterparties and evaluates the creditworthiness of all counterparties prior to the purchase of the contracts. For consideration in contracting with a counterparty, the rating required by the Company is a credit rating of “A” or higher. Accordingly, all options are purchased from nationally recognized financial institutions with a demonstrated performance for honoring their financial obligations and possessing substantial financial capacity. In addition, each counterparty is required to execute a credit support agreement obligating the counterparty to provide collateral to the Company when the fair value of the Company’s exposure to the counterparty exceeds specified amounts. Counterparty credit ratings and credit exposure are monitored continuously by National Western’s Investment Department with adjustments to collateral levels managed as incurred under the credit support agreements.

102

The Company is also exposed to credit spread risk related to market prices of investment securities and cash flows associated with changes in credit spreads. Credit spread tightening will reduce net investment income associated with new purchases of fixed debt securities and will increase the fair value of the investment portfolio. Credit spread widening will reduce the fair value of the investment portfolio and will increase net investment income on new purchases.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Liquidity requirements are met primarily by funds provided from operations. Premium deposits and annuity considerations, investment income, and investment maturities and prepayments are the primary sources of funds while investment purchases, policy benefits in the form of claims, and payments to policyholders and contract holders in connection with surrenders and withdrawals as well as operating expenses are the primary uses of funds. To ensure the Company will be able to pay future commitments, the funds received as premium payments and deposits are invested in high quality investments, primarily fixed income securities. Funds are invested with the intent that the income from investments, plus proceeds from maturities, will meet the ongoing cash flow needs of the Company. The approach of matching asset and liability durations and yields requires an appropriate mix of investments. Although the Company historically has not been put in the position of having to liquidate invested assets to provide cash flow, its investments consist primarily of marketable debt securities that could be readily converted to cash for liquidity needs. National Western maintains a line of credit facility of $75 million which it may access for short-term cash needs. As part of the acquisition of Ozark National and NIS effective January 31, 2019, National Western borrowed $75 million to partly fund the closing cash purchase price of $205.4 million. The amounts borrowed were subsequently repaid during the first quarter of 2019 and there have been no borrowings under the line of credit since that time including as at September 30, 2020.

A primary liquidity concern for life insurers is the risk of an extraordinary level of early policyholder withdrawals, particularly with respect to annuity products which can move more rapidly with interest rate changes. The Company includes provisions within its annuity and universal life insurance policies, such as surrender and market value adjustments, that help limit and discourage early withdrawals.

The actual amounts paid by product line in connection with surrenders and withdrawals for the three and nine months ended September 30, for each respective year, are noted in the table below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Product Line:
Traditional Life	$	4,059	4,375	12,413	13,397
Universal Life	22,065		29,395	78,864	73,888
Annuities	146,238		173,160	490,622	528,668
Total	$	172,362	206,930	581,899	615,953

The above contractual withdrawals, as well as the level of surrenders experienced, and the associated cash outflows did not have an adverse impact on overall liquidity. Individual life insurance policies are typically less susceptible to withdrawal than annuity reserves and deposit liabilities because policyholders may need to undergo a new underwriting process in order to obtain a new insurance policy elsewhere. Cash flow projections and tests under various market interest rate scenarios and assumptions are performed to assist in evaluating liquidity needs and adequacy. Given the economic decline precipitated by the COVID-19 pandemic, Company management conducted additional liquidity scenario testing during the first nine months of 2020 using more severe assumptions and concluded that liquid assets were more than adequate under these scenarios. Accordingly, the Company currently expects available liquidity sources and future cash flows to be more than adequate to meet the demand for funds.

103

Cash flows from the Company's insurance operations have historically been sufficient to meet current needs. Cash flows from operating activities were $279.4 million and $244.2 million for the nine months ended September 30, 2020 and 2019, respectively. The Company also has significant cash flows from both scheduled and unscheduled investment security maturities, redemptions, and prepayments. These cash flows totaled $860.4 million and $676.3 million for the nine months ended September 30, 2020 and 2019, respectively. Operating and investing activity cash flow items could be reduced if interest rates rise at an accelerated rate in the future. Net cash inflows/(outflows) from the Company's universal life and investment annuity deposit product operations totaled $(372.9) million and $(454.7) million during the nine months ended September 30, 2020 and 2019, respectively, reflecting lower levels of annuity sales in combination with a higher incidence of annuity cash surrenders and withdrawals.

Capital Resources

The Company relies on stockholders' equity for its capital resources as there is no long-term debt outstanding and the Company does not anticipate the need for any long-term debt in the near future. As of September 30, 2020, the Company maintained commitments for its normal operating and investment activities. During the first quarter of 2020, National Western became a member of the Federal Home Loan Bank of Dallas (FHLB) through an initial minimum required stock investment of $4.3 million. Through this membership, National Western will have a specified borrowing capacity based upon the amount of collateral it establishes.

The Company has declared and paid an annual dividend on its common shares since 2005. The Company's practice has been to take a conservative approach to dividends, and the Board of Directors has adopted a strategic position to substantially reinvest earnings internally. This conservative approach yields the following benefits: (1) providing capital to finance the development of new business; (2) enabling the Company to take advantage of potential acquisitions and other competitive situations as they arise; (3) building a strong capital base to support the Company's financial strength ratings; (4) maintaining the Company's liquidity and solvency during difficult economic and market conditions; and (5) enhancing the Company's regulatory capital position. For similar reasons, despite the fact the Company's market price of its Class A common shares has been trading at a discount to the book value per share for some time, there are no imminent plans for the Company to repurchase its shares.

As the largest subsidiary of NWLGI, National Western serves as the primary funding source for NWLGI. The capacity of National Western to pay dividends to NWLGI is limited by law in the state of Colorado to earned profits (statutory unassigned surplus). At December 31, 2019, the maximum amount legally available for distribution without further regulatory approval is $152.8 million.

OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

It is Company practice to not enter into off-balance sheet arrangements or to issue guarantees to third parties, other than in the normal course of issuing insurance contracts. Commitments related to insurance products sold are reflected as liabilities for future policy benefits. Insurance contracts guarantee certain performances by National Western and Ozark National.

Insurance reserves are the means by which life insurance companies determine the liabilities that must be established to assure that future policy benefits are provided for and can be paid. These reserves are required by law and based upon standard actuarial methodologies to ensure fulfillment of commitments guaranteed to policyholders and their beneficiaries, even though the obligations may not be due for many years. Refer to Note 1 in the Notes to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of reserving methods.

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The table below summarizes future estimated cash payments under existing contractual obligations.

	Payment Due by Period
	Total		Less Than 1 Year	1 - 3 Years	3 - 5 Years	More Than 5 Years
	(In thousands)
Loan commitments	$	7,200	7,200	—	—	—
Commitments for capital calls to investment funds	52,213		9,213	37,000	—	6,000
Lease obligations	951		413	538	—	—
Claims payable (1)	74,265		74,265	—	—	—
Other long-term reserve liabilities reflected on the balance sheet (2)	13,233,047		1,047,679	1,920,811	1,701,997	8,562,560
Total	$	13,367,676	1,138,770	1,958,349	1,701,997	8,568,560

(1) Claims payable include benefit and claim liabilities for life, accident and health policies which the Company believes the amount and timing of the payment is essentially fixed and determinable. Such amounts generally relate to incurred and reported death, critical illness, accident and health claims including an estimate of claims incurred but not reported.

(2)  Other long-term liabilities include estimated life and annuity obligations related to death claims, policy surrenders, policy withdrawals, maturities and annuity payments based on mortality, lapse, annuitization, and withdrawal assumptions consistent with the Company's historical experience. These estimated life and annuity obligations are undiscounted projected cash outflows that assume interest crediting and market growth consistent with assumptions used in amortizing deferred acquisition costs. They do not include any offsets for future premiums or deposits. Other long-term liabilities also include determinable payout patterns related to immediate annuities. Due to the significance of the assumptions used, the actual cash outflows will differ both in amount and timing, possibly materially, from these estimates.

Subsequent to acquiring a commercial office building at the end of 2016 through its wholly owned subsidiary Braker P III, LLC ("BP III"), the Company entered into lease agreements with various tenants for available space not occupied by the Company. Total revenues recorded pertaining to these leases for the three-month periods ended September 30, 2020 and 2019 amounted to $1.1 million and $1.0 million, respectively, and for the nine months ended amounted to $3.4 million and $3.0 million, respectively. Under their respective terms these leases expire at various dates from 2023 through 2026.

The table below summarizes future estimated cash receipts under all existing lease agreements, including those in addition to the BP III lease agreements discussed above.

	Estimated Cash Receipts by Period
	Total		Less Than 1 Year	1 - 3 Years	3 - 5 Years	More Than 5 Years
	(In thousands)
Real estate revenue	$	41,813	5,985	10,999	9,013	15,816

105

CHANGES IN ACCOUNTING PRINCIPLES AND CRITICAL ACCOUNTING POLICIES

Changes in Accounting Principles

Effective January 1, 2020 the Company implemented ASU 2016-13, Financial Instruments - Credit Losses. This standard replaced the previous incurred loss recognition model with an expected loss recognition model for certain financial assets. Adoption of the standard resulted in an incremental allowance for credit losses as of January 1, 2020 of $3.8 million, and a charge to retained earnings, net of tax, of $3.0 million as a change in accounting. There were no other changes in accounting principles during the periods reported in this Form 10-Q.

REGULATORY AND OTHER ISSUES

Statutory Accounting Practices

Regulations that affect the Company and the insurance industry are often the result of actions taken by the National Association of Insurance Commissioners ("NAIC"). The NAIC routinely publishes new regulations as model acts or laws which states subsequently adopt as part of their insurance regulations. Currently, the Company is not aware of any NAIC regulatory matter material to its operations or reporting of financial results.

Risk-Based Capital Requirements

The NAIC established risk-based capital ("RBC") requirements to help state regulators monitor the financial strength and stability of life insurers by identifying those companies that may be inadequately capitalized. Under the NAIC's requirements, each insurer must maintain its total capital above a calculated threshold or take corrective measures to achieve the threshold. The threshold of adequate capital is based on a formula that takes into account the amount of risk each company faces on its products and investments. The RBC formula takes into consideration four major areas of risk which are: (i) asset risk which primarily focuses on the quality of investments; (ii) insurance risk which encompasses mortality and morbidity risk; (iii) interest rate risk which involves asset/liability matching issues; and (iv) other business risks.

Statutory laws prohibit public dissemination of certain RBC information. However, both National Western and Ozark National's current statutory capital and surplus are significantly in excess of the current threshold RBC requirements.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

This information is included in Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, in the Investments section.

ITEM 4.  CONTROLS AND PROCEDURES

The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing, and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.

There were no changes in the Company's internal controls over financial reporting, as defined in Rules 13a-15(f) and 15d-15(e) under the Exchange Act, during the quarter ended September 30, 2020 that materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting. With respect to the ongoing COVID-19 pandemic crisis, the Company's businesses were included in the financial services sector categorized as a Critical Infrastructure Sector by the Department of Homeland Security and mandated to maintain normal work schedules which it has done throughout. While the Company has adopted working remote for a sizable portion of its home office employees, existing internal controls over financial reporting have been maintained and augmented where necessary given the unique situation presented in this environment.

106

Internal controls over financial reporting change as the Company modifies or enhances its systems and processes to meet business needs. Any significant changes in controls are evaluated prior to implementation to help ensure continued effectiveness of internal controls and the control environment.

In August 2020, the Company experienced a data event in which an intruder accessed and exfiltrated certain data from our network. Based on our investigation to date, we believe that the intruder accessed or exfiltrated personal information for approximately 985,000 individuals. The Company was able to quickly restore its network and systems to continue business operations and policy servicing. While our investigation of the matter is ongoing, we have notified law enforcement and are in the process of notifying regulators and taking appropriate steps to begin notifying the impacted individuals.

PART II.  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to Note 8(A) "Legal Proceedings" of the accompanying Condensed Consolidated Financial Statements included in this Form 10-Q.

ITEM 1A. RISK FACTORS

The risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 included a discussion of the potential ramifications of natural or man-made disasters and catastrophes including pandemic disease. As a business identified as being part of a Critical Infrastructure Security by the Department of Homeland Security, our companies and businesses have retained normal operations and business hours throughout the COVID-19 pandemic crisis. Although the majority of our home office staff have been redeployed to remote work sites following social distancing protocols, our companies have continued to accept applications for insurance, issue policies, invest and manage assets, pay policy benefits and expenses, maintain information technology operations, and adhere to a sound system of internal controls over financial reporting. Since operations have not been interrupted or suspended, the Company has not activated the business continuity plans that it has in place. The exposure to adverse mortality experience has been evaluated and deemed to not significantly impact the Company's financial position. The exposure to financial service companies has principally manifested in degradations in asset values, management of adequate liquidity and capital resources, and successfully maintaining competitiveness and product profitability in an exceptionally low interest rate environment. Although the impact has not been significant to date, no conclusion can be drawn at this time whether the ongoing affects of COVID-19 upon the global economy will have a material effect on our business, results of operations and financial condition.

107

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Effective August 22, 2008, National Western adopted and implemented a limited stock buy-back program associated with the 2008 Incentive Plan which provides Option Holders the additional alternative of selling shares acquired through the exercise of options directly back to the Company. This plan was assumed by NWLGI from National Western in 2015 pursuant to the terms of the holding company reorganization implemented at that time. The program provides Option Holders with the ability to elect to sell such acquired shares back to the Company at any time within ninety (90) days after the exercise of options at the prevailing market price as of the date of notice of election. As of September 30, 2020, there are no options outstanding under the plan.

Purchased shares are reported in the Company's Condensed Consolidated Financial Statements as authorized and unissued. At December 31, 2019 and September 30, 2020 there were no stock options vested or unvested and outstanding under these plans.

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May yet Be Purchased Under the Plans or Programs
July 1, 2020 through July 31, 2020	—	$	—	N/A	N/A
August 1, 2020 through August 31, 2020	—	$	—	N/A	N/A
September 1, 2020 through September 30, 2020	—	$	—	N/A	N/A
Total	—	$	—	N/A	N/A

108

ITEM 4.  Removed and Reserved.

ITEM 6.  EXHIBITS

(a) Exhibits

Exhibit 31(a)	-	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31(b)	-	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32(a)	-	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

109

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NATIONAL WESTERN LIFE GROUP, INC.

(Registrant)

Date:	November 6, 2020	/S/ Ross R. Moody
		Ross R. Moody
		Chairman of the Board, President and
		Chief Executive Officer
		(Authorized Officer)
Date:	November 6, 2020	/S/ Brian M. Pribyl
		Brian M. Pribyl
		Senior Vice President,
		Chief Financial Officer and Treasurer
		(Principal Financial Officer)
		(Principal Accounting Officer)

110

EX-31.A

EXHIBIT 31(a)

CERTIFICATION

I, Ross R. Moody, certify that:

1.I have reviewed this report on Form 10-Q of National Western Life Group, Inc.;

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 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 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:	November 6, 2020	/S/ Ross R. Moody
		Ross R. Moody
		Chairman of the Board, President and
		Chief Executive Officer

EX-31.B

EXHIBIT 31(b)

CERTIFICATION

I, Brian M. Pribyl, certify that:

1.I have reviewed this report on Form 10-Q of National Western Life Group, Inc.;

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 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 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:	November 6, 2020	/S/Brian M. Pribyl
		Brian M. Pribyl
		Senior Vice President,
		Chief Financial Officer and
		Treasurer

EX-32.A

EXHIBIT 32(a)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of National Western Life Group, Inc. ("Company") on Form 10-Q for the period ended September 30, 2020 as filed with the Securities and Exchange Commission on or about the date hereof ("Report"), I, Ross R. Moody, Chairman of the Board, President, and Chief Executive Officer of the Company and I, Brian M. Pribyl, Senior Vice President, Chief Financial Officer, and Treasurer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)to my knowledge, the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	November 6, 2020	/S/Ross R. Moody
		Ross R. Moody
		Chairman of the Board, President and
		Chief Executive Officer
		/S/Brian M. Pribyl
		Brian M. Pribyl
		Senior Vice President,
		Chief Financial Officer
		and Treasurer

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2020	Nov. 05, 2020
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	000-55522
Entity Registrant Name	NATIONAL WESTERN LIFE GROUP, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-3339380
Entity Address, Address Line One	10801 N. Mopac Expy Bldg 3
Entity Address, City or Town	Austin,
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78759
City Area Code	(512)
Local Phone Number	836-1010
Title of 12(b) Security	Class A Common Stock, $0.01 par value
Trading Symbol	NWLI
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0001635984
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false
Class A
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		3,436,020
Class B
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		200,000

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Investments:
Debt securities held to maturity, at amortized cost, net of allowance for credit losses ($5,086 and $0; fair value: $7,378,399 and $7,407,703)	$ 6,822,053	$ 7,106,245
Debt securities available for sale, at fair value (cost: $3,156,486 and $3,206,120)	3,410,656	3,356,945
Mortgage loans, net of allowance for credit losses ($2,357 and $675)	302,715	272,422
Policy loans	75,714	80,008
Derivatives, index options	93,367	157,588
Equity securities, at fair value (cost: $15,157 and $16,894)	18,610	23,594
Other long-term investments	78,579	62,090
Total investments	10,801,694	11,058,892
Cash and cash equivalents	507,025	253,525
Deferred policy acquisition costs	633,349	723,972
Deferred sales inducements	86,104	104,359
Value of business acquired	132,426	138,071
Accrued investment income	93,330	93,298
Federal income tax receivable	802	0
Other assets	166,256	181,330
Total assets	12,420,986	12,553,447
Future policy benefits:
Universal life and annuity contracts (Note 1)	9,013,661	9,303,233
Traditional life reserves	848,515	838,738
Other policyholder liabilities	136,392	127,607
Deferred Federal income tax liability (Note 1)	53,055	36,767
Federal income tax payable	0	3,748
Other liabilities	154,133	126,924
Total liabilities	10,205,756	10,437,017
COMMITMENTS AND CONTINGENCIES (Note 8)
Common stock:
Additional paid-in capital	41,716	41,716
Accumulated other comprehensive income (loss)	104,764	60,108
Retained earnings (Note 1)	2,068,714	2,014,570
Total stockholders’ equity	2,215,230	2,116,430
Total liabilities and stockholders' equity	12,420,986	12,553,447
Class A
Common stock:
Common stock, value outstanding	34	34
Class B
Common stock:
Common stock, value outstanding	$ 2	$ 2

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Debt securities held to maturity, allowance for expected credit losses	$ 5,086	$ 0
Debt securities held to maturity - fair value	7,378,399	7,407,703
Debt securities available for sale, amortized cost	3,156,486	3,206,120
Mortgage loans - allowance for possible losses	2,357	675
Equity securities - cost	$ 15,157	$ 16,894
Class A
STOCKHOLDERS’ EQUITY:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	7,500,000	7,500,000
Common stock, shares issued (in shares)	3,436,020	3,436,020
Common stock, shares outstanding (in shares)	3,436,020	3,436,020
Class B
STOCKHOLDERS’ EQUITY:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	200,000	200,000
Common stock, shares issued (in shares)	200,000	200,000
Common stock, shares outstanding (in shares)	200,000	200,000

XML

Condensed Consolidated Statements of Earnings (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Premiums and other revenues:
Universal life and annuity contract charges	$ 40,303	$ 37,840	$ 112,478	$ 112,703
Traditional life premiums	22,693	24,099	68,956	65,492
Net investment income (loss)	129,679	108,456	261,894	388,211
Other revenues	3,977	3,273	15,217	13,652
Net realized investment gains (losses):
Total other-than-temporary impairment (“OTTI”) gains (losses)	1	(1,943)	5	(7,840)
Portion of OTTI (gains) losses recognized in other comprehensive income	(1)	(2)	(5)	(7)
Net OTTI losses recognized in earnings	0	(1,945)	0	(7,847)
Other net investment gains (losses)	6,050	1,443	12,660	11,549
Realized gains (losses) on investments	6,050	(502)	12,660	3,702
Total revenues	202,702	173,166	471,205	583,760
Benefits and expenses:
Life and other policy benefits	26,940	39,918	94,005	101,764
Amortization of deferred policy acquisition costs and value of business acquired	50,800	22,998	111,937	86,573
Universal life and annuity contract interest	85,879	59,445	119,625	200,500
Other operating expenses	25,754	25,813	74,730	77,196
Total benefits and expenses	189,373	148,174	400,297	466,033
Earnings before Federal income taxes	13,329	24,992	70,908	117,727
Federal income taxes	2,504	5,003	13,732	23,844
Net earnings	10,825	19,989	57,176	93,883
Class A
Benefits and expenses:
Net earnings	$ 10,519	$ 19,424	$ 55,560	$ 91,228
Basic earnings per share:
Basic earnings per share (in dollars per share)	$ 3.06	$ 5.65	$ 16.17	$ 26.55
Diluted earnings per share:
Diluted earnings per share (in dollars per share)	$ 3.06	$ 5.65	$ 16.17	$ 26.55
Class B
Benefits and expenses:
Net earnings	$ 306	$ 565	$ 1,616	$ 2,655
Basic earnings per share:
Basic earnings per share (in dollars per share)	$ 1.53	$ 2.83	$ 8.08	$ 13.28
Diluted earnings per share:
Diluted earnings per share (in dollars per share)	$ 1.53	$ 2.83	$ 8.08	$ 13.28

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Statement of Comprehensive Income [Abstract]
Net earnings	$ 10,825	$ 19,989	$ 57,176	$ 93,883
Unrealized gains (losses) on securities:
Net unrealized holding gains (losses) arising during period	24,357	15,586	53,569	93,730
Net unrealized liquidity gains (losses)	1	1	2	3
Reclassification adjustment for net amounts included in net earnings	(702)	1,380	(2,670)	4,252
Net unrealized gains (losses) on securities	23,656	16,967	50,901	97,985
Foreign currency translation adjustments	85	52	(46)	519
Benefit plans:
Amortization of net prior service cost and net gain (loss)	(2,066)	(504)	(6,199)	(1,512)
Other comprehensive income (loss)	21,675	16,515	44,656	96,992
Comprehensive income (loss)	$ 32,500	$ 36,504	$ 101,832	$ 190,875

XML

Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Total	Common stock	Additional paid-in capital	Accumulated other comprehensive income (loss)	Unrealized gains (losses) on non-impaired securities	Unrealized gains (losses) on non-impaired securities Cumulative effect, adjustment	Unrealized losses on impaired held to maturity securities	Unrealized losses on impaired held to maturity securities Cumulative effect, adjustment	Unrealized losses on impaired available for sale securities	Foreign currency translation adjustments	Benefit plan liability adjustment	Retained earnings	Retained earnings Cumulative effect, adjustment
Total stockholders’ equity, beginning of period at Dec. 31, 2018		$ 36	$ 41,716		$ (30,286)	$ 0	$ (7)		$ (2)	$ 4,577	$ (11,297)	$ 1,896,040	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares exercised under stock option plan		0	0
Change in unrealized gains (losses) during period, net of tax	$ 93,730				97,982
Amortization							6
Other-than-temporary impairments, non-credit, net of tax							0
Additional credit loss on previously impaired securities							0
Change in shadow deferred policy acquisition costs							(3)		0
Other-than-temporary impairments, non-credit, net of tax									0
Recoveries, net of tax									0
Change in translation adjustments during period										519
Amortization of net prior service cost and net loss, net of tax	(1,512)										(1,512)
Net earnings	93,883											93,883
Total stockholders’ equity, end of period at Sep. 30, 2019	2,091,652	36	41,716	$ 59,977	67,696		(4)		(2)	5,096	(12,809)	1,989,923
Total stockholders’ equity, beginning of period at Jun. 30, 2019		36	41,716		50,730		(5)	$ 0	(2)	5,044	(12,305)	1,969,934	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares exercised under stock option plan		0	0
Change in unrealized gains (losses) during period, net of tax	15,586				16,966
Amortization							2
Other-than-temporary impairments, non-credit, net of tax							0
Additional credit loss on previously impaired securities							0
Change in shadow deferred policy acquisition costs							(1)		0
Other-than-temporary impairments, non-credit, net of tax									0
Recoveries, net of tax									0
Change in translation adjustments during period										52
Amortization of net prior service cost and net loss, net of tax	(504)										(504)
Net earnings	19,989											19,989
Total stockholders’ equity, end of period at Sep. 30, 2019	2,091,652	36	41,716	59,977	67,696		(4)		(2)	5,096	(12,809)	1,989,923
Total stockholders’ equity, beginning of period at Dec. 31, 2019	2,116,430	36	41,716		70,665	$ 0	(4)		(2)	5,101	(15,652)	2,014,570	(3,032)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares exercised under stock option plan		0	0
Change in unrealized gains (losses) during period, net of tax	53,569				50,899
Amortization							4
Other-than-temporary impairments, non-credit, net of tax							0
Additional credit loss on previously impaired securities							0
Change in shadow deferred policy acquisition costs							(2)		0
Other-than-temporary impairments, non-credit, net of tax									0
Recoveries, net of tax									0
Change in translation adjustments during period										(46)
Amortization of net prior service cost and net loss, net of tax	(6,199)										(6,199)
Net earnings	57,176											57,176
Total stockholders’ equity, end of period at Sep. 30, 2020	2,215,230	36	41,716	104,764	121,564		(2)		(2)	5,055	(21,851)	2,068,714
Total stockholders’ equity, beginning of period at Jun. 30, 2020		36	41,716		97,909		(3)	$ 0	(2)	4,970	(19,785)	2,057,889	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares exercised under stock option plan		0	0
Change in unrealized gains (losses) during period, net of tax	24,357				23,655
Amortization							1
Other-than-temporary impairments, non-credit, net of tax							0
Additional credit loss on previously impaired securities							0
Change in shadow deferred policy acquisition costs							0		0
Other-than-temporary impairments, non-credit, net of tax									0
Recoveries, net of tax									0
Change in translation adjustments during period										85
Amortization of net prior service cost and net loss, net of tax	(2,066)										(2,066)
Net earnings	10,825											10,825
Total stockholders’ equity, end of period at Sep. 30, 2020	$ 2,215,230	$ 36	$ 41,716	$ 104,764	$ 121,564		$ (2)		$ (2)	$ 5,055	$ (21,851)	$ 2,068,714

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Cash flows from operating activities:
Net earnings	$ 57,176	$ 93,883
Adjustments to reconcile net earnings to net cash from operating activities:
Universal life and annuity contract interest	119,625	200,500
Surrender charges and other policy revenues	(21,219)	(25,608)
Realized (gains) losses on investments	(12,660)	(3,702)
Accretion/amortization of discounts and premiums, investments	1,580	1,798
Depreciation and amortization	8,892	8,501
Increase (decrease) in estimated credit losses on investments	2,930	0
(Increase) decrease in value of equity securities	3,107	(2,639)
(Increase) decrease in value of derivatives	34,866	(63,127)
(Increase) decrease in deferred policy acquisition and sales inducement costs, and value of business acquired	75,604	53,837
(Increase) decrease in accrued investment income	(32)	3,837
(Increase) decrease in other assets	8,746	1,831
Increase (decrease) in liabilities for future policy benefits	(5,288)	6,960
Increase (decrease) in other policyholder liabilities	8,785	(19,847)
Increase (decrease) in Federal income tax liability	(4,550)	6,486
Increase (decrease) in deferred Federal income tax	5,224	(17,502)
Increase (decrease) in other liabilities	(3,391)	(1,045)
Net cash provided by operating activities	279,395	244,163
Proceeds from sales of:
Debt securities available for sale	0	80,528
Other investments	5,786	29,960
Proceeds from maturities, redemptions, and prepayments of:
Debt securities held to maturity	619,984	486,344
Debt securities available for sale	240,398	189,944
Other investments	9,753	5,911
Derivatives, index options	84,778	28,457
Purchases of:
Debt securities held to maturity	(318,138)	(161,617)
Debt securities available for sale	(181,162)	(127,811)
Equity securities	(1,019)	(977)
Derivatives, index options	(51,318)	(57,443)
Other investments	(23,268)	(7,314)
Property, equipment, and other productive assets	(7,223)	(4,364)
Payment to acquire businesses, net of cash acquired	0	(189,121)
Principal payments on mortgage loans	6,022	22,384
Cost of mortgage loans acquired	(41,530)	(47,744)
Decrease (increase) in policy loans	4,294	2,580
Net cash provided by (used in) investing activities	347,357	249,717
Cash flows from financing activities:
Deposits to account balances for universal life and annuity contracts	348,583	292,551
Return of account balances on universal life and annuity contracts	(721,496)	(747,260)
Borrowings under line of credit agreement	0	75,000
Principal payments on line of credit borrowings	0	(75,000)
Principal payments under finance lease obligation	(280)	(295)
Net cash provided by (used in) financing activities	(373,193)	(455,004)
Effect of foreign exchange	(59)	657
Net increase (decrease) in cash, cash equivalents, and restricted cash	253,500	39,533
Cash, cash equivalents, and restricted cash at beginning of period	253,525	131,976
Cash, cash equivalents and restricted cash at end of period	507,025	171,509
Cash paid (received) during the period for:
Interest	56	252
Income taxes	13,229	34,758
Noncash operating activities:
Net deferral and amortization of sales inducements	(12,755)	(13,501)
Noncash investing and financing activities:
Contingent consideration to acquire businesses	$ 0	$ 3,700

XML

Consolidation and Basis of Presentation

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

CONSOLIDATION AND BASIS OF PRESENTATION

CONSOLIDATION AND BASIS OF PRESENTATION

The accompanying unaudited Condensed Consolidated Financial Statements 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 of the information and footnotes required by GAAP for annual financial statements. In the opinion of management, the accompanying Condensed Consolidated Financial Statements contain all adjustments necessary to present fairly the financial position of National Western Life Group, Inc. ("NWLGI") and its wholly owned subsidiaries (“Company”) as of September 30, 2020, and the results of its operations and its cash flows for the three and nine months ended September 30, 2020 and September 30, 2019. Such adjustments are of a normal recurring nature. The results of operations for the nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the full year. It is recommended that these Condensed Consolidated Financial Statements be read in conjunction with the audited consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 which is accessible free of charge through the Company's internet site at www.nwlgi.com or the Securities and Exchange Commission internet site at www.sec.gov. The Condensed Consolidated Balance Sheet at December 31, 2019 has been derived from the audited consolidated financial statements as of that date.

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of NWLGI and its wholly owned subsidiaries: National Western Life Insurance Company ("NWLIC" or "National Western"), Regent Care San Marcos Holdings, LLC, NWL Services, Inc., and N.I.S. Financial Services, Inc. ("NIS"). National Western's wholly owned subsidiaries include The Westcap Corporation, NWL Financial, Inc., NWLSM, Inc., Braker P III, LLC, and Ozark National Life Insurance Company ("Ozark National"). The results of operations for Ozark National and NIS include their respective business activity subsequent to their acquisition effective January 31, 2019 and all references herein to results for the nine months ended September 30, 2019 for Ozark National and NIS refer to their eight month activity February 1, 2019 through September 30, 2019. All significant intercorporate transactions and accounts have been eliminated in consolidation.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates in the accompanying Condensed Consolidated Financial Statements include: (1) liabilities for future policy benefits, (2) valuation of derivative instruments, (3) recoverability and amortization of deferred policy acquisition costs ("DPAC"), deferred sales inducements ("DSI") and the value of business acquired ("VOBA"), (4) valuation allowances for deferred tax assets, (5) goodwill, (6) allowances for credit losses and other-than-temporary impairment losses on debt securities, (7) commitments and contingencies, and (8) credit loss and valuation allowances for mortgage loans and real estate. During the first quarter of 2019, the Company incorporated accounting estimates for business combinations, value of business acquired, and fair value measurement as a result of its acquisition of Ozark National and NIS.

Revision of Prior Period Consolidated Financial Statements

During the first quarter of 2020, management identified an understatement of an excess benefit reserve on a specific block of policies that dated back to the first quarter of 2004 with the adoption of the Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts (SOP 03-1). Management concluded that this error was not material to previously issued consolidated financial statements and would be corrected through a revision to the comparative consolidated balance sheet presented for the year ended December 31, 2019. The impact of this revision as of December 31, 2019 was an increase to the future policy benefits liability of $15.0 million, a decrease to deferred federal income tax liability of $3.2 million, and a decrease to retained earnings of $11.8 million.

The table below shows the unrealized gains and losses on available-for-sale securities that were reclassified out of accumulated other comprehensive income for the three and nine months ended September 30, 2020 and September 30, 2019.

Affected Line Item in the Statements of Earnings	Amount Reclassified From Accumulated Other Comprehensive Income
	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Other net investment gains (losses)	$	889	198	3,380	2,465
Net OTTI losses recognized in earnings	—		(1,945)	—	(7,847)
Earnings before Federal income taxes	889		(1,747)	3,380	(5,382)
Federal income taxes	187		(367)	710	(1,130)
Net earnings	$	702	(1,380)	2,670	(4,252)

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New Accounting Pronouncements

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

NEW ACCOUNTING PRONOUNCEMENTS

NEW ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements not yet adopted

In August 2018, the FASB issued ASU 2018-12 Financial Services-Insurance (Topic 944) - Targeted Improvements to the Accounting for Long-Duration Contracts. This update is aimed at improving the Codification as it relates to long-duration contracts which will improve the timeliness of recognizing changes in the liability for future policy benefits, simplify accounting for certain market-based options, simplify the amortization of deferred acquisition costs, and improve the effectiveness of required disclosures. Amendments include the following:

A. Require insurance entity to (1) review and update assumptions used to measure cash flows at least annually (with changes recognized in net income) and (2) update discount rate assumption at each reporting date (with changes recognized in other comprehensive income).

B. Require insurance entity to measure all market risk benefits associated with deposit (i.e. account balance) contracts at fair value, with change in fair value attributable to change in instrument-specific credit risk recognized in other comprehensive income.

C. Simplify amortization of deferred acquisition costs and other balances amortized in proportion to premiums, gross profits, or gross margins and require those balances be amortized on constant level basis over expected term of related contract. Deferred acquisition costs are required to be written off for unexpected contract terminations but are not subject to impairment test.

D. Require insurance entity to add disclosures of disaggregated rollforwards of beginning to ending balances of the liability for future policy benefits, policyholder account balances, market risk benefits, separate account liabilities, and deferred acquisition costs. Insurance entity must also disclose information about significant inputs, judgments, assumptions, and methods used in measurement, including changes in those inputs, judgments, and assumptions, and the effect of those changes on measurement.

These updates are required to be applied retrospectively to the earliest period presented in the financial statements for fiscal periods beginning after December 15, 2022, with early adoption permitted. The Company has performed a preliminary gap analysis and created a roadmap for implementation of this standard by the effective date and is evaluating the impact of the new guidance on its Consolidated Financial Statements.

In December 2019, the FASB issued ASU 2019-12 Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740), which simplifies various aspects of the income tax accounting guidance and will be applied using different approaches depending on the specific amendment. The amendments will be effective for fiscal periods beginning after December 15, 2020. Early adoption is permitted. The Company does not expect this guidance to have a material impact on the Consolidated Financial Statements and related disclosures upon adoption.

Accounting pronouncements adopted

In June 2016, the FASB released ASU 2016-13, Financial Instruments-Credit Losses, which revises the credit loss recognition criteria for certain financial assets measured at amortized cost. The new guidance replaces the existing incurred loss recognition model with an expected loss recognition model (“CECL”). The objective of the CECL model is for the reporting entity to recognize its estimate of current expected credit losses for affected financial assets in a valuation allowance deducted from the amortized cost basis of the related financial assets that results in presenting the net carrying value of the financial assets at the amount expected to be collected. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The amendments in this Update add clarification and correction to ASU 2016-13 around accrued interest, transfers between classifications or categories for loans and debt securities, consideration of recoveries in estimating allowances, reinsurance recoveries, consideration of prepayments and estimated costs to sell when foreclosure is probable. In November, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. The amendments in this Update add clarification and correction to ASU 2016-13 around expected recoveries for purchased financial assets with credit deterioration, transition relief for troubled debt restructurings, disclosures related to accrued interest receivables, and financial assets secured by collateral maintenance provisions. The guidance for these pronouncements was effective for interim and annual periods beginning after December 15, 2019, and for most affected instruments must be adopted using a modified retrospective approach, with a cumulative effect adjustment recorded to beginning retained earnings. Effective January 1, 2020, the Company adopted the expected loss recognition model related to mortgage loans, debt securities held to maturity and reinsurance recoverable. The change in accounting, net of tax, of $3.0 million was recorded as a charge to retained earnings in the first quarter of 2020 reflecting initial allowance for estimated credit losses balances of $1.2 million on mortgage loans and $3.3 million on debt securities held to maturity. The estimated credit losses for the reinsurance recoverable were immaterial to the financial statements, but are monitored on a quarterly basis for any changes. Refer to Note (9) Investments for more information. Certain disclosures required by ASU 2016-13 are not included in the Consolidated Financial Statements as the impact of this standard was not material.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on the Company’s present or future Consolidated Financial Statements.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

Robert L. Moody, Sr., through the Robert L. Moody Revocable Trust, controls 99.0% of the total outstanding shares of the Company's Class B common stock as of September 30, 2020. Holders of the Company's Class A common stock elect one-third of the Board of Directors of the Company, and holders of the Class B common stock elect the remainder. Any cash or in-kind dividends paid on each share of Class B common stock are to be only one-half of the cash or in-kind dividends paid on each share of Class A common stock. In the event of liquidation of the Company, the Class A stockholders will receive the par value of their shares; then the Class B stockholders shall receive the par value of their shares; and the remaining net assets of the Company shall be divided between the stockholders of both Class A and Class B stock based upon the number of shares held.

National Western is restricted by state insurance laws as to dividend amounts which may be paid to stockholders without prior approval from the Colorado Division of Insurance. The restrictions are based on the lesser of statutory earnings from operations, excluding capital gains, or 10% of statutory surplus of National Western as of the previous year-end. Under these guidelines the maximum dividend payment which may be made without prior approval in 2020 is $152.8 million. As the sole owner of NWLIC, all dividends declared by National Western are payable entirely to NWLGI and are eliminated in consolidation.

Ozark National is similarly restricted under the state insurance laws of Missouri as to dividend amounts which may be paid to stockholders without prior approval to the greater of 10.0% of the statutory surplus of the company from the preceding year-end or the company's net gain from operations, excluding capital gains, from the prior calendar year. Based upon this restriction, the maximum dividend payment which may be made in 2020 without prior approval is $17.2 million.

As part of the Stock Purchase Agreement dated October 3, 2018, by and between NWLIC and Ozark National's previous owner, the Missouri Department of Commerce and Insurance granted approval for an extraordinary dividend of $102.7 million to be paid to the prior owner concurrent with the closing of the transaction effective January 31, 2019. All dividends declared by Ozark National thereafter are payable entirely to NWLIC as the sole owner and are eliminated in consolidation.

National Western did not declare or pay cash dividends to NWLGI in the nine months ended September 30, 2020. In the first quarter of 2019, National Western declared and paid a $32.0 million dividend to NWLGI, the proceeds of which were used as part of the cash purchase of NIS. In the third quarter of 2019, National Western declared a $4.0 million dividend to NWLGI which was subsequently paid on October 17, 2019.

NWLGI did not declare or pay cash dividends on its common shares during the nine months ended September 30, 2020 and 2019.

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Earnings Per Share

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Basic earnings per share of common stock are computed by dividing net earnings available to each class of common stockholders on an as if distributed basis by the weighted-average number of common shares outstanding for the period. Diluted earnings per share, by definition, reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock, that then shared in the distributed earnings of each class of common stock. U.S. GAAP requires a two-class presentation for the Company's two classes of common stock. The Company currently has no share-based compensation awards outstanding that could be redeemed for shares of common stock.

Net earnings for the periods shown below is allocated between Class A shares and Class B shares based upon (1) the proportionate number of shares issued and outstanding as of the end of the period, and (2) the per share dividend rights of the two classes under the Company's Restated Certificate of Incorporation (the Class B dividend per share is equal to one-half the Class A dividend per share).

	Three Months Ended September 30,
	2020			2019
	Class A		Class B	Class A	Class B
	(In thousands except per share amounts)
Numerator for Basic and Diluted Earnings Per Share:
Net earnings	$	10,825		19,989
Dividends - Class A shares	—			—
Dividends - Class B shares	—			—
Undistributed earnings	$	10,825		19,989
Allocation of net earnings:
Dividends	$	—	—	—	—
Allocation of undistributed earnings	10,519		306	19,424	565
Net earnings	$	10,519	306	19,424	565
Denominator:
Basic earnings per share - weighted-average shares	3,436		200	3,436	200
Effect of dilutive stock options	—		—	—	—
Diluted earnings per share - adjusted weighted-average shares for assumed conversions	3,436		200	3,436	200
Basic earnings per share	$	3.06	1.53	5.65	2.83
Diluted earnings per share	$	3.06	1.53	5.65	2.83

	Nine Months Ended September 30,
	2020			2019
	Class A		Class B	Class A	Class B
	(In thousands except per share amounts)
Numerator for Basic and Diluted Earnings Per Share:
Net earnings	$	57,176		93,883
Dividends - Class A shares	—			—
Dividends - Class B shares	—			—
Undistributed earnings	$	57,176		93,883
Allocation of net earnings:
Dividends	$	—	—	—	—
Allocation of undistributed earnings	55,560		1,616	91,228	2,655
Net earnings	$	55,560	1,616	91,228	2,655
Denominator:
Basic earnings per share - weighted-average shares	3,436		200	3,436	200
Effect of dilutive stock options	—		—	—	—
Diluted earnings per share - adjusted weighted-average shares for assumed conversions	3,436		200	3,436	200
Basic Earnings Per Share	$	16.17	8.08	26.55	13.28
Diluted Earnings Per Share	$	16.17	8.08	26.55	13.28

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Pension and Other Postretirement Plans

9 Months Ended

Sep. 30, 2020

Retirement Benefits [Abstract]

PENSION AND OTHER POSTRETIREMENT PLANS

PENSION AND OTHER POSTRETIREMENT PLANS

(A)Defined Benefit Pension Plans

National Western sponsors a qualified defined benefit pension plan covering employees enrolled prior to 2008. The plan provides benefits based on the participants' years of service and compensation. The Company makes annual contributions to the plan that comply with the minimum funding provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). On October 19, 2007, National Western's Board of Directors approved an amendment to freeze the pension plan as of December 31, 2007. The freeze ceased future benefit accruals to all participants and closed the plan to any new participants. In addition, all participants became immediately 100% vested in their accrued benefits as of that date. As participants are no longer earning a credit for service, future qualified defined benefit plan expense is projected to be minimal. Fair values of plan assets and liabilities are measured as of the prior December 31 for each year. The following table summarizes the components of net periodic benefit cost.

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2020		2019	2020	2019
	(In thousands)
Service cost	$	27	24	81	72
Interest cost	168		210	505	630
Expected return on plan assets	(315)		(271)	(946)	(815)
Amortization of prior service cost	—		—	—	—
Amortization of net loss	145		165	435	495
Net periodic benefit cost	$	25	128	75	382

The service cost shown above for each period represents plan expenses expected to be paid out of plan assets. Under the clarified rules of the Pension Protection Act, plan expenses paid from plan assets are to be included in the plan's service cost component.

The Company's minimum required contribution for the 2020 plan year is $0.0 million. There were no planned contributions remaining for the 2019 plan year as of September 30, 2020. As of September 30, 2020, the Company has made $0.2 million in contributions to the plan for the 2020 plan year.

The components of net periodic benefit cost including service cost are reported in the line item “Other operating expenses” in the Condensed Consolidated Statements of Earnings (Loss).

National Western also sponsors three non-qualified defined benefit pension plans. The first plan covers certain senior officers and provides benefits based on the participants' years of service and compensation. The primary pension obligations and administrative responsibilities of the plan are maintained by a pension administration firm, which is a subsidiary of American National Group, Inc. ("American National"), a related party. American National has guaranteed the payment of pension obligations under the plan. However, the Company has a contingent liability with respect to the plan should these entities be unable to meet their obligations under the existing agreements. Also, the Company has a contingent liability with respect to the plan in the event that a plan participant continues employment with National Western beyond age seventy, the aggregate average annual participant salary increases exceed 10% per year, or any additional employees become eligible to participate in the plan. If any of these conditions are met, the Company would be responsible for any additional pension obligations resulting from these items. Amendments were made to the plan to allow an additional employee to participate and to change the benefit formula for the then Chairman of the Company. As previously mentioned, these additional obligations are a liability to the Company. Effective December 31, 2004, this plan was frozen with respect to the continued accrual of benefits of the then Chairman and the then President of the Company in order to comply with law changes under the American Jobs Creation Act of 2004 ("Act").

Effective July 1, 2005, National Western established a second non-qualified defined benefit plan for the benefit of the then Chairman of the Company. This plan is intended to provide for post-2004 benefit accruals that mirror and supplement the pre-2005 benefit accruals under the previously discussed non-qualified plan, while complying with the requirements of the Act.

Effective November 1, 2005, National Western established a third non-qualified defined benefit plan for the benefit of the then President of the Company. This plan is intended to provide for post-2004 benefit accruals that supplement the pre-2005 benefit accruals under the first non-qualified plan as previously discussed, while complying with the requirements of the Act.

The following table summarizes the components of net periodic benefit costs for the non-qualified defined benefit plans.

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2020		2019	2020	2019
	(In thousands)
Service cost	$	302	126	907	377
Interest cost	337		256	1,012	768
Amortization of prior service cost	14		14	44	44
Amortization of net loss	1,446		348	4,336	1,044
Net periodic benefit cost	$	2,099	744	6,299	2,233

As the plans are not funded, there is no expected return on plan assets shown in the net periodic benefit cost table above. The Company expects to contribute $2.0 million to these plans in 2020. As of September 30, 2020, the Company has contributed $1.6 million to the plans.

The components of net periodic benefit cost including service cost are reported in the line item “Other operating expenses” in the Condensed Consolidated Statements of Earnings (Loss).

Ozark National and NIS have no defined benefit plans.

(B)Postretirement Employment Plans Other Than Pension

National Western sponsors two healthcare plans that were amended in 2004 to provide postretirement benefits to certain fully-vested individuals. The plans are unfunded. The following table summarizes the components of net periodic benefit costs.

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2020		2019	2020	2019
	(In thousands)
Interest cost	$	41	49	124	148
Amortization of prior service cost	—		13	—	39
Amortization of net loss	40		61	119	183
Net periodic benefit cost	$	81	123	243	370

As the plans are not funded, there is no expected return on plan assets shown in the net periodic benefit cost table above. The Company expects to contribute minimal amounts to the plans in 2020. Ozark National and NIS do not offer postemployment benefits.

The components of net periodic benefit cost including service cost are reported in the line item “Other operating expenses” in the Condensed Consolidated Statements of Earnings (Loss).

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Segment and Other Operating Information

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

SEGMENT AND OTHER OPERATING INFORMATION

SEGMENT AND OTHER OPERATING INFORMATION

The Company defines its reportable operating segments as domestic life insurance, international life insurance, annuities, and acquired businesses. These segments are organized based on product types, geographic marketing areas, and business groupings. Ozark National and NIS have been combined into the segment "Acquired Businesses" given its inter-related marketing and sales approach which consists of a coordinated sale of a non-participating whole life insurance product (Ozark National) and a mutual fund investment product (NIS). A fifth category "All Others" primarily includes investments and earnings of non-operating subsidiaries as well as other remaining investments and assets not otherwise supporting specific segment operations.

A summary of segment information as of September 30, 2020 and December 31, 2019 for the Condensed Consolidated Balance Sheet items and for the three and nine months ended September 30, 2020 and September 30, 2019 for the Condensed Consolidated Statements of Earnings (Loss) is provided below.

Condensed Consolidated Balance Sheet Items:

	September 30, 2020
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Deferred policy acquisition costs, sales inducements, and value of business acquired	$	127,124	183,318	402,072	139,365	—	851,879
Total segment assets	1,467,577		1,049,371	7,797,137	1,030,162	367,605	11,711,852
Future policy benefits	1,275,476		798,665	7,068,118	719,917	—	9,862,176
Other policyholder liabilities	17,190		12,214	91,818	15,170	—	136,392

	December 31, 2019
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Deferred policy acquisition costs, sales inducements, and value of business acquired	$	127,557	209,858	486,553	142,434	—	966,402
Total segment assets	1,399,818		1,153,105	8,198,730	978,243	362,900	12,092,796
Future policy benefits (1)	1,198,103		870,461	7,366,894	706,513	—	10,141,971
Other policyholder liabilities	18,016		14,903	80,002	14,686	—	127,607

(1) Revised to correct for an adjustment related to an understatement of reserve liabilities of $15.0 million. Refer to Note 1.

Condensed Consolidated Statements of Earnings (Loss):

	Three Months Ended September 30, 2020
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Premiums and contract revenues	$	17,734	21,551	4,187	19,524	—	62,996
Net investment income (loss)	21,201		10,354	87,889	6,434	3,801	129,679
Other revenues	10		6	84	2,628	1,249	3,977
Total revenues	38,945		31,911	92,160	28,586	5,050	196,652
Life and other policy benefits	3,785		2,278	3,383	17,494	—	26,940
Amortization of deferred policy acquisition costs and value of business acquired	10,540		6,496	31,794	1,970	—	50,800
Universal life and annuity contract interest	20,352		(14,023)	79,550	—	—	85,879
Other operating expenses	5,185		5,434	9,205	4,498	1,432	25,754
Federal income taxes (benefit)	(161)		5,169	(5,294)	963	556	1,233
Total expenses	39,701		5,354	118,638	24,925	1,988	190,606
Segment earnings (loss)	$	(756)	26,557	(26,478)	3,661	3,062	6,046

	Nine Months Ended September 30, 2020
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Premiums and contract revenues	$	40,971	67,479	13,536	59,448	—	181,434
Net investment income	23,293		12,507	196,187	19,284	10,623	261,894
Other revenues	40		54	80	7,369	7,674	15,217
Total revenues	64,304		80,040	209,803	86,101	18,297	458,545
Life and other policy benefits	13,831		9,293	20,452	50,429	—	94,005
Amortization of deferred policy acquisition costs and value of business acquired	16,322		19,392	70,159	6,064	—	111,937
Universal life and annuity contract interest	17,831		(15,368)	117,162	—	—	119,625
Other operating expenses	15,123		13,047	28,787	13,361	4,412	74,730
Federal income taxes (benefit)	199		8,907	(4,440)	4,103	2,304	11,073
Total expenses	63,306		35,271	232,120	73,957	6,716	411,370
Segment earnings (loss)	$	998	44,769	(22,317)	12,144	11,581	47,175

	Three Months Ended September 30, 2019
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Premiums and contract revenues	$	11,387	25,065	5,336	20,151	—	61,939
Net investment income	12,885		6,872	78,000	6,300	4,399	108,456
Other revenues	49		25	8	2,318	873	3,273
Total revenues	24,321		31,962	83,344	28,769	5,272	173,668
Life and other policy benefits	6,099		5,074	12,550	16,195	—	39,918
Amortization of deferred acquisition costs and value of business acquired	2,181		(3,047)	21,688	2,176	—	22,998
Universal life and annuity contract interest	11,267		14,637	33,541	—	—	59,445
Other operating expenses	5,297		5,493	8,596	4,772	1,655	25,813
Federal income taxes (benefit)	(107)		1,970	1,388	1,133	725	5,109
Total expenses	24,737		24,127	77,763	24,276	2,380	153,283
Segment earnings (loss)	$	(416)	7,835	5,581	4,493	2,892	20,385

	Nine Months Ended September 30, 2019
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Premiums and contract revenues	$	32,897	74,905	16,061	54,332	—	178,195
Net investment income	51,379		30,165	270,727	16,283	19,657	388,211
Other revenues	113		79	80	6,049	7,331	13,652
Total revenues	84,389		105,149	286,868	76,664	26,988	580,058
Life and other policy benefits	13,850		10,195	33,856	43,863	—	101,764
Amortization of deferred acquisition costs and value of business acquired	8,898		11,195	60,150	6,330	—	86,573
Universal life and annuity contract interest	45,693		33,967	120,840	—	—	200,500
Other operating expenses	14,437		14,278	25,478	12,348	10,655	77,196
Federal income taxes (benefit)	306		7,192	9,426	2,836	3,307	23,067
Total expenses	83,184		76,827	249,750	65,377	13,962	489,100
Segment earnings (loss)	$	1,205	28,322	37,118	11,287	13,026	90,958

Reconciliations of segment information to the Company's Condensed Consolidated Financial Statements are provided below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Premiums and Other Revenues:
Premiums and contract revenues	$	62,996	61,939	181,434	178,195
Net investment income (loss)	129,679		108,456	261,894	388,211
Other revenues	3,977		3,273	15,217	13,652
Realized gains (losses) on investments	6,050		(502)	12,660	3,702
Total condensed consolidated premiums and other revenues	$	202,702	173,166	471,205	583,760

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Federal Income Taxes:
Total segment Federal income taxes	$	1,233	5,109	11,073	23,067
Taxes on realized gains (losses) on investments	1,271		(106)	2,659	777
Total condensed consolidated Federal income taxes	$	2,504	5,003	13,732	23,844

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Net Earnings:
Total segment earnings	$	6,046	20,385	47,175	90,958
Realized gains (losses) on investments, net of taxes	4,779		(396)	10,001	2,925
Total condensed consolidated net earnings	$	10,825	19,989	57,176	93,883

	September 30,		December 31,
	2020		2019
	(In thousands)
Assets:
Total segment assets	$	11,711,852	12,092,796
Other unallocated assets	709,134		460,651
Total condensed consolidated assets	$	12,420,986	12,553,447

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Share-Based Payments

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

SHARE-BASED PAYMENTS

SHARE-BASED PAYMENTSEffective June 20, 2008, the Company's shareholders approved a 2008 Incentive Plan (“2008 Plan”) which provided for the grant of any or all of the following types of awards to eligible employees: (1) stock options, including incentive stock options and nonqualified stock options; (2) stock appreciation rights ("SARs"), in tandem with stock options or freestanding; (3) restricted stock or restricted stock units; and, (4) performance awards. The number of shares of Class A, $1.00 par value, common stock which were allowed to be issued under the 2008 Plan, or as to which SARs or other awards were allowed to be granted, could not exceed 300,000. This plan was assumed by NWLGI from National Western pursuant to the terms of the holding company reorganization in 2015. On June 15, 2016, stockholders of NWLGI approved an amended and restated 2008 Plan ("Incentive Plan"), which extended the term of the 2008 Plan for ten years from the date of stockholder approval. The Incentive Plan includes additional provisions, most notably regarding the definition of performance objectives which could be used in the issuance of the fourth type of award noted above (performance awards).

All of the employees of the Company and its subsidiaries are eligible to participate in the current Incentive Plan. In addition, directors of the Company are eligible to receive the same types of awards as employees except that they are not eligible to receive incentive stock options. Company directors, including members of the Compensation and Stock Option Committee, are eligible for nondiscretionary stock options. At the end of 2018, all stock options granted under the 2008 Plan had been exercised, forfeited, or expired. SARs granted prior to 2016 vest 20% annually following three years of service following the grant date. Employee SARs granted 2016 and thereafter vest 33.3% annually following one year of service from the date of the grant. Directors' SARs grants vest 20% annually following one year of service from the date of grant.

Effective during August 2008, the Company adopted and implemented a limited stock buy-back program with respect to the 2008 Plan which provided stock option holders the additional alternative of selling shares acquired through the exercise of options directly back to the Company. Option holders could elect to sell such acquired shares back to the Company at any time within ninety (90) days after the exercise of options at the prevailing market price as of the date of notice of election. The buy-back program did not alter the terms and conditions of the 2008 Plan. This plan was assumed as well by NWLGI from National Western pursuant to the terms of the holding company reorganization. There are currently no stock options issued and outstanding.

The Incentive Plan allows for certain other share or unit awards which are solely paid out in cash based on the value of the Company's shares, or changes therein, as well as the financial performance of the Company under pre-determined target performance metrics. Certain awards, such as restricted stock units ("RSUs") provide solely for cash settlement based upon the market price of the Company's Class A common shares, often referred to as "phantom stock-based awards" in equity compensation plans. Unlike share-settled awards, which have a fixed grant-date fair value, the fair value of unsettled or unvested liability awards is remeasured at the end of each reporting period based on the change in fair value of a share. The liability and corresponding expense are adjusted accordingly until the award is settled. For employees, the vesting period for RSUs is 100% at the end of 3 years from the grant date. RSUs granted prior to 2019 are payable in cash at the vesting date equal to the closing price of the Company's Class A common share on the three years anniversary date. RSUs granted in 2019 are payable in cash at the 3 years vesting date equal to the 20-day moving average closing price of the Company’s Class A common share at that time.

Other awards may involve performance share units ("PSUs") which are units granted at a specified dollar amount per unit, typically linked to the Company's Class A common share price, that are subsequently multiplied by an attained performance factor to derive the number of PSUs to be paid as cash compensation at the vesting date. PSUs also vest three years from the date of grant. For PSUs, the performance period begins the first day of the calendar year for which the PSUs are granted and runs three calendar years. At that time, the three-year performance outcome will be measured against the pre-defined target amounts to determine the number of PSUs earned as compensation. PSUs granted prior to 2019 are paid at the closing price of the Company's Class A common share on the vesting date. PSUs granted in 2019 are payable at the 20-day moving average closing price of the Company’s Class A common share at the vesting date.

PSU awards covering the three year measurement period ended December 31, 2018 were paid out in the first quarter of 2019. The performance factor during the measurement period used to determine compensation payouts was 93.86% of the pre-defined metric target.

PSU awards covering the three year measurement period ended December 31, 2019 were paid out in the first quarter of 2020. The performance factor during the measurement period used to determine compensation payouts was 101.19% of the pre-defined metric target.

Directors of the Company are eligible to receive RSUs under the Incentive Plan. Unlike RSUs granted to officers, the RSUs granted to directors vest one year from the date of grant. RSUs granted prior to 2019 are payable in cash at the vesting date equal to the closing price of the Company's Class A common share at that time. RSUs granted in 2019 are payable in cash at the vesting date equal to the 20-day moving average closing price of the Company’s Class A common share at that time.

No awards were granted to officers and directors during the nine months ended September 30, 2020 and 2019.

The Company uses the current fair value method to measure compensation costs for awards granted under the share-based plans.

As of September 30, 2020 and December 31, 2019, the liability balance was $5.0 million and $11.2 million, respectively. A summary of awards by type and related activity is detailed below.

		Options Outstanding
	Shares Available For Grant	Shares	Weighted- Average Exercise Price
Stock Options:
Balance at January 1, 2020	291,000	—	$	—
Exercised	—	—	$	—
Forfeited	—	—	$	—
Expired	—	—	$	—
Stock options granted	—	—	$	—
Balance at September 30, 2020	291,000	—	$	—

	Liability Awards
	SAR	RSU	PSU
Other Share/Unit Awards:
Balance at January 1, 2020	107,517	14,352	19,108
Exercised	(1,372)	(2,357)	(4,150)
Forfeited	(1,797)	(259)	—
Granted	—	—	—
Balance at September 30, 2020	104,348	11,736	14,958

SARs, RSUs, and PSUs shown as forfeited in the above tables represent vested and unvested awards not exercised by plan participants upon their termination from the Company in accordance with the expiration provisions of the awards.

The total intrinsic value of share-based compensation exercised was $1.9 million and $2.5 million for the nine months ended September 30, 2020 and 2019, respectively. The total share-based compensation paid was $1.9 million and $2.5 million for the nine months ended September 30, 2020 and 2019, respectively. The total fair value of SARs, RSUs, and PSUs vested during the nine months ended September 30, 2020 and 2019 was $1.8 million and $3.0 million, respectively. No cash amounts were received from the exercise of stock options under the Plans during the periods reported.

The following table summarizes information about SARs outstanding at September 30, 2020. There were no options outstanding as of September 30, 2020.

	SARs Outstanding
	Number Outstanding		Weighted- Average Remaining Contractual Life	Number Exercisable
Exercise prices:
$132.56	19,118		1.2 years	19,118
$210.22	23,550		3.2 years	19,600
$216.48	11,149		5.4 years	11,149
$311.16	9,797		6.2 years	9,797
$310.55	203		6.6 years	203
$334.34	9,264		7.0 years	6,254
$303.77	11,462		8.0 years	3,967
$252.91	19,805		9.1 years	249
Totals	104,348			70,337
Aggregate intrinsic value (in thousands)	$	960		$	960

The aggregate intrinsic value in the table above is based on the closing Class A stock price of $182.77 per share on September 30, 2020.

In estimating the fair value of the SARs outstanding at September 30, 2020 and December 31, 2019, the Company employed the Black-Scholes option pricing model with assumptions detailed below.

	September 30, 2020	December 31, 2019
Expected term	1.2 to 9.1 years	1.9 to 10 years
Expected volatility weighted-average	32.85 %	22.19	%
Expected dividend yield	0.20 %	0.12	%
Risk-free rate weighted-average	0.17 %	1.61	%

The Company reviewed the contractual term relative to the SARs as well as perceived future behavior patterns of exercise. Volatility is based on the Company’s historical volatility over the expected term of the SARs by expected exercise date.

The pre-tax compensation cost/(benefit) recognized in the financial statements related to these plans was $(0.5) million and $(4.4) million for the three and nine months ended September 30, 2020 and $1.5 million and $0.1 million for the three and nine months ended September 30, 2019, respectively. The related tax expense/(benefit) recognized was $0.1 million and $0.9 million for the three and nine months ended September 30, 2020 and $(0.3) million and $0.0 million for the three and nine months ended September 30, 2019.

As of September 30, 2020, the total pre-tax compensation expense related to non-vested share-based awards not yet recognized was $2.6 million. This amount is expected to be recognized over a weighted-average period of 1.3 years. The Company recognizes compensation cost over the graded vesting periods.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

(A)  Legal Proceedings

In the normal course of business, the Company is involved or may become involved in various legal actions in which claims for alleged economic and punitive damages have been or may be asserted, some for substantial amounts. In recent years, carriers offering life insurance and annuity products have faced litigation, including class action lawsuits, alleging improper product design, improper sales practices, and similar claims. As previously disclosed, the Company has been a defendant in prior years in such class action lawsuits. Given the uncertainty involved in these types of actions, the ability to make a reliable evaluation of the likelihood of an unfavorable outcome or an estimate of the amount of or range of potential loss is endemic to the particular circumstances and evolving developments of each individual matter on its own merits.

On September 28, 2017, a purported shareholder derivative lawsuit was filed in the 122nd District Court of Galveston County, State of Texas entitled Robert L. Moody, Jr. derivatively on behalf of National Western Life Insurance Company and National Western Life Group, Inc. v. Ross Rankin Moody, et al., naming certain current and former directors and current officers as defendants. The complaint challenged the directors’ oversight of insurance sales to non-U.S. residents and alleged that the defendants breached their fiduciary duties in the conduct of their duties as board members by failing to act (i) on an informed basis and (ii) in good faith or with the honest belief that their actions were in the best interests of the Company. The complaint sought an undetermined amount of damages, attorneys’ fees and costs, and equitable relief, including the removal of the Company’s Chairman and Chief Executive Officer and other board members and/or officers of the Company. The Company believes that the claims in the complaint were baseless and without merit, will continue to vigorously defend this lawsuit, and was awarded reimbursement of legal costs and expenses from plaintiff as detailed below. The Company believes, based on information currently available, that the final outcome of this lawsuit will not have a material adverse effect on the Company’s business, results of operations, or consolidated financial position. The companies and directors filed their respective Pleas to the Jurisdiction ("Pleas") contesting the plaintiff's standing to even pursue this action, along with their Answers, on October 27, 2017. On December 14, 2017, plaintiff filed a Response to the Pleas and on December 21, 2017, the Court heard oral argument on the Pleas. Plaintiff then filed a First Amended Petition on January 11, 2018. The companies and directors filed a Supplement to the Pleas on January 30, 2018, to which plaintiff responded on February 1, 2018, and the companies and directors replied on February 9, 2018. On May 3, 2018, the Court issued a memorandum to all attorneys of record stating that the Court would grant the defendants' Pleas and asked the attorney for defendants to prepare and submit proposed orders/judgments granting the requested relief for consideration by the Court. The defendants filed such proposed order granting the Pleas on May 7, 2018. On May 16, 2018 the Court issued an Order granting the Pleas and dismissing Robert L. Moody, Jr.’s claims with prejudice, and plaintiff then filed a Motion to Transfer Venue (“MTTV”). Defendants filed an Application for Fees, seeking to recover defendants’ legal costs and expenses from plaintiff, and a Response to the MTTV on June 8, 2018. In response plaintiff filed a Motion to Vacate, a Response to the Application for Fees, and his own Request for Attorney’s Fees on July 5, 2018. Defendants filed a Response to the Motion to Vacate and to plaintiff’s Request for Attorney’s Fees on July 11, 2018, and the Court heard oral arguments on July 16, 2018. Plaintiff filed supplemental briefing in support of his July 5, 2018 filings on July 25, 2018, and defendants filed their response to plaintiff's supplemental briefing on July 27, 2018. On August 8, 2018 the Court issued an Order denying plaintiff's Motion to Vacate. Pursuant to the Court’s instructions, on October 5, 2018, defendants filed an Order Granting Application for Expenses. Defendants then filed a Motion for Entry of Final Judgment and a Request for Submission Date on Motion for Entry of Final Judgment on October 11, 2018, which the Court set as October 30, 2018. Plaintiff filed his Objection to Proposed Final Judgment and Objection to Proposed Order on Attorneys’ Fees on October 25, 2018, to which defendants filed a response on October 30, 2018. On November 11, 2018, the Court issued its Final Judgment: ordering Plaintiff to pay the companies $1,314,054 for reasonable and necessary fees and expenses; denying Plaintiff’s Motion to Transfer Venue, and; dismissing Plaintiff’s counterclaim. Plaintiff has appealed the Court’s Final Judgment and that appeal is pending before the First District Court of Appeals in Houston, Texas.

In April of 2019, National Western defended a two-week jury trial in which it was alleged that it committed actionable Financial Elder Abuse in its issuance of a $100,000 equity indexed annuity to the Plaintiff in the case of Williams v Pantaleoni et al, Case No. 17CV03462, Butte County California Superior Court. The Court entered an Amended Judgment on the Jury Verdict on July 27, 2019 against National Western in the amount of $14,949 for economic damages and $2.9 million in non-economic and punitive damages. National Western vigorously disputes the verdicts and the amounts awarded, and in furtherance of such, filed a Motion for Judgment Notwithstanding Jury Verdict and a Motion for New Trial, both of which were rejected by the Court. On September 9, 2019, NWLIC filed its Notice of Appeal. On November 11, 2019, the judge awarded the Plaintiff attorney’s fees in the amount of $1.3 million. Both the Plaintiff and NWLIC have appealed this ruling.

Although there can be no assurances, at the present time, the Company does not anticipate that the ultimate liability arising from such other potential, pending, or threatened legal actions will have a material adverse effect on the financial condition or operating results of the Company.

Separately, Brazilian authorities commenced an investigation into possible violations of Brazilian criminal law in connection with the issuance of National Western insurance policies to Brazilian residents, and in assistance of such investigation a Commissioner appointed by the U.S. District Court for the Western District of Texas issued a subpoena in March of 2015 upon NWLIC to provide information relating to such possible violations. No conclusion can be drawn at this time as to its outcome or how such outcome may impact the Company’s business, results of operations or financial condition. National Western has been cooperating with the relevant governmental authorities in regard to this matter.

(B) Financial Instruments

In order to meet the financing needs of its customers in the normal course of business, the Company is a party to financial instruments with off-balance sheet risk. These financial instruments are commitments to extend credit which involve elements of credit and interest rate risk in excess of the amounts recognized in the Condensed Consolidated Balance Sheets.

The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amounts, assuming that the amounts are fully advanced and that collateral or other security is of no value. Commitments to extend credit are legally binding agreements to lend to a customer that generally have fixed expiration dates or other termination clauses and may require payment of a fee. Commitments do not necessarily represent future liquidity requirements, as some could expire without being drawn upon. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The Company controls the credit risk of these transactions through credit approvals, limits, and monitoring procedures.

The Company had no commitments to fund new loans and $7.2 million of commitments to extend credit relating to existing loans at September 30, 2020. The Company evaluates each customer's creditworthiness on a case-by-case basis. The Company had commitments to make capital contributions to investment funds of $52.2 million as of September 30, 2020.

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Investments

9 Months Ended

Sep. 30, 2020

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS

INVESTMENTS

(A)Investment Gains and Losses

The Company uses the specific identification method in computing realized gains and losses. The table below presents realized gains and losses, excluding impairment losses, for the periods indicated.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Available for sale debt securities:
Realized gains on disposal	$	888	197	3,379	2,548
Realized losses on disposal	—		—	—	(84)
Held to maturity debt securities:
Realized gains on disposal	2,501		1,246	6,620	2,197
Realized losses on disposal	—		—	—	—
Real estate gains (losses)	2,661		—	2,661	6,888
Other	—		—	—	—
Totals	$	6,050	1,443	12,660	11,549

Disposals in the held to maturity category during the periods shown represent calls initiated by the credit issuer of the debt security. It is the Company's policy to initiate disposals of debt securities in the held to maturity category only in instances in which the credit status of the issuer comes into question and the realization of all or a significant portion of the investment principal of the holding is deemed to be in jeopardy.

In the third quarter of 2020, the Company sold an investment real estate property for a realized gain of $2.7 million. Net real estate gains for the nine months ended September 30, 2019 primarily pertain to the Company's sale of its nursing home operations in Reno, Nevada and San Marcos, Texas as well as a property sold located in Austin, Texas. The sale of the Reno nursing home was completed effective during the first quarter of 2019 and a gain of $5.7 million was realized on the sale of the land and building associated with the operation. The sale of the San Marcos nursing home was concluded during the second quarter of 2019 and the Company recorded a loss of $(2.0) million associated with the sale of the land and building of this operation. The sale of the Company's prior home office was also completed during the second quarter of 2019 and realized a gain on the sale of $3.2 million.

For the three months ended September 30, 2020 and 2019 the percentage of total gains on bonds due to the call of securities was 99.9% and 99.6%, respectively. This includes calls out of the Company's available for sale portfolio of debt securities. For the nine months ended September 30, 2020 and 2019 the percentage of gains on bonds due to the call of securities was 99.8% and 81.0%, respectively.

(B)Debt Securities

The table below presents amortized costs and fair values of debt securities held to maturity at September 30, 2020.

	Debt Securities Held to Maturity
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value	Allowance for Credit Losses
	(In thousands)
U.S. agencies	$	73,153	2,934	—	76,087	(81)
U.S. Treasury	3,798		156	—	3,954	—
States and political subdivisions	437,620		24,976	(124)	462,472	(176)
Foreign governments	1,128		150	—	1,278	—
Public utilities	812,251		71,098	—	883,349	(718)
Corporate	4,549,262		401,764	(7,620)	4,943,406	(4,111)
Commercial mortgage-backed	3,019		34	—	3,053	—
Residential mortgage-backed	944,838		57,854	(1)	1,002,691	—
Asset-backed	2,070		39	—	2,109	—
Totals	$	6,827,139	559,005	(7,745)	7,378,399	(5,086)

The table below presents amortized costs and fair values of debt securities available for sale at September 30, 2020.

	Debt Securities Available for Sale
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value	Allowance for Credit Losses
	(In thousands)
States and political subdivisions	$	89,168	8,384	(2)	97,550	—
Foreign governments	9,990		235	—	10,225	—
Public utilities	62,413		5,194	—	67,607	—
Corporate	2,895,799		256,716	(20,349)	3,132,166	—
Commercial mortgage-backed	27,124		1,187	—	28,311	—
Residential mortgage-backed	10,653		1,247	(159)	11,741	—
Asset-backed	61,339		1,759	(42)	63,056	—
Totals	$	3,156,486	274,722	(20,552)	3,410,656	—

The table below presents amortized costs and fair values of debt securities held to maturity at December 31, 2019.

	Debt Securities Held to Maturity
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(In thousands)
U.S. agencies	$	100,910	1,686	—	102,596
U.S. Treasury	3,782		140	—	3,922
States and political subdivisions	431,433		19,440	(84)	450,789
Foreign governments	1,144		55	—	1,199
Public utilities	888,444		36,638	(83)	924,999
Corporate	4,607,826		212,281	(718)	4,819,389
Commercial mortgage-backed	3,032		52	—	3,084
Residential mortgage-backed	1,066,899		32,706	(716)	1,098,889
Asset-backed	2,775		62	(1)	2,836
Totals	$	7,106,245	303,060	(1,602)	7,407,703

The table below presents amortized costs and fair values of debt securities available for sale at December 31, 2019.

	Debt Securities Available for Sale
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(In thousands)
States and political subdivisions	$	98,037	4,495	(3)	102,529
Foreign governments	9,983		203	—	10,186
Public utilities	67,895		3,476	—	71,371
Corporate	2,921,431		141,705	(2,479)	3,060,657
Commercial mortgage-backed	28,871		1,071	—	29,942
Residential mortgage-backed	12,815		1,077	(117)	13,775
Asset-backed	67,088		1,397	—	68,485
Totals	$	3,206,120	153,424	(2,599)	3,356,945

Unrealized losses for debt securities held to maturity and debt securities available for sale increased at September 30, 2020 from comparable balances at December 31, 2019 primarily due to the widening in interest rate spreads that occurred during the period as a result of COVID-19 effects on financial markets.

Debt securities balances at September 30, 2020 and December 31, 2019 include Ozark National holdings of $335.3 million and $307.2 million in held to maturity and $416.0 million and $415.7 million in available for sale. As part of the acquisition effective January 31, 2019 the Company employed purchase accounting procedures in accordance with GAAP which revalued the acquired investment portfolio to their fair values as of the date of the acquisition. These fair values became the book values for Ozark National from that point going forward. Accordingly, unrealized gains and losses for the Ozark National debt securities represent the changes subsequent to the purchase accounting book values established at the acquisition.

The following table shows the gross unrealized losses and fair values of the Company's held to maturity debt securities by investment category and length of time the individual securities have been in a continuous unrealized loss position at September 30, 2020.

	Debt Securities Held to Maturity
	Less than 12 Months			12 Months or Greater		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
	(In thousands)
States and political subdivisions	$	13,687	(55)	1,757	(69)	15,444	(124)
Public utilities	—		—	—	—	—	—
Corporate	148,574		(7,464)	5,817	(156)	154,391	(7,620)
Commercial mortgage-backed	—		—	—	—	—	—
Residential mortgage-backed	1,004		(1)	—	—	1,004	(1)
Asset-backed	—		—	—	—	—	—
Totals	$	163,265	(7,520)	7,574	(225)	170,839	(7,745)

The following table shows the gross unrealized losses and fair values of the Company's available for sale debt securities by investment category and length of time the individual securities have been in a continuous unrealized loss position at September 30, 2020.

	Debt Securities Available for Sale
	Less than 12 Months			12 Months or Greater		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
	(In thousands)
States and political subdivisions	$	558	(2)	—	—	558	(2)
Public utilities	—		—	—	—	—	—
Corporate	179,742		(17,784)	28,389	(2,565)	208,131	(20,349)
Commercial mortgage-backed	—		—	—	—	—	—
Residential mortgage-backed	—		—	572	(159)	572	(159)
Asset-backed	15,131		(42)	—	—	15,131	(42)
Totals	$	195,431	(17,828)	28,961	(2,724)	224,392	(20,552)

The following table shows the gross unrealized losses and fair values of the Company's held to maturity debt securities by investment category and length of time the individual securities have been in a continuous unrealized loss position at December 31, 2019.

	Debt Securities Held to Maturity
	Less than 12 Months			12 Months or Greater		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
	(In thousands)
States and political subdivisions	$	5,013	(33)	1,712	(51)	6,725	(84)
Public utilities	2,345		(83)	—	—	2,345	(83)
Corporate	31,419		(337)	17,191	(381)	48,610	(718)
Residential mortgage-backed	25,859		(63)	43,498	(653)	69,357	(716)
Asset-backed	1,349		(1)	—	—	1,349	(1)
Totals	$	65,985	(517)	62,401	(1,085)	128,386	(1,602)

The following table shows the gross unrealized losses and fair values of the Company's available for sale debt securities by investment category and length of time that the individual securities have been in a continuous unrealized loss position at December 31, 2019.

	Debt Securities Available for Sale
	Less than 12 Months			12 Months or Greater		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
	(In thousands)
States and political subdivisions	$	470	(3)	—	—	470	(3)
Public utilities	—		—	—	—	—	—
Corporate	40,080		(105)	28,582	(2,374)	68,662	(2,479)
Residential mortgage-backed	—		—	710	(117)	710	(117)
Totals	$	40,550	(108)	29,292	(2,491)	69,842	(2,599)

Debt securities. The gross unrealized losses for debt securities are made up of 68 individual issues, or 5.0% of the total debt securities held by the Company at September 30, 2020. The market value of these bonds as a percent of amortized cost approximates 93.3%. Of the 68 securities, 8, or 11.8%, fall in the 12 months or greater aging category; and 45 were rated investment grade at September 30, 2020.

The amortized cost and fair value of investments in debt securities at September 30, 2020, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Debt Securities Available for Sale			Debt Securities Held to Maturity
	Amortized Cost		Fair Value	Amortized Cost	Fair Value
	(In thousands)
Due in 1 year or less	$	179,359	182,907	579,550	587,799
Due after 1 year through 5 years	1,361,831		1,450,221	3,004,262	3,204,761
Due after 5 years through 10 years	1,178,727		1,291,931	1,474,459	1,656,357
Due after 10 years	337,453		382,489	818,941	921,629
	3,057,370		3,307,548	5,877,212	6,370,546
Mortgage and asset-backed securities	99,116		103,108	949,927	1,007,853
Totals before allowance for credit losses	3,156,486		3,410,656	6,827,139	7,378,399
Allowance for credit losses	—		—	(5,086)	—
Totals	$	3,156,486	3,410,656	6,822,053	7,378,399

As disclosed in Note (2) New Accounting Pronouncements in the Notes to Condensed Consolidated Financial Statements, the Company adopted new accounting guidance as of January 1, 2020 for credit loss recognition of certain financial assets, including debt securities classified in the held to maturity category. The Company employs a cohort cumulative loss rate method in estimating current expected credit losses with respect to its held to maturity debt securities. This method applies publicly available industry wide statistics of default incidence by defined segmentations of debt security investments combined with future assumptions regarding economic conditions (i.e. GDP forecasts) both in the near term and the long term. The Company utilizes Moody's loss rates by industry type and credit ratings and applies them to each major bond category. These bond categories are further segmented by credit ratings and by maturities of two years and less and more than two years. The following table presents the allowance for credit losses for the three and nine months ended September 30, 2020 and 2019.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	Debt Securities Held to Maturity		Debt Securities Available for Sale	Debt Securities Held to Maturity	Debt Securities Available for Sale
	(In thousands)
Balance, beginning of period	$	4,940	—	—	—
Provision January 1, 2020 for adoption of new accounting guidance	—		—	3,334	—
(Releases)/provision during period	146		—	1,752	—
Balance, end of period	$	5,086	—	5,086	—

Provisions to and releases from the allowance for credit losses are recorded in net investment income in the Condensed Consolidated Statements of Earnings (Loss). Previous accounting guidance required the Company to review its portfolio for potential other-than-temporary impairments which would require that affected securities be written down to an adjusted cost basis with the amount of the writedown recorded as part of net realized gains and losses in the Condensed Consolidated Statements of Earnings (Loss).

The Company determines current expected credit losses for available-for-sale debt securities in accordance with FASB ASC Subtopic 326-30 when fair value is less than amortized cost, interest payments are missed and the security is experiencing credit issues. At September 30, 2020, the Company performed additional analyses on certain available-for-sale securities whose market values were negatively impacted by the change in the economic environment precipitated by the COVID-19 pandemic crisis. Based on its review, the Company determined none of these investments required an allowance for credit loss at September 30, 2020. Under the previous guidance, debt securities were not considered to be other-than-temporarily impaired when a decline in market value was attributable to factors such as market volatility, liquidity, spread widening and credit quality in which it was anticipated that a recovery of all amounts due under the contractual terms of the security would occur and the Company had the intent and ability to hold the security until recovery or maturity. There was a $1.9 million and $7.8 million other-than-temporary impairment recorded on a single debt security during the three and nine months ended September 30, 2019, respectively. The Company's operating procedures include monitoring the investment portfolio on an ongoing basis for any changes in issuer facts and circumstances that might lead to future need for a credit loss allowance.

In the table below, held to maturity securities and their corresponding allowance for credit losses are represented according to credit ratings by nationally recognized statistical rating organizations.

	Debt Securities Held to Maturity
	Amortized Cost		Allowance for Credit Losses	Carrying Value
	(In thousands)
AAA	$	95,861	—	95,861
AA	1,639,976		(379)	1,639,597
A	2,224,126		(939)	2,223,187
BBB	2,737,258		(3,292)	2,733,966
BB and other below investment	129,918		(476)	129,442
Bonds Total	$	6,827,139	(5,086)	6,822,053

(C)Transfer of Securities

During the three and nine months ended September 30, 2020 the Company made no transfers from the held to maturity category to securities available for sale.

(D) Mortgage Loans and Real Estate

A financing receivable is a contractual right to receive money on demand or on fixed or determinable dates that is recognized as an asset in a company's statement of financial position. The Company's mortgage, participation and mezzanine loans on real estate are the only financing receivables included in the Condensed Consolidated Balance Sheets.

Credit and default risk are minimized through strict underwriting guidelines and diversification of underlying property types and geographic locations. In addition to being secured by the property, mortgage loans with leases on the underlying property are often guaranteed by the lease payments. This approach has proved to result in quality mortgage loans with few defaults. Mortgage loan interest income is recognized on an accrual basis with any premium or discount amortized over the life of the loan. Prepayment and late fees are recorded on the date of collection.

Loans in foreclosure, loans considered impaired or loans past due 90 days or more are placed on a non-accrual status. If a mortgage loan is determined to be on non-accrual status, the mortgage loan does not accrue any revenue into the Condensed Consolidated Statements of Earnings (Loss). The loan is independently monitored and evaluated as to potential impairment or foreclosure. If delinquent payments are made and the loan is brought current, then the Company returns the loan to active status and accrues income accordingly. The Company had no mortgage loans past due 90 days or more at September 30, 2020 or 2019 and as a result all interest income was recognized at September 30, 2020 and 2019. As a result of the economic climate change induced by the COVID-19 virus, various mortgage loan borrowers of the Company have requested a temporary forbearance of principal payments on loans in the range of three to nine months. During the nine months ended September 30, 2020 there were eight loans representing an aggregate principal balance of $29.2 million with borrowers meeting specified criteria of the Company that forbearance terms were agreed to.

The following table represents the mortgage loan portfolio by loan-to-value ratio.

	September 30, 2020			December 31, 2019
	Amount		%	Amount		%
	(In thousands)			(In thousands)
Mortgage Loans by Loan-to-Value Ratio (1):
Less than 50%	$	52,987	17.4	$	52,778	19.3
50% to 60%	57,744		18.9	56,929		20.8
60% to 70%	148,694		48.7	117,377		43.0
70% to 80%	45,647		15.0	46,013		16.9
80% to 90%	—		—	—		—
Greater than 90%	—		—	—		—
Gross balance	305,072		100.0	273,097		100.0
Allowance for credit losses	(2,357)		(0.8)	(675)		(0.2)
Totals	$	302,715	99.2	$	272,422	99.8

(1) Loan-to-Value Ratio is determined using the most recent appraised value. Appraisals are required at the time of funding and may be updated if a material change occurs from the original loan agreement.

All mortgage loans are analyzed quarterly in order to monitor the financial quality of these assets. Based on ongoing monitoring, mortgage loans with a likelihood of becoming delinquent are identified and placed on an internal “watch list.” Among the criteria that may indicate a potential problem include: major tenant vacancies or bankruptcies, late payments, and loan relief/restructuring requests. The mortgage loan portfolio is analyzed for the need for a valuation allowance on any loan that is on the internal watch list, in the process of foreclosure or that currently has a valuation allowance.

Prior to January 1, 2020, mortgage loans were considered impaired when, based on current information and events, it was probable that the Company would be unable to collect all amounts due according to the contractual terms of the loan agreement. When it was determined that a loan was impaired, a loss was recognized for the difference between the carrying amount of the mortgage loan and the estimated value reduced by the cost to sell. Estimated value was typically based on the loan's observable market price or the fair value of the collateral less cost to sell. Impairments and changes in the valuation allowance were reported in net realized investment gains (losses) in the Condensed Consolidated Statements of Earnings (Loss). The Company held a valuation allowance of $0.7 million at December 31, 2019.

Effective January 1, 2020, the Company implemented FASB ASU 2016-13, Financial Instruments-Credit Losses, which revises the credit loss recognition criteria for certain financial assets measured at amortized cost. The new guidance replaces the existing incurred loss recognition model with an expected loss recognition model (“CECL”). The objective of the CECL model is for the reporting entity to recognize its estimate of current expected credit losses for affected financial assets in a valuation allowance deducted from the amortized cost basis of the related financial assets that results in presenting the net carrying value of the financial assets at the amount expected to be collected. For mortgage loan investments the Company is using the Weighted Average Remaining Maturity ("WARM") method, which uses an average annual charge-off rate applied to each mortgage loan risk category. Under this new accounting guidance, at January 1, 2020 a balance of $1.2 million was recorded which incorporated the previous year-end balance under the prior accounting method. The adjustment resulted in a charge to retained earnings as a change in accounting, net of tax, of $0.4 million. Subsequent changes in the allowance for current expected credit losses are reported in net investment income in the Condensed Consolidated Statements of Earnings (Loss).

The following table represents the mortgage loan allowance for credit losses.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Balance, beginning of the period	$	2,227	675	675	675
Provision January 1, 2020 for adoption of new accounting guidance	—		—	504	—
Provision during the period	130		—	1,178	—
Releases	—		—	—	—
Total ending allowance for credit losses	$	2,357	675	2,357	675

The Company's direct investments in real estate are not a significant portion of its total investment portfolio and totaled approximately $33.9 million and $34.6 million at September 30, 2020 and December 31, 2019, respectively. The Company recognized operating income on real estate properties of approximately $2.2 million and $2.1 million for the first nine months of 2020 and 2019, respectively. In the third quarter of 2020, the Company sold a property located in Travis County, Texas for a realized gain of $2.7 million.

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Fair Values of Financial Instruments

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

FAIR VALUES OF FINANCIAL INSTRUMENTS

FAIR VALUES OF FINANCIAL INSTRUMENTS

For financial instruments, the FASB provides guidance which defines fair value, establishes a framework for measuring fair value under GAAP, and requires additional disclosures about fair value measurements. In compliance with this GAAP guidance, the Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into a three level hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities ("Level 1") and the lowest priority to unobservable inputs ("Level 3"). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

Financial assets and liabilities recorded at fair value on the Condensed Consolidated Balance Sheets are categorized as follows:

Level 1: Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. These generally provide the most reliable evidence and are used to measure fair value whenever available. The Company's Level 1 assets are equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets.

Level 2:  Fair value is based upon significant inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable for substantially the full term of the asset or liability through corroboration with observable market data as of the reporting date. Level 2 inputs include quoted market prices in active markets for similar assets and liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities, model-derived valuations whose inputs are observable or whose significant value drivers are observable and other observable inputs. The Company’s Level 2 assets include fixed maturity debt securities (corporate and private bonds, government or agency securities, asset-backed and mortgage-backed securities). Valuations are generally obtained from third party pricing services for identical or comparable assets or determined through use of valuation methodologies using observable market inputs.

Level 3:  Fair value is based on significant unobservable inputs which reflect the entity’s or third party pricing service’s assumptions about the assumptions market participants would use in pricing an asset or liability. The Company’s Level 3 assets are over-the-counter derivative contracts. The Company’s Level 3 liabilities consist of share-based compensation obligations, certain product-related embedded derivatives, and contingent consideration in the acquisition of businesses. Valuations are estimated based on non-binding broker prices or internally developed valuation models or methodologies, discounted cash flow models and other similar techniques.

The following tables set forth the Company’s assets and liabilities that are measured at fair value on a recurring basis as of the date indicated:

	September 30, 2020
	Total		Level 1	Level 2	Level 3
	(In thousands)
Debt securities, available for sale	$	3,410,656	—	3,410,656	—
Equity securities	18,610		18,610	—	—
Derivatives, index options	93,367		—	—	93,367
Other invested assets	1		1	—	—
Total assets	$	3,522,634	18,611	3,410,656	93,367
Policyholder account balances (a)	$	116,802	—	—	116,802
Other liabilities (b)	4,951		—	—	4,951
Total liabilities	$	121,753	—	—	121,753

During the three and nine months ended September 30, 2020, the Company made no transfers into or out of Levels 1, 2 or 3.

	December 31, 2019
	Total		Level 1	Level 2	Level 3
	(In thousands)
Debt securities, available for sale	$	3,356,945	—	3,356,945	—
Equity securities	23,594		23,594	—	—
Derivatives, index options	157,588		—	—	157,588
Other invested assets	2		2	—	—
Total assets	$	3,538,129	23,596	3,356,945	157,588
Policyholder account balances (a)	$	155,902	—	—	155,902
Other liabilities (c)	15,301		—	—	15,301
Total liabilities	$	171,203	—	—	171,203

(a)  Represents the fair value of certain product-related embedded derivatives that were recorded at fair value.

(b)  Represents the liability for share-based compensation.

(c)  Represents the liability for share-based compensation and the contingent consideration for businesses acquired.

The following tables present, by pricing source and fair value hierarchy level, the Company's assets that are measured at fair value on a recurring basis:

	September 30, 2020
	Total			Level 1		Level 2		Level 3
	(In thousands)
Debt securities, available for sale:
Priced by third-party vendors	$	3,410,656		—		3,410,656		—
Priced internally	—			—		—		—
Subtotal	3,410,656			—		3,410,656		—
Equity securities, available for sale:
Priced by third-party vendors	18,610			18,610		—		—
Priced internally	—			—		—		—
Subtotal	18,610			18,610		—		—
Derivatives, index options:
Priced by third-party vendors	93,367			—		—		93,367
Priced internally	—			—		—		—
Subtotal	93,367			—		—		93,367
Other invested assets:
Priced by third-party vendors	1			1		—		—
Priced internally	—			—		—		—
Subtotal	1			1		—		—
Total	$	3,522,634		18,611		3,410,656		93,367
Percent of total	100.0		%	0.5	%	96.8	%	2.7	%

	December 31, 2019
	Total			Level 1		Level 2		Level 3
	(In thousands)
Debt securities, available for sale:
Priced by third-party vendors	$	3,356,945		—		3,356,945		—
Priced internally	—			—		—		—
Subtotal	3,356,945			—		3,356,945		—
Equity securities, available for sale:
Priced by third-party vendors	23,594			23,594		—		—
Priced internally	—			—		—		—
Subtotal	23,594			23,594		—		—
Derivatives, index options:
Priced by third-party vendors	157,588			—		—		157,588
Priced internally	—			—		—		—
Subtotal	157,588			—		—		157,588
Other invested assets:
Priced by third-party vendors	2			2		—		—
Priced internally	—			—		—		—
Subtotal	2			2		—		—
Total	$	3,538,129		23,596		3,356,945		157,588
Percent of total	100.0		%	0.7	%	94.8	%	4.5	%

The following tables provide additional information about fair value measurements for which significant unobservable (Level 3) inputs were utilized to determine fair value.

	For the Three Months Ended September 30, 2020
	Assets				Other Liabilities
		Derivatives, Index Options		Total Assets	Policyholder Account Balances	Stock Options	Contingent Consideration	Total Other Liabilities
	(In thousands)
Beginning balance, July 1, 2020		$	66,738	66,738	87,573	5,497	—	93,070
Total realized and unrealized gains (losses):
Included in net earnings		31,520		31,520	34,119	(546)	—	33,573
Included in other comprehensive income		—		—		—	—	—
Purchases, sales, issuances and settlements, net:
Purchases		11,426		11,426	11,427	—	—	11,427
Sales		—		—	—	—	—	—
Issuances		—		—	—	—	—	—
Settlements		(16,317)		(16,317)	(16,317)	—	—	(16,317)
Transfers into (out of) Level 3		—		—	—	—	—	—
Balance at end of period		$	93,367	93,367	116,802	4,951	—	121,753
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:
Net investment income		$	50,636	50,636	—	—	—	—
Benefits and expenses		—		—	50,636	(546)	—	50,090
Total		$	50,636	50,636	50,636	(546)	—	50,090

	For the Three Months Ended September 30, 2019
	Assets				Other Liabilities
		Derivatives, Index Options		Total Assets	Policyholder Account Balances	Stock Options	Contingent Consideration	Total Other Liabilities
	(In thousands)
Beginning balance, July 1, 2019		$	89,900	89,900	100,638	7,991	3,871	112,500
Total realized and unrealized gains (losses):
Included in net earnings		3,296		3,296	(3,534)	1,462	94	(1,978)
Included in other comprehensive income		—		—	—	—	—	—
Purchases, sales, issuances and settlements, net:
Purchases		19,872		19,872	19,872	—	—	19,872
Sales		—		—	—	—	—	—
Issuances		—		—	—	—	—	—
Settlements		(6,704)		(6,704)	(6,704)	—	—	(6,704)
Transfers into (out of) Level 3		—		—	—	—	—	—
Balance at end of period		$	106,364	106,364	110,272	9,453	3,965	123,690
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:
Net investment income		$	(2,020)	(2,020)	—	—	—	—
Benefits and expenses		—		—	(2,020)	1,462	94	(464)
Total		$	(2,020)	(2,020)	(2,020)	1,462	94	(464)

	For the Nine Months Ended September 30, 2020
	Assets				Other Liabilities
		Derivatives, Index Options		Total Assets	Policyholder Account Balances	Stock Options	Contingent Consideration	Total Other Liabilities
	(In thousands)
Beginning balance, January 1, 2020		$	157,588	157,588	155,902	11,225	4,076	171,203
Total realized and unrealized gains (losses):
Included in net earnings		(34,865)		(34,865)	(9,744)	(4,395)	(4,076)	(18,215)
Included in other comprehensive income		—		—	—	—	—	—
Purchases, sales, issuances and settlements, net:
Purchases		50,287		50,287	50,287	—	—	50,287
Sales		—		—	—	—	—	—
Issuances		—		—	—	—	—	—
Settlements		(79,643)		(79,643)	(79,643)	(1,879)	—	(81,522)
Transfers into (out of) Level 3		—		—	—	—	—	—
Balance at end of period		$	93,367	93,367	116,802	4,951	—	121,753
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:
Net investment income		$	6,966	6,966	—	—	—	—
Benefits and expenses		—		—	6,966	(4,395)	(4,076)	(1,505)
Total		$	6,966	6,966	6,966	(4,395)	(4,076)	(1,505)

	For the Nine Months Ended September 30, 2019
	Assets				Other Liabilities
		Derivatives, Index Options		Total Assets	Policyholder Account Balances	Stock Options	Contingent Consideration	Total Other Liabilities
	(In thousands)
Beginning balance, January 1, 2019		$	14,684	14,684	44,781	11,923	—	56,704
Total realized and unrealized gains (losses):
Included in net earnings		63,127		63,127	36,938	52	265	37,255
Included in other comprehensive income		—		—	—	—	—	—
Purchases, sales, issuances and settlements, net:
Purchases		56,494		56,494	56,494	—	—	56,494
Sales		—		—	—	—	—	—
Issuances		—		—	—	—	3,700	3,700
Settlements		(27,941)		(27,941)	(27,941)	(2,522)	—	(30,463)
Transfers into (out of) Level 3		—		—	—	—	—	—
Balance at end of period		$	106,364	106,364	110,272	9,453	3,965	123,690
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:
Net investment income		$	42,794	42,794	—	—	—	—
Benefits and expenses		—		—	42,794	52	265	43,111
Total		$	42,794	42,794	42,794	52	265	43,111

The following table presents the valuation method for financial assets and liabilities categorized as level 3, as well as the unobservable inputs used in the valuation of those financial instruments:

	September 30, 2020
	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Average)
	(In thousands)
Assets:
Derivatives, index options	$	93,367	Broker prices	Implied volatility	12.96% - 53.69% (19.74%)
Total assets	$	93,367
Liabilities:
Policyholder account balances	$	116,802	Deterministic cash flow model	Projected option cost	0.0% - 38.69% (5.18%)
Share based compensation	4,951		Black-Scholes model	Expected term	1.2 to 9.1 years
				Expected volatility	32.85%
Total liabilities	$	121,753

	December 31, 2019
	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Average)
	(In thousands)
Assets:
Derivatives, index options	$	157,588	Broker prices	Implied volatility	13.10% - 19.90% (15.25%)
Total assets	$	157,588
Liabilities:
Policyholder account balances	$	155,902	Deterministic cash flow model	Projected option cost	0.0% - 17.55% (3.14%)
Share based compensation	11,225		Black-Scholes model	Expected term	1.9 to 10 years
				Expected volatility	22.19%
Contingent consideration on businesses acquired	4,076		Probabilistic Method	Discount rate	10.0%
				Projected renewal premium	$57.2 - $82.4 million ($71.9)
Total liabilities	$	171,203

Realized gains (losses) on debt securities are reported in the Condensed Consolidated Statements of Earnings (Loss) as net investment gains (losses) with liabilities reported as expenses. Unrealized gains (losses) on available for sale debt securities are reported as other comprehensive income (loss) within the stockholders' equity section of the Condensed Consolidated Balance Sheet.

The fair value hierarchy classifications are reviewed each reporting period. Reclassification of certain financial assets and liabilities may result based on changes in the observability of valuation attributes. Reclassifications are reported as transfers into and out of Level 3 at the beginning fair value for the reporting period in which the changes occur.

The carrying amounts and fair values of the Company's financial instruments are as follows:

	September 30, 2020
				Fair Value Hierarchy Level
	Carrying Values		Fair Values	Level 1	Level 2	Level 3
	(In thousands)
ASSETS
Debt securities held to maturity	$	6,822,053	7,378,399	—	7,378,399	—
Debt securities available for sale	3,410,656		3,410,656	—	3,410,656	—
Cash and cash equivalents	507,025		507,025	507,025	—	—
Mortgage loans	302,715		303,910	—	—	303,910
Real estate	33,927		48,547	—	—	48,547
Policy loans	75,714		128,615	—	—	128,615
Other loans	19,712		20,004	—	—	20,004
Derivatives, index options	93,367		93,367	—	—	93,367
Equity securities	18,610		18,610	18,610	—	—
Life interest in Libbie Shearn Moody Trust	9,230		12,775	—	—	12,775
Other investments	4,514		22,581	1	—	22,580
LIABILITIES
Deferred annuity contracts	$	6,697,569	5,422,599	—	—	5,422,599
Immediate annuity and supplemental contracts	417,663		449,676	—	—	449,676
Contingent consideration on businesses acquired	—		—	—	—	—

	December 31, 2019
				Fair Value Hierarchy Level
	Carrying Values		Fair Values	Level 1	Level 2	Level 3
	(In thousands)
ASSETS
Debt securities held to maturity	$	7,106,245	7,407,703	—	7,407,703	—
Debt securities available for sale	3,356,945		3,356,945	—	3,356,945	—
Cash and cash equivalents	253,524		253,524	253,524	—	—
Mortgage loans	272,422		270,931	—	—	270,931
Real estate	34,588		57,204	—	—	57,204
Policy loans	80,008		123,650	—	—	123,650
Other loans	13,547		13,698	—	—	13,698
Derivatives, index options	157,588		157,588	—	—	157,588
Equity securities	23,594		23,594	23,594	—	—
Life interest in Libbie Shearn Moody Trust	9,230		12,775	—	—	12,775
Other investments	197		16,182	2	—	16,180
LIABILITIES
Deferred annuity contracts (1)	$	7,014,833	5,931,352	—	—	5,931,352
Immediate annuity and supplemental contracts	400,465		422,931	—	—	422,931
Contingent consideration on businesses acquired	4,076		4,076	—	—	4,076

(1) Revised to correct for an adjustment related to the understatement of reserve liabilities of $15.0 million. See Note 1.

Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

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Derivative Investments

9 Months Ended

Sep. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INVESTMENTS

DERIVATIVE INVESTMENTSFixed-index products provide traditional fixed annuities and universal life contracts with the option to have credited interest rates linked in part to an underlying equity index or a combination of equity indices. The equity return component of such policy contracts is identified separately and accounted for in future policy benefits as embedded derivatives on the Condensed Consolidated Balance Sheets. The remaining portions of these policy contracts are considered the host contracts and are recorded separately as fixed annuity or universal life contracts. The host contracts are accounted for under debt instrument type accounting in which future policy benefits are recorded as discounted debt instruments and accreted, using the effective yield method, to their minimum account values at their projected maturities or termination dates.

The Company purchases over-the-counter index options, which are derivative financial instruments, to hedge the equity return component of its fixed-index annuity and life products. The index options act as hedges to match closely the returns on the underlying index or indices. The amounts which may be credited to policyholders are linked, in part, to the returns of the underlying index or indices. As a result, changes to policyholders' liabilities are substantially offset by changes in the value of the options. Cash is exchanged upon purchase of the index options and no principal or interest payments are made by either party during the option periods. Upon maturity or expiration of the options, cash may be paid to the Company depending on the performance of the underlying index or indices and terms of the contract.

The Company does not elect hedge accounting relative to these derivative instruments. The index options are reported at fair value in the accompanying Condensed Consolidated Financial Statements. The changes in the values of the index options and the changes in the policyholder liabilities are both reflected in the Condensed Consolidated Statements of Earnings (Loss). Any changes relative to the embedded derivatives associated with policy contracts are reflected in contract interest in the Condensed Consolidated Statements of Earnings (Loss). Any gains or losses from the sale or expiration of the options, as well as period-to-period changes in values, are reflected as net investment income in the Condensed Consolidated Statements of Earnings (Loss).

Although there is credit risk in the event of nonperformance by counterparties to the index options, the Company does not expect any of its counterparties to fail to meet their obligations, given their high credit ratings. In addition, credit support agreements are in place with all counterparties for option holdings in excess of specific limits, which may further reduce the Company's credit exposure.

The tables below present the fair value of derivative instruments as of September 30, 2020 and December 31, 2019, respectively.

	September 30, 2020
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
		(In thousands)			(In thousands)
Derivatives not designated as hedging instruments
Equity index options	Derivatives, Index Options	$	93,367
Fixed-index products				Universal Life and Annuity Contracts	$	116,802
Total		$	93,367		$	116,802

	December 31, 2019
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
		(In thousands)			(In thousands)
Derivatives not designated as hedging instruments
Equity index options	Derivatives, Index Options	$	157,588
Fixed-index products				Universal Life and Annuity Contracts	$	155,902
Total		$	157,588		$	155,902

The table below presents the effect of derivative instruments in the Condensed Consolidated Statements of Earnings (Loss) for the three months ended September 30, 2020 and 2019.

		September 30, 2020		September 30, 2019
Derivatives Not Designated As Hedging Instruments	Location of Gain or (Loss) Recognized In Income on Derivatives	Amount of Gain or (Loss) Recognized in Income on Derivatives
		(In thousands)
Equity index options	Net investment income (loss)	$	31,520	3,296
Fixed-index products	Universal life and annuity contract interest	(34,119)		3,533
		$	(2,599)	6,829

The table below presents the effect of derivative instruments in the Condensed Consolidated Statements of Earnings (Loss) for the nine months ended September 30, 2020 and 2019.

		September 30, 2020		September 30, 2019
Derivatives Not Designated As Hedging Instruments	Location of Gain or (Loss) Recognized In Income on Derivatives	Amount of Gain or (Loss) Recognized in Income on Derivatives
		(In thousands)
Equity index options	Net investment income	$	(34,865)	63,127
Fixed-index products	Universal life and annuity contract interest	9,744		(36,937)
		$	(25,121)	26,190

The embedded derivative liability, the change of which is recorded in universal life and annuity contract interest in the Condensed Consolidated Statements of Earnings (Loss), includes projected interest credits that are offset by the expected collectability by the Company of asset management fees on fixed-index products. The anticipated asset management fees to be collected increases or decreases based upon the most recent performance of index options and adds to or reduces the offset applied to the embedded derivative liability (increasing or decreasing contract interest expense). For the three months ended September 30, 2020 and 2019, the change in the embedded derivative liability due to the expected collectability of asset management fees increased/(decreased) contract interest expense by $3.7 million and $(6.8) million, respectively. For the nine months ended September 30, 2020 and 2019, contract interest expense was increased/(decreased) by $29.3 million and $(27.1) million, respectively, for the expected collectability of asset management fees. Beginning in the second quarter of 2020, the Company changed its budget for purchasing options to match the collection of asset management fees with the payoff from out of the money options, thereby removing the option premium currently being paid for the probability or expectation of collecting asset management fees ("out of the money" hedging). As the current one year options outstanding expire and are replaced by out of the money hedges, the embedded derivative liability component due to the projected collectability of asset management fees will be eliminated.

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Business Combinations

9 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS

Effective January 31, 2019, the Company acquired Ozark National and NIS following the receipt of regulatory approvals. NWLGI and National Western paid cash in an aggregate amount of approximately $205.4 million in exchange for all of the outstanding stock of Ozark National (wholly owned by National Western) and NIS (wholly owned by NWLGI). In addition to the cash price paid, National Western recorded a contingent liability for an "earn-out payment" based upon the subsequent persistency of Ozark National's acquired in force business achieving thresholds as specified in the Stock Purchase Agreement ("Agreement"). The earn-out payment to the seller per the Agreement had a maximum limit of $5.0 million. Using a probabilistic method for valuing contingent consideration, the Company at January 31, 2019 recorded a liability of $3.7 million representing the estimated fair value of the additional consideration estimated to be paid as part of the acquisition. The contingent consideration was revalued during the earn-out term using the same probabilistic method and had a fair value of $4.1 million as of December 31, 2019. Changes in the fair value during year ended December 31, 2019 were recorded through Other operating expenses.

During the quarter ended June 30, 2020, the Company and and the Seller executed an agreement under which the parties agreed that the Company had fulfilled its payment obligation under the Stock Purchase Agreement executed October 3, 2018. As a result, the Company reversed the contingent earn-out liability balance of $4.2 million recorded at March 31, 2020 and reflected this amount in Other revenues.

In addition to the purchase price, the Company incurred $3.3 million of acquisition-related costs. In accordance with GAAP, these costs are included in Other operating expenses in the Condensed Consolidated Statements of Earnings (Loss) for the nine months ended September 30, 2019 and are not considered part of the purchase price.

The acquisition has been accounted for in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Purchase accounting, as defined by ASC 805, requires that the assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The fair values shown below were determined based on management’s best estimates, employing fair valuation methodologies commonly utilized in preparing financial statements in accordance with GAAP, and are subject to revision for one year following the acquisition date. The excess of the purchase price paid above net tangible assets acquired has been assigned to identifiable intangible assets and goodwill. The following table presents the fair values of the net assets acquired as of January 31, 2019.

	January 31, 2019
	Fair value
Assets	(In thousands)
Debt securities held to maturity	$	261,059
Debt securities available for sale	400,719
Policy loans	28,128
Real estate	4,600
Cash and cash equivalents	16,275
Accrued investment income	6,116
Value of business acquired	145,768
Reinsurance recoverables	21,895
Other intangible assets	9,600
Other assets acquired	12,075
Total assets acquired	906,235
Liabilities
Traditional life reserves	691,297
Other policyholder liabilities	13,867
Other liabilities acquired	5,840
	711,004
Net identifiable assets acquired	195,231
Goodwill	13,864
Net assets acquired	$	209,095

Identifiable Intangible Assets

The following table presents the fair value of identifiable intangible assets acquired at January 31, 2019:

	Fair Value		Weighted-Average Amortization Period
	(In thousands)
Trademarks / trade names	$	2,800	15
Internally developed software	3,800		7
Insurance licenses	3,000		NA
	$	9,600

The gross carrying amounts and accumulated amortization for each specifically identifiable intangible asset were as follows.

	September 30, 2020				December 31, 2019
	Weighted-Average Amortization Period	Gross Carrying Amount		Accumulated Amortization	Gross Carrying Amount	Accumulated Amortization
		(In thousands)
Trademarks/trade names	15	$	2,800	(311)	2,800	(171)
Internally developed software	7	3,800		(905)	3,800	(498)
Insurance licenses	N/A	3,000		—	3,000	—
		$	9,600	(1,216)	9,600	(669)

The value of trademarks was estimated using the relief from royalty method, based on the assumption that in lieu of ownership, an organization would be willing to pay a royalty in order to receive the related benefits of using the brand. The value of insurance licenses was estimated using the market approach to value, based on values paid for licenses in recent shell company transactions. The value of internally developed software was estimated using the replacement cost method. Trademarks, trade names and internally developed software are amortized using a straight-line method over the estimated useful lives. These intangible assets will be evaluated for impairment if indicators of impairment arise. Insurance licenses were determined to have an indefinite useful life. The Company evaluates the useful life insurance licenses at each reporting period to determine whether the useful life remains indefinite.

Value of Business Acquired ("VOBA")

VOBA is a purchase accounting convention for life insurance companies in business combinations based upon an actuarial determination of the difference between the fair value of policyholder liabilities acquired and the same policyholder liabilities measured in accordance with the acquiring company's accounting policies. The difference, referred to as VOBA, is an intangible asset subject to periodic amortization. As of the January 31, 2019 acquisition date, the VOBA balance recorded was $145.8 million. Changes in VOBA were as follows for the periods shown:

	September 30,		December 31,
	2020		2019
	(In thousands)
Balance, beginning of year	$	138,071	—
Business acquired	—		145,768
Amortization:
Amortization, excluding unlocking	(5,645)		(7,697)
Balance as of end of period	$	132,426	138,071

Estimated future amortization of VOBA, net of interest (in thousands), as of September 30, 2020, is as follows:

	Expected Amortization
	(In thousands)
Remainder of 2020	$	1,844
2021	$	7,002
2022	$	6,646
2023	$	6,337
2024	$	6,060

Goodwill

The changes in the carrying amount of goodwill (in thousands) were as follows:

	September 30,		December 31,
	2020		2019
	(In thousands)
Gross goodwill as of beginning of year	$	13,864	—
Goodwill resulting from business acquisition	—		13,864
Gross goodwill, before impairments	13,864		13,864
Accumulated impairment as of beginning of year	—		—
Current year impairments	—		—
Net goodwill as of end of period	$	13,864	13,864

Due to the severe change in economic climate as a result of the COVID-19 pandemic, the Company evaluated the goodwill balance for potential impairment as of September 30, 2020 and determined that there was evidence to support not impairing the balance.

Financial Information

Subsequent to the acquisition date of January 31, 2019, Ozark National and NIS total revenues of $77.1 million and net earnings of $11.7 million were included in Condensed Consolidated Statements of Earnings (Loss) for the nine month period ended September 30, 2019. Their results for segment reporting purposes are combined in the Acquired Businesses segment.

The following unaudited comparative pro forma total revenues and net earnings represent Condensed Consolidated Results of Operations for the Company which assume amounts estimated had the acquisition of Ozark National and NIS by the Company been effective January 1, 2018.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Total revenues	$	202,702	173,166	471,205	593,402
Net earnings (loss)	$	10,825	19,989	57,176	95,341

The pro forma amounts shown above include the estimated total revenues and net earnings of the acquired businesses for each period incorporating amortization of identifiable intangible assets acquired and fair value adjustments to acquired invested assets and traditional life insurance reserves.

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Subsequent Events	9 Months Ended
	Sep. 30, 2020
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	SUBSEQUENT EVENTSSubsequent events have been evaluated through the date of filing and no reportable items were identified.

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New Accounting Pronouncements (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

New Accounting Pronouncements

NEW ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements not yet adopted

In August 2018, the FASB issued ASU 2018-12 Financial Services-Insurance (Topic 944) - Targeted Improvements to the Accounting for Long-Duration Contracts. This update is aimed at improving the Codification as it relates to long-duration contracts which will improve the timeliness of recognizing changes in the liability for future policy benefits, simplify accounting for certain market-based options, simplify the amortization of deferred acquisition costs, and improve the effectiveness of required disclosures. Amendments include the following:

A. Require insurance entity to (1) review and update assumptions used to measure cash flows at least annually (with changes recognized in net income) and (2) update discount rate assumption at each reporting date (with changes recognized in other comprehensive income).

B. Require insurance entity to measure all market risk benefits associated with deposit (i.e. account balance) contracts at fair value, with change in fair value attributable to change in instrument-specific credit risk recognized in other comprehensive income.

C. Simplify amortization of deferred acquisition costs and other balances amortized in proportion to premiums, gross profits, or gross margins and require those balances be amortized on constant level basis over expected term of related contract. Deferred acquisition costs are required to be written off for unexpected contract terminations but are not subject to impairment test.

D. Require insurance entity to add disclosures of disaggregated rollforwards of beginning to ending balances of the liability for future policy benefits, policyholder account balances, market risk benefits, separate account liabilities, and deferred acquisition costs. Insurance entity must also disclose information about significant inputs, judgments, assumptions, and methods used in measurement, including changes in those inputs, judgments, and assumptions, and the effect of those changes on measurement.

These updates are required to be applied retrospectively to the earliest period presented in the financial statements for fiscal periods beginning after December 15, 2022, with early adoption permitted. The Company has performed a preliminary gap analysis and created a roadmap for implementation of this standard by the effective date and is evaluating the impact of the new guidance on its Consolidated Financial Statements.

In December 2019, the FASB issued ASU 2019-12 Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740), which simplifies various aspects of the income tax accounting guidance and will be applied using different approaches depending on the specific amendment. The amendments will be effective for fiscal periods beginning after December 15, 2020. Early adoption is permitted. The Company does not expect this guidance to have a material impact on the Consolidated Financial Statements and related disclosures upon adoption.

Accounting pronouncements adopted

In June 2016, the FASB released ASU 2016-13, Financial Instruments-Credit Losses, which revises the credit loss recognition criteria for certain financial assets measured at amortized cost. The new guidance replaces the existing incurred loss recognition model with an expected loss recognition model (“CECL”). The objective of the CECL model is for the reporting entity to recognize its estimate of current expected credit losses for affected financial assets in a valuation allowance deducted from the amortized cost basis of the related financial assets that results in presenting the net carrying value of the financial assets at the amount expected to be collected. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. The amendments in this Update add clarification and correction to ASU 2016-13 around accrued interest, transfers between classifications or categories for loans and debt securities, consideration of recoveries in estimating allowances, reinsurance recoveries, consideration of prepayments and estimated costs to sell when foreclosure is probable. In November, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses. The amendments in this Update add clarification and correction to ASU 2016-13 around expected recoveries for purchased financial assets with credit deterioration, transition relief for troubled debt restructurings, disclosures related to accrued interest receivables, and financial assets secured by collateral maintenance provisions. The guidance for these pronouncements was effective for interim and annual periods beginning after December 15, 2019, and for most affected instruments must be adopted using a modified retrospective approach, with a cumulative effect adjustment recorded to beginning retained earnings. Effective January 1, 2020, the Company adopted the expected loss recognition model related to mortgage loans, debt securities held to maturity and reinsurance recoverable. The change in accounting, net of tax, of $3.0 million was recorded as a charge to retained earnings in the first quarter of 2020 reflecting initial allowance for estimated credit losses balances of $1.2 million on mortgage loans and $3.3 million on debt securities held to maturity. The estimated credit losses for the reinsurance recoverable were immaterial to the financial statements, but are monitored on a quarterly basis for any changes. Refer to Note (9) Investments for more information. Certain disclosures required by ASU 2016-13 are not included in the Consolidated Financial Statements as the impact of this standard was not material.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on the Company’s present or future Consolidated Financial Statements.

Fair Value Measurements

FAIR VALUES OF FINANCIAL INSTRUMENTS

For financial instruments, the FASB provides guidance which defines fair value, establishes a framework for measuring fair value under GAAP, and requires additional disclosures about fair value measurements. In compliance with this GAAP guidance, the Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into a three level hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities ("Level 1") and the lowest priority to unobservable inputs ("Level 3"). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

Financial assets and liabilities recorded at fair value on the Condensed Consolidated Balance Sheets are categorized as follows:

Level 1: Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. These generally provide the most reliable evidence and are used to measure fair value whenever available. The Company's Level 1 assets are equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets.

Level 2:  Fair value is based upon significant inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable for substantially the full term of the asset or liability through corroboration with observable market data as of the reporting date. Level 2 inputs include quoted market prices in active markets for similar assets and liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities, model-derived valuations whose inputs are observable or whose significant value drivers are observable and other observable inputs. The Company’s Level 2 assets include fixed maturity debt securities (corporate and private bonds, government or agency securities, asset-backed and mortgage-backed securities). Valuations are generally obtained from third party pricing services for identical or comparable assets or determined through use of valuation methodologies using observable market inputs.

Level 3:  Fair value is based on significant unobservable inputs which reflect the entity’s or third party pricing service’s assumptions about the assumptions market participants would use in pricing an asset or liability. The Company’s Level 3 assets are over-the-counter derivative contracts. The Company’s Level 3 liabilities consist of share-based compensation obligations, certain product-related embedded derivatives, and contingent consideration in the acquisition of businesses. Valuations are estimated based on non-binding broker prices or internally developed valuation models or methodologies, discounted cash flow models and other similar techniques.

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Consolidation and Basis of Presentation (Tables)

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of the unrealized gains and losses on available-for-sale securities that were reclassified out of accumulated other comprehensive income

The table below shows the unrealized gains and losses on available-for-sale securities that were reclassified out of accumulated other comprehensive income for the three and nine months ended September 30, 2020 and September 30, 2019.

Affected Line Item in the Statements of Earnings	Amount Reclassified From Accumulated Other Comprehensive Income
	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Other net investment gains (losses)	$	889	198	3,380	2,465
Net OTTI losses recognized in earnings	—		(1,945)	—	(7,847)
Earnings before Federal income taxes	889		(1,747)	3,380	(5,382)
Federal income taxes	187		(367)	710	(1,130)
Net earnings	$	702	(1,380)	2,670	(4,252)

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Schedule of earnings per share

	Three Months Ended September 30,
	2020			2019
	Class A		Class B	Class A	Class B
	(In thousands except per share amounts)
Numerator for Basic and Diluted Earnings Per Share:
Net earnings	$	10,825		19,989
Dividends - Class A shares	—			—
Dividends - Class B shares	—			—
Undistributed earnings	$	10,825		19,989
Allocation of net earnings:
Dividends	$	—	—	—	—
Allocation of undistributed earnings	10,519		306	19,424	565
Net earnings	$	10,519	306	19,424	565
Denominator:
Basic earnings per share - weighted-average shares	3,436		200	3,436	200
Effect of dilutive stock options	—		—	—	—
Diluted earnings per share - adjusted weighted-average shares for assumed conversions	3,436		200	3,436	200
Basic earnings per share	$	3.06	1.53	5.65	2.83
Diluted earnings per share	$	3.06	1.53	5.65	2.83

	Nine Months Ended September 30,
	2020			2019
	Class A		Class B	Class A	Class B
	(In thousands except per share amounts)
Numerator for Basic and Diluted Earnings Per Share:
Net earnings	$	57,176		93,883
Dividends - Class A shares	—			—
Dividends - Class B shares	—			—
Undistributed earnings	$	57,176		93,883
Allocation of net earnings:
Dividends	$	—	—	—	—
Allocation of undistributed earnings	55,560		1,616	91,228	2,655
Net earnings	$	55,560	1,616	91,228	2,655
Denominator:
Basic earnings per share - weighted-average shares	3,436		200	3,436	200
Effect of dilutive stock options	—		—	—	—
Diluted earnings per share - adjusted weighted-average shares for assumed conversions	3,436		200	3,436	200
Basic Earnings Per Share	$	16.17	8.08	26.55	13.28
Diluted Earnings Per Share	$	16.17	8.08	26.55	13.28

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Pension and Other Postretirement Plans (Tables)

9 Months Ended

Sep. 30, 2020

Defined Benefit Pension Plans

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule of net periodic benefit costs

The following table summarizes the components of net periodic benefit cost.

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2020		2019	2020	2019
	(In thousands)
Service cost	$	27	24	81	72
Interest cost	168		210	505	630
Expected return on plan assets	(315)		(271)	(946)	(815)
Amortization of prior service cost	—		—	—	—
Amortization of net loss	145		165	435	495
Net periodic benefit cost	$	25	128	75	382

Chairman and President Non-Qualified Defined Benefit Plans

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule of net periodic benefit costs

The following table summarizes the components of net periodic benefit costs for the non-qualified defined benefit plans.

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2020		2019	2020	2019
	(In thousands)
Service cost	$	302	126	907	377
Interest cost	337		256	1,012	768
Amortization of prior service cost	14		14	44	44
Amortization of net loss	1,446		348	4,336	1,044
Net periodic benefit cost	$	2,099	744	6,299	2,233

Defined Benefit Postretirement Healthcare Plans

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule of net periodic benefit costs

The following table summarizes the components of net periodic benefit costs.

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2020		2019	2020	2019
	(In thousands)
Interest cost	$	41	49	124	148
Amortization of prior service cost	—		13	—	39
Amortization of net loss	40		61	119	183
Net periodic benefit cost	$	81	123	243	370

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Segment and Other Operating Information (Tables)

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Summary of segment information, by quarter

A summary of segment information as of September 30, 2020 and December 31, 2019 for the Condensed Consolidated Balance Sheet items and for the three and nine months ended September 30, 2020 and September 30, 2019 for the Condensed Consolidated Statements of Earnings (Loss) is provided below.

Condensed Consolidated Balance Sheet Items:

	September 30, 2020
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Deferred policy acquisition costs, sales inducements, and value of business acquired	$	127,124	183,318	402,072	139,365	—	851,879
Total segment assets	1,467,577		1,049,371	7,797,137	1,030,162	367,605	11,711,852
Future policy benefits	1,275,476		798,665	7,068,118	719,917	—	9,862,176
Other policyholder liabilities	17,190		12,214	91,818	15,170	—	136,392

	December 31, 2019
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Deferred policy acquisition costs, sales inducements, and value of business acquired	$	127,557	209,858	486,553	142,434	—	966,402
Total segment assets	1,399,818		1,153,105	8,198,730	978,243	362,900	12,092,796
Future policy benefits (1)	1,198,103		870,461	7,366,894	706,513	—	10,141,971
Other policyholder liabilities	18,016		14,903	80,002	14,686	—	127,607

(1) Revised to correct for an adjustment related to an understatement of reserve liabilities of $15.0 million. Refer to Note 1.

Condensed Consolidated Statements of Earnings (Loss):

	Three Months Ended September 30, 2020
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Premiums and contract revenues	$	17,734	21,551	4,187	19,524	—	62,996
Net investment income (loss)	21,201		10,354	87,889	6,434	3,801	129,679
Other revenues	10		6	84	2,628	1,249	3,977
Total revenues	38,945		31,911	92,160	28,586	5,050	196,652
Life and other policy benefits	3,785		2,278	3,383	17,494	—	26,940
Amortization of deferred policy acquisition costs and value of business acquired	10,540		6,496	31,794	1,970	—	50,800
Universal life and annuity contract interest	20,352		(14,023)	79,550	—	—	85,879
Other operating expenses	5,185		5,434	9,205	4,498	1,432	25,754
Federal income taxes (benefit)	(161)		5,169	(5,294)	963	556	1,233
Total expenses	39,701		5,354	118,638	24,925	1,988	190,606
Segment earnings (loss)	$	(756)	26,557	(26,478)	3,661	3,062	6,046

	Nine Months Ended September 30, 2020
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Premiums and contract revenues	$	40,971	67,479	13,536	59,448	—	181,434
Net investment income	23,293		12,507	196,187	19,284	10,623	261,894
Other revenues	40		54	80	7,369	7,674	15,217
Total revenues	64,304		80,040	209,803	86,101	18,297	458,545
Life and other policy benefits	13,831		9,293	20,452	50,429	—	94,005
Amortization of deferred policy acquisition costs and value of business acquired	16,322		19,392	70,159	6,064	—	111,937
Universal life and annuity contract interest	17,831		(15,368)	117,162	—	—	119,625
Other operating expenses	15,123		13,047	28,787	13,361	4,412	74,730
Federal income taxes (benefit)	199		8,907	(4,440)	4,103	2,304	11,073
Total expenses	63,306		35,271	232,120	73,957	6,716	411,370
Segment earnings (loss)	$	998	44,769	(22,317)	12,144	11,581	47,175

	Three Months Ended September 30, 2019
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Premiums and contract revenues	$	11,387	25,065	5,336	20,151	—	61,939
Net investment income	12,885		6,872	78,000	6,300	4,399	108,456
Other revenues	49		25	8	2,318	873	3,273
Total revenues	24,321		31,962	83,344	28,769	5,272	173,668
Life and other policy benefits	6,099		5,074	12,550	16,195	—	39,918
Amortization of deferred acquisition costs and value of business acquired	2,181		(3,047)	21,688	2,176	—	22,998
Universal life and annuity contract interest	11,267		14,637	33,541	—	—	59,445
Other operating expenses	5,297		5,493	8,596	4,772	1,655	25,813
Federal income taxes (benefit)	(107)		1,970	1,388	1,133	725	5,109
Total expenses	24,737		24,127	77,763	24,276	2,380	153,283
Segment earnings (loss)	$	(416)	7,835	5,581	4,493	2,892	20,385

	Nine Months Ended September 30, 2019
	Domestic Life Insurance		International Life Insurance	Annuities	Acquired Businesses	All Others	Totals
	(In thousands)
Premiums and contract revenues	$	32,897	74,905	16,061	54,332	—	178,195
Net investment income	51,379		30,165	270,727	16,283	19,657	388,211
Other revenues	113		79	80	6,049	7,331	13,652
Total revenues	84,389		105,149	286,868	76,664	26,988	580,058
Life and other policy benefits	13,850		10,195	33,856	43,863	—	101,764
Amortization of deferred acquisition costs and value of business acquired	8,898		11,195	60,150	6,330	—	86,573
Universal life and annuity contract interest	45,693		33,967	120,840	—	—	200,500
Other operating expenses	14,437		14,278	25,478	12,348	10,655	77,196
Federal income taxes (benefit)	306		7,192	9,426	2,836	3,307	23,067
Total expenses	83,184		76,827	249,750	65,377	13,962	489,100
Segment earnings (loss)	$	1,205	28,322	37,118	11,287	13,026	90,958

Reconciliation of segment premiums and other revenues to condensed consolidated financial statements

Reconciliations of segment information to the Company's Condensed Consolidated Financial Statements are provided below.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Premiums and Other Revenues:
Premiums and contract revenues	$	62,996	61,939	181,434	178,195
Net investment income (loss)	129,679		108,456	261,894	388,211
Other revenues	3,977		3,273	15,217	13,652
Realized gains (losses) on investments	6,050		(502)	12,660	3,702
Total condensed consolidated premiums and other revenues	$	202,702	173,166	471,205	583,760

Reconciliation of segment federal income taxes to condensed consolidated financial statements

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Federal Income Taxes:
Total segment Federal income taxes	$	1,233	5,109	11,073	23,067
Taxes on realized gains (losses) on investments	1,271		(106)	2,659	777
Total condensed consolidated Federal income taxes	$	2,504	5,003	13,732	23,844

Reconciliation of segment net earnings to condensed consolidated financial statements

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Net Earnings:
Total segment earnings	$	6,046	20,385	47,175	90,958
Realized gains (losses) on investments, net of taxes	4,779		(396)	10,001	2,925
Total condensed consolidated net earnings	$	10,825	19,989	57,176	93,883

Reconciliation of segment assets to condensed consolidated financial statements

	September 30,		December 31,
	2020		2019
	(In thousands)
Assets:
Total segment assets	$	11,711,852	12,092,796
Other unallocated assets	709,134		460,651
Total condensed consolidated assets	$	12,420,986	12,553,447

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Share-Based Payments (Tables)

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Summary of shares available for grant and stock option activity

A summary of awards by type and related activity is detailed below.

		Options Outstanding
	Shares Available For Grant	Shares	Weighted- Average Exercise Price
Stock Options:
Balance at January 1, 2020	291,000	—	$	—
Exercised	—	—	$	—
Forfeited	—	—	$	—
Expired	—	—	$	—
Stock options granted	—	—	$	—
Balance at September 30, 2020	291,000	—	$	—

Schedule of activity

	Liability Awards
	SAR	RSU	PSU
Other Share/Unit Awards:
Balance at January 1, 2020	107,517	14,352	19,108
Exercised	(1,372)	(2,357)	(4,150)
Forfeited	(1,797)	(259)	—
Granted	—	—	—
Balance at September 30, 2020	104,348	11,736	14,958

Summary of information about stock options and SARs outstanding

The following table summarizes information about SARs outstanding at September 30, 2020. There were no options outstanding as of September 30, 2020.

	SARs Outstanding
	Number Outstanding		Weighted- Average Remaining Contractual Life	Number Exercisable
Exercise prices:
$132.56	19,118		1.2 years	19,118
$210.22	23,550		3.2 years	19,600
$216.48	11,149		5.4 years	11,149
$311.16	9,797		6.2 years	9,797
$310.55	203		6.6 years	203
$334.34	9,264		7.0 years	6,254
$303.77	11,462		8.0 years	3,967
$252.91	19,805		9.1 years	249
Totals	104,348			70,337
Aggregate intrinsic value (in thousands)	$	960		$	960

Summary of assumptions employed using Black-Scholes option pricing model

In estimating the fair value of the SARs outstanding at September 30, 2020 and December 31, 2019, the Company employed the Black-Scholes option pricing model with assumptions detailed below.

	September 30, 2020	December 31, 2019
Expected term	1.2 to 9.1 years	1.9 to 10 years
Expected volatility weighted-average	32.85 %	22.19	%
Expected dividend yield	0.20 %	0.12	%
Risk-free rate weighted-average	0.17 %	1.61	%

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Investments (Tables)

9 Months Ended

Sep. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Realized investment gains and losses, excluding impairment losses

The table below presents realized gains and losses, excluding impairment losses, for the periods indicated.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Available for sale debt securities:
Realized gains on disposal	$	888	197	3,379	2,548
Realized losses on disposal	—		—	—	(84)
Held to maturity debt securities:
Realized gains on disposal	2,501		1,246	6,620	2,197
Realized losses on disposal	—		—	—	—
Real estate gains (losses)	2,661		—	2,661	6,888
Other	—		—	—	—
Totals	$	6,050	1,443	12,660	11,549

Schedule of held-to-maturity securities

The table below presents amortized costs and fair values of debt securities held to maturity at September 30, 2020.

	Debt Securities Held to Maturity
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value	Allowance for Credit Losses
	(In thousands)
U.S. agencies	$	73,153	2,934	—	76,087	(81)
U.S. Treasury	3,798		156	—	3,954	—
States and political subdivisions	437,620		24,976	(124)	462,472	(176)
Foreign governments	1,128		150	—	1,278	—
Public utilities	812,251		71,098	—	883,349	(718)
Corporate	4,549,262		401,764	(7,620)	4,943,406	(4,111)
Commercial mortgage-backed	3,019		34	—	3,053	—
Residential mortgage-backed	944,838		57,854	(1)	1,002,691	—
Asset-backed	2,070		39	—	2,109	—
Totals	$	6,827,139	559,005	(7,745)	7,378,399	(5,086)

The table below presents amortized costs and fair values of debt securities held to maturity at December 31, 2019.

	Debt Securities Held to Maturity
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(In thousands)
U.S. agencies	$	100,910	1,686	—	102,596
U.S. Treasury	3,782		140	—	3,922
States and political subdivisions	431,433		19,440	(84)	450,789
Foreign governments	1,144		55	—	1,199
Public utilities	888,444		36,638	(83)	924,999
Corporate	4,607,826		212,281	(718)	4,819,389
Commercial mortgage-backed	3,032		52	—	3,084
Residential mortgage-backed	1,066,899		32,706	(716)	1,098,889
Asset-backed	2,775		62	(1)	2,836
Totals	$	7,106,245	303,060	(1,602)	7,407,703

Schedule of debt securities, available-for-sale securities

The table below presents amortized costs and fair values of debt securities available for sale at September 30, 2020.

	Debt Securities Available for Sale
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value	Allowance for Credit Losses
	(In thousands)
States and political subdivisions	$	89,168	8,384	(2)	97,550	—
Foreign governments	9,990		235	—	10,225	—
Public utilities	62,413		5,194	—	67,607	—
Corporate	2,895,799		256,716	(20,349)	3,132,166	—
Commercial mortgage-backed	27,124		1,187	—	28,311	—
Residential mortgage-backed	10,653		1,247	(159)	11,741	—
Asset-backed	61,339		1,759	(42)	63,056	—
Totals	$	3,156,486	274,722	(20,552)	3,410,656	—

The table below presents amortized costs and fair values of debt securities available for sale at December 31, 2019.

	Debt Securities Available for Sale
	Amortized Cost		Gross Unrealized Gains	Gross Unrealized Losses	Fair Value
	(In thousands)
States and political subdivisions	$	98,037	4,495	(3)	102,529
Foreign governments	9,983		203	—	10,186
Public utilities	67,895		3,476	—	71,371
Corporate	2,921,431		141,705	(2,479)	3,060,657
Commercial mortgage-backed	28,871		1,071	—	29,942
Residential mortgage-backed	12,815		1,077	(117)	13,775
Asset-backed	67,088		1,397	—	68,485
Totals	$	3,206,120	153,424	(2,599)	3,356,945

Schedule of gross unrealized losses and fair values of held-to-maturity investments, continuous unrealized loss position

The following table shows the gross unrealized losses and fair values of the Company's held to maturity debt securities by investment category and length of time the individual securities have been in a continuous unrealized loss position at September 30, 2020.

	Debt Securities Held to Maturity
	Less than 12 Months			12 Months or Greater		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
	(In thousands)
States and political subdivisions	$	13,687	(55)	1,757	(69)	15,444	(124)
Public utilities	—		—	—	—	—	—
Corporate	148,574		(7,464)	5,817	(156)	154,391	(7,620)
Commercial mortgage-backed	—		—	—	—	—	—
Residential mortgage-backed	1,004		(1)	—	—	1,004	(1)
Asset-backed	—		—	—	—	—	—
Totals	$	163,265	(7,520)	7,574	(225)	170,839	(7,745)

The following table shows the gross unrealized losses and fair values of the Company's held to maturity debt securities by investment category and length of time the individual securities have been in a continuous unrealized loss position at December 31, 2019.

	Debt Securities Held to Maturity
	Less than 12 Months			12 Months or Greater		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
	(In thousands)
States and political subdivisions	$	5,013	(33)	1,712	(51)	6,725	(84)
Public utilities	2,345		(83)	—	—	2,345	(83)
Corporate	31,419		(337)	17,191	(381)	48,610	(718)
Residential mortgage-backed	25,859		(63)	43,498	(653)	69,357	(716)
Asset-backed	1,349		(1)	—	—	1,349	(1)
Totals	$	65,985	(517)	62,401	(1,085)	128,386	(1,602)

Schedule of gross unrealized losses and fair values of debt securities, available-for-sale investments, continuous unrealized loss position

The following table shows the gross unrealized losses and fair values of the Company's available for sale debt securities by investment category and length of time the individual securities have been in a continuous unrealized loss position at September 30, 2020.

	Debt Securities Available for Sale
	Less than 12 Months			12 Months or Greater		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
	(In thousands)
States and political subdivisions	$	558	(2)	—	—	558	(2)
Public utilities	—		—	—	—	—	—
Corporate	179,742		(17,784)	28,389	(2,565)	208,131	(20,349)
Commercial mortgage-backed	—		—	—	—	—	—
Residential mortgage-backed	—		—	572	(159)	572	(159)
Asset-backed	15,131		(42)	—	—	15,131	(42)
Totals	$	195,431	(17,828)	28,961	(2,724)	224,392	(20,552)

The following table shows the gross unrealized losses and fair values of the Company's available for sale debt securities by investment category and length of time that the individual securities have been in a continuous unrealized loss position at December 31, 2019.

	Debt Securities Available for Sale
	Less than 12 Months			12 Months or Greater		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
	(In thousands)
States and political subdivisions	$	470	(3)	—	—	470	(3)
Public utilities	—		—	—	—	—	—
Corporate	40,080		(105)	28,582	(2,374)	68,662	(2,479)
Residential mortgage-backed	—		—	710	(117)	710	(117)
Totals	$	40,550	(108)	29,292	(2,491)	69,842	(2,599)

Investments classified by contractual maturity date

The amortized cost and fair value of investments in debt securities at September 30, 2020, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Debt Securities Available for Sale			Debt Securities Held to Maturity
	Amortized Cost		Fair Value	Amortized Cost	Fair Value
	(In thousands)
Due in 1 year or less	$	179,359	182,907	579,550	587,799
Due after 1 year through 5 years	1,361,831		1,450,221	3,004,262	3,204,761
Due after 5 years through 10 years	1,178,727		1,291,931	1,474,459	1,656,357
Due after 10 years	337,453		382,489	818,941	921,629
	3,057,370		3,307,548	5,877,212	6,370,546
Mortgage and asset-backed securities	99,116		103,108	949,927	1,007,853
Totals before allowance for credit losses	3,156,486		3,410,656	6,827,139	7,378,399
Allowance for credit losses	—		—	(5,086)	—
Totals	$	3,156,486	3,410,656	6,822,053	7,378,399

Allowance for debt securities held to maturity

The following table presents the allowance for credit losses for the three and nine months ended September 30, 2020 and 2019.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	Debt Securities Held to Maturity		Debt Securities Available for Sale	Debt Securities Held to Maturity	Debt Securities Available for Sale
	(In thousands)
Balance, beginning of period	$	4,940	—	—	—
Provision January 1, 2020 for adoption of new accounting guidance	—		—	3,334	—
(Releases)/provision during period	146		—	1,752	—
Balance, end of period	$	5,086	—	5,086	—

In the table below, held to maturity securities and their corresponding allowance for credit losses are represented according to credit ratings by nationally recognized statistical rating organizations.

	Debt Securities Held to Maturity
	Amortized Cost		Allowance for Credit Losses	Carrying Value
	(In thousands)
AAA	$	95,861	—	95,861
AA	1,639,976		(379)	1,639,597
A	2,224,126		(939)	2,223,187
BBB	2,737,258		(3,292)	2,733,966
BB and other below investment	129,918		(476)	129,442
Bonds Total	$	6,827,139	(5,086)	6,822,053

Allowance for debt securities available for sale

The following table presents the allowance for credit losses for the three and nine months ended September 30, 2020 and 2019.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	Debt Securities Held to Maturity		Debt Securities Available for Sale	Debt Securities Held to Maturity	Debt Securities Available for Sale
	(In thousands)
Balance, beginning of period	$	4,940	—	—	—
Provision January 1, 2020 for adoption of new accounting guidance	—		—	3,334	—
(Releases)/provision during period	146		—	1,752	—
Balance, end of period	$	5,086	—	5,086	—

Schedule of mortgage loans by loan-to-value ratio

The following table represents the mortgage loan portfolio by loan-to-value ratio.

	September 30, 2020			December 31, 2019
	Amount		%	Amount		%
	(In thousands)			(In thousands)
Mortgage Loans by Loan-to-Value Ratio (1):
Less than 50%	$	52,987	17.4	$	52,778	19.3
50% to 60%	57,744		18.9	56,929		20.8
60% to 70%	148,694		48.7	117,377		43.0
70% to 80%	45,647		15.0	46,013		16.9
80% to 90%	—		—	—		—
Greater than 90%	—		—	—		—
Gross balance	305,072		100.0	273,097		100.0
Allowance for credit losses	(2,357)		(0.8)	(675)		(0.2)
Totals	$	302,715	99.2	$	272,422	99.8

(1) Loan-to-Value Ratio is determined using the most recent appraised value. Appraisals are required at the time of funding and may be updated if a material change occurs from the original loan agreement.

Schedule of allowance for mortgage loans

The following table represents the mortgage loan allowance for credit losses.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Balance, beginning of the period	$	2,227	675	675	675
Provision January 1, 2020 for adoption of new accounting guidance	—		—	504	—
Provision during the period	130		—	1,178	—
Releases	—		—	—	—
Total ending allowance for credit losses	$	2,357	675	2,357	675

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of assets and liabilities that are measured at fair value on a recurring basis

The following tables set forth the Company’s assets and liabilities that are measured at fair value on a recurring basis as of the date indicated:

	September 30, 2020
	Total		Level 1	Level 2	Level 3
	(In thousands)
Debt securities, available for sale	$	3,410,656	—	3,410,656	—
Equity securities	18,610		18,610	—	—
Derivatives, index options	93,367		—	—	93,367
Other invested assets	1		1	—	—
Total assets	$	3,522,634	18,611	3,410,656	93,367
Policyholder account balances (a)	$	116,802	—	—	116,802
Other liabilities (b)	4,951		—	—	4,951
Total liabilities	$	121,753	—	—	121,753

During the three and nine months ended September 30, 2020, the Company made no transfers into or out of Levels 1, 2 or 3.

	December 31, 2019
	Total		Level 1	Level 2	Level 3
	(In thousands)
Debt securities, available for sale	$	3,356,945	—	3,356,945	—
Equity securities	23,594		23,594	—	—
Derivatives, index options	157,588		—	—	157,588
Other invested assets	2		2	—	—
Total assets	$	3,538,129	23,596	3,356,945	157,588
Policyholder account balances (a)	$	155,902	—	—	155,902
Other liabilities (c)	15,301		—	—	15,301
Total liabilities	$	171,203	—	—	171,203

(a)  Represents the fair value of certain product-related embedded derivatives that were recorded at fair value.

(b)  Represents the liability for share-based compensation.

(c)  Represents the liability for share-based compensation and the contingent consideration for businesses acquired.

Schedule of assets by pricing source and fair value hierarchy level

The following tables present, by pricing source and fair value hierarchy level, the Company's assets that are measured at fair value on a recurring basis:

	September 30, 2020
	Total			Level 1		Level 2		Level 3
	(In thousands)
Debt securities, available for sale:
Priced by third-party vendors	$	3,410,656		—		3,410,656		—
Priced internally	—			—		—		—
Subtotal	3,410,656			—		3,410,656		—
Equity securities, available for sale:
Priced by third-party vendors	18,610			18,610		—		—
Priced internally	—			—		—		—
Subtotal	18,610			18,610		—		—
Derivatives, index options:
Priced by third-party vendors	93,367			—		—		93,367
Priced internally	—			—		—		—
Subtotal	93,367			—		—		93,367
Other invested assets:
Priced by third-party vendors	1			1		—		—
Priced internally	—			—		—		—
Subtotal	1			1		—		—
Total	$	3,522,634		18,611		3,410,656		93,367
Percent of total	100.0		%	0.5	%	96.8	%	2.7	%

	December 31, 2019
	Total			Level 1		Level 2		Level 3
	(In thousands)
Debt securities, available for sale:
Priced by third-party vendors	$	3,356,945		—		3,356,945		—
Priced internally	—			—		—		—
Subtotal	3,356,945			—		3,356,945		—
Equity securities, available for sale:
Priced by third-party vendors	23,594			23,594		—		—
Priced internally	—			—		—		—
Subtotal	23,594			23,594		—		—
Derivatives, index options:
Priced by third-party vendors	157,588			—		—		157,588
Priced internally	—			—		—		—
Subtotal	157,588			—		—		157,588
Other invested assets:
Priced by third-party vendors	2			2		—		—
Priced internally	—			—		—		—
Subtotal	2			2		—		—
Total	$	3,538,129		23,596		3,356,945		157,588
Percent of total	100.0		%	0.7	%	94.8	%	4.5	%

Schedule of significant unobservable inputs for fair value measurements

The following tables provide additional information about fair value measurements for which significant unobservable (Level 3) inputs were utilized to determine fair value.

	For the Three Months Ended September 30, 2020
	Assets				Other Liabilities
		Derivatives, Index Options		Total Assets	Policyholder Account Balances	Stock Options	Contingent Consideration	Total Other Liabilities
	(In thousands)
Beginning balance, July 1, 2020		$	66,738	66,738	87,573	5,497	—	93,070
Total realized and unrealized gains (losses):
Included in net earnings		31,520		31,520	34,119	(546)	—	33,573
Included in other comprehensive income		—		—		—	—	—
Purchases, sales, issuances and settlements, net:
Purchases		11,426		11,426	11,427	—	—	11,427
Sales		—		—	—	—	—	—
Issuances		—		—	—	—	—	—
Settlements		(16,317)		(16,317)	(16,317)	—	—	(16,317)
Transfers into (out of) Level 3		—		—	—	—	—	—
Balance at end of period		$	93,367	93,367	116,802	4,951	—	121,753
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:
Net investment income		$	50,636	50,636	—	—	—	—
Benefits and expenses		—		—	50,636	(546)	—	50,090
Total		$	50,636	50,636	50,636	(546)	—	50,090

	For the Three Months Ended September 30, 2019
	Assets				Other Liabilities
		Derivatives, Index Options		Total Assets	Policyholder Account Balances	Stock Options	Contingent Consideration	Total Other Liabilities
	(In thousands)
Beginning balance, July 1, 2019		$	89,900	89,900	100,638	7,991	3,871	112,500
Total realized and unrealized gains (losses):
Included in net earnings		3,296		3,296	(3,534)	1,462	94	(1,978)
Included in other comprehensive income		—		—	—	—	—	—
Purchases, sales, issuances and settlements, net:
Purchases		19,872		19,872	19,872	—	—	19,872
Sales		—		—	—	—	—	—
Issuances		—		—	—	—	—	—
Settlements		(6,704)		(6,704)	(6,704)	—	—	(6,704)
Transfers into (out of) Level 3		—		—	—	—	—	—
Balance at end of period		$	106,364	106,364	110,272	9,453	3,965	123,690
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:
Net investment income		$	(2,020)	(2,020)	—	—	—	—
Benefits and expenses		—		—	(2,020)	1,462	94	(464)
Total		$	(2,020)	(2,020)	(2,020)	1,462	94	(464)

	For the Nine Months Ended September 30, 2020
	Assets				Other Liabilities
		Derivatives, Index Options		Total Assets	Policyholder Account Balances	Stock Options	Contingent Consideration	Total Other Liabilities
	(In thousands)
Beginning balance, January 1, 2020		$	157,588	157,588	155,902	11,225	4,076	171,203
Total realized and unrealized gains (losses):
Included in net earnings		(34,865)		(34,865)	(9,744)	(4,395)	(4,076)	(18,215)
Included in other comprehensive income		—		—	—	—	—	—
Purchases, sales, issuances and settlements, net:
Purchases		50,287		50,287	50,287	—	—	50,287
Sales		—		—	—	—	—	—
Issuances		—		—	—	—	—	—
Settlements		(79,643)		(79,643)	(79,643)	(1,879)	—	(81,522)
Transfers into (out of) Level 3		—		—	—	—	—	—
Balance at end of period		$	93,367	93,367	116,802	4,951	—	121,753
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:
Net investment income		$	6,966	6,966	—	—	—	—
Benefits and expenses		—		—	6,966	(4,395)	(4,076)	(1,505)
Total		$	6,966	6,966	6,966	(4,395)	(4,076)	(1,505)

	For the Nine Months Ended September 30, 2019
	Assets				Other Liabilities
		Derivatives, Index Options		Total Assets	Policyholder Account Balances	Stock Options	Contingent Consideration	Total Other Liabilities
	(In thousands)
Beginning balance, January 1, 2019		$	14,684	14,684	44,781	11,923	—	56,704
Total realized and unrealized gains (losses):
Included in net earnings		63,127		63,127	36,938	52	265	37,255
Included in other comprehensive income		—		—	—	—	—	—
Purchases, sales, issuances and settlements, net:
Purchases		56,494		56,494	56,494	—	—	56,494
Sales		—		—	—	—	—	—
Issuances		—		—	—	—	3,700	3,700
Settlements		(27,941)		(27,941)	(27,941)	(2,522)	—	(30,463)
Transfers into (out of) Level 3		—		—	—	—	—	—
Balance at end of period		$	106,364	106,364	110,272	9,453	3,965	123,690
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:
Net investment income		$	42,794	42,794	—	—	—	—
Benefits and expenses		—		—	42,794	52	265	43,111
Total		$	42,794	42,794	42,794	52	265	43,111

Schedule of quantitative information of Level 3 assets

The following table presents the valuation method for financial assets and liabilities categorized as level 3, as well as the unobservable inputs used in the valuation of those financial instruments:

	September 30, 2020
	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Average)
	(In thousands)
Assets:
Derivatives, index options	$	93,367	Broker prices	Implied volatility	12.96% - 53.69% (19.74%)
Total assets	$	93,367
Liabilities:
Policyholder account balances	$	116,802	Deterministic cash flow model	Projected option cost	0.0% - 38.69% (5.18%)
Share based compensation	4,951		Black-Scholes model	Expected term	1.2 to 9.1 years
				Expected volatility	32.85%
Total liabilities	$	121,753

	December 31, 2019
	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Average)
	(In thousands)
Assets:
Derivatives, index options	$	157,588	Broker prices	Implied volatility	13.10% - 19.90% (15.25%)
Total assets	$	157,588
Liabilities:
Policyholder account balances	$	155,902	Deterministic cash flow model	Projected option cost	0.0% - 17.55% (3.14%)
Share based compensation	11,225		Black-Scholes model	Expected term	1.9 to 10 years
				Expected volatility	22.19%
Contingent consideration on businesses acquired	4,076		Probabilistic Method	Discount rate	10.0%
				Projected renewal premium	$57.2 - $82.4 million ($71.9)
Total liabilities	$	171,203

Schedule of carrying amounts and fair values of the company's financial instruments

The carrying amounts and fair values of the Company's financial instruments are as follows:

	September 30, 2020
				Fair Value Hierarchy Level
	Carrying Values		Fair Values	Level 1	Level 2	Level 3
	(In thousands)
ASSETS
Debt securities held to maturity	$	6,822,053	7,378,399	—	7,378,399	—
Debt securities available for sale	3,410,656		3,410,656	—	3,410,656	—
Cash and cash equivalents	507,025		507,025	507,025	—	—
Mortgage loans	302,715		303,910	—	—	303,910
Real estate	33,927		48,547	—	—	48,547
Policy loans	75,714		128,615	—	—	128,615
Other loans	19,712		20,004	—	—	20,004
Derivatives, index options	93,367		93,367	—	—	93,367
Equity securities	18,610		18,610	18,610	—	—
Life interest in Libbie Shearn Moody Trust	9,230		12,775	—	—	12,775
Other investments	4,514		22,581	1	—	22,580
LIABILITIES
Deferred annuity contracts	$	6,697,569	5,422,599	—	—	5,422,599
Immediate annuity and supplemental contracts	417,663		449,676	—	—	449,676
Contingent consideration on businesses acquired	—		—	—	—	—

	December 31, 2019
				Fair Value Hierarchy Level
	Carrying Values		Fair Values	Level 1	Level 2	Level 3
	(In thousands)
ASSETS
Debt securities held to maturity	$	7,106,245	7,407,703	—	7,407,703	—
Debt securities available for sale	3,356,945		3,356,945	—	3,356,945	—
Cash and cash equivalents	253,524		253,524	253,524	—	—
Mortgage loans	272,422		270,931	—	—	270,931
Real estate	34,588		57,204	—	—	57,204
Policy loans	80,008		123,650	—	—	123,650
Other loans	13,547		13,698	—	—	13,698
Derivatives, index options	157,588		157,588	—	—	157,588
Equity securities	23,594		23,594	23,594	—	—
Life interest in Libbie Shearn Moody Trust	9,230		12,775	—	—	12,775
Other investments	197		16,182	2	—	16,180
LIABILITIES
Deferred annuity contracts (1)	$	7,014,833	5,931,352	—	—	5,931,352
Immediate annuity and supplemental contracts	400,465		422,931	—	—	422,931
Contingent consideration on businesses acquired	4,076		4,076	—	—	4,076

(1) Revised to correct for an adjustment related to the understatement of reserve liabilities of $15.0 million. See Note 1.

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Derivative Investments (Tables)

9 Months Ended

Sep. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of fair value of derivative instruments

The tables below present the fair value of derivative instruments as of September 30, 2020 and December 31, 2019, respectively.

	September 30, 2020
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
		(In thousands)			(In thousands)
Derivatives not designated as hedging instruments
Equity index options	Derivatives, Index Options	$	93,367
Fixed-index products				Universal Life and Annuity Contracts	$	116,802
Total		$	93,367		$	116,802

	December 31, 2019
	Asset Derivatives			Liability Derivatives
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
		(In thousands)			(In thousands)
Derivatives not designated as hedging instruments
Equity index options	Derivatives, Index Options	$	157,588
Fixed-index products				Universal Life and Annuity Contracts	$	155,902
Total		$	157,588		$	155,902

Schedule of derivative instruments in the condensed consolidated statements of earnings

The table below presents the effect of derivative instruments in the Condensed Consolidated Statements of Earnings (Loss) for the three months ended September 30, 2020 and 2019.

		September 30, 2020		September 30, 2019
Derivatives Not Designated As Hedging Instruments	Location of Gain or (Loss) Recognized In Income on Derivatives	Amount of Gain or (Loss) Recognized in Income on Derivatives
		(In thousands)
Equity index options	Net investment income (loss)	$	31,520	3,296
Fixed-index products	Universal life and annuity contract interest	(34,119)		3,533
		$	(2,599)	6,829

The table below presents the effect of derivative instruments in the Condensed Consolidated Statements of Earnings (Loss) for the nine months ended September 30, 2020 and 2019.

		September 30, 2020		September 30, 2019
Derivatives Not Designated As Hedging Instruments	Location of Gain or (Loss) Recognized In Income on Derivatives	Amount of Gain or (Loss) Recognized in Income on Derivatives
		(In thousands)
Equity index options	Net investment income	$	(34,865)	63,127
Fixed-index products	Universal life and annuity contract interest	9,744		(36,937)
		$	(25,121)	26,190

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Business Combinations (Tables)

9 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

Schedule of fair value of net assets acquired

The following table presents the fair values of the net assets acquired as of January 31, 2019.

	January 31, 2019
	Fair value
Assets	(In thousands)
Debt securities held to maturity	$	261,059
Debt securities available for sale	400,719
Policy loans	28,128
Real estate	4,600
Cash and cash equivalents	16,275
Accrued investment income	6,116
Value of business acquired	145,768
Reinsurance recoverables	21,895
Other intangible assets	9,600
Other assets acquired	12,075
Total assets acquired	906,235
Liabilities
Traditional life reserves	691,297
Other policyholder liabilities	13,867
Other liabilities acquired	5,840
	711,004
Net identifiable assets acquired	195,231
Goodwill	13,864
Net assets acquired	$	209,095

Schedule of fair value of identifiable intangible assets acquired

The following table presents the fair value of identifiable intangible assets acquired at January 31, 2019:

	Fair Value		Weighted-Average Amortization Period
	(In thousands)
Trademarks / trade names	$	2,800	15
Internally developed software	3,800		7
Insurance licenses	3,000		NA
	$	9,600

The gross carrying amounts and accumulated amortization for each specifically identifiable intangible asset were as follows.

	September 30, 2020				December 31, 2019
	Weighted-Average Amortization Period	Gross Carrying Amount		Accumulated Amortization	Gross Carrying Amount	Accumulated Amortization
		(In thousands)
Trademarks/trade names	15	$	2,800	(311)	2,800	(171)
Internally developed software	7	3,800		(905)	3,800	(498)
Insurance licenses	N/A	3,000		—	3,000	—
		$	9,600	(1,216)	9,600	(669)

Schedule of changes in VOBA

Changes in VOBA were as follows for the periods shown:

	September 30,		December 31,
	2020		2019
	(In thousands)
Balance, beginning of year	$	138,071	—
Business acquired	—		145,768
Amortization:
Amortization, excluding unlocking	(5,645)		(7,697)
Balance as of end of period	$	132,426	138,071

Schedule of expected amortization of VOBA

Estimated future amortization of VOBA, net of interest (in thousands), as of September 30, 2020, is as follows:

	Expected Amortization
	(In thousands)
Remainder of 2020	$	1,844
2021	$	7,002
2022	$	6,646
2023	$	6,337
2024	$	6,060

Schedule of changes in carrying amount of goodwill

The changes in the carrying amount of goodwill (in thousands) were as follows:

	September 30,		December 31,
	2020		2019
	(In thousands)
Gross goodwill as of beginning of year	$	13,864	—
Goodwill resulting from business acquisition	—		13,864
Gross goodwill, before impairments	13,864		13,864
Accumulated impairment as of beginning of year	—		—
Current year impairments	—		—
Net goodwill as of end of period	$	13,864	13,864

Schedule of pro forma total revenues and net earnings

The following unaudited comparative pro forma total revenues and net earnings represent Condensed Consolidated Results of Operations for the Company which assume amounts estimated had the acquisition of Ozark National and NIS by the Company been effective January 1, 2018.

	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
	(In thousands)
Total revenues	$	202,702	173,166	471,205	593,402
Net earnings (loss)	$	10,825	19,989	57,176	95,341

The pro forma amounts shown above include the estimated total revenues and net earnings of the acquired businesses for each period incorporating amortization of identifiable intangible assets acquired and fair value adjustments to acquired invested assets and traditional life insurance reserves.

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Consolidation and Basis of Presentation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Decrease to deferred federal income tax liability	$ (53,055)		$ (53,055)		$ (36,767)
Decrease to retained earnings	(2,068,714)		(2,068,714)		(2,014,570)
Other net investment gains (losses)	6,050	$ 1,443	12,660	$ 11,549
Earnings before Federal income taxes	13,329	24,992	70,908	117,727
Federal income taxes	2,504	5,003	13,732	23,844
Net earnings	10,825	19,989	57,176	93,883
Unrealized Gains and Losses on Available-for-sale Securities | Amount Reclassified From Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Other net investment gains (losses)	889	198	3,380	2,465
Net OTTI losses recognized in earnings	0	(1,945)	0	(7,847)
Earnings before Federal income taxes	889	(1,747)	3,380	(5,382)
Federal income taxes	187	(367)	710	(1,130)
Net earnings	$ 702	$ (1,380)	$ 2,670	$ (4,252)
Restatement Adjustment
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Increase in future policy benefits liability					15,000
Decrease to deferred federal income tax liability					3,200
Decrease to retained earnings					$ 11,800

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New Accounting Pronouncements (Details) - USD ($) $ in Thousands		9 Months Ended
	Jan. 01, 2020	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Retained earnings		$ 2,068,714		$ 2,014,570
Valuation allowance for mortgage loans	$ 1,200	2,357	$ 2,227	675	$ 675	$ 675	$ 675
Debt securities held to maturity, allowance for expected credit losses	$ 3,300	$ 5,086	4,940	0
Accounting Standards Update [Extensible List]	us-gaap:AccountingStandardsUpdate201613Member	us-gaap:AccountingStandardsUpdate201613Member
Cumulative Effect, Period Of Adoption, Adjustment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Retained earnings	$ 3,000
Valuation allowance for mortgage loans			0	504		$ 0	$ 0
Debt securities held to maturity, allowance for expected credit losses			$ 0	$ 3,334

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Stockholders' Equity (Details) - USD ($)		3 Months Ended			9 Months Ended
	Jan. 31, 2019	Sep. 30, 2020	Sep. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019
Dividends Payable [Line Items]
Dividends					$ 0	$ 0
NWLIC
Dividends Payable [Line Items]
Maximum dividend payment which may be paid without prior approval		$ 152,800,000			152,800,000
Dividends			$ 4,000,000.0	$ 32,000,000.0
Ozark National Life Insurance Company
Dividends Payable [Line Items]
Maximum dividend payment which may be paid without prior approval		17,200,000			$ 17,200,000
Extraordinary dividend paid	$ 102,700,000
Class A
Dividends Payable [Line Items]
Percent of Board of Directors elected					33.33%
Dividends		0	0		$ 0	0
Class B
Dividends Payable [Line Items]
Dividends in kind paid to common stockholders compare to other classes					50.00%
Dividends		$ 0	$ 0		$ 0	$ 0
Class B | Board of Directors Chairman
Dividends Payable [Line Items]
Common stock, percentage ownership		99.00%			99.00%

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Earnings Per Share (EPS Calculation) (Details) - USD ($) $ / shares in Units, shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net earnings	$ 10,825,000	$ 19,989,000	$ 57,176,000	$ 93,883,000
Dividends			0	0
Undistributed earnings	10,825,000	19,989,000	57,176,000	93,883,000
Allocation of net earnings:
Dividends			0	0
Undistributed earnings	10,825,000	19,989,000	57,176,000	93,883,000
Net earnings	10,825,000	19,989,000	57,176,000	93,883,000
Class A
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net earnings	10,519,000	19,424,000	55,560,000	91,228,000
Dividends	0	0	0	0
Undistributed earnings	10,519,000	19,424,000	55,560,000	91,228,000
Allocation of net earnings:
Dividends	0	0	0	0
Undistributed earnings	10,519,000	19,424,000	55,560,000	91,228,000
Net earnings	$ 10,519,000	$ 19,424,000	$ 55,560,000	$ 91,228,000
Denominator:
Basic earnings per share - weighted-average shares (in shares)	3,436	3,436	3,436	3,436
Effect of dilutive stock options (in shares)	0	0	0	0
Diluted earnings per share - adjusted weighted-average shares for assumed conversions (in shares)	3,436	3,436	3,436	3,436
Basic earnings per share (in dollars per share)	$ 3.06	$ 5.65	$ 16.17	$ 26.55
Diluted earnings per share (in dollars per share)	$ 3.06	$ 5.65	$ 16.17	$ 26.55
Class B
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net earnings	$ 306,000	$ 565,000	$ 1,616,000	$ 2,655,000
Dividends	0	0	0	0
Undistributed earnings	306,000	565,000	1,616,000	2,655,000
Allocation of net earnings:
Dividends	0	0	0	0
Undistributed earnings	306,000	565,000	1,616,000	2,655,000
Net earnings	$ 306,000	$ 565,000	$ 1,616,000	$ 2,655,000
Denominator:
Basic earnings per share - weighted-average shares (in shares)	200	200	200	200
Effect of dilutive stock options (in shares)	0	0	0	0
Diluted earnings per share - adjusted weighted-average shares for assumed conversions (in shares)	200	200	200	200
Basic earnings per share (in dollars per share)	$ 1.53	$ 2.83	$ 8.08	$ 13.28
Diluted earnings per share (in dollars per share)	$ 1.53	$ 2.83	$ 8.08	$ 13.28

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Pension and Other Postretirement Plans (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2020 USD ($) benefit_plan	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) benefit_plan	Sep. 30, 2019 USD ($)	Dec. 31, 2007
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Number of non-qualified defined benefit pension plans | benefit_plan	3		3
Number of healthcare plans | benefit_plan	2		2
Defined Benefit Pension Plans
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Vesting percentage in accrued benefits from plan freeze					100.00%
Service cost	$ 27,000	$ 24,000	$ 81,000	$ 72,000
Interest cost	168,000	210,000	505,000	630,000
Expected return on plan assets	(315,000)	(271,000)	(946,000)	(815,000)
Amortization of prior service cost	0	0	0	0
Amortization of net loss	145,000	165,000	435,000	495,000
Net periodic benefit cost	25,000	128,000	75,000	382,000
Minimum required contribution	0.0		0.0
Planned contributions remaining	0		0
Company contributions to plan			200,000
Chairman and President Non-Qualified Defined Benefit Plans
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Service cost	302,000	126,000	907,000	377,000
Interest cost	337,000	256,000	1,012,000	768,000
Amortization of prior service cost	14,000	14,000	44,000	44,000
Amortization of net loss	1,446,000	348,000	4,336,000	1,044,000
Net periodic benefit cost	2,099,000	744,000	6,299,000	2,233,000
Company contributions to plan			1,600,000
Company expected contributions to plans in fiscal year	2,000,000.0		2,000,000.0
Defined Benefit Postretirement Healthcare Plans
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Interest cost	41,000	49,000	124,000	148,000
Amortization of prior service cost	0	13,000	0	39,000
Amortization of net loss	40,000	61,000	119,000	183,000
Net periodic benefit cost	$ 81,000	$ 123,000	$ 243,000	$ 370,000
Minimum | Chairman and President Non-Qualified Defined Benefit Plans
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Aggregate average annual participant salary increase			10.00%

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Segment and Other Operating Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Selected Condensed Consolidated Balance Sheet Items:
Total assets	$ 12,420,986		$ 12,420,986		$ 12,553,447
Other policyholder liabilities	136,392		136,392		127,607
Condensed Consolidated Income Statements:
Premiums and contract revenues	62,996	$ 61,939	181,434	$ 178,195
Net investment income (loss)	129,679	108,456	261,894	388,211
Other revenues	3,977	3,273	15,217	13,652
Realized gains (losses) on investments	6,050	(502)	12,660	3,702
Total revenues	202,702	173,166	471,205	583,760
Life and other policy benefits	26,940	39,918	94,005	101,764
Amortization of deferred policy acquisition costs and value of business acquired	50,800	22,998	111,937	86,573
Universal life and annuity contract interest	85,879	59,445	119,625	200,500
Other operating expenses	25,754	25,813	74,730	77,196
Federal income taxes (benefit)	2,504	5,003	13,732	23,844
Net earnings	10,825	19,989	57,176	93,883
Segments
Selected Condensed Consolidated Balance Sheet Items:
Deferred policy acquisition costs, sales inducements, and value of business acquired	851,879		851,879		966,402
Total assets	11,711,852		11,711,852		12,092,796
Future policy benefits	9,862,176		9,862,176		10,141,971
Other policyholder liabilities	136,392		136,392		127,607
Condensed Consolidated Income Statements:
Premiums and contract revenues	62,996	61,939	181,434	178,195
Net investment income (loss)	129,679	108,456	261,894	388,211
Other revenues	3,977	3,273	15,217	13,652
Total revenues	196,652	173,668	458,545	580,058
Life and other policy benefits	26,940	39,918	94,005	101,764
Amortization of deferred policy acquisition costs and value of business acquired	50,800	22,998	111,937	86,573
Universal life and annuity contract interest	85,879	59,445	119,625	200,500
Other operating expenses	25,754	25,813	74,730	77,196
Federal income taxes (benefit)	1,233	5,109	11,073	23,067
Total expenses	190,606	153,283	411,370	489,100
Net earnings	6,046	20,385	47,175	90,958
Segments | Domestic Life Insurance
Selected Condensed Consolidated Balance Sheet Items:
Deferred policy acquisition costs, sales inducements, and value of business acquired	127,124		127,124		127,557
Total assets	1,467,577		1,467,577		1,399,818
Future policy benefits	1,275,476		1,275,476		1,198,103
Other policyholder liabilities	17,190		17,190		18,016
Condensed Consolidated Income Statements:
Premiums and contract revenues	17,734	11,387	40,971	32,897
Net investment income (loss)	21,201	12,885	23,293	51,379
Other revenues	10	49	40	113
Total revenues	38,945	24,321	64,304	84,389
Life and other policy benefits	3,785	6,099	13,831	13,850
Amortization of deferred policy acquisition costs and value of business acquired	10,540	2,181	16,322	8,898
Universal life and annuity contract interest	20,352	11,267	17,831	45,693
Other operating expenses	5,185	5,297	15,123	14,437
Federal income taxes (benefit)	(161)	(107)	199	306
Total expenses	39,701	24,737	63,306	83,184
Net earnings	(756)	(416)	998	1,205
Segments | International Life Insurance
Selected Condensed Consolidated Balance Sheet Items:
Deferred policy acquisition costs, sales inducements, and value of business acquired	183,318		183,318		209,858
Total assets	1,049,371		1,049,371		1,153,105
Future policy benefits	798,665		798,665		870,461
Other policyholder liabilities	12,214		12,214		14,903
Condensed Consolidated Income Statements:
Premiums and contract revenues	21,551	25,065	67,479	74,905
Net investment income (loss)	10,354	6,872	12,507	30,165
Other revenues	6	25	54	79
Total revenues	31,911	31,962	80,040	105,149
Life and other policy benefits	2,278	5,074	9,293	10,195
Amortization of deferred policy acquisition costs and value of business acquired	6,496	(3,047)	19,392	11,195
Universal life and annuity contract interest	(14,023)	14,637	(15,368)	33,967
Other operating expenses	5,434	5,493	13,047	14,278
Federal income taxes (benefit)	5,169	1,970	8,907	7,192
Total expenses	5,354	24,127	35,271	76,827
Net earnings	26,557	7,835	44,769	28,322
Segments | Annuities
Selected Condensed Consolidated Balance Sheet Items:
Deferred policy acquisition costs, sales inducements, and value of business acquired	402,072		402,072		486,553
Total assets	7,797,137		7,797,137		8,198,730
Future policy benefits	7,068,118		7,068,118		7,366,894
Other policyholder liabilities	91,818		91,818		80,002
Condensed Consolidated Income Statements:
Premiums and contract revenues	4,187	5,336	13,536	16,061
Net investment income (loss)	87,889	78,000	196,187	270,727
Other revenues	84	8	80	80
Total revenues	92,160	83,344	209,803	286,868
Life and other policy benefits	3,383	12,550	20,452	33,856
Amortization of deferred policy acquisition costs and value of business acquired	31,794	21,688	70,159	60,150
Universal life and annuity contract interest	79,550	33,541	117,162	120,840
Other operating expenses	9,205	8,596	28,787	25,478
Federal income taxes (benefit)	(5,294)	1,388	(4,440)	9,426
Total expenses	118,638	77,763	232,120	249,750
Net earnings	(26,478)	5,581	(22,317)	37,118
Segments | Acquired Businesses
Selected Condensed Consolidated Balance Sheet Items:
Deferred policy acquisition costs, sales inducements, and value of business acquired	139,365		139,365		142,434
Total assets	1,030,162		1,030,162		978,243
Future policy benefits	719,917		719,917		706,513
Other policyholder liabilities	15,170		15,170		14,686
Condensed Consolidated Income Statements:
Premiums and contract revenues	19,524	20,151	59,448	54,332
Net investment income (loss)	6,434	6,300	19,284	16,283
Other revenues	2,628	2,318	7,369	6,049
Total revenues	28,586	28,769	86,101	76,664
Life and other policy benefits	17,494	16,195	50,429	43,863
Amortization of deferred policy acquisition costs and value of business acquired	1,970	2,176	6,064	6,330
Universal life and annuity contract interest	0	0	0	0
Other operating expenses	4,498	4,772	13,361	12,348
Federal income taxes (benefit)	963	1,133	4,103	2,836
Total expenses	24,925	24,276	73,957	65,377
Net earnings	3,661	4,493	12,144	11,287
Segments | All Others
Selected Condensed Consolidated Balance Sheet Items:
Deferred policy acquisition costs, sales inducements, and value of business acquired	0		0		0
Total assets	367,605		367,605		362,900
Future policy benefits	0		0		0
Other policyholder liabilities	0		0		0
Condensed Consolidated Income Statements:
Premiums and contract revenues	0	0	0	0
Net investment income (loss)	3,801	4,399	10,623	19,657
Other revenues	1,249	873	7,674	7,331
Total revenues	5,050	5,272	18,297	26,988
Life and other policy benefits	0	0	0	0
Amortization of deferred policy acquisition costs and value of business acquired	0	0	0	0
Universal life and annuity contract interest	0	0	0	0
Other operating expenses	1,432	1,655	4,412	10,655
Federal income taxes (benefit)	556	725	2,304	3,307
Total expenses	1,988	2,380	6,716	13,962
Net earnings	3,062	2,892	11,581	13,026
Other unallocated
Selected Condensed Consolidated Balance Sheet Items:
Total assets	709,134		709,134		460,651
Segment Reconciling Items
Condensed Consolidated Income Statements:
Taxes on realized gains (losses) on investments	1,271	(106)	2,659	777
Realized gains (losses) on investments, net of taxes	$ 4,779	$ (396)	$ 10,001	$ 2,925
Restatement Adjustment
Selected Condensed Consolidated Balance Sheet Items:
Future policy benefits					$ 15,000

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Share-Based Payments (General Descriptions) (Details) - USD ($)		3 Months Ended				9 Months Ended		12 Months Ended
	Jun. 15, 2016	Sep. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Jun. 20, 2008
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period in force, from which option holders may elect to sell back acquired shares						90 days
Compensation cost not yet recognized		$ 5,000,000.0				$ 5,000,000.0		$ 11,200,000
Total intrinsic value of options exercised						1,900,000	$ 2,500,000
Total share-based liabilities paid						1,900,000	2,500,000
Fair value of vested awards						1,800,000	3,000,000.0
Cash received from exercise of stock options						$ 0
Shares outstanding (in shares)		0				0		0
Closing stock price (in dollars per share)		$ 182.77				$ 182.77
Pre-tax compensation cost (benefit) recognized		$ (500,000)		$ 1,500,000		$ (4,400,000)	100,000
Compensation cost (benefit), tax expense (benefit)		100,000		$ (300,000)		900,000	$ 0.0
Compensation cost related to nonvested options not yet recognized		$ 2,600,000				$ 2,600,000
Weighted average period over which the compensation is expected to be recognized						1 year 3 months 18 days
Officers and Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted						0	0
Employee SARs granted before 2016 | Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Requisite service period of awards (in years)						3 years
Employee Stock Options and SARs | Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Requisite service period of awards (in years)						1 year
Employee Stock Options and SARs | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Requisite service period of awards (in years)						1 year
RSU | Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage (in percentage)						100.00%
Requisite service period of awards (in years)						3 years		3 years
Vesting period (in years)						3 years
RSU | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Requisite service period of awards (in years)						1 year
PSU
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)						3 years
Performance period (in years)						3 years
Performance outcome period (in years)						3 years
Award measurement period (in years)			3 years		3 years
Performance factor used to determine compensation payout			101.19%		93.86%
Vesting After Service Period, Year One | Employee SARs granted before 2016 | Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage (in percentage)						20.00%
Vesting After Service Period, Year One | Employee SARs | Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage (in percentage)						33.30%
Vesting After Service Period, Year One | Employee Stock Options and SARs | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage (in percentage)						20.00%
Vesting After Service Period, Year Two | Employee SARs granted before 2016 | Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage (in percentage)						20.00%
Vesting After Service Period, Year Two | Employee SARs | Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage (in percentage)						33.30%
Vesting After Service Period, Year Two | Employee Stock Options and SARs | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage (in percentage)						20.00%
Vesting After Service Period, Year Three | Employee SARs granted before 2016 | Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage (in percentage)						20.00%
Vesting After Service Period, Year Three | Employee SARs | Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage (in percentage)						33.30%
Vesting After Service Period, Year Three | Employee Stock Options and SARs | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage (in percentage)						20.00%
Vesting After Service Period, Year Four | Employee SARs granted before 2016 | Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage (in percentage)						20.00%
Vesting After Service Period, Year Four | Employee Stock Options and SARs | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage (in percentage)						20.00%
Vesting After Service Period, Year Five | Employee SARs granted before 2016 | Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage (in percentage)						20.00%
Vesting After Service Period, Year Five | Employee Stock Options and SARs | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage (in percentage)						20.00%
2008 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term of extension	10 years
Class A
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, par value (in dollars per share)		$ 0.01				$ 0.01		$ 0.01
Class A | RSU | Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting price determining period						20 days
Class A | RSU | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting price determining period						20 days
Class A | PSU
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting price determining period						20 days
Class A | 2008 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, par value (in dollars per share)									$ 1.00
Share-based payments, number of shares authorized under plans (in shares)									300,000

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Share-Based Payments (Options and Stock Appreciation Rights Outstanding) (Details)	9 Months Ended
	Sep. 30, 2020 $ / shares shares
Shares Available For Grant
Beginning balance (in shares)	291,000
Ending balance (in shares)	291,000
Option Outstanding, Shares
Beginning balance (in shares)	0
Exercised (in shares)	0
Forfeited (in shares)	0
Expired (in shares)	0
Stock option granted (in shares)	0
Ending balance (in shares)	0
Option Outstanding, Weighted-Average Exercise Price
Beginning balance (in dollars per share) | $ / shares	$ 0
Exercised (in dollars per share) | $ / shares	0
Forfeited (in dollars per share) | $ / shares	0
Expired (in dollars per share) | $ / shares	0
Stock option granted (in dollars per share) | $ / shares	0
Ending balance (in dollars per share) | $ / shares	$ 0
SAR
Liability Awards
Beginning balance (in shares)	107,517
Exercised (in shares)	(1,372)
Forfeited (in shares)	(1,797)
Granted (in shares)	0
Ending balance (in shares)	104,348
RSU
Liability Awards
Beginning balance (in shares)	14,352
Exercised (in shares)	(2,357)
Forfeited (in shares)	(259)
Granted (in shares)	0
Ending balance (in shares)	11,736
PSU
Liability Awards
Beginning balance (in shares)	19,108
Exercised (in shares)	(4,150)
Forfeited (in shares)	0
Granted (in shares)	0
Ending balance (in shares)	14,958

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Share-Based Payments (Exercise Range) (Details) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($) $ / shares shares
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Number Outstanding (in shares)	104,348
Number Exercisable (in shares)	70,337
SAR
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Number Outstanding, Aggregate intrinsic value | $	$ 960
Options Exercisable, Aggregate intrinsic value | $	$ 960
SAR | 132.56
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise price (in dollars per share) | $ / shares	$ 132.56
Number Outstanding (in shares)	19,118
Weighted- Average Remaining Contractual Life	1 year 2 months 12 days
Number Exercisable (in shares)	19,118
SAR | 210.22
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise price (in dollars per share) | $ / shares	$ 210.22
Number Outstanding (in shares)	23,550
Weighted- Average Remaining Contractual Life	3 years 2 months 12 days
Number Exercisable (in shares)	19,600
SAR | 216.48
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise price (in dollars per share) | $ / shares	$ 216.48
Number Outstanding (in shares)	11,149
Weighted- Average Remaining Contractual Life	5 years 4 months 24 days
Number Exercisable (in shares)	11,149
SAR | 311.16
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise price (in dollars per share) | $ / shares	$ 311.16
Number Outstanding (in shares)	9,797
Weighted- Average Remaining Contractual Life	6 years 2 months 12 days
Number Exercisable (in shares)	9,797
SAR | 310.55
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise price (in dollars per share) | $ / shares	$ 310.55
Number Outstanding (in shares)	203
Weighted- Average Remaining Contractual Life	6 years 7 months 6 days
Number Exercisable (in shares)	203
SAR | 334.34
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise price (in dollars per share) | $ / shares	$ 334.34
Number Outstanding (in shares)	9,264
Weighted- Average Remaining Contractual Life	7 years
Number Exercisable (in shares)	6,254
SAR | 303.77
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise price (in dollars per share) | $ / shares	$ 303.77
Number Outstanding (in shares)	11,462
Weighted- Average Remaining Contractual Life	8 years
Number Exercisable (in shares)	3,967
SAR | 252.91
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise price (in dollars per share) | $ / shares	$ 252.91
Number Outstanding (in shares)	19,805
Weighted- Average Remaining Contractual Life	9 years 1 month 6 days
Number Exercisable (in shares)	249

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Share-Based Payments (Black Scholes Option Pricing Model Assumptions) (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected dividend yield	0.20%	0.12%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term	1 year 2 months 12 days	1 year 10 months 24 days
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term	9 years 1 month 6 days	10 years
Weighted-Average
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility weighted-average	32.85%	22.19%
Risk-free rate weighted-average	0.17%	1.61%

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Commitments and Contingencies (Details) - USD ($)	Nov. 11, 2019	Jul. 27, 2019	Nov. 11, 2018	Sep. 30, 2020	Apr. 30, 2019
New Loans
Loss Contingencies [Line Items]
Other commitment				$ 0
Existing Loans
Loss Contingencies [Line Items]
Other commitment				7,200,000
Capital Contributions to Investment Funds
Loss Contingencies [Line Items]
Other commitment				$ 52,200,000
Williams v Pantaleoni et al
Loss Contingencies [Line Items]
Equity indexed annuity					$ 100,000
Loss contingency, compensatory damages awarded		$ 14,949
Loss contingency, punitive damages awarded		$ 2,900,000
Loss contingency, damages sought	$ 1,300,000
Settled Litigation | National Western Life Insurance Company and National Western Life Group, Inc. v. Ross Rankin Moody et. al
Loss Contingencies [Line Items]
Loss contingency, damages awarded			$ 1,314,054

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Investments (Investment Gains and Losses) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Available for sale debt securities:
Realized gains on disposal	$ 888	$ 197	$ 3,379	$ 2,548
Realized losses on disposal	0	0	0	(84)
Held to maturity debt securities:
Realized gains on disposal	2,501	1,246	6,620	2,197
Realized losses on disposal	0	0	0	0
Real estate gains (losses)	2,661	0	2,661	6,888
Other	0	0	0	0
Totals	$ 6,050	$ 1,443	$ 12,660	$ 11,549

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Investments (Narrative) (Details) $ in Thousands	3 Months Ended				9 Months Ended
	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Sep. 30, 2020 USD ($) loan	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Schedule of Investments [Line Items]
Real estate gain (loss)	$ 2,661	$ 0			$ 2,661	$ 6,888
Percentage of gains on bonds due to calls of securities	99.90%	99.60%			99.80%	81.00%
Debt securities, held to maturity	$ 6,827,139				$ 6,827,139		$ 7,106,245
Debt securities available for sale	3,410,656				3,410,656		3,356,945
Travis County
Schedule of Investments [Line Items]
Gain on sale of property	2,700
Ozark National Life Insurance Company [Member]
Schedule of Investments [Line Items]
Debt securities, held to maturity	335,300				335,300		307,200
Debt securities available for sale	416,000				$ 416,000		$ 415,700
Loans In Forbearance
Schedule of Investments [Line Items]
Number of loans | loan					8
Loans receivable	$ 29,200				$ 29,200
Nursing Home Operations in Reno, Nevada
Schedule of Investments [Line Items]
Real estate gain (loss)				$ 5,700
Nursing Home Operations, San Marcos, Texas
Schedule of Investments [Line Items]
Real estate gain (loss)			$ (2,000)
Prior Home Office
Schedule of Investments [Line Items]
Real estate gain (loss)			$ 3,200

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Investments (Securities Held to Maturity) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Jun. 30, 2020	Jan. 01, 2020	Dec. 31, 2019
Schedule of Held-to-maturity Securities [Line Items]
Totals before allowance for credit losses	$ 6,827,139			$ 7,106,245
Gross Unrealized Gains	559,005			303,060
Gross Unrealized Losses	(7,745)			(1,602)
Fair Value	7,378,399			7,407,703
Allowance for Credit Losses	(5,086)	$ (4,940)	$ (3,300)	0
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract]
Less than 12 Months, Fair Value	163,265			65,985
Less than 12 Months, Unrealized Losses	(7,520)			(517)
12 Months or Greater, Fair Value	7,574			62,401
12 Months or Greater, Unrealized Losses	(225)			(1,085)
Total, Fair Value	170,839			128,386
Total, Unrealized Losses	(7,745)			(1,602)
U.S. agencies
Schedule of Held-to-maturity Securities [Line Items]
Totals before allowance for credit losses	73,153			100,910
Gross Unrealized Gains	2,934			1,686
Gross Unrealized Losses	0			0
Fair Value	76,087			102,596
Allowance for Credit Losses	(81)
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract]
Total, Unrealized Losses	0			0
U.S. Treasury
Schedule of Held-to-maturity Securities [Line Items]
Totals before allowance for credit losses	3,798			3,782
Gross Unrealized Gains	156			140
Gross Unrealized Losses	0			0
Fair Value	3,954			3,922
Allowance for Credit Losses	0
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract]
Total, Unrealized Losses	0			0
States and political subdivisions
Schedule of Held-to-maturity Securities [Line Items]
Totals before allowance for credit losses	437,620			431,433
Gross Unrealized Gains	24,976			19,440
Gross Unrealized Losses	(124)			(84)
Fair Value	462,472			450,789
Allowance for Credit Losses	(176)
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract]
Less than 12 Months, Fair Value	13,687			5,013
Less than 12 Months, Unrealized Losses	(55)			(33)
12 Months or Greater, Fair Value	1,757			1,712
12 Months or Greater, Unrealized Losses	(69)			(51)
Total, Fair Value	15,444			6,725
Total, Unrealized Losses	(124)			(84)
Foreign governments
Schedule of Held-to-maturity Securities [Line Items]
Totals before allowance for credit losses	1,128			1,144
Gross Unrealized Gains	150			55
Gross Unrealized Losses	0			0
Fair Value	1,278			1,199
Allowance for Credit Losses	0
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract]
Total, Unrealized Losses	0			0
Public utilities
Schedule of Held-to-maturity Securities [Line Items]
Totals before allowance for credit losses	812,251			888,444
Gross Unrealized Gains	71,098			36,638
Gross Unrealized Losses	0			(83)
Fair Value	883,349			924,999
Allowance for Credit Losses	(718)
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract]
Less than 12 Months, Fair Value	0			2,345
Less than 12 Months, Unrealized Losses	0			(83)
12 Months or Greater, Fair Value	0			0
12 Months or Greater, Unrealized Losses	0			0
Total, Fair Value	0			2,345
Total, Unrealized Losses	0			(83)
Corporate
Schedule of Held-to-maturity Securities [Line Items]
Totals before allowance for credit losses	4,549,262			4,607,826
Gross Unrealized Gains	401,764			212,281
Gross Unrealized Losses	(7,620)			(718)
Fair Value	4,943,406			4,819,389
Allowance for Credit Losses	(4,111)
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract]
Less than 12 Months, Fair Value	148,574			31,419
Less than 12 Months, Unrealized Losses	(7,464)			(337)
12 Months or Greater, Fair Value	5,817			17,191
12 Months or Greater, Unrealized Losses	(156)			(381)
Total, Fair Value	154,391			48,610
Total, Unrealized Losses	(7,620)			(718)
Commercial mortgage-backed
Schedule of Held-to-maturity Securities [Line Items]
Totals before allowance for credit losses	3,019			3,032
Gross Unrealized Gains	34			52
Gross Unrealized Losses	0			0
Fair Value	3,053			3,084
Allowance for Credit Losses	0
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract]
Less than 12 Months, Fair Value	0
Less than 12 Months, Unrealized Losses	0
12 Months or Greater, Fair Value	0
12 Months or Greater, Unrealized Losses	0
Total, Fair Value	0
Total, Unrealized Losses	0			0
Residential mortgage-backed
Schedule of Held-to-maturity Securities [Line Items]
Totals before allowance for credit losses	944,838			1,066,899
Gross Unrealized Gains	57,854			32,706
Gross Unrealized Losses	(1)			(716)
Fair Value	1,002,691			1,098,889
Allowance for Credit Losses	0
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract]
Less than 12 Months, Fair Value	1,004			25,859
Less than 12 Months, Unrealized Losses	(1)			(63)
12 Months or Greater, Fair Value	0			43,498
12 Months or Greater, Unrealized Losses	0			(653)
Total, Fair Value	1,004			69,357
Total, Unrealized Losses	(1)			(716)
Asset-backed
Schedule of Held-to-maturity Securities [Line Items]
Totals before allowance for credit losses	2,070			2,775
Gross Unrealized Gains	39			62
Gross Unrealized Losses	0			(1)
Fair Value	2,109			2,836
Allowance for Credit Losses	0
Debt Securities, Held-to-maturity, Continuous Unrealized Loss Position [Abstract]
Less than 12 Months, Fair Value	0			1,349
Less than 12 Months, Unrealized Losses	0			(1)
12 Months or Greater, Fair Value	0			0
12 Months or Greater, Unrealized Losses	0			0
Total, Fair Value	0			1,349
Total, Unrealized Losses	$ 0			$ (1)

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Investments (Securities Available for Sale) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
Debt securities:
Totals before allowance for credit losses	$ 3,156,486	$ 3,206,120
Gross Unrealized Gains	274,722	153,424
Gross Unrealized Losses	(20,552)	(2,599)
Fair Value	3,410,656	3,356,945
Allowance for Credit Losses	0		$ 0	$ 0	$ 0
Fair Value
Less than 12 Months	195,431	40,550
12 Months or Greater	28,961	29,292
Total	224,392	69,842
Unrealized Losses
Less than 12 Months	(17,828)	(108)
12 Months or Greater	(2,724)	(2,491)
Total	(20,552)	(2,599)
States and political subdivisions
Debt securities:
Totals before allowance for credit losses	89,168	98,037
Gross Unrealized Gains	8,384	4,495
Gross Unrealized Losses	(2)	(3)
Fair Value	97,550	102,529
Allowance for Credit Losses	0
Fair Value
Less than 12 Months	558	470
12 Months or Greater	0	0
Total	558	470
Unrealized Losses
Less than 12 Months	(2)	(3)
12 Months or Greater	0	0
Total	(2)	(3)
Foreign governments
Debt securities:
Totals before allowance for credit losses	9,990	9,983
Gross Unrealized Gains	235	203
Gross Unrealized Losses	0	0
Fair Value	10,225	10,186
Allowance for Credit Losses	0
Public utilities
Debt securities:
Totals before allowance for credit losses	62,413	67,895
Gross Unrealized Gains	5,194	3,476
Gross Unrealized Losses	0	0
Fair Value	67,607	71,371
Allowance for Credit Losses	0
Fair Value
Less than 12 Months	0	0
12 Months or Greater	0	0
Total	0	0
Unrealized Losses
Less than 12 Months	0	0
12 Months or Greater	0	0
Total	0	0
Corporate
Debt securities:
Totals before allowance for credit losses	2,895,799	2,921,431
Gross Unrealized Gains	256,716	141,705
Gross Unrealized Losses	(20,349)	(2,479)
Fair Value	3,132,166	3,060,657
Allowance for Credit Losses	0
Fair Value
Less than 12 Months	179,742	40,080
12 Months or Greater	28,389	28,582
Total	208,131	68,662
Unrealized Losses
Less than 12 Months	(17,784)	(105)
12 Months or Greater	(2,565)	(2,374)
Total	(20,349)	(2,479)
Commercial mortgage-backed
Debt securities:
Totals before allowance for credit losses	27,124	28,871
Gross Unrealized Gains	1,187	1,071
Gross Unrealized Losses	0	0
Fair Value	28,311	29,942
Allowance for Credit Losses	0
Fair Value
Less than 12 Months	0
12 Months or Greater	0
Total	0
Unrealized Losses
Less than 12 Months	0
12 Months or Greater	0
Total	0
Residential mortgage-backed
Debt securities:
Totals before allowance for credit losses	10,653	12,815
Gross Unrealized Gains	1,247	1,077
Gross Unrealized Losses	(159)	(117)
Fair Value	11,741	13,775
Allowance for Credit Losses	0
Fair Value
Less than 12 Months	0	0
12 Months or Greater	572	710
Total	572	710
Unrealized Losses
Less than 12 Months	0	0
12 Months or Greater	(159)	(117)
Total	(159)	(117)
Asset-backed
Debt securities:
Totals before allowance for credit losses	61,339	67,088
Gross Unrealized Gains	1,759	1,397
Gross Unrealized Losses	(42)	0
Fair Value	63,056	$ 68,485
Allowance for Credit Losses	0
Fair Value
Less than 12 Months	15,131
12 Months or Greater	0
Total	15,131
Unrealized Losses
Less than 12 Months	(42)
12 Months or Greater	0
Total	$ (42)

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Investments (Unrealized Losses) (Details) $ in Thousands		3 Months Ended		9 Months Ended
	Jan. 01, 2020 USD ($)	Sep. 30, 2020 USD ($) security	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) security	Sep. 30, 2019 USD ($)	Jun. 30, 2020 USD ($)	Dec. 31, 2019 USD ($)	Jun. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)
Schedule of Investments [Line Items]
Securities, other-than-temporarily impaired			$ 1,900		$ 7,800
Valuation allowance for mortgage loans	$ 1,200	$ 2,357	$ 675	$ 2,357	675	$ 2,227	$ 675	$ 675	$ 675
Accounting Standards Update [Extensible List]	us-gaap:AccountingStandardsUpdate201613Member			us-gaap:AccountingStandardsUpdate201613Member
Decrease to retained earnings		(2,068,714)		$ (2,068,714)			(2,014,570)
Other long-term investments		78,579		78,579			62,090
Real Estate
Schedule of Investments [Line Items]
Other long-term investments		$ 33,900		33,900			34,600
Operating income from real estate				$ 2,200	$ 2,100
Cumulative Effect, Period Of Adoption, Adjustment
Schedule of Investments [Line Items]
Valuation allowance for mortgage loans						$ 0	$ 504	$ 0	$ 0
Decrease to retained earnings	$ (3,000)
Cumulative Effect, Period Of Adoption, Adjustment | Accounting Standards Update 2016-13
Schedule of Investments [Line Items]
Decrease to retained earnings	$ (400)
Debt Securities
Schedule of Investments [Line Items]
Gross unrealized losses, number of issues | security		68		68
Gross unrealized losses, percentage of total debt		5.00%		5.00%
Gross unrealized losses, market value as a percent of amortized cost		93.30%		93.30%
Gross unrealized losses, number of securities with maturities of 12 months or greater | security		8		8
Gross unrealized losses, number of securities with maturities of 12 months or greater (as a percentage)		11.80%		11.80%
Debt Securities | External Credit Rating, Investment Grade
Schedule of Investments [Line Items]
Gross unrealized losses, number of securities rated investment grade | security		45		45
Travis County
Schedule of Investments [Line Items]
Gain on sale of property		$ 2,700

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Investments (Contractual Maturity) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Jun. 30, 2020	Jan. 01, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
Debt Securities Available for Sale - Amortized Cost
Due in 1 year or less	$ 179,359
Due after 1 year through 5 years	1,361,831
Due after 5 years through 10 years	1,178,727
Due after 10 years	337,453
Amortized Cost	3,057,370
Mortgage and asset-backed securities	99,116
Totals before allowance for credit losses	3,156,486			$ 3,206,120
Allowance for Credit Losses	0				$ 0	$ 0	$ 0
Totals	3,156,486
Debt Securities Available for Sale - Fair Value
Due in 1 year or less	182,907
Due after 1 year through 5 years	1,450,221
Due after 5 years through 10 years	1,291,931
Due after 10 years	382,489
Fair Value	3,307,548
Mortgage and asset-backed securities	103,108
Total	3,410,656			3,356,945
Debt Securities Held to Maturity - Amortized Costs
Due in 1 year or less	579,550
Due after 1 year through 5 years	3,004,262
Due after 5 years through 10 years	1,474,459
Due after 10 years	818,941
Amortized Cost	5,877,212
Mortgage and asset-backed securities	949,927
Totals before allowance for credit losses	6,827,139			7,106,245
Allowance for Credit Losses	(5,086)	$ (4,940)	$ (3,300)	0
Totals	6,822,053			7,106,245
Debt Securities Held to Maturity - Fair Value
Due in 1 year or less	587,799
Due after 1 year through 5 years	3,204,761
Due after 5 years through 10 years	1,656,357
Due after 10 years	921,629
Fair Value	6,370,546
Mortgage and asset-backed securities	1,007,853
Total	$ 7,378,399			$ 7,407,703

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Investments (Debt Securities Allowance For Credit Losses) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Debt Securities Held to Maturity
Beginning balance	$ 4,940		$ 0
(Releases)/provision during period	146		1,752
Ending balance	5,086		5,086
Debt Securities Available for Sale
Beginning balance		$ 0		$ 0
(Releases)/provision during period		0		0
Ending balance	0	0	0	0
Cumulative Effect, Period Of Adoption, Adjustment
Debt Securities Held to Maturity
Beginning balance	$ 0		$ 3,334
Debt Securities Available for Sale
Beginning balance		$ 0		$ 0

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Investments (Held To Maturity Securities Allowance for Credit Losses by Credit Rating) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Jun. 30, 2020	Jan. 01, 2020	Dec. 31, 2019
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized Cost	$ 6,827,139			$ 7,106,245
Allowance for Credit Losses	(5,086)	$ (4,940)	$ (3,300)	0
Totals	6,822,053			$ 7,106,245
AAA
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized Cost	95,861
Allowance for Credit Losses	0
Totals	95,861
AA
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized Cost	1,639,976
Allowance for Credit Losses	(379)
Totals	1,639,597
A
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized Cost	2,224,126
Allowance for Credit Losses	(939)
Totals	2,223,187
BBB
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized Cost	2,737,258
Allowance for Credit Losses	(3,292)
Totals	2,733,966
BB and other below investment
Debt Securities, Held-to-maturity, Credit Quality Indicator [Line Items]
Amortized Cost	129,918
Allowance for Credit Losses	(476)
Totals	$ 129,442

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Investments (Mortgage Loans and Real Estate) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Jan. 01, 2020	Dec. 31, 2019
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for credit losses	$ (2,357)	$ (675)	$ (2,357)	$ (675)	$ (2,357)	$ (1,200)	$ (675)
Totals					302,715		272,422
Allowance for Loan and Lease Losses [Roll Forward]
Balance, beginning of the period	2,227	675	675	675
Provision	130	0	1,178	0
Releases	0	0	0	0
Total ending allowance for credit losses	2,357	675	2,357	675
Cumulative Effect, Period Of Adoption, Adjustment
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Allowance for credit losses	0	0	(504)	0			(504)
Allowance for Loan and Lease Losses [Roll Forward]
Balance, beginning of the period	0	$ 0	504	$ 0
Commercial Real Estate
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Mortgage loan, amount					305,072		273,097
Allowance for credit losses	(2,357)		(675)		(2,357)		(675)
Totals					$ 302,715		$ 272,422
Mortgage loans, percentage					100.00%		100.00%
Allowance for credit losses					(0.80%)		(0.20%)
Totals, percentage					99.20%		99.80%
Allowance for Loan and Lease Losses [Roll Forward]
Balance, beginning of the period			675
Total ending allowance for credit losses	$ 2,357		$ 2,357
Commercial Real Estate | Less than 50%
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Mortgage loan, amount					$ 52,987		$ 52,778
Mortgage loans, percentage					17.40%		19.30%
Commercial Real Estate | 50% to 60%
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Mortgage loan, amount					$ 57,744		$ 56,929
Mortgage loans, percentage					18.90%		20.80%
Commercial Real Estate | 60% to 70%
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Mortgage loan, amount					$ 148,694		$ 117,377
Mortgage loans, percentage					48.70%		43.00%
Commercial Real Estate | 70% to 80%
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Mortgage loan, amount					$ 45,647		$ 46,013
Mortgage loans, percentage					15.00%		16.90%
Commercial Real Estate | 80% to 90%
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Mortgage loan, amount					$ 0		$ 0
Mortgage loans, percentage					0.00%		0.00%
Commercial Real Estate | Greater than 90%
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Mortgage loan, amount					$ 0		$ 0
Mortgage loans, percentage					0.00%		0.00%

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Fair Value of Financial Instruments (Assets and Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	$ 3,410,656	$ 3,356,945
Equity securities	18,610	23,594
Derivatives, index options	93,367	157,588
Other invested assets	1	2
Total assets	3,522,634	3,538,129
Policyholder account balances	116,802	155,902
Other liabilities	4,951	15,301
Total liabilities	$ 121,753	$ 171,203
Percent of total	100.00%	100.00%
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	$ 0	$ 0
Equity securities	18,610	23,594
Derivatives, index options	0	0
Other invested assets	1	2
Total assets	18,611	23,596
Policyholder account balances	0	0
Other liabilities	0	0
Total liabilities	$ 0	$ 0
Percent of total	0.50%	0.70%
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	$ 3,410,656	$ 3,356,945
Equity securities	0	0
Derivatives, index options	0	0
Other invested assets	0	0
Total assets	3,410,656	3,356,945
Policyholder account balances	0	0
Other liabilities	0	0
Total liabilities	$ 0	$ 0
Percent of total	96.80%	94.80%
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	$ 0	$ 0
Equity securities	0	0
Derivatives, index options	93,367	157,588
Other invested assets	0	0
Total assets	93,367	157,588
Policyholder account balances	116,802	155,902
Other liabilities	4,951	15,301
Total liabilities	$ 121,753	$ 171,203
Percent of total	2.70%	4.50%
Priced by third-party vendors
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	$ 3,410,656	$ 3,356,945
Equity securities	18,610	23,594
Derivatives, index options	93,367	157,588
Other invested assets	1	2
Priced by third-party vendors | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Equity securities	18,610	23,594
Derivatives, index options	0	0
Other invested assets	1	2
Priced by third-party vendors | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	3,410,656	3,356,945
Equity securities	0	0
Derivatives, index options	0	0
Other invested assets	0	0
Priced by third-party vendors | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Equity securities	0	0
Derivatives, index options	93,367	157,588
Other invested assets	0	0
Priced internally
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Equity securities	0	0
Derivatives, index options	0	0
Other invested assets	0	0
Priced internally | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Equity securities	0	0
Derivatives, index options	0	0
Other invested assets	0	0
Priced internally | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Equity securities	0	0
Derivatives, index options	0	0
Other invested assets	0	0
Priced internally | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Equity securities	0	0
Derivatives, index options	0	0
Other invested assets	$ 0	$ 0

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Fair Value of Financial Instruments (Fair Value Measurements for Level 3 Instruments) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Balance at beginning of period	$ 66,738	$ 89,900	$ 157,588	$ 14,684
Total realized and unrealized gains (losses):
Included in net earnings	31,520	3,296	(34,865)	63,127
Included in other comprehensive income	0	0	0	0
Purchases, sales, issuances and settlements, net:
Purchases	11,426	19,872	50,287	56,494
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	(16,317)	(6,704)	(79,643)	(27,941)
Transfers into (out of) Level 3	0	0	0	0
Balance at end of period	93,367	106,364	93,367	106,364
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	50,636	(2,020)	6,966	42,794
Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Balance at beginning of period	93,070	112,500	171,203	56,704
Total realized and unrealized gains (losses):
Included in net earnings	33,573	(1,978)	(18,215)	37,255
Included in other comprehensive income	0	0	0	0
Purchases, sales, issuances and settlements, net:
Purchases	11,427	19,872	50,287	56,494
Sales	0	0	0	0
Issuances	0	0	0	3,700
Settlements	(16,317)	(6,704)	(81,522)	(30,463)
Transfers into (out of) Level 3	0	0	0	0
Balance at end of period	121,753	123,690	121,753	123,690
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	50,090	(464)	(1,505)	43,111
Net investment income
Purchases, sales, issuances and settlements, net:
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	50,636	(2,020)	6,966	42,794
Purchases, sales, issuances and settlements, net:
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	0	0	0	0
Benefits and expenses
Purchases, sales, issuances and settlements, net:
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	0	0	0	0
Purchases, sales, issuances and settlements, net:
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	50,090	(464)	(1,505)	43,111
Policyholder Account Balances
Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Balance at beginning of period	87,573	100,638	155,902	44,781
Total realized and unrealized gains (losses):
Included in net earnings	34,119	(3,534)	(9,744)	36,938
Included in other comprehensive income		0	0	0
Purchases, sales, issuances and settlements, net:
Purchases	11,427	19,872	50,287	56,494
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	(16,317)	(6,704)	(79,643)	(27,941)
Transfers into (out of) Level 3	0	0	0	0
Balance at end of period	116,802	110,272	116,802	110,272
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	50,636	(2,020)	6,966	42,794
Policyholder Account Balances | Net investment income
Purchases, sales, issuances and settlements, net:
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	0	0	0	0
Policyholder Account Balances | Benefits and expenses
Purchases, sales, issuances and settlements, net:
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	50,636	(2,020)	6,966	42,794
Stock Options
Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Balance at beginning of period	5,497	7,991	11,225	11,923
Total realized and unrealized gains (losses):
Included in net earnings	(546)	1,462	(4,395)	52
Included in other comprehensive income	0	0	0	0
Purchases, sales, issuances and settlements, net:
Purchases	0	0	0	0
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	0	0	(1,879)	(2,522)
Transfers into (out of) Level 3	0	0	0	0
Balance at end of period	4,951	9,453	4,951	9,453
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	(546)	1,462	(4,395)	52
Stock Options | Net investment income
Purchases, sales, issuances and settlements, net:
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	0	0	0	0
Stock Options | Benefits and expenses
Purchases, sales, issuances and settlements, net:
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	(546)	1,462	(4,395)	52
Contingent Consideration
Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Balance at beginning of period	0	3,871	4,076	0
Total realized and unrealized gains (losses):
Included in net earnings	0	94	(4,076)	265
Included in other comprehensive income	0	0	0	0
Purchases, sales, issuances and settlements, net:
Purchases	0	0	0	0
Sales	0	0	0	0
Issuances	0	0	0	3,700
Settlements	0	0	0	0
Transfers into (out of) Level 3	0	0	0	0
Balance at end of period	0	3,965	0	3,965
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	0	94	(4,076)	265
Contingent Consideration | Net investment income
Purchases, sales, issuances and settlements, net:
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	0	0	0	0
Contingent Consideration | Benefits and expenses
Purchases, sales, issuances and settlements, net:
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	0	94	(4,076)	265
Derivatives, Index Options
Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward]
Balance at beginning of period	66,738	89,900	157,588	14,684
Total realized and unrealized gains (losses):
Included in net earnings	31,520	3,296	(34,865)	63,127
Included in other comprehensive income	0	0	0	0
Purchases, sales, issuances and settlements, net:
Purchases	11,426	19,872	50,287	56,494
Sales	0	0	0	0
Issuances	0	0	0	0
Settlements	(16,317)	(6,704)	(79,643)	(27,941)
Transfers into (out of) Level 3	0	0	0	0
Balance at end of period	93,367	106,364	93,367	106,364
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	50,636	(2,020)	6,966	42,794
Derivatives, Index Options | Net investment income
Purchases, sales, issuances and settlements, net:
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	50,636	(2,020)	6,966	42,794
Derivatives, Index Options | Benefits and expenses
Purchases, sales, issuances and settlements, net:
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets/liabilities held at the end of the reporting period:	$ 0	$ 0	$ 0	$ 0

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Fair Values of Financial Instruments (Quantitative Information) (Details) $ in Thousands	Sep. 30, 2020 USD ($) year	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($) year
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, index options	$ 93,367		$ 157,588
Total assets	3,522,634		3,538,129
Contingent consideration on businesses acquired		$ 4,200
Total liabilities	121,753		171,203
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, index options	93,367		157,588
Total assets	93,367		157,588
Contingent consideration on businesses acquired	0		4,076
Total liabilities	121,753		171,203
Broker prices | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, index options	93,367		157,588
Deterministic cash flow model | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Policyholder account balances	116,802		155,902
Black-Scholes model | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Share based compensation	$ 4,951		11,225
Probabilistic Method | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration on businesses acquired			$ 4,076
Expected volatility | Black-Scholes model | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Share based compensation, measurement input	0.3285		0.2219
Discount rate | Probabilistic Method | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration on businesses acquired, measurement input			0.100
Minimum | Implied volatility | Broker prices | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, index options, measurement input	0.1296		0.1310
Minimum | Projected option cost | Deterministic cash flow model | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Policyholder account balances, measurement input	0.000		0.000
Minimum | Expected term | Black-Scholes model | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Share based compensation, measurement input | year	1.2		1.9
Minimum | Projected renewal premium | Probabilistic Method | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration on businesses acquired, measurement input			57,200
Maximum | Implied volatility | Broker prices | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, index options, measurement input	0.5369		0.1990
Maximum | Projected option cost | Deterministic cash flow model | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Policyholder account balances, measurement input	0.3869		0.1755
Maximum | Expected term | Black-Scholes model | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Share based compensation, measurement input | year	9.1		10
Maximum | Projected renewal premium | Probabilistic Method | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration on businesses acquired, measurement input			82,400
Weighted-Average | Implied volatility | Broker prices | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, index options, measurement input	0.1974		0.1525
Weighted-Average | Projected option cost | Deterministic cash flow model | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Policyholder account balances, measurement input	0.0518		0.0314
Weighted-Average | Projected renewal premium | Probabilistic Method | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration on businesses acquired, measurement input			71,900

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Fair Values of Financial Instruments (Fair Value by Balance Sheet Grouping) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Mar. 31, 2020	Dec. 31, 2019
ASSETS
Debt securities held to maturity	$ 7,378,399		$ 7,407,703
Debt securities available for sale	3,410,656		3,356,945
Derivatives, index options	93,367		157,588
Equity securities	18,610		23,594
LIABILITIES
Contingent consideration on businesses acquired		$ 4,200
Restatement Adjustment
LIABILITIES
Increase in future policy benefits liability			15,000
Carrying Values
ASSETS
Debt securities held to maturity	6,822,053		7,106,245
Debt securities available for sale	3,410,656		3,356,945
Cash and cash equivalents	507,025		253,524
Mortgage loans	302,715		272,422
Real estate	33,927		34,588
Policy loans	75,714		80,008
Other loans	19,712		13,547
Derivatives, index options	93,367		157,588
Equity securities	18,610		23,594
Life interest in Libbie Shearn Moody Trust	9,230		9,230
Other investments	4,514		197
LIABILITIES
Deferred annuity contracts	6,697,569		7,014,833
Immediate annuity and supplemental contracts	417,663		400,465
Contingent consideration on businesses acquired	0		4,076
Fair Values
ASSETS
Debt securities held to maturity	7,378,399		7,407,703
Debt securities available for sale	3,410,656		3,356,945
Cash and cash equivalents	507,025		253,524
Mortgage loans	303,910		270,931
Real estate	48,547		57,204
Policy loans	128,615		123,650
Other loans	20,004		13,698
Derivatives, index options	93,367		157,588
Equity securities	18,610		23,594
Life interest in Libbie Shearn Moody Trust	12,775		12,775
Other investments	22,581		16,182
LIABILITIES
Deferred annuity contracts	5,422,599		5,931,352
Immediate annuity and supplemental contracts	449,676		422,931
Contingent consideration on businesses acquired	0		4,076
Level 1
ASSETS
Debt securities held to maturity	0		0
Debt securities available for sale	0		0
Cash and cash equivalents	507,025		253,524
Mortgage loans	0		0
Real estate	0		0
Policy loans	0		0
Other loans	0		0
Derivatives, index options	0		0
Equity securities	18,610		23,594
Life interest in Libbie Shearn Moody Trust	0		0
Other investments	1		2
LIABILITIES
Deferred annuity contracts	0		0
Immediate annuity and supplemental contracts	0		0
Contingent consideration on businesses acquired	0		0
Level 2
ASSETS
Debt securities held to maturity	7,378,399		7,407,703
Debt securities available for sale	3,410,656		3,356,945
Cash and cash equivalents	0		0
Mortgage loans	0		0
Real estate	0		0
Policy loans	0		0
Other loans	0		0
Derivatives, index options	0		0
Equity securities	0		0
Life interest in Libbie Shearn Moody Trust	0		0
Other investments	0		0
LIABILITIES
Deferred annuity contracts	0		0
Immediate annuity and supplemental contracts	0		0
Contingent consideration on businesses acquired	0		0
Level 3
ASSETS
Debt securities held to maturity	0		0
Debt securities available for sale	0		0
Cash and cash equivalents	0		0
Mortgage loans	303,910		270,931
Real estate	48,547		57,204
Policy loans	128,615		123,650
Other loans	20,004		13,698
Derivatives, index options	93,367		157,588
Equity securities	0		0
Life interest in Libbie Shearn Moody Trust	12,775		12,775
Other investments	22,580		16,180
LIABILITIES
Deferred annuity contracts	5,422,599		5,931,352
Immediate annuity and supplemental contracts	449,676		422,931
Contingent consideration on businesses acquired	$ 0		$ 4,076

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Derivative Investments (Balance Sheet) (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Derivatives, Fair Value [Line Items]
Asset Derivatives	$ 93,367	$ 157,588
Liability Derivatives	116,802	155,902
Derivatives not designated as hedging instruments
Derivatives, Fair Value [Line Items]
Asset Derivatives	93,367	157,588
Liability Derivatives	116,802	155,902
Derivatives not designated as hedging instruments | Equity index options | Derivatives, Index Options
Derivatives, Fair Value [Line Items]
Asset Derivatives	93,367	157,588
Derivatives not designated as hedging instruments | Fixed-index products | Universal Life and Annuity Contracts
Derivatives, Fair Value [Line Items]
Liability Derivatives	$ 116,802	$ 155,902

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Derivative Investments (Statements of Earnings) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Derivative Instruments, Gain (Loss) [Line Items]
Increase (decrease) in contract interest expense	$ 3,700	$ (6,800)	$ 29,300	$ (27,100)
Derivatives not designated as hedging instruments
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivatives	(2,599)	6,829	(25,121)	26,190
Derivatives not designated as hedging instruments | Equity index options | Net investment income (loss)
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivatives	31,520	3,296	(34,865)	63,127
Derivatives not designated as hedging instruments | Fixed-index products | Universal life and annuity contract interest
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivatives	$ (34,119)	$ 3,533	$ 9,744	$ (36,937)

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Business Combinations (Narrative) (Details) - USD ($)		9 Months Ended
	Jan. 31, 2019	Sep. 30, 2019	Sep. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Business Acquisition [Line Items]
Contingent consideration on businesses acquired				$ 4,200,000
Value of business acquired			$ 132,426,000		$ 138,071,000	$ 0
Ozark National Life Insurance Company and NIS
Business Acquisition [Line Items]
Payments to acquire business	$ 205,400,000
Acquisition-related costs		$ 3,300,000
Revenues of acquiree since acquisition date		77,100,000
Net earnings of acquiree since acquisition date		$ 11,700,000
Ozark National Life Insurance Company
Business Acquisition [Line Items]
Earn-out payment maximum	5,000,000.0
Contingent consideration on businesses acquired	3,700,000				$ 4,100,000
Value of business acquired	$ 145,800,000

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Business Combinations (Fair Value of Net Assets Acquired) (Details) - Ozark National Life Insurance Company - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Jan. 31, 2019
Assets
Debt securities held to maturity			$ 261,059
Debt securities available for sale			400,719
Policy loans			28,128
Real estate			4,600
Cash and cash equivalents			16,275
Accrued investment income			6,116
Value of business acquired			145,768
Reinsurance recoverables			21,895
Other intangible assets			9,600
Other assets acquired			12,075
Total assets acquired			906,235
Liabilities
Traditional life reserves			691,297
Other policyholder liabilities			13,867
Other liabilities acquired			5,840
Total liabilities acquired			711,004
Net identifiable assets acquired			195,231
Goodwill	$ 13,864	$ 13,864	13,864
Net assets acquired			$ 209,095

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Business Combinations (Fair Value of Intangible Assets Acquired) (Details) - Ozark National Life Insurance Company - USD ($) $ in Thousands		9 Months Ended
	Jan. 31, 2019	Sep. 30, 2020
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets acquired	$ 9,600
Trademarks / trade names
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets acquired	$ 2,800
Weighted-Average Amortization Period	15 years	15 years
Internally developed software
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets acquired	$ 3,800
Weighted-Average Amortization Period	7 years	7 years
Insurance licenses
Acquired Finite-Lived Intangible Assets [Line Items]
Insurance licenses	$ 3,000

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Business Combinations (Gross Carrying Amounts and Accumulated Amortization) (Details) - Ozark National Life Insurance Company - USD ($) $ in Thousands		9 Months Ended
	Jan. 31, 2019	Sep. 30, 2020	Dec. 31, 2019
Business Acquisition [Line Items]
Gross Carrying Amount		$ 9,600	$ 9,600
Accumulated Amortization		$ (1,216)	(669)
Trademarks / trade names
Business Acquisition [Line Items]
Weighted-Average Amortization Period	15 years	15 years
Gross Carrying Amount		$ 2,800	2,800
Accumulated Amortization		$ (311)	(171)
Internally developed software
Business Acquisition [Line Items]
Weighted-Average Amortization Period	7 years	7 years
Gross Carrying Amount		$ 3,800	3,800
Accumulated Amortization		(905)	(498)
Insurance licenses
Business Acquisition [Line Items]
Gross Carrying Amount		3,000	3,000
Accumulated Amortization		$ 0	$ 0

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Business Combinations (VOBA) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Movement in Present Value of Future Insurance Profits [Roll Forward]
Balance, beginning of year	$ 138,071	$ 0
Business acquired	0	145,768
Amortization, excluding unlocking	(5,645)	(7,697)
Balance as of end of period	$ 132,426	$ 138,071

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Business Combinations (Expected Amortization) (Details) - Ozark National Life Insurance Company $ in Thousands	Sep. 30, 2020 USD ($)
Business Acquisition [Line Items]
Remainder of 2020	$ 1,844
2021	7,002
2022	6,646
2023	6,337
2024	$ 6,060

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Business Combinations (Changes in Goodwill) (Details) - Ozark National Life Insurance Company - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019	Jan. 31, 2019	Dec. 31, 2018
Goodwill [Roll Forward]
Gross goodwill as of beginning of year	$ 13,864	$ 0
Goodwill resulting from business acquisition	0	13,864
Gross goodwill, before impairments	13,864	13,864
Accumulated impairment as of beginning of year		0		$ 0
Current year impairments	0	0
Net goodwill as of end of period	$ 13,864	$ 13,864	$ 13,864

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Business Combinations (Pro Forma) (Details) - Ozark National Life Insurance Company - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Business Acquisition [Line Items]
Total revenues	$ 202,702	$ 173,166	$ 471,205	$ 593,402
Net earnings (loss)	$ 10,825	$ 19,989	$ 57,176	$ 95,341