Disposition

9 Months Ended

Sep. 30, 2014

Discontinued Operations and Disposal Groups [Abstract]

Disposition

Disposition

On April 1, 2014, the Company completed the sale of Lincoln Benefit Life Company (“LBL”), LBL’s life insurance business generated through independent master brokerage agencies, and all of LBL’s deferred fixed annuity and long-term care insurance business to Resolution Life Holdings, Inc.  The gross sale price was $797 million, representing $596 million of cash and the retention of tax benefits.  The loss on disposition increased by $28 million, pre-tax, ($29 million, after-tax) and $78 million, pre-tax, ($38 million, after-tax) in the three months and nine months ended September 30, 2014, respectively. The loss on disposition in the three months ended September 30, 2014 included the finalization of certain tax balances and other adjustments.

In conjunction with the sale, the Company was required to establish a trust relating to the business that LBL continues to cede to ALIC.  This trust is required to have assets greater than or equal to the statutory reserves ceded by LBL to ALIC, measured on a monthly basis.  As of September 30, 2014, the trust holds $5.08 billion of investments, which are reported in the statement of financial position.

The following table summarizes the assets and liabilities classified as held for sale as of December 31, 2013.

($ in millions)
Assets
Investments
Fixed income securities	$	10,167
Mortgage loans	1,367
Short-term investments	160
Policy loans	198
Other investments	91
Total investments	11,983
Cash	—
Deferred policy acquisition costs	743
Reinsurance recoverables, net	1,660
Accrued investment income	109
Other assets	79
Separate Accounts	1,701
Assets held for sale	16,275
Less: Loss accrual	(682		)
Total assets held for sale	$	15,593
Liabilities
Reserve for life-contingent contract benefits	$	1,894
Contractholder funds	10,945
Unearned premiums	12
Deferred income taxes	151
Other liabilities and accrued expenses	196
Separate Accounts	1,701
Total liabilities held for sale	$	14,899

Included in shareholder’s equity was $85 million of accumulated other comprehensive income related to assets held for sale as of December 31, 2013.