Held for Sale Transaction and Subsequent Event

3 Months Ended

Mar. 31, 2014

Held for Sale Transaction and Subsequent Event

Held for Sale Transaction and Subsequent Event

2.  Held for Sale Transaction and Subsequent Event

On July 17, 2013, the Company entered into a definitive agreement with Resolution Life Holdings, Inc. to sell 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.  This transaction met the criteria for held for sale accounting.  As a result, the related assets and liabilities are included as single line items in the asset and liability sections of the Condensed Consolidated Statements of Financial Position as of March 31, 2014 and December 31, 2013.  The following table summarizes the assets and liabilities held for sale.

($ in millions)		March 31, 2014		December 31, 2013
Assets
Investments
Fixed income securities	$	9,959	$	10,167
Mortgage loans		1,289		1,367
Short-term investments		--		160
Policy loans		197		198
Other investments		61		91
Total investments		11,506		11,983
Cash		242		--
Deferred policy acquisition costs		714		743
Reinsurance recoverables, net		1,782		1,660
Accrued investment income		108		109
Other assets		85		79
Separate Accounts		1,661		1,701
Assets held for sale		16,098		16,275
Less: Loss accrual		(708)		(682)
Total assets held for sale	$	15,390	$	15,593
Liabilities
Reserve for life-contingent contract benefits	$	2,000	$	1,894
Contractholder funds		10,661		10,945
Unearned premiums		11		12
Deferred income taxes		151		151
Other liabilities and accrued expenses		157		196
Separate Accounts		1,661		1,701
Total liabilities held for sale	$	14,641	$	14,899

Included in shareholder’s equity is $155 million and $85 million of accumulated other comprehensive income related to assets held for sale as of March 31, 2014 and December 31, 2013, respectively.

The estimated loss on disposition, excluding any impact of unrealized net capital gains and losses, increased by $61 million, pre-tax, ($18 million, after-tax) in first quarter 2014.

On April 1, 2014, the Company closed the sale.  The estimated gross sale price is $796 million, representing $594 million of cash and the retention of tax benefits.  The actual cash proceeds will be based on the actual valuation as of the closing date of April 1, 2014.