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OPERATING SEGMENTS
9 Months Ended
Sep. 30, 2016
Segment Reporting [Abstract]  
OPERATING SEGMENTS
OPERATING SEGMENTS
 
The Company has several operating segments, each having a strategic focus. An operating segment is distinguished by products, channels of distribution, and/or other strategic distinctions. The Company periodically evaluates its operating segments, as prescribed in the ASC Segment Reporting Topic, and makes adjustments to its segment reporting as needed. There were no changes to the Company’s operating segments made or required to be made as a result of the Merger on February 1, 2015. A brief description of each segment follows.
 
The Life Marketing segment markets fixed universal life (“UL”), indexed universal life ("IUL"), variable universal life (“VUL”), bank-owned life insurance (“BOLI”), and level premium term insurance (“traditional”) products on a national basis primarily through networks of independent insurance agents and brokers, broker-dealers, financial institutions, independent marketing organizations, and affinity groups.
 
The Acquisitions segment focuses on acquiring, converting, and servicing policies acquired from other companies. The segment’s primary focus is on life insurance policies and annuity products that were sold to individuals. The level of the segment’s acquisition activity is predicated upon many factors, including available capital, operating capacity, potential return on capital, and market dynamics. Policies acquired through the Acquisitions segment are typically blocks of business where no new policies are being marketed. Therefore earnings and account values are expected to decline as the result of lapses, deaths, and other terminations of coverage unless new acquisitions are made.
 
The Annuities segment markets fixed and VA products. These products are primarily sold through broker-dealers, financial institutions, and independent agents and brokers.
 
The Stable Value Products segment sells fixed and floating rate funding agreements directly to the trustees of municipal bond proceeds, money market funds, bank trust departments, and other institutional investors. This segment also issues funding agreements to the FHLB, and markets guaranteed investment contracts (“GICs”) to 401(k) and other qualified retirement savings plans. The Company also has an unregistered funding agreement-backed notes program which provides for offers of notes to both domestic and international institutional investors.

The Asset Protection segment markets extended service contracts and credit life and disability insurance to protect consumers’ investments in automobiles, recreational vehicles, watercraft, and powersports. In addition, the segment markets a guaranteed asset protection (“GAP”) product. GAP coverage covers the difference between the loan pay-off amount and an asset’s actual cash value in the case of a total loss.

The Corporate and Other segment primarily consists of net investment income on assets supporting our equity capital, unallocated corporate overhead and expenses not attributable to the segments above (including interest on corporate debt). This segment includes earnings from several non-strategic or runoff lines of business, various investment-related transactions, the operations of several small subsidiaries, and the repurchase of obligations and debt on the open market.
 
The Company's management and Board of Directors analyzes and assesses the operating performance of each segment using "pre-tax operating income (loss)". Consistent with GAAP accounting guidance for segment reporting, pre-tax operating income (loss) is the Company's measure of segment performance. Pre-tax operating income (loss) is calculated by adjusting "income (loss) before income tax," by excluding the following items:

realized gains and losses on investments and derivatives,
changes in the GMWB embedded derivatives exclusive of the portion attributable to the economic cost of the GMWB,
actual GMWB incurred claims, and
the amortization of DAC, VOBA, and certain policy liabilities that is impacted by the exclusion of these items.
 
These items are important to understanding the overall results of operations. Pre-tax operating income (loss) is not a substitute for net income (loss), and may not be comparable to similarly titled measures reported by other companies. The Company believes that pre-tax operating income (loss) enhances management's and the Board of Directors' understanding of the ongoing operations, the underlying profitability of each segment, and helps facilitate the allocation of resources.

In determining the components of the pre-tax operating income (loss) for each segment, premiums and policy fees, other income, benefits and settlement expenses, and amortization of DAC and VOBA are attributed directly to each operating segment. Net investment income is allocated based on directly related assets required for transacting the business of that segment. Realized investment gains (losses) and other operating expenses are allocated to the segments in a manner that most appropriately reflects the operations of that segment. Investments and other assets are allocated based on statutory policy liabilities net of associated statutory policy assets, while DAC/VOBA and goodwill are shown in the segments to which they are attributable.
 
There were no significant intersegment transactions during the three and nine months ended September 30, 2016 (Successor Company), the three months ended September 30, 2015 (Successor Company), the period of February 1, 2015 to September 30, 2015 (Successor Company), and the period of January 1, 2015 to January 31, 2015 (Predecessor Company).
 
The following tables summarize financial information for the Company’s segments (Predecessor and Successor periods are not comparable):
 
 
Successor Company
 
Predecessor Company
 
For the Three Months Ended September 30, 2016
 
For The Three Months Ended September 30, 2015
 
For The Nine Months Ended September 30, 2016
 
February 1, 2015
to
September 30, 2015
 
January 1, 2015
to
January 31, 2015
 
(Dollars In Thousands)
 
(Dollars In Thousands)
Revenues
 

 
 
 
 
 
 

 
 

Life Marketing
$
409,423

 
$
388,768

 
$
1,231,397

 
$
1,040,066

 
$
145,595

Acquisitions
391,017

 
352,141

 
1,269,672

 
974,915

 
139,761

Annuities
174,798

 
92,773

 
410,455

 
341,227

 
7,884

Stable Value Products
27,380

 
17,065

 
83,519

 
44,063

 
8,181

Asset Protection
69,306

 
68,949

 
201,041

 
182,656

 
21,953

Corporate and Other
51,722

 
40,897

 
170,876

 
118,754

 
17,535

Total revenues
$
1,123,646

 
$
960,593

 
$
3,366,960

 
$
2,701,681

 
$
340,909

Pre-tax Operating Income (Loss)
 

 
 
 
 
 
 

 
 

Life Marketing
$
(1,306
)
 
$
19,535

 
$
36,957

 
$
29,611

 
$
(1,618
)
Acquisitions
70,157

 
59,016

 
184,095

 
132,962

 
20,134

Annuities
53,666

 
46,003

 
164,196

 
133,377

 
13,164

Stable Value Products
14,700

 
12,785

 
44,326

 
28,249

 
4,529

Asset Protection
5,455

 
5,322

 
16,216

 
15,266

 
2,420

Corporate and Other
(29,774
)
 
(8,854
)
 
(60,231
)
 
(16,850
)
 
(10,144
)
Pre-tax operating income
112,898

 
133,807

 
385,559

 
322,615

 
28,485

Realized investment (losses) gains - investments(1)
(688
)
 
8,625

 
183,362

 
(150,014
)
 
89,815

Realized investment (losses) gains - derivatives
20,869

 
(55,172
)
 
(95,339
)
 
104,396

 
(117,118
)
Income before income tax
133,079

 
87,260

 
473,582

 
276,997

 
1,182

Income tax (expense) benefit
(39,785
)
 
(26,853
)
 
(152,820
)
 
(89,889
)
 
327

Net income
$
93,294

 
$
60,407

 
$
320,762

 
$
187,108

 
$
1,509

 
 
 
 
 
 
 
 
 
 
All other investment gains (losses)
$
20,844

 
$
(4,716
)
 
$
187,771

 
$
(147,843
)
 
$
80,672

Less: amortization related to DAC/VOBA and benefits and settlement expenses
21,532

 
(13,341
)
 
4,409

 
2,171

 
(9,143
)
Realized investment gains (losses) - investments
$
(688
)
 
$
8,625

 
$
183,362

 
$
(150,014
)
 
$
89,815

 
 
 
 
 
 
 
 
 
 
Derivative financial instruments gains (losses)
$
116

 
$
(74,590
)
 
$
(156,749
)
 
$
53,654

 
$
(123,274
)
Less: VA GMWB economic cost
(20,753
)
 
(19,418
)
 
(61,410
)
 
(50,742
)
 
(6,156
)
Realized investment gains (losses) - derivatives
$
20,869

 
$
(55,172
)
 
$
(95,339
)
 
$
104,396

 
$
(117,118
)
 
(1) Includes credit related other-than-temporary impairments of $3.3 million, $6.9 million, $10.1 million, $15.8 million, and $0.5 million for the three and nine months ended September 30, 2016 (Successor Company), the three months ended September 30, 2015 (Successor Company), for the period of February 1, 2015 to September 30, 2015 (Successor Company), and for the period of January 1, 2015 to January 31, 2015 (Predecessor Company), respectively.

 
Operating Segment Assets
As of September 30, 2016 (Successor Company)
 
(Dollars In Thousands)
 
Life
Marketing
 
Acquisitions
 
Annuities
 
Stable Value
Products
Investments and other assets
$
14,170,687

 
$
19,986,370

 
$
20,501,261

 
$
3,283,420

Deferred policy acquisition costs and value of business acquired
1,155,759

 
82,803

 
634,820

 
5,919

Other intangibles
306,158

 
37,741

 
186,781

 
8,889

Goodwill
200,274

 
14,524

 
336,677

 
113,813

Total assets
$
15,832,878

 
$
20,121,438

 
$
21,659,539

 
$
3,412,041

 
 
Asset
Protection
 
Corporate
and Other
 
Total
Consolidated
Investments and other assets
$
973,552

 
$
13,991,364

 
$
72,906,654

Deferred policy acquisition costs and value of business acquired
30,612

 

 
1,909,913

Other intangibles
75,333

 

 
614,902

Goodwill
67,155

 

 
732,443

Total assets
$
1,146,652

 
$
13,991,364

 
$
76,163,912

 
 
Operating Segment Assets
As of December 31, 2015 (Successor Company)
 
(Dollars In Thousands)
 
Life
Marketing
 
Acquisitions
 
Annuities
 
Stable Value
Products
Investments and other assets
$
13,258,639

 
$
19,879,988

 
$
19,926,108

 
$
2,006,263

Deferred policy acquisition costs and value of business acquired
1,119,515

 
(178,662
)
 
578,742

 
2,357

Other intangibles
319,623

 
39,658

 
196,780

 
9,389

Goodwill
200,274

 
14,524

 
336,677

 
113,813

Total assets
$
14,898,051

 
$
19,755,508

 
$
21,038,307

 
$
2,131,822

 
 
Asset
Protection
 
Corporate
and Other
 
Total
Consolidated
Investments and other assets
$
897,326

 
$
9,583,991

 
$
65,552,315

Deferred policy acquisition costs and value of business acquired
36,856

 

 
1,558,808

Other intangibles
79,681

 

 
645,131

Goodwill
67,155

 

 
732,443

Total assets
$
1,081,018

 
$
9,583,991

 
$
68,488,697