10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

OR

¨ 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 333-1173

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

(Exact name of registrant as specified in its charter)

COLORADO	84-0467907
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

8515 EAST ORCHARD ROAD, GREENWOOD VILLAGE, CO 80111

(Address of principal executive offices)

(303) 737-3000

(Registrant’s telephone number, including area code)

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 x         No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x         No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company as defined in Rule 12b-2 of the Act.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x 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 Act.

Yes ¨         No x

As of August 14, 2018, 7,320,176 shares of the registrant’s common stock were outstanding, all of which were owned by the registrant’s parent company.

Table of Contents

			Page
			Number
Part I	Financial Information
	Item 1	Interim Financial Statements	3
		Condensed Consolidated Balance Sheets at June 30, 2018 (Unaudited) and December 31, 2017	3
		Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2018 and 2017 (Unaudited)	5
		Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Six Months Ended June 30, 2018 and 2017 (Unaudited)	6
		Condensed Consolidated Statements of Stockholder’s Equity for the Six Months Ended June 30, 2018 and 2017 (Unaudited)	7
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017 (Unaudited)	8
		Notes to Condensed Consolidated Financial Statements (Unaudited)	10
		Note 1 - Organization and Basis of Presentation	10
		Note 2 - Application of Recent Accounting Pronouncements	10
		Note 3 - Related Party Transactions	12
		Note 4 - Dividends	12
		Note 5 - Summary of Investments	13
		Note 6 - Derivative Financial Instruments	17
		Note 7 - Summary of Offsetting Assets and Liabilities	22
		Note 8 - Fair Value Measurements	23
		Note 9 - Other Comprehensive Income	28
		Note 10 - Revenue	29
		Note 11 - Employee Benefit Plans	31
		Note 12 - Income Taxes	32
		Note 13 - Segment Information	32
		Note 14 - Commitments and Contingencies	35
		Note 15 - Subsequent Events	36
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	52
	Item 4	Controls and Procedures	53
Part II	Other Information		54
	Item 1	Legal Proceedings	54
	Item 1A	Risk Factors	54
	Item 6	Exhibits	56
		Signature	56

2

Part I     Financial Information

Item1.    Interim Financial Statements

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Condensed Consolidated Balance Sheets

June 30, 2018 (Unaudited) and December 31, 2017

(In Thousands, Except Share Amounts)

	June 30, 2018		December 31, 2017
Assets
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost $22,757,572 and $22,762,962)	$	22,762,737	$	23,593,139
Fixed maturities, held-for-trading, at fair value (amortized cost $19,825 and $20,512)	19,519		21,059
Mortgage loans on real estate (net of allowances of $773 and $773)	4,316,198		4,005,187
Policy loans	4,121,136		4,104,094
Short-term investments (amortized cost $294,314 and $350,266)	294,314		350,266
Limited partnership interests	63,586		45,540
Other investments	53,298		17,997
Total investments	31,630,788		32,137,282
Other assets:
Cash and cash equivalents	88,106		17,211
Reinsurance recoverable	591,657		589,080
Deferred acquisition costs (“DAC”) and value of business acquired (“VOBA”)	681,959		518,510
Investment income due and accrued	285,953		299,362
Collateral under securities lending agreements	80,013		—
Due from parent and affiliates	101,671		114,133
Goodwill	137,683		137,683
Other intangible assets	15,741		17,085
Other assets	1,039,558		954,250
Assets of discontinued operations	14,662		16,095
Separate account assets	26,676,615		27,660,571
Total assets	$	61,344,406	$	62,461,262

See notes to condensed consolidated financial statements. (Continued)

3

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Condensed Consolidated Balance Sheets

June 30, 2018 (Unaudited) and December 31, 2017

(In Thousands, Except Share Amounts)

	June 30, 2018			December 31, 2017
Liabilities and stockholder’s equity
Policy benefit liabilities:
Future policy benefits	$	30,293,590		$	30,048,927
Policy and contract claims	388,222			389,029
Policyholders’ funds	273,319			280,578
Provision for policyholders’ dividends	40,325			41,972
Undistributed earnings on participating business	10,903			14,636
Total policy benefit liabilities	31,006,359			30,775,142
General liabilities:
Due to parent and affiliates	563,852			553,901
Commercial paper	99,381			99,886
Payable under securities lending agreements	80,013			—
Deferred income tax liabilities, net	5,643			93,203
Other liabilities	857,885			812,875
Liabilities of discontinued operations	14,662			16,095
Separate account liabilities	26,676,615			27,660,571
Total liabilities	59,304,410			60,011,673
Commitments and contingencies (See Note 14)
Stockholder’s equity:
Preferred stock, $1 par value, 50,000,000 shares authorized; none issued and outstanding	—			—
Common stock, $1 par value, 50,000,000 shares authorized; 7,320,176 shares issued and outstanding	7,320			7,320
Additional paid-in capital	951,640			949,520
Accumulated other comprehensive (loss) income	(51,100		)	440,957
Retained earnings	1,132,136			1,051,792
Total stockholder’s equity	2,039,996			2,449,589
Total liabilities and stockholder’s equity	$	61,344,406		$	62,461,262

See notes to condensed consolidated financial statements. (Concluded)

4

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Condensed Consolidated Statements of Income

Three and Six Months Ended June 30, 2018 and 2017

(In Thousands)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Revenues:
Premium income	$	78,155		$	67,663		$	222,836		$	219,904
Fee income	286,696			267,338			562,660			522,453
Other revenue	3,077			3,661			6,062			6,045
Net investment income	327,471			297,221			665,612			610,691
Investment gains (losses), net	40,256			22,064			(3,487		)	10,310
Total revenues	735,655			657,947			1,453,683			1,369,403
Benefits and expenses:
Life and other policy benefits	166,613			166,995			354,157			337,283
Decrease in future policy benefits	(77,381		)	(63,978		)	(99,390		)	(63,852		)
Interest credited or paid to contractholders	164,397			157,544			325,680			311,490
Provision for policyholders’ share of losses on participating business	(340		)	(62		)	(856		)	(64		)
Dividends to policyholders	7,397			9,045			19,679			24,114
Total benefits	260,686			269,544			599,270			608,971
General insurance expenses	308,545			284,364			606,677			591,495
Amortization of DAC and VOBA	30,957			20,401			42,249			25,723
Interest expense	9,588			7,646			17,397			15,276
Total benefits and expenses	609,776			581,955			1,265,593			1,241,465
Income before income taxes	125,879			75,992			188,090			127,938
Income tax expense	27,251			26,168			40,804			43,286
Net income	$	98,628		$	49,824		$	147,286		$	84,652

See notes to condensed consolidated financial statements.

5

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Condensed Consolidated Statements of Comprehensive (Loss) Income

Three and Six Months Ended June 30, 2018 and 2017

(In Thousands)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net income	$	98,628		$	49,824		$	147,286		$	84,652
Components of other comprehensive (loss) income
Unrealized holding (losses) gains, net, arising on available-for-sale fixed maturity investments	(353,834		)	236,996			(813,514		)	367,225
Unrealized holding gains (losses), net, arising on cash flow hedges	58,939			(18,245		)	52,443			(25,200		)
Reclassification adjustment for (gains) losses, net, realized in net income	(11,720		)	(1,832		)	(17,307		)	(357		)
Net unrealized (losses) gains related to investments	(306,615		)	216,919			(778,378		)	341,668
Future policy benefits, DAC and VOBA adjustments	66,954			(55,549		)	154,362			(84,015		)
Employee benefit plan adjustment	579			2,146			1,159			4,292
Other comprehensive (loss) income before income taxes	(239,082		)	163,516			(622,857		)	261,945
Income tax (benefit) expense related to items of other comprehensive income	(50,207		)	57,231			(130,800		)	91,681
Other comprehensive (loss) income(1)	(188,875		)	106,285			(492,057		)	170,264
Total comprehensive (loss) income	$	(90,247	)	$	156,109		$	(344,771	)	$	254,916

⁽¹⁾ Other comprehensive (loss) income includes the non-credit component of impaired (losses) gains, net, on fixed maturities available-for-sale in the amounts of $2,976 and $(520) for the three months ended June 30, 2018 and 2017, respectively and $(13,246) and $(1,609) for the six months ended June 30, 2018 and 2017, respectively.

See notes to condensed consolidated financial statements.

6

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Condensed Consolidated Statements of Stockholder’s Equity

Six Months Ended June 30, 2018 and 2017

(In Thousands)

(Unaudited)

	Six Months Ended June 30, 2018
	Common stock		Additional paid-in capital		Accumulated  other comprehensive income (loss)			Retained earnings			Total
Balances, January 1, 2018	$	7,320	$	949,520	$	440,957		$	1,051,792		$	2,449,589
Cumulative impact of adopting ASC 606, net of tax	—		—		—			32,952			32,952
Adjusted balances, January 1, 2018	7,320		949,520		440,957			1,084,744			2,482,541
Net income	—		—		—			147,286			147,286
Other comprehensive loss, net of income taxes	—		—		(492,057		)	—			(492,057		)
Dividends	—		—		—			(99,894		)	(99,894		)
Capital contribution(1)	—		1,688		—			—			1,688
Capital contribution - stock-based compensation	—		432		—			—			432
Balances, June 30, 2018	$	7,320	$	951,640	$	(51,100	)	$	1,132,136		$	2,039,996

⁽¹⁾ In February 2018, the Company received a capital contribution from its parent, GWL&A Financial Inc., in the amount of $848. In May 2018, an additional capital contribution was received in the amount of $840. No additional shares of the Company were issued in relation to these contributions.

	Six Months Ended June 30, 2017
	Common stock		Additional paid-in capital		Accumulated other comprehensive income		Retained earnings			Total
Balances, January 1, 2017	$	7,293	$	863,031	$	235,875	$	906,122		$	2,012,321
Net income	—		—		—		84,652			84,652
Other comprehensive income, net of income taxes	—		—		170,264		—			170,264
Dividends	—		—		—		(137,301		)	(137,301		)
Capital Contribution(1)	—		76,429		—		—			76,429
Capital contribution - stock-based compensation	—		925		—		—			925
Balances, June 30, 2017	$	7,293	$	940,385	$	406,139	$	853,473		$	2,207,290

⁽¹⁾ In May 2017, the Company received a capital contribution from its parent, GWL&A Financial Inc., in the amount of $76,429. No additional shares of the Company were issued in relation to this contribution.

See notes to condensed consolidated financial statements.

7

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30, 2018 and 2017

(In Thousands)

(Unaudited)

	Six Months Ended June 30,
	2018			2017
Net cash provided by operating activities	$	261,940		$	481,107
Cash flows from investing activities:
Proceeds from sales, maturities and redemptions of investments:
Fixed maturities, available-for-sale	2,130,539			3,132,414
Mortgage loans on real estate	223,785			209,888
Limited partnership interests and other investments	4,438			6,425
Purchases of investments:
Fixed maturities, available-for-sale	(2,108,487		)	(2,840,513		)
Mortgage loans on real estate	(536,765		)	(565,217		)
Limited partnership interests and other investments	(15,581		)	(8,114		)
Net change in short-term investments	81,207			(612,835		)
Net change in policy loans	3,783			(9,037		)
Purchases of furniture, equipment, and software	(26,247		)	(21,710		)
Net cash used in investing activities	(243,328		)	(708,699		)
Cash flows from financing activities:
Contract deposits	1,330,196			1,405,204
Contract withdrawals	(1,176,725		)	(1,087,940		)
Proceeds from surplus note issued to parent	346,218			—
Redemption of surplus note issued to parent	(333,400		)	—
Dividends paid	(99,894		)	(137,301		)
Capital contribution	1,688			76,429
Payments for and interest paid on financing element derivatives, net	(1,673		)	(3,461		)
Net change in commercial paper borrowings	(505		)	(27,796		)
Net change in book overdrafts	(13,590		)	1,623
Employee taxes paid for withheld shares	(32		)	(648		)
Net cash provided by financing activities	52,283			226,110
Net increase (decrease) in cash and cash equivalents	70,895			(1,482		)
Cash and cash equivalents, beginning of year	17,211			18,321
Cash and cash equivalents, end of period	$	88,106		$	16,839

See notes to condensed consolidated financial statements. (Continued)

8

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30, 2018 and 2017

(In Thousands)

(Unaudited)

	Six Months Ended June 30,
	2018			2017
Supplemental disclosures of cash flow information:
Net cash paid during the year for:
Income taxes	$	(9,323	)	$	(10,449	)
Interest	(16,194		)	(12,931		)
Non-cash investing and financing transactions during the years:
Share-based compensation expense	$	432		$	925
Fair value of assets acquired in settlement of fixed maturity investments	28,315			—

See notes to condensed consolidated financial statements. (Concluded)

9

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

1.  Organization and Basis of Presentation

Organization

Great-West Life & Annuity Insurance Company (“GWLA”) and its subsidiaries (collectively, the “Company”) is a direct wholly-owned subsidiary of GWL&A Financial Inc. (“GWL&A Financial”), a holding company.  GWL&A Financial is a direct wholly-owned subsidiary of Great-West Lifeco U.S. LLC (“Lifeco U.S.”) and an indirect wholly-owned subsidiary of Great-West Lifeco Inc. (“Lifeco”), a Canadian holding company.  The Company offers a wide range of life insurance, retirement, and investment products to individuals, businesses, and other private and public organizations throughout the United States. The Company is an insurance company domiciled in the State of Colorado and is subject to regulation by the Colorado Division of Insurance.

Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and the accounts of its subsidiaries over which it exercises control and are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).  Intercompany transactions and balances have been eliminated in consolidation.

The condensed consolidated balance sheet as of December 31, 2017, which was derived from the Company’s audited consolidated financial statements, and the unaudited interim condensed consolidated financial statements as of and for the three and six months ended June 30, 2018, have been prepared in accordance with the instructions for Form 10-Q.  In compliance with those instructions, certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.  As such, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

In the opinion of management, these statements include all normal recurring adjustments necessary to fairly present the Company’s condensed consolidated results of operations, financial position, and cash flows as of June 30, 2018, and for all periods presented. The condensed consolidated results of operations and condensed consolidated statement of cash flows for the six months ended June 30, 2018, are not necessarily indicative of the results or cash flows expected for the full year.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

2.  Application of Recent Accounting Pronouncements

Recently adopted accounting pronouncements

In May, 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, and all the related amendments to customer contracts (collectively “ASC 606”), effective for interim and annual periods beginning after December 15, 2017. ASC 606 supersedes nearly all existing revenue recognition guidance under U.S. GAAP; however, it did not impact the accounting for insurance and investment contracts within the scope of financial services insurance, leases, financial instruments and guarantees. The core principle of the model requires that an entity recognizes revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The update also requires increased disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts. See Note 10 for additional information.

10

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605, Revenue Recognition (“ASC 605”).

The primary impact of ASC 606 to the Company relates to the accounting for certain contract costs and contract fulfillment costs, which were expensed as incurred under ASC 605. Under ASC 606, these costs are deferred and amortized over the expected life of the customer contract, which the Company determined to be 10 years. The Company presents these contract costs and contract fulfillment costs on the condensed consolidated balance sheet as a part of the DAC and VOBA balance.

The Company recorded a net increase to opening retained earnings of $32,952, net of tax, as of January 1, 2018 due to the cumulative impact of adopting ASC 606.

In January, 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, effective for interim and annual periods beginning after December 15, 2017. The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments including requiring equity investments (except those accounted for under the equity method of accounting) to be measured at fair value with changes in fair value recognized in net income, eliminating certain disclosure requirements related to financial instruments measured at amortized cost, and adding disclosures related to the measurement categories of financial assets and financial liabilities.  The primary impact to the Company’s condensed consolidated financial statements was that the Company’s limited partnership interests, that were accounted for under the cost method, are now measured at fair value with changes in the fair value recognized in net income. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force), effective for fiscal years and interim periods within those beginning after December 15, 2017. This ASU addresses diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The primary impacts to the Company’s condensed consolidated financial statement include reclassification of proceeds received from the settlement of corporate-owned life insurance policies (“COLI”) from cash flow from operations to cash flow from investing and reclassification of certain change in due to / from parent and affiliate from investing to operating. As the Company has retroactively applied this guidance as required by the ASU, the following updates were made to the condensed consolidated cash flow statement for the six months ended June 30, 2017 to conform to current year presentation:

• Reclassification of proceeds received from the settlement of COLIs of $1,680 from cash flow from operations to cash flows from investing; and

• Reclassification of change in due to / from parent and affiliate of $21,388 from cash flow from financing to cash flows from operations.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash (a consensus of the Emerging Issues Task Force), effective for fiscal years and interim periods within those beginning after December 15, 2017. This update requires organizations to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The adoption of this standard did not have a material impact on the condensed consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, effective for annual reporting periods beginning on or after December 15, 2017, and interim periods within those annual periods. This update requires organizations to disaggregate the service cost component from the other components of net benefit costs in the income statement and present it with other current compensation costs for the related employees while providing guidance for capitalization eligibility for service costs. The adoption of this standard did not have a material impact on the condensed consolidated financial statements.

11

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

Future adoption of new accounting pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases, and all the related amendments to leases (collectively “ASU 2016-02”) effective for annual reporting periods beginning on or after December 15, 2018, and interim periods within those annual periods. Earlier application is permitted as of the beginning of an interim or annual period. This update requires organizations to recognize lease assets and lease liabilities on the balance sheet with lease terms of more than 12 months and also disclose certain qualitative and quantitative information about leasing arrangements. The Company’s implementation efforts are primarily focused on identifying a new lease accounting system, the review of its existing lease contracts and performing a completeness assessment over the lease population. The Company continues to evaluate the impact of this update on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments: Credit Losses: Measurement of Credit Losses on Financial Instruments, effective for fiscal years and interim periods within those beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2018. This update amends guidance on the impairment of financial instruments by adding an impairment model that is based on expected losses rather than incurred losses and is intended to result in more timely recognition of losses. The standard also simplifies the accounting by decreasing the number of credit impairment models that an entity can use to account for debt instruments. The Company continues to evaluate the impact of this update on its condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other, effective for annual or any interim goodwill impairment tests after December 15, 2019.  Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The update eliminates Step 2 from the goodwill impairment test and will require management to perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.  Any amount by which the carrying amount exceeds the reporting unit’s fair value (not to exceed the goodwill allocated to that reporting unit) is recognized as an impairment charge.  The Company performs its goodwill impairment annually in the 4th quarter or more frequently if events or circumstances indicate that there may be justification for performing an interim test. The adoption of this standard is not anticipated to have a material impact on the condensed consolidated financial statements.

3.  Related Party Transactions

A note payable to GWL&A Financial was issued as a surplus note on May 17, 2018, with a face and carrying amount of $346,218. The surplus note bears a fixed interest rate of 4.881%. The note matures on May 17, 2048.

On June 15, 2018, the surplus note with a principal amount of $333,400 was redeemed in full. The surplus note to GWL&A Financial was issued on May 19, 2006. The surplus note bore an interest rate of 2.588% plus the then-current three-month London Interbank Offering Rate (“LIBOR”). The surplus note became redeemable by the Company at the principal amount plus any accrued and unpaid interest after May 16, 2016.

From time to time, the Company makes direct investments in mutual funds of Great-West Funds, Inc., an open-end management investment company, which is a related party of GWL&A, to seed new investment products. As of June 30, 2018, the Company held $35,268 in seed investments. 

4.  Dividends

The maximum amount of dividends, which can be paid to stockholders by insurance companies domiciled in the State of Colorado, is subject to restrictions relating to statutory surplus and statutory net gain from operations.  Prior to the payment of any dividends, the Company seeks approval from the Colorado Insurance Commissioner.  During the six months ended June 30, 2018 and 2017, the Company paid dividends of $99,894 and $137,301, respectively, to its parent, GWL&A Financial. 

12

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

5.  Summary of Investments

The following tables summarize fixed maturity investments classified as available-for-sale and the non-credit-related component of other-than-temporary impairments (“OTTI”) in accumulated other comprehensive income (loss) (“AOCI”): 

	June 30, 2018
	Amortized		Gross unrealized		Gross unrealized		Estimated fair value		OTTI (gain) loss
Fixed maturities:	cost		gains		losses		and carrying value		included in AOCI (1)
U.S. government direct obligations and U.S. agencies	$	1,362,245	$	26,310	$	32,382	$	1,356,173	$	—
Obligations of U.S. states and their subdivisions	1,841,971		165,819		4,368		2,003,422		—
Corporate debt securities (2)	15,596,700		262,319		420,281		15,438,738		(779		)
Asset-backed securities	1,609,259		68,040		23,498		1,653,801		(36,665		)
Residential mortgage-backed securities	56,655		2,056		886		57,825		(70		)
Commercial mortgage-backed securities	1,358,117		4,899		43,216		1,319,800		—
Collateralized debt obligations	932,625		1,544		1,191		932,978		—
Total fixed maturities	$	22,757,572	$	530,987	$	525,822	$	22,762,737	$	(37,514	)

⁽¹⁾  Indicates the amount of any OTTI (gain) loss included in AOCI that is included in gross unrealized gains and losses.  OTTI (gain) loss included in AOCI, as presented above, includes both the initial recognition of non-credit losses and the effects of subsequent increases and decreases in estimated fair value for those fixed maturity securities with previous non-credit impairment. The non-credit loss component of OTTI (gain) loss was in an unrealized gain position due to increases in estimated fair value subsequent to initial recognition of non-credit losses on such securities.

⁽²⁾ Includes perpetual debt investments with amortized cost of $89,267 and estimated fair value of $81,435.

	December 31, 2017
	Amortized		Gross unrealized		Gross unrealized		Estimated fair value		OTTI (gain) loss
Fixed maturities:	cost		gains		losses		and carrying value		included in AOCI (1)
U.S. government direct obligations and U.S. agencies	$	1,837,748	$	41,777	$	7,883	$	1,871,642	$	—
Obligations of U.S. states and their subdivisions	1,872,120		220,507		1,655		2,090,972		—
Corporate debt securities (2)	15,234,473		581,991		110,377		15,706,087		(1,018		)
Asset-backed securities	1,622,806		105,301		10,131		1,717,976		(56,735		)
Residential mortgage-backed securities	63,187		2,446		649		64,984		(140		)
Commercial mortgage-backed securities	1,352,906		17,692		12,989		1,357,609		—
Collateralized debt obligations	779,722		4,227		80		783,869		—
Total fixed maturities	$	22,762,962	$	973,941	$	143,764	$	23,593,139	$	(57,893	)

⁽¹⁾  Indicates the amount of any OTTI (gain) loss included in AOCI that is included in gross unrealized gains and losses.  OTTI (gain) loss included in AOCI, as presented above, includes both the initial recognition of non-credit losses and the effects of subsequent increases and decreases in estimated fair value for those fixed maturity securities with previous non-credit impairment. The non-credit loss component of OTTI (gain) loss was in an unrealized gain position due to increases in estimated fair value subsequent to initial recognition of non-credit losses on such securities.

⁽²⁾ Includes perpetual debt investments with amortized cost of $89,267 and estimated fair value of $87,348.

See Note 8 for additional discussion regarding fair value measurements.

13

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

The amortized cost and estimated fair value of fixed maturity investments classified as available-for-sale, by contractual maturity date, are shown in the table below.  Actual maturities will likely differ from these projections because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. 

	June 30, 2018
	Amortized cost		Estimated fair value
Maturing in one year or less	$	619,874	$	620,381
Maturing after one year through five years	3,447,149		3,441,249
Maturing after five years through ten years	8,216,510		8,066,134
Maturing after ten years	5,500,704		5,670,372
Mortgage-backed and asset-backed securities	4,973,335		4,964,601
Total fixed maturities	$	22,757,572	$	22,762,737

Mortgage-backed (commercial and residential) and asset-backed securities include those issued by the U.S. government and U.S. agencies.

The following table summarizes information regarding the sales of securities classified as available-for-sale:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Proceeds from sales	$	511,199	$	891,026	$	1,477,619	$	2,471,548
Gross realized gains from sales	12,452		8,488		24,726		20,921
Gross realized losses from sales	9,789		6,080		16,072		21,337

Mortgage loans on real estate — The recorded investment of the mortgage loan portfolio categorized as performing was $4,316,971 and $4,005,960 as of June 30, 2018 and December 31, 2017, respectively.

The following table summarizes activity in the mortgage provision allowance:

	Six Months Ended June 30, 2018		Year Ended December 31, 2017
	Commercial mortgages		Commercial mortgages
Beginning balance	$	773	$	2,882
Provision increases	—		157
Charge-off	—		(663		)
Recovery	—		(30		)
Provision decreases	—		(1,573		)
Ending balance	$	773	$	773
Allowance ending balance by basis of impairment method:
Collectively evaluated for impairment	773		773
Recorded investment balance in the mortgage loan portfolio, gross of allowance, by basis of impairment method:	$	4,316,971	$	4,005,960
Individually evaluated for impairment	2,799		2,942
Collectively evaluated for impairment	4,314,172		4,003,018

14

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

Limited partnershipinterests — Limited partnership interests represent the Company’s minority ownership interests in pooled investment funds that primarily make private equity investments across diverse industries and geographical focuses. The Company has determined its interest in each limited partnership to be considered a variable interest entity (“VIE”). Consolidation is not required as the Company is not deemed to be the primary beneficiary of the VIEs. The carrying value and maximum exposure to loss in relation to the activities of the VIEs was $63,586 and $45,540 at June 30, 2018 and December 31, 2017, respectively.

Securities lending — Securities with a cost or amortized cost of $98,705 and estimated fair values of $93,255 were on loan under the program at June 30, 2018. There were no securities on loan at December 31, 2017.  The Company received cash of $80,013 and securities with a fair value of $16,502 as collateral at June 30, 2018. The Company bears the risk of any deficiency in the amount of collateral available for return to a borrower due to a loss in an approved investment.

Under the securities lending program the collateral pledged is, by definition, the securities loaned against the cash borrowed. The cash collateral liability under the securities lending program is $80,013, and the class of securities loaned consists entirely of corporate debt securities.

The Company’s securities lending agreements are open agreements meaning the borrower can return and the Company can recall the loaned securities at any time. The assets and liabilities associated with securities lending program are not subject to master netting arrangements and are not offset in the condensed consolidated balance sheets.

Unrealized losses on fixed maturity investments classified as available-for-sale — The following tables summarize unrealized investment losses, including the non-credit-related portion of OTTI losses reported in AOCI, by class of investment:

	June 30, 2018
	Less than twelve months				Twelve months or longer				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
Fixed maturities:	fair value		loss and OTTI		fair value		loss and OTTI		fair value		loss and OTTI
U.S. government direct obligations and U.S. agencies	$	833,130	$	25,923	$	150,012	$	6,459	$	983,142	$	32,382
Obligations of U.S. states and their subdivisions	157,066		1,958		36,003		2,410		193,069		4,368
Corporate debt securities	8,687,225		278,236		1,591,254		142,045		10,278,479		420,281
Asset-backed securities	764,102		14,417		211,254		9,081		975,356		23,498
Residential mortgage-backed securities	3,679		63		10,029		823		13,708		886
Commercial mortgage-backed securities	838,617		24,039		280,386		19,177		1,119,003		43,216
Collateralized debt obligations	296,314		1,191		—		—		296,314		1,191
Total fixed maturities	$	11,580,133	$	345,827	$	2,278,938	$	179,995	$	13,859,071	$	525,822
Total number of securities in an unrealized loss position			1,076				268				1,344

15

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

	December 31, 2017
	Less than twelve months				Twelve months or longer				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
Fixed maturities:	fair value		loss and OTTI		fair value		loss and OTTI		fair value		loss and OTTI
U.S. government direct obligations and U.S. agencies	$	755,861	$	4,159	$	230,447	$	3,724	$	986,308	$	7,883
Obligations of U.S. states and their subdivisions	24,908		180		37,012		1,475		61,920		1,655
Corporate debt securities	2,229,585		19,568		2,036,323		90,809		4,265,908		110,377
Asset-backed securities	544,778		3,011		245,341		7,120		790,119		10,131
Residential mortgage-backed securities	4,405		23		11,416		626		15,821		649
Commercial mortgage-backed securities	342,820		2,451		295,164		10,538		637,984		12,989
Collateralized debt obligations	7,277		80		—		—		7,277		80
Total fixed maturities	$	3,909,634	$	29,472	$	2,855,703	$	114,292	$	6,765,337	$	143,764
Total number of securities in an unrealized loss position			368				293				661

Fixed maturity investments — Total unrealized losses and OTTI increased by $382,058, or 266%, from December 31, 2017 to June 30, 2018. The majority, or $316,355, of the increase was in the less than twelve months category. The overall increase in unrealized losses was across most asset classes and reflects higher interest rates at June 30, 2018, compared to December 31, 2017, resulting in generally lower valuations of these fixed maturity securities.

Total unrealized losses greater than twelve months increased by $65,703 from December 31, 2017 to June 30, 2018.  Corporate debt securities account for 79%, or $142,045, of the unrealized losses and OTTI greater than twelve months at June 30, 2018.  Non-investment grade corporate debt securities account for $6,676 of the unrealized losses and OTTI greater than twelve months. Management does not have the intent to sell these assets; therefore, an OTTI was not recognized in earnings.

Asset-backed and commercial-backed securities account for 16% of the unrealized losses and OTTI greater than twelve months at June 30, 2018.  The present value of the cash flows expected to be collected is not less than amortized cost and management does not have the intent to sell these assets; therefore, an OTTI was not recognized in earnings.

Other-than-temporary impairment recognition — The OTTI on fixed maturity securities where the loss portion is bifurcated and the credit related component is recognized in investment (losses) gains is summarized as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Beginning balance	$	52,775		$	80,359		$	62,231		$	83,665
Reductions:
Due to sales, maturities or payoffs during the period	—			—			(1,510		)	—
Due to increases in cash flows expected to be collected that are recognized over the remaining life of the security	(3,092		)	(2,948		)	(11,038		)	(6,254		)
Ending balance	$	49,683		$	77,411		$	49,683		$	77,411

16

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

6.  Derivative Financial Instruments

Derivative transactions are generally entered into pursuant to International Swaps and Derivatives Association (“ISDA”) Master Agreements or Master Securities Forward Transaction Agreements (“MSFTA”) with approved counterparties that provide for a single net payment to be made by one party to the other on a daily basis, periodic payment dates, or at the due date, expiration, or termination of the agreement.

The ISDA Master Agreements contain provisions that would allow the counterparties to require immediate settlement of all derivative instruments in a net liability position if the Company were to default on any debt obligations over a certain threshold.  The MSFTA contain provisions which do not stipulate a threshold for default and only apply to debt obligations between the Company and the specific counterparty.  The aggregate fair value, inclusive of accrued income and expense, of derivative instruments with credit-risk-related contingent features that were in a net liability position was $72,759 and $93,761 as of June 30, 2018, and December 31, 2017, respectively.  The Company had pledged collateral related to these derivatives of $15,900 and $42,750 as of June 30, 2018, and December 31, 2017, respectively, in the normal course of business.  If the credit-risk-related contingent features were triggered on June 30, 2018, the fair value of assets that could be required to settle the derivatives in a net liability position was $56,859.

At June 30, 2018, and December 31, 2017, the Company had pledged $27,169 and $52,330 of unrestricted cash collateral to counterparties in the normal course of business, while other counterparties had pledged $12,696 and $5,490 of unrestricted cash collateral to the Company to satisfy collateral netting agreements, respectively.

At June 30, 2018, the Company estimated $15,222 of net derivative gains related to cash flow hedges included in AOCI will be reclassified into net income within the next twelve months. Gains and losses included in AOCI are reclassified into net income when the hedged item affects earnings.

Types of derivative instruments and derivative strategies

Interest rate contracts

Cash flow hedges

Interest rate swap agreements are used to convert the interest rate on certain debt security investments and debt obligations from a floating rate to a fixed rate. 

Not designated as hedging instruments

The Company enters into certain transactions in which derivatives are hedging an economic risk but hedge accounting is either not elected or the transactions are not eligible for hedge accounting.  These derivative instruments include:  exchange-traded interest rate swap futures, over-the-counter (“OTC”) interest rate swaptions, OTC interest rate swaps, exchange-traded Eurodollar interest rate futures, and treasury interest rate futures.  Certain of the Company’s OTC derivatives are cleared and settled through the Chicago Mercantile Exchange ("CME") while others are bilateral contracts between the Company and a counterparty.

In 2017, the CME amended its rulebook to classify variation margin transfers as settlement payments instead of collateral. The Company adjusts the fair value by the variation margin payments on derivatives cleared through the CME.

The derivative instruments mentioned above are economic hedges and used to manage risk.  These transactions are used to offset changes in liabilities including those in variable annuity products, hedge the economic effect of a large increase in interest rates, manage the potential variability in future interest payments due to a change in credited interest rates and the related change in cash flows due to increased surrenders, and manage interest rate risks of forecasted acquisitions of fixed rate maturity investments and forecasted liability pricing.

17

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

Foreign currency contracts

Cross-currency swaps and foreign currency forwards are used to manage the foreign currency exchange rate risk associated with investments denominated in other than U.S. dollars.  The Company uses cross-currency swaps to convert interest and principal payments on foreign denominated debt instruments into U.S. dollars.  Cross-currency swaps may be designated as cash flow hedges; however, some are not eligible for hedge accounting. The Company uses foreign currency forwards to reduce the risk of foreign currency exchange rate changes on proceeds received on sales of foreign denominated debt instruments; however, hedge accounting is not elected.

Equity contracts

The Company uses futures on equity indices to offset changes in guaranteed lifetime withdrawal benefit liabilities; however, they are not eligible for hedge accounting.

Other forward contracts

The Company uses forward settling to be announced (“TBA”) securities to gain exposure to the investment risk and return of agency mortgage-backed securities (pass-throughs). These transactions enhance the return on the Company’s investment portfolio and provide a more liquid and cost effective method of achieving these goals than purchasing or selling individual agency mortgage-backed pools.  As the Company does not regularly accept delivery of such securities, they are accounted for as derivatives but are not eligible for hedge accounting. 

The following tables summarize the notional amount and fair value of derivative financial instruments, excluding embedded derivatives:

	June 30, 2018
			Net derivatives			Asset derivatives		Liability derivatives
	Notional amount		Fair value			Fair value (1)		Fair value (1)
Hedge designation/derivative type:
Derivatives designated as hedges:
Cash flow hedges:
Interest rate swaps	$	22,300	$	5,917		$	5,917	$	—
Cross-currency swaps	864,154		(8,854		)	30,471		39,325
Total cash flow hedges	886,454		(2,937		)	36,388		39,325
Total derivatives designated as hedges	886,454		(2,937		)	36,388		39,325
Derivatives not designated as hedges:
Interest rate swaps	548,500		577			1,461		884
Futures on equity indices	56,521		—			—		—
Interest rate futures	34,300		—			—		—
Interest rate swaptions	190,400		163			163		—
Other forward contracts	2,460,000		3,294			4,565		1,271
Cross-currency swaps	573,703		(11,778		)	20,292		32,070
Total derivatives not designated as hedges	3,863,424		(7,744		)	26,481		34,225
Total derivative financial instruments	$	4,749,878	$	(10,681	)	$	62,869	$	73,550

⁽¹⁾ The estimated fair value includes accrued income and expense. The estimated fair value of all derivatives in an asset position is reported within other assets and the estimated fair value of all derivatives in a liability position is reported within other liabilities in the condensed consolidated balance sheets.

18

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

	December 31, 2017
			Net derivatives			Asset derivatives		Liability derivatives
	Notional amount		Fair value			Fair value (1)		Fair value (1)
Hedge designation/derivative type:
Derivatives designated as hedges:
Cash flow hedges:
Interest rate swaps	$	388,800	$	7,476		$	7,476	$	—
Cross-currency swaps	800,060		(31,358		)	19,958		51,316
Total cash flow hedges	1,188,860		(23,882		)	27,434		51,316
Total derivatives designated as hedges	1,188,860		(23,882		)	27,434		51,316
Derivatives not designated as hedges:
Interest rate swaps	519,100		1,902			3,530		1,628
Futures on equity indices	22,074		—			—		—
Interest rate futures	60,700		—			—		—
Interest rate swaptions	164,522		75			75		—
Cross-currency swaps	612,733		(21,279		)	20,320		41,599
Total derivatives not designated as hedges	1,379,129		(19,302		)	23,925		43,227
Total derivative financial instruments	$	2,567,989	$	(43,184	)	$	51,359	$	94,543

⁽¹⁾ The estimated fair value excludes accrued income and expense. The estimated fair value of all derivatives in an asset position is reported within other assets and the estimated fair value of all derivatives in a liability position is reported within other liabilities in the condensed consolidated balance sheets.

Notional amounts are used to express the extent of the Company’s involvement in derivative transactions and represent a standard measurement of the volume of its derivative activity.  Notional amounts represent those amounts used to calculate contractual flows to be exchanged and are not paid or received. The average notional outstanding during the six months endedJune 30, 2018, was $672,886, $1,451,399, $90,541, $179,348, and $1,764,286 for interest rate swaps, cross-currency swaps, futures, swaptions, and other forward contracts, respectively. The average notional outstanding during the year ended December 31, 2017, was $905,977, $1,323,398, $108,438, $162,896, and $2,231,196 for interest rate swaps, cross-currency swaps, futures, swaptions, and other forward contracts, respectively.

The following tables present the effect of derivative instruments in the condensed consolidated statements of income and comprehensive income reported by cash flow hedges and derivatives not designated as hedges, excluding embedded derivatives: 

	Gain (loss) recognized in OCI on derivatives (Effective portion)						Gain (loss) reclassified from OCI into net income (Effective portion)
	Three Months Ended June 30,						Three Months Ended June 30,
	2018			2017			2018		2017
Cash flow hedges:
Interest rate swaps	$	(319	)	$	644		$	705	$	1,186		(A)
Interest rate swaps	1			(8,193		)	887		(787		)	(B)
Cross-currency swaps	59,257			(10,696		)	7,467		(973		)	(A)
Total cash flow hedges	$	58,939		$	(18,245	)	$	9,059	$	(574	)

(A) Net investment income.

(B) Interest expense.

19

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

	Gain (loss) recognized in OCI on derivatives (Effective portion)						Gain (loss) reclassified from OCI into net income (Effective portion)
	Six Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018		2017
Cash flow hedges:
Interest rate swaps	$	(1,331	)	$	496		$	1,633	$	2,406		(A)
Interest rate swaps	29,030			(4,350		)	632		(1,667		)	(B)
Cross-currency swaps	24,744			(21,346		)	6,941		129			(A)
Total cash flow hedges	$	52,443		$	(25,200	)	$	9,206	$	868

(A) Net investment income.

(B) Interest expense.

	Gain (loss) on derivatives recognized in net income
	Three Months Ended June 30,
	2018				2017
Derivatives not designated as hedging instruments:
Futures on equity indices	$	—		(A)	$	350		(A)
Futures on equity indices	(1,504		)	(B)	(1,536		)	(B)
Interest rate swaps	—			(A)	4,976			(A)
Interest rate swaps	(3,336		)	(B)	—			(B)
Interest rate futures	—			(A)	116			(A)
Interest rate futures	67			(B)	(206		)	(B)
Interest rate swaptions	—			(A)	(4		)	(A)
Interest rate swaptions	(187		)	(B)	(77		)	(B)
Other forward contracts	—			(A)	(9,363		)	(A)
Other forward contracts	(1,575		)	(B)	18,716			(B)
Cross-currency swaps	—			(A)	(8,083		)	(A)
Cross-currency swaps	40,739			(B)	—			(B)
Total derivatives not designated as hedging instruments	$	34,204			$	4,889

(A) Net investment income.

(B) Represents investment (losses) gains, net.

20

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

	Gain (loss) on derivatives recognized in net income
	Six Months Ended June 30,
	2018				2017
Derivatives not designated as hedging instruments:
Futures on equity indices	$	—		(A)	$	(334	)	(A)
Futures on equity indices	(2,145		)	(B)	(2,820		)	(B)
Interest rate swaps	—			(A)	3,427			(A)
Interest rate swaps	(14,302		)	(B)	—			(B)
Interest rate futures	—			(A)	102			(A)
Interest rate futures	115			(B)	(201		)	(B)
Interest rate swaptions	—			(A)	(31		)	(A)
Interest rate swaptions	(151		)	(B)	(151		)	(B)
Other forward contracts	—			(A)	(2,580		)	(A)
Other forward contracts	(21,943		)	(B)	13,119			(B)
Cross-currency swaps	—			(A)	(22,251		)	(A)
Cross-currency swaps	12,595			(B)	—			(B)
Total derivatives not designated as hedging instruments	$	(25,831	)		$	(11,720	)

(A) Net investment income.

(B) Represents investment (losses) gains, net.

Embedded derivative - Guaranteed Lifetime Withdrawal Benefit

The Company offers a guaranteed lifetime withdrawal benefit (“GLWB”) through a variable annuity or a contingent deferred annuity. The GLWB is deemed to be an embedded derivative. The GLWB is recorded at fair value within future policy benefits on the condensed consolidated balance sheets. Changes in fair value of the GLWB are recorded in investment gains (losses), net in the condensed consolidated statements of income.

The estimated fair value of the GLWB was $513and $11,095 at June 30, 2018, and December 31, 2017, respectively. The changes in fair value of the GLWB were $3,480 and $(5,553) for the three months ended June 30, 2018 and 2017, respectively, and $10,582 and $(3,883) for the six months ended June 30, 2018 and 2017, respectively.

21

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

7.  Summary of Offsetting Assets and Liabilities

The Company enters into derivative transactions and short-term reverse repurchase agreements with several approved counterparties. The Company’s derivative transactions are generally governed by MSFTA or ISDA Master Agreements which provide for legally enforceable set-off and close-out netting in the event of default or bankruptcy of the Company’s counterparties.  The Company’s MSFTA and ISDA Master Agreements generally include provisions which require both the pledging and accepting of collateral in connection with its derivative transactions. These provisions have the effect of securing each party’s position to the extent of collateral held. Short-term reverse repurchase agreements also include collateral provisions with the counterparty. The following tables summarize the effect of master netting arrangements on the Company’s financial position in the normal course of business and in the event of default or bankruptcy of the Company’s counterparties: 

	June 30, 2018
			Gross fair value not offset
			in balance sheets
	Gross fair value of		Financial						Net
Financial instruments:	recognized assets/liabilities (1)		instruments			Cash collateral			fair value
Derivative instruments (assets) (2)	$	62,869	$	(50,356	)	$	(10,612	)	$	1,901
Derivative instruments (liabilities) (3)	$	73,550	$	(50,356	)	$	(16,310	)	$	6,884

⁽¹⁾ The gross fair value of derivative instrument assets is not netted against offsetting liabilities for presentation on the condensed consolidated balance sheets.

⁽²⁾ The estimated fair value of derivative instrument assets is reported in other assets in the condensed consolidated balance sheets. Derivative transactions entered into under ISDA master agreements include income and expense accruals.

⁽³⁾ The estimated fair value of derivative instrument liabilities is reported in other liabilities in the condensed consolidated balance sheets. Derivative transactions entered into under ISDA master agreements include income and expense accruals.

	December 31, 2017
			Gross fair value not offset
			in balance sheets
	Gross fair value of		Financial						Net
Financial instruments (assets):	recognized assets (1)		instruments			Cash collateral			fair value
Derivative instruments (2)	$	52,738	$	(47,827	)	$	(4,911	)	$	—
Short-term reverse repurchase agreements (3)	23,200		(23,200		)	—			—
Total financial instruments (assets)	$	75,938	$	(71,027	)	$	(4,911	)	$	—
	December 31, 2017
			Gross fair value not offset
			in balance sheets
	Gross fair value of		Financial						Net
Financial instruments (liabilities):	recognized liabilities (1)		instruments			Cash collateral			fair value
Derivative instruments (4)	$	93,761	$	(47,827	)	$	(42,750	)	$	3,184

⁽¹⁾ The gross fair value of derivative instrument and short-term reverse repurchase agreement assets is not netted against offsetting liabilities for presentation on the condensed consolidated balance sheets.

⁽²⁾ The estimated fair value of derivative instrument assets is reported in other assets in the condensed consolidated balance sheets. Derivative transactions entered into under ISDA master agreements include income and expense accruals.

⁽³⁾ The estimated fair value of short-term reverse repurchase agreement assets is reported in short-term investments in the condensed consolidated balance sheets. The collateral is held by an independent third-party custodian under a tri-party agreement.

⁽⁴⁾ The estimated fair value of derivative instrument liabilities is reported in other liabilities in the condensed consolidated balance sheets. Derivative transactions entered into under ISDA master agreements include income and expense accruals.

22

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

8.  Fair Value Measurements

Recurring fair value measurements

The following tables present the Company’s financial assets and liabilities carried at fair value on a recurring basis by fair value hierarchy category:

	Assets and liabilities measured at fair value on a recurring basis
	June 30, 2018
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Assets
Fixed maturities available-for-sale:
U.S. government direct obligations and U.S. agencies	$	—	$	1,356,173	$	—	$	1,356,173
Obligations of U.S. states and their subdivisions	—		2,003,422		—		2,003,422
Corporate debt securities	—		15,429,768		8,970		15,438,738
Asset-backed securities	—		1,653,801		—		1,653,801
Residential mortgage-backed securities	—		57,825		—		57,825
Commercial mortgage-backed securities	—		1,319,800		—		1,319,800
Collateralized debt obligations	—		932,978		—		932,978
Total fixed maturities available-for-sale	—		22,753,767		8,970		22,762,737
Fixed maturities held-for-trading:
U.S. government direct obligations and U.S. agencies	—		15,481		—		15,481
Corporate debt securities	—		3,001		—		3,001
Commercial mortgage-backed securities	—		1,037		—		1,037
Total fixed maturities held-for-trading	—		19,519		—		19,519
Short-term investments	260,967		33,347		—		294,314
Limited partnership interests (1)	—		—		—		63,586
Equity investments	37,564		5,011		—		42,575
Collateral under securities lending agreements	—		80,013		—		80,013
Collateral under derivative counterparty collateral agreements	39,865		—		—		39,865
Derivative instruments designated as hedges:
Interest rate swaps	—		5,917		—		5,917
Cross-currency swaps	—		30,471		—		30,471
Derivative instruments not designated as hedges:
Interest rate swaps	—		1,461		—		1,461
Interest rate swaptions	—		163		—		163
Other forward contracts	—		4,565		—		4,565
Cross-currency swaps	—		20,292		—		20,292
Total derivative instruments	—		62,869		—		62,869
Separate account assets (1)	16,089,089		10,137,807		—		26,676,615
Total assets	$	16,389,921	$	33,087,322	$	8,970	$	49,935,932
Liabilities
Payable under securities lending agreements	$	—	$	80,013	$	—	$	80,013
Collateral under derivative counterparty collateral agreements	12,696		—		—		12,696
Derivative instruments designated as hedges:
Cross-currency swaps	—		39,325		—		39,325
Derivative instruments not designated as hedges:
Interest rate swaps	—		884		—		884
Other forward contracts	—		1,271		—		1,271
Cross-currency swaps	—		32,070		—		32,070
Total derivative instruments	—		73,550		—		73,550
Embedded derivatives - GLWB	—		—		513		513
Separate account liabilities (2)	—		431,960		—		431,960
Total liabilities	$	12,696	$	585,523	$	513	$	598,732

⁽¹⁾ Included in the total fair value amount are $450 million of separate account assets and $64 million of limited partnership interests as of     June 30, 2018 for which the fair value is estimated using net asset value per unit as a practical expedient.

 ⁽²⁾ Includes only separate account instruments which are carried at the fair value of the underlying liabilities owned by the separate accounts.

23

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

	Assets and liabilities measured at fair value on a recurring basis
	December 31, 2017
	Quoted prices		Significant
	in active markets for identical assets (Level 1)		other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Assets
Fixed maturities available-for-sale:
U.S. government direct obligations and U.S. agencies	$	—	$	1,871,642	$	—	$	1,871,642
Obligations of U.S. states and their subdivisions	—		2,090,972		—		2,090,972
Corporate debt securities	—		15,696,349		9,738		15,706,087
Asset-backed securities	—		1,717,976		—		1,717,976
Residential mortgage-backed securities	—		64,984		—		64,984
Commercial mortgage-backed securities	—		1,357,609		—		1,357,609
Collateralized debt obligations	—		783,869		—		783,869
Total fixed maturities available-for-sale	—		23,583,401		9,738		23,593,139
Fixed maturities held-for-trading:
U.S. government direct obligations and U.S. agencies	—		16,836		—		16,836
Corporate debt securities	—		3,156		—		3,156
Commercial mortgage-backed securities	—		1,067		—		1,067
Total fixed maturities held-for-trading	—		21,059		—		21,059
Short-term investments	288,302		61,964		—		350,266
Collateral under derivative counterparty collateral agreements	57,820		—		—		57,820
Derivative instruments designated as hedges:
Interest rate swaps	—		7,476		—		7,476
Cross-currency swaps	—		19,958		—		19,958
Derivative instruments not designated as hedges:
Interest rate swaps	—		3,530		—		3,530
Interest rate swaptions	—		75		—		75
Cross-currency swaps	—		20,320		—		20,320
Total derivative instruments	—		51,359		—		51,359
Separate account assets (1)	16,523,630		10,736,532		—		27,660,571
Total assets	$	16,869,752	$	34,454,315	$	9,738	$	51,734,214
Liabilities
Collateral under derivative counterparty collateral agreements	$	5,490	$	—	$	—	$	5,490
Derivative instruments designated as hedges:
Cross-currency swaps	—		51,316		—		51,316
Derivative instruments not designated as hedges:
Interest rate swaps	—		1,628		—		1,628
Cross-currency swaps	—		41,599		—		41,599
Total derivative instruments	—		94,543		—		94,543
Embedded derivatives - GLWB	—		—		11,095		11,095
Separate account liabilities (2)	8		409,266		—		409,274
Total liabilities	$	5,498	$	503,809	$	11,095	$	520,402

⁽¹⁾ Included in the total fair value amounts are $400 million of investments as of December 31, 2017 for which the fair value is estimated using net asset value per unit as a practical expedient.

⁽²⁾ Includes only separate account instruments which are carried at the fair value of the underlying liabilities owned by the separate accounts.

The methods and assumptions used to estimate the fair value of the Company’s financial assets and liabilities carried at fair value on a recurring basis are as follows:

Fixed maturity investments

The fair values for fixed maturity investments are generally based upon evaluated prices from independent pricing services.  In cases where these prices are not readily available, fair values are estimated by the Company.  To determine estimated fair value for these instruments, the Company generally utilizes discounted cash flow models with market observable pricing inputs such as

24

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

spreads, average life, and credit quality.  Fair value estimates are made at a specific point in time, based on available market information and judgments about financial instruments, including estimates of the timing and amounts of expected future cash flows and the credit standing of the issuer or counterparty.

Equity investments

The fair value for equity securities is generally based upon quoted market prices in active markets for identical assets

that the Company has the ability to access. 

Short-term investments and securities lending agreements

The amortized cost of short-term investments, collateral under securities lending agreements, and payable under securities lending agreements is a reasonable estimate of fair value due to their short-term nature and high credit quality of the issuers.

Derivative counterparty collateral agreements

Included in other assets is cash collateral received from or pledged to derivative counterparties and included in other liabilities is the obligation to return the cash collateral to the counterparties.  The carrying value of the collateral is a reasonable estimate of fair value.

Derivative instruments

Included in other assets and other liabilities are derivative financial instruments. The estimated fair values of OTC derivatives, primarily consisting of cross-currency swaps, interest rate swaps, interest rate swaptions, and other forward contracts, are the estimated amounts the Company would receive or pay to terminate the agreements at the end of each reporting period, taking into consideration current interest rates and other relevant factors.

Embedded derivative - GLWB

Significant unobservable inputs used in the fair value measurements of GLWB include long-term equity and interest rate implied volatility, mortality, and policyholder behavior assumptions, such as benefit utilization, lapses, and partial withdrawals.

Limited partnership interests

Limited partnership interests represent the Company’s minority ownership interests in pooled investment funds.  These funds employ varying investment strategies that primarily make private equity investments across diverse industries and geographical focuses.  The net asset value, determined using the partnership financial statement reported capital account adjusted for other relevant information which may impact the exit value of the investments, is used as a practical expedient to estimate fair value. Distributions by these investments are generated from investment gains, from operating income generated by the underlying investments of the funds, and from liquidation of the underlying assets of the funds which are estimated to be liquidated over the next one to 10 years. 

Separate account assets and liabilities

Separate account assets and liabilities primarily include investments in mutual fund, fixed maturity, and short-term securities.  Mutual funds are recorded at net asset value, which approximates fair value, on a daily basis.  The fixed maturity and short-term investments are valued in the same manner, and using the same pricing sources and inputs as the fixed maturity and short-term investments of the Company.

25

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

The following tables present additional information about assets and liabilities measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

	Recurring Level 3 financial assets and liabilities
	Three Months Ended June 30, 2018
	Assets			Liabilities
	Fixed maturities  available-for-sale			Embedded derivatives - GLWB
	Corporate debt securities
Balances, April 1, 2018	$	9,287		$	3,993
Realized and unrealized gains (losses) included in:
Net income (loss)	—			3,480
Other comprehensive income (loss)	129			—
Settlements	(446		)	—
Balances, June 30, 2018	$	8,970		$	513
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets and liabilities held at June 30, 2018	$	—		$	3,480

	Recurring Level 3 financial assets and liabilities
	Three Months Ended June 30, 2017
	Assets			Liabilities
	Fixed maturities  available-for-sale			Embedded derivatives - GLWB
	Corporate debt securities
Balances, April 1, 2017	$	10,931		$	4,042
Realized and unrealized gains (losses) included in:
Net income (loss)	—			(5,553		)
Other comprehensive income (loss)	84			—
Settlements	(312		)	—
Balances, June 30, 2017	$	10,703		$	9,595
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets and liabilities held at June 30, 2017	$	—		$	(5,553	)

	Recurring Level 3 financial assets and liabilities
	Six Months Ended June 30, 2018
	Assets			Liabilities
	Fixed maturities  available-for-sale			Embedded derivatives - GLWB
	Corporate debt securities
Balances, January 1, 2018	$	9,738		$	11,095
Realized and unrealized gains (losses) included in:
Net income (loss)	—			10,582
Other comprehensive income (loss)	116			—
Settlements	(884		)	—
Balances, June 30, 2018	$	8,970		$	513
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets and liabilities held at June 30, 2018	$	—		$	10,582

26

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

	Recurring Level 3 financial assets and liabilities
	Six Months Ended June 30, 2017
	Assets			Liabilities
	Fixed maturities  available-for-sale			Embedded derivatives - GLWB
	Corporate debt securities
Balances, January 1, 2017	$	11,639		$	5,712
Realized and unrealized gains (losses) included in:
Net income (loss)	—			(3,883		)
Other comprehensive income (loss)	(280		)	—
Settlements	(656		)	—
Balances, June 30, 2017	$	10,703		$	9,595
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets and liabilities held at June 30, 2017	$	—		$	(3,883	)

The following table presents significant unobservable inputs used during the valuation of certain liabilities categorized within Level 3 of the recurring fair value measurements table:

			Range
	Valuation Technique	Unobservable Input	June 30, 2018	December 31, 2017
Embedded derivatives - GLWB	Risk neutral stochastic valuation methodology	Equity volatility	15% - 30%	15% - 30%
		Swap curve	2.34% - 2.97%	1.69% - 2.54%
		Mortality rate	Based on the Annuity 2000 Mortality Table	Based on the Annuity 2000 Mortality Table
		Base Lapse rate	1% - 15%	1% - 15%

Fair value of financial instruments

The following tables summarize the carrying amounts and estimated fair values of the Company’s financial instruments and investments not carried at fair value on a recurring basis:

	June 30, 2018					December 31, 2017
					Fair value					Fair value
	Carrying		Estimated		hierarchy	Carrying		Estimated		hierarchy
	amount		fair value		level	amount		fair value		level
Assets
Mortgage loans on real estate	$	4,316,198	$	4,265,476	2	$	4,005,187	$	4,066,800	2
Policy loans	4,121,136		4,121,136		2	4,104,094		4,104,094		2
Limited partnership interests (1)	—		—			43,281		45,009
Other investments	10,723		39,050		3	11,507		41,588		3
Liabilities
Annuity contract benefits without life contingencies	$	12,833,068	$	12,390,980	2	$	12,704,401	$	12,647,309	2
Policyholders’ funds	273,319		273,319		2	280,578		280,578		2
Commercial paper	99,381		99,381		2	99,886		99,886		2
Notes payable	556,529		608,684		2	543,338		581,097		2

⁽¹⁾ The fair value of limited partnership interests as of December 31, 2017 is estimated using net asset value per unit as a practical expedient.

27

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

9.Other Comprehensive Income

The following table presents the accumulated balances for each classification of other comprehensive income (loss):

	Three Months Ended June 30, 2018
	Unrealized holding gains (losses) arising on fixed maturities, available-for-sale (1)			Unrealized holding gains (losses) arising on cash flow hedges (2)			Future policy benefits, DAC and VOBA adjustments			Employee benefit plan adjustment (3)			Total
Balances, April 1, 2018	$	286,289		$	14,475		$	(72,255	)	$	(90,734	)	$	137,775
OCI before reclassifications	(353,834		)	58,939			66,954			—			(227,941		)
Deferred income tax benefit (expense)	74,304			(12,377		)	(14,060		)	—			47,867
AOCI before reclassification, net of tax	(279,530		)	46,562			52,894			—			(180,074		)
Amounts reclassified from AOCI	(2,661		)	(9,059		)	—			579			(11,141		)
Deferred income tax benefit (expense)	559			1,902			—			(121		)	2,340
Amounts reclassified from AOCI, net of tax	(2,102		)	(7,157		)	—			458			(8,801		)
Balances, June 30, 2018	$	4,657		$	53,880		$	(19,361	)	$	(90,276	)	$	(51,100	)

⁽¹⁾ Reclassifications affect investment gains (losses), net on the condensed consolidated statements of income.

⁽²⁾ Reclassifications affect net investment income on the condensed consolidated statements of income, except for $(887) (before tax) which affected interest expense for the three months ended June 30, 2018.

⁽³⁾ The adjustments for defined benefit plans are included in the computation of net periodic (benefit) cost of employee benefit plans (see note 11 for additional details).

The following table presents the accumulated balances for each classification of other comprehensive income (loss):

	Three Months Ended June 30, 2017
	Unrealized holding gains (losses) arising on fixed maturities, available-for-sale (1)			Unrealized holding gains (losses) arising on cash flow hedges (2)			Future policy benefits, DAC and VOBA adjustments			Employee benefit plan adjustment (3)			Total
Balances, April 1, 2017	$	398,293		$	61,618		$	(77,149	)	$	(82,908	)	$	299,854
OCI before reclassifications	236,996			(18,245		)	(55,549		)	—			163,202
Deferred income tax (expense) benefit	(82,949		)	6,386			19,442			—			(57,121		)
AOCI before reclassification, net of tax	154,047			(11,859		)	(36,107		)	—			106,081
Amounts reclassified from AOCI	(2,406		)	574			—			2,146			314
Deferred income tax benefit (expense)	842			(201		)	—			(751		)	(110		)
Amounts reclassified from AOCI, net of tax	(1,564		)	373			—			1,395			204
Balances, June 30, 2017	$	550,776		$	50,132		$	(113,256	)	$	(81,513	)	$	406,139

⁽¹⁾ Reclassifications affect investment gains (losses), net on the condensed consolidated statements of income.

⁽²⁾ Reclassifications affect net investment income on the condensed consolidated statements of income, except for $787 (before tax) which affected interest expense for the three months ended June 30, 2017.

⁽³⁾ The adjustments for defined benefit plans are included in the computation of net periodic (benefit) cost of employee benefit plans (see note 11 for additional details).

28

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

	Six Months Ended June 30, 2018
	Unrealized holding gains (losses) arising on fixed maturities, available-for-sale (1)			Unrealized holding gains (losses) arising on cash flow hedges (2)			Future policy benefits, DAC and VOBA adjustments			Employee benefit plan adjustment (3)			Total
Balances, January 1, 2018	$	544,887		$	103,529		$	(116,267	)	$	(91,192	)	$	440,957
Change in estimate of tax reform impact	108,846			(83,806		)	(25,040		)	—			—
OCI before reclassifications	(813,514		)	52,443			154,362			—			(606,709		)
Deferred income tax benefit (expense)	170,838			(11,013		)	(32,416		)	—			127,409
AOCI before reclassification, net of tax	(642,676		)	41,430			121,946			—			(479,300		)
Amounts reclassified from AOCI	(8,101		)	(9,206		)	—			1,159			(16,148		)
Deferred income tax benefit (expense)	1,701			1,933			—			(243		)	3,391
Amounts reclassified from AOCI, net of tax	(6,400		)	(7,273		)	—			916			(12,757		)
Balances, June 30, 2018	$	4,657		$	53,880		$	(19,361	)	$	(90,276	)	$	(51,100	)

⁽¹⁾ Reclassifications affect investment gains (losses), net on the condensed consolidated statements of income.

⁽²⁾ Reclassifications affect net investment income on the condensed consolidated statements of income, except for $(632)(before tax) which affected interest expense for the six months ended June 30, 2018.

⁽³⁾ The adjustments for defined benefit plans are included in the computation of net periodic (benefit) cost of employee benefit plans (see note 11 for additional details).

	Six Months Ended June 30, 2017
	Unrealized holding gains (losses) arising on fixed maturities, available-for-sale (1)			Unrealized holding gains (losses) arising on cash flow hedges (2)			Future policy benefits, DAC and VOBA adjustments			Employee benefit plan adjustment (3)			Total
Balances, January 1, 2017	$	311,748		$	67,076		$	(58,646	)	$	(84,303	)	$	235,875
OCI before reclassifications	367,225			(25,200		)	(84,015		)	—			258,010
Deferred income tax (expense) benefit	(128,529		)	8,820			29,405			—			(90,304		)
AOCI before reclassification, net of tax	238,696			(16,380		)	(54,610		)	—			167,706
Amounts reclassified from AOCI	511			(868		)	—			4,292			3,935
Deferred income tax (expense) benefit	(179		)	304			—			(1,502		)	(1,377		)
Amounts reclassified from AOCI, net of tax	332			(564		)	—			2,790			2,558
Balances, June 30, 2017	$	550,776		$	50,132		$	(113,256	)	$	(81,513	)	$	406,139

⁽¹⁾ Reclassifications affect investment gains (losses), net on the condensed consolidated statements of income.

⁽²⁾ Reclassifications affect net investment income on the condensed consolidated statements of income, except for $1,667 (before tax) which affected interest expense for the six months ended June 30, 2017.

⁽³⁾ The adjustments for defined benefit plans are included in the computation of net periodic (benefit) cost of employee benefit plans (see note 11 for additional details).

10.  Revenues

Fee Income Revenue Recognition

Fee income is recognized upon transfer of control of promised services when provided to customers in an amount that reflects the consideration expected to be received in exchange for those services. Fee income can be based on a rate per plan or per participant, percentage of assets under management or administration, or rate based on the services provided.

29

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

Certain recordkeeping and administrative contracts include non-performance penalties if certain customer satisfaction metrics are not met. The Company estimates a reduction in fee income for non-performance penalties based on an analysis of historical loss.

The sources of fee income from contracts with customers include:

Administration, Recordkeeping, Servicing, and Distribution Fees

Fees earned for providing recordkeeping, shareholder servicing and distribution of funds, administrative, trustee, and custodial services for retirement plan sponsors, plan participants, insurance policy holders and IRA account holders. Recordkeeping contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for the individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. These fees are primarily earned over time (i.e. services are rendered daily) and are calculated as a percentage of assets under administration or as a rate per plan or per participants in a plan. These fees also include service revenues that are recognized as services are rendered and are based upon established billing rates. Such services include loan processing and postage fees. Fees are generally invoiced quarterly and are either deducted directly from plan or participant assets or due within 30 days.

Investment Advisory and Asset Management Fees

Fees earned for investment advisory and asset management and administrative services to retirement plan sponsors, plan participants, insurance policyholders and IRA accountholders, and affiliates of the Company. These fees are primarily earned over time (i.e. services are rendered daily) and are calculated as a percentage of average daily net assets under management or are based upon established billing rates. Fees are generally invoiced quarterly and due within 30 days or are deducted directly from plan, participant, or other investment accounts.

Other Fees

Other fees includes insurance product related fees earned under the guidance of Topic 944, Financial Services - Insurance such as fees for certain variable annuity guaranteed death benefits and insurance risk charges.

The following table presents fee income disaggregated by type of services and segment:

	Three Months Ended June 30, 2018
	Individual Markets		Empower Retirement		Other		Total
Administration, recordkeeping and servicing fees	$	1,162	$	167,348	$	—	$	168,510
Investment advisory and asset management fees	3,443		68,680		1,684		73,807
Other fee income	28,562		15,817		—		44,379
Total Fee Income	$	33,167	$	251,845	$	1,684	$	286,696

	Six Months Ended June 30, 2018
	Individual Markets		Empower Retirement		Other		Total
Administration, recordkeeping and servicing fees	$	2,302	$	325,199	$	—	$	327,501
Investment advisory and asset management fees	6,698		136,970		3,563		147,231
Other fee income	55,795		32,133		—		87,928
Total Fee Income	$	64,795	$	494,302	$	3,563	$	562,660

At June 30, 2018 and December 31, 2017, included in other assets are customer contract receivables of $246,719 and $234,256, respectively. The Company did not have material bad debt expense during the three and six months ended June 30, 2018.

30

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

Assets Recognized from the Costs to Obtain and Fulfill a Contract

The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it is expected that the costs are recoverable and the benefit of those costs will be longer than one year. The Company also recognizes an asset for costs that relate directly to fulfilling a contract and are expected to be recovered. At June 30, 2018, the Company included deferred contract costs related to ASC 606 of $44,528 in the DAC and VOBA balance in the condensed consolidated balance sheet.

11.  Employee Benefit Plans

Net periodic cost (benefit) of the Defined Benefit Pension, Post-Retirement Medical, and Supplemental Executive Retirement plans included in general insurance expenses in the accompanying condensed consolidated statements of income includes the following components:

	Three Months Ended June 30,
	Defined Benefit  Pension Plan						Post-Retirement  Medical Plan						Supplemental Executive Retirement Plan						Total
	2018			2017			2018			2017			2018			2017			2018			2017
Components of net periodic cost (benefit):
Service cost	$	—		$	1,333		$	376		$	357		$	—		$	(4	)	$	376		$	1,686
Interest cost	5,709			6,121			172			188			339			405			6,220			6,714
Expected return on plan assets	(5,331		)	(5,118		)	—			—			—			—			(5,331		)	(5,118		)
Amortization of unrecognized prior service costs (benefits)	—			—			(5		)	(52		)	81			125			76			73
Amortization of losses (gains) from earlier periods	584			2,199			(70		)	(113		)	(11		)	(13		)	503			2,073
Net periodic cost (benefit)	$	962		$	4,535		$	473		$	380		$	409		$	513		$	1,844		$	5,428

	Six Months Ended June 30,
	Defined Benefit  Pension Plan						Post-Retirement  Medical Plan						Supplemental Executive Retirement Plan						Total
	2018			2017			2018			2017			2018			2017			2018			2017
Components of net periodic cost (benefit):
Service cost	$	—		$	(734	)	$	752		$	714		$	—		$	(8	)	$	752		$	(28	)
Interest cost	11,419			12,242			344			376			678			810			12,441			13,428
Expected return on plan assets	(10,661		)	(10,236		)	—			—			—			—			(10,661		)	(10,236		)
Amortization of unrecognized prior service costs (benefits)	—			—			(10		)	(104		)	162			250			152			146
Amortization of losses (gains) from earlier periods	1,168			4,398			(138		)	(226		)	(23		)	(26		)	1,007			4,146
Net periodic cost (benefit)	$	1,926		$	5,670		$	948		$	760		$	817		$	1,026		$	3,691		$	7,456

The Company expects to make payments of approximately $234 with respect to its Post-Retirement Medical Plan and $2,398 with respect to its Supplemental Executive Retirement Plan during the year ended December 31, 2018.  The Company does not expect to make contributions to its Defined Benefit Pension Plan during the year ended December 31, 2018.  A December 31 measurement date is used for the employee benefit plans.

31

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

The following table summarizes payments made to the Post-Retirement Medical Plan and the Supplemental Executive Retirement Plan:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Payments to the Post-Retirement Medical Plan	$	34	$	207	$	117	$	376
Payments to the Supplemental Executive Retirement Plan	599		834		1,199		1,668

12.  Income Taxes

The provision for income taxes is comprised of the following:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Current expense	$	22,327	$	18,300	$	6,556	$	31,260
Deferred expense	4,924		7,868		34,248		12,026
Total income tax provision	$	27,251	$	26,168	$	40,804	$	43,286

The following table presents a reconciliation between the statutory federal income tax rate and the Company’s effective income tax rate:

	Six Months Ended June 30,
	2018		2017
Statutory federal income tax rate	21.0	%	35.0	%
Income tax effect of:
Investment income not subject to federal tax	(2.0	)%	(3.4	)%
Tax credits	(0.6	)%	(0.6	)%
State income taxes, net of federal benefit	2.7	%	2.5	%
Other, net	0.6	%	0.3	%
Effective income tax rate	21.7	%	33.8	%

The effective income tax rate from continuing operations was 21.7% for the six months endedJune 30, 2018, compared with 33.8% for the same period in 2017. The decrease in effective income tax rate for the six months endedJune 30, 2018, compared with the same period in 2017, was primarily the result of the passage of the Tax Reconciliation Act, which reduced the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018.

The Company recorded an increase of $1,924 and an increase of $3,714 in unrecognized tax benefits during the six months ended June 30, 2018, and 2017, respectively. The Company anticipates additional increases to its unrecognized tax benefits of $3,000 to $4,000 in the next twelve months. The Company expects that the majority of the increase in its unrecognized tax benefits will not impact the effective tax rate.

The Company files income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U.S. federal income tax examinations by tax authorities for years 2013 and prior.  Tax years 2014 through 2016 are open to federal examination by the Internal Revenue Service (“IRS”).  The Company does not expect significant increases or decreases to unrecognized tax benefits relating to federal, state, or local audits.

13.  Segment Information

The Chief Operating Decision Maker (“CODM”) of the Company is also the Chief Executive Officer (“CEO”) of the Company and Lifeco U.S. The CODM reviews the financial information for the purposes of assessing performance and allocating

32

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

resources based upon the results of Lifeco U.S. and other U.S. affiliates prepared in accordance with International Financial Reporting Standards. The CODM, in his capacity as CEO of the Company, reviews the Company’s financial information only

in connection with the quarterly and annual reports that are filed with the Securities and Exchange Commission (“SEC”).

Consequently, the Company does not provide its discrete financial information to the CODM to be regularly reviewed to make

decisions about resources to be allocated or to assess performance. For purposes of SEC reporting requirements, the Company

has chosen to present its financial information in three segments, notwithstanding the above. The three segments are: Individual Markets, Empower Retirement, and Other. 

Individual Markets

The Individual Markets reporting and operating segment distributes life insurance and individual annuity products to both individuals and businesses through various distribution channels.  Life insurance products in-force include participating and non-participating term life, whole life, universal life, and variable universal life.

Empower Retirement

The Empower Retirement reporting and operating segment provides various retirement plan products and investment options as well as comprehensive administrative and record-keeping services for financial institutions and employers, which include educational, advisory, enrollment, and communication services for employer-sponsored defined contribution plans and associated defined benefit plans.

Other

The Company’s Other reporting segment is substantially comprised of activity under the assumption of reinsurance between Great-West Life & Annuity Insurance Company of South Carolina (“GWSC”), a wholly owned subsidiary, and The Canada Life Assurance Company (“CLAC”) (“the GWSC operating segment”), corporate items not directly allocated to the other operating segments, and interest expense on long-term debt.

The accounting principles used to determine segment results are the same as those used in the consolidated financial statements.  The Company evaluates performance of its reportable segments based on their profitability from operations after income taxes. Inter-segment transactions and balances have been eliminated in consolidation.  The Company’s operations are not materially dependent on one or a few customers, brokers, or agents. The following tables summarize segment financial information:

	Three Months Ended June 30, 2018
	Individual		Empower
	Markets		Retirement		Other		Total
Revenue:
Premium income	$	49,955	$	1,086	$	27,114	$	78,155
Fee income	33,167		251,845		1,684		286,696
Other revenue	—		3,077		—		3,077
Net investment income	197,403		117,289		12,779		327,471
Investment gains (losses), net	32,117		8,138		1		40,256
Total revenues	312,642		381,435		41,578		735,655
Benefits and expenses:
Policyholder benefits	201,554		53,968		5,164		260,686
Operating expenses	58,422		258,871		31,797		349,090
Total benefits and expenses	259,976		312,839		36,961		609,776
Income before income taxes	52,666		68,596		4,617		125,879
Income tax expense	10,135		16,009		1,107		27,251
Net income	$	42,531	$	52,587	$	3,510	$	98,628

33

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

	Three Months Ended June 30, 2017
	Individual		Empower
	Markets		Retirement		Other			Total
Revenue:
Premium income	$	44,701	$	1,052	$	21,910		$	67,663
Fee income	29,199		236,573		1,566			267,338
Other revenue	—		3,661		—			3,661
Net investment income	192,788		92,756		11,677			297,221
Realized investment gains (losses), net	4,037		18,011		16			22,064
Total revenues	270,725		352,053		35,169			657,947
Benefits and expenses:
Policyholder benefits	198,171		50,702		20,671			269,544
Operating expenses	47,420		249,178		15,813			312,411
Total benefits and expenses	245,591		299,880		36,484			581,955
Income (loss) before income taxes	25,134		52,173		(1,315		)	75,992
Income tax expense (benefit)	8,531		17,996		(359		)	26,168
Net income (loss)	$	16,603	$	34,177	$	(956	)	$	49,824

	Six Months Ended June 30, 2018
	Individual		Empower
	Markets		Retirement			Other		Total
Revenue:
Premium income	$	173,540	$	1,675		$	47,621	$	222,836
Fee income	64,795		494,302			3,563		562,660
Other revenue	—		6,062			—		6,062
Net investment income	394,732		246,297			24,583		665,612
Investment gains (losses), net	15,447		(18,984		)	50		(3,487		)
Total revenues	648,514		729,352			75,817		1,453,683
Benefits and expenses:
Policyholder benefits	473,562		105,247			20,461		599,270
Operating expenses	101,024		518,752			46,547		666,323
Total benefits and expenses	574,586		623,999			67,008		1,265,593
Income before income taxes	73,928		105,353			8,809		188,090
Income tax expense	14,033		24,777			1,994		40,804
Net income	$	59,895	$	80,576		$	6,815	$	147,286

34

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

	Six Months Ended June 30, 2017
	Individual		Empower
	Markets		Retirement		Other			Total
Revenue:
Premium income	$	176,260	$	1,143	$	42,501		$	219,904
Fee income	55,180		463,892		3,381			522,453
Other revenue	—		6,045		—			6,045
Net investment income	376,993		210,375		23,323			610,691
Realized investment gains (losses), net	4,622		5,695		(7		)	10,310
Total revenues	613,055		687,150		69,198			1,369,403
Benefits and expenses:
Policyholder benefits	468,259		98,330		42,382			608,971
Operating expenses	85,807		504,941		41,746			632,494
Total benefits and expenses	554,066		603,271		84,128			1,241,465
Income (loss) before income taxes	58,989		83,879		(14,930		)	127,938
Income tax expense (benefit)	20,182		28,421		(5,317		)	43,286
Net income (loss)	$	38,807	$	55,458	$	(9,613	)	$	84,652

14.  Commitments and Contingencies

Commitments

The Company has a revolving credit facility agreement in the amount of $50,000 for general corporate purposes.  The credit facility expires on March 1, 2023.  Interest accrues at a rate dependent on various conditions and terms of borrowings.  The agreement requires, among other things, the Company to maintain a minimum adjusted net worth of $1,022,680, as defined in the credit facility agreement (compiled on the statutory accounting basis prescribed by the National Association of Insurance Commissioners), at any time.  The Company was in compliance with all covenants at June 30, 2018 and December 31, 2017.  At June 30, 2018 and December 31, 2017, there were no outstanding amounts related to the credit facility.

GWL&A Financial has a letter of credit for the benefit of GWSC for capital support in the amount of $70,000 and which

renews annually until the Company terminates it under the provisions specified in the agreement. At June 30, 2018 and December 31, 2017, there were no outstanding amounts related to the letter of credit.

In addition, the Company has other letters of credit with a total amount of $9,095, renewable annually for an indefinite period of time. At June 30, 2018 and December 31, 2017, there were no outstanding amounts related to those letters of credit.

The Company makes commitments to fund partnership interests, mortgage loans on real estate, and other investments in the normal course of its business.  The amounts of these unfunded commitments at June 30, 2018 and December 31, 2017, were as follows:

	June 30, 2018		December 31, 2017
Due in less than one year	$	269,760	$	312,152
Due within one to three years	—		1,090
Total	$	269,760	$	313,242

Included in the total unfunded commitments at June 30, 2018 and December 31, 2017, is $119,731and $114,726, respectively, related to limited partnership interests, all of which is due within one year from the dates indicated.

35

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

Notes to Condensed Consolidated Financial Statements

(Dollars in Thousands)

(Unaudited)

Contingencies

From time to time, the Company may be threatened with, or named as a defendant in, lawsuits, arbitrations, and administrative claims. Any such claims that are decided against the Company could harm the Company’s business. The Company is also subject to periodic regulatory audits and inspections which could result in fines or other disciplinary actions. Unfavorable outcomes in such matters may result in a material impact on the Company's financial position, results of operations, or cash flows.

The Company is defending lawsuits relating to the costs and features of certain retirement or fund products. Management believes the claims are without merit and will defend these actions. Based on the information known, these actions will not have a material adverse effect on the consolidated financial position of the Company.

The Company is involved in other various legal proceedings that arise in the ordinary course of its business.  In the opinion of management, after consultation with counsel, the likelihood of loss from the resolution of these proceedings is remote and/or the estimated loss is not expected to have a material effect on the Company’s consolidated financial position, results of its operations, or cash flows.

15.  Subsequent Events

On July 25, 2018, the Company’s Board of Directors declared dividends of$30,000, to be paid on September 28, 2018, to its sole shareholder, GWL&A Financial.

36

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

As used in this Form 10-Q, the “Company” refers to Great-West Life & Annuity Insurance Company, a stock life insurance company originally organized on March 28, 1907 and domiciled in the state of Colorado, and its subsidiaries.

This Form 10-Q contains forward-looking statements.  Forward-looking statements are statements not based on historical information and that relate to future operations, strategies, financial results, or other developments.  In particular, statements using words such as “may,” “would,” “could,” “should,” “estimates,” “expected,” “anticipate,” “believe,” or words of similar import generally involve forward-looking statements.  Without limiting the foregoing, forward-looking statements include statements that represent the Company’s beliefs concerning future or projected levels of sales of its products, investment spreads or yields, or the earnings or profitability of the Company’s activities.

Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond the Company’s control and many of which, with respect to future business decisions, are subject to change.  Some of these risks are described in “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.  These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company.  Whether or not actual results differ materially from forward-looking statements may depend on numerous foreseeable and unforeseeable events or developments, some of which may be global or national in scope, such as general economic conditions and interest rates, some of which may be related to the insurance industry generally, such as pricing competition, regulatory developments and industry consolidation, and others of which may relate to the Company specifically, such as credit, volatility, and other risks associated with its investment portfolio and other factors. 

Readers should also consider other matters, including any risks and uncertainties, discussed in documents filed by the Company and certain of its subsidiaries with the Securities and Exchange Commission. The following discussion addresses the Company’s results of operations for the three and six months ended June 30, 2018, compared with the same period in 2017.  This discussion should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” to which the reader is directed for additional information.

Recent Events

On April 6, 2016, the U.S. Department of Labor (“DOL”) issued a rule redefining and expanding who is a fiduciary by reason of providing investment advice to a retirement plan or holder of an individual retirement account. The DOL issued an 18-month delay for full compliance with the rule to July 1, 2019. However, on March 15, 2018, the United States Court of Appeals for the Fifth Circuit released an opinion vacating the rule in its entirety and later in June 2018 issued a mandate making the Court’s decision effective.

On April 18, 2018, the Securities and Exchange Commission released its proposal on the best interest standards applicable to brokers and advisors. The Company has provided comments to the SEC. The Company will monitor any developments or proposed revisions and is preparing to comply with the standards.

The Tax Reconciliation Act, which was signed in December 2017, among other changes, lowered the federal income tax rate from 35% to 21% effective on January 1, 2018. As a result, net earnings in 2018 reflect net income, tax effected at the lower 21% rate. Other provisions of the tax bill did not have a material effect on year-to-date taxable income in 2018.

37

Current Market Conditions

The S&P 500 index at June 30, 2018 was up by 3% compared to March 31, 2018 and up by 2% compared to January 1, 2018. The S&P 500 index at June 30, 2017 was up by 3% compared to March 31, 2017 and up by 8% compared to January 1, 2017.  The average of the S&P 500 index was up by 13% and 15% during the three and six months endedJune 30, 2018, when compared to the same period in 2017.

	2018			2017
S&P 500 Index	Close	Average in Quarter	Average for Year to Date	Close	Average in Quarter	Average for Year to Date
June 30	2,718	2,704	2,718	2,423	2,396	2,360
March 31	2,641	2,733	2,733	2,363	2,324	2,324
January 1	2,674			2,239

Variable asset-based fees earned by the Company fluctuate with changes in participant account balances. Participant account balances change due to cash flow and unrealized market gains and losses, which are primarily associated with changes in the U.S. equities market. Fee income increased for the three and six months ended June 30, 2018, when compared to the same period in 2017. For the three and six months ended June 30, 2018, the increase was primarily due to higher asset-based fees, driven by growth in these assets, due to positive net cash flows.

The 10-year U.S. Treasury rate at June 30, 2018, was up by 11 basis points as compared to March 31, 2018 and was up by

45 basis points as compared to January 1, 2018. The rate at June 30, 2017 was down by 4 basis points as compared to March 31, 2017 and was down by 14 basis points as compared to January 1, 2017. The average of the 10-year U.S. Treasury rate during the three months ended June 30, 2018, was up by 66 basis points when compared to 2017 and the rate during the six months ended June 30, 2018 was up by 49 basis points when compared to 2017.

	2018						2017
10-Year Treasury Rate	Close		Average in Quarter		Average for Year to Date		Close		Average in Quarter		Average for Year to Date
June 30	2.85	%	2.92	%	2.84	%	2.31	%	2.26	%	2.35	%
March 31	2.74	%	2.76	%	2.76	%	2.35	%	2.45	%	2.45	%
January 1	2.40	%					2.45	%

Unrealized gains on fixed maturity investments fluctuate with changes in the prevailing interest rates. When interest rates decrease, market values of fixed maturity investments generally increase, and vice-versa. The Company has recorded in other comprehensive income unfavorable changes in unrealized gains (losses), net, on fixed maturity investments, of $357 million and $825 million for the three and six months ended June 30, 2018, compared to favorable changes of $235 million and $369 million for the three and six months ended June 30, 2017. This resulted in a decrease in accumulated other comprehensive income (loss), net of policy holder related amounts, and deferred taxes.

The Company employs hedging strategies for the purpose of managing the interest rate, foreign currency exchange rate, and equity market risks impacting the Company’s business. For some derivative instruments, hedge accounting is either not elected or the transactions are not eligible for hedge accounting; therefore all gains or losses from these transactions are recorded in the condensed consolidated statement of income. As a result, fluctuations in interest rates, foreign currencies, or equity markets may cause the Company to experience volatility in net income. For the three and six months ended June 30, 2018, the Company recorded losses on interest rate swaps in the condensed consolidated statement of income of $3 million and $14 million, compared to gains of $5 million and $3 million, respectively in 2017. For the three and six months ended June 30, 2018, the Company recorded gains on cross-currency swaps in the condensed consolidated statement of income of $41 million and $13 million, compared to losses of $8 million and $22 million, respectively in 2017. For the three and six months ended June 30, 2018, the Company recorded realized losses on forward settling to be announced (“TBA”) securities of $2 million and $22 million, compared to gains of $19 million and $13 million, respectively in 2017.

38

Reconciliation of Net Income to Adjusted Operating Income

The Company uses the same accounting policies and procedures to measure adjusted operating income as it uses to measure consolidated net income. The Company employs hedging strategies for the purpose of managing the interest rate, foreign currency exchange rate, and equity market risks impacting the Company’s business.  For some derivative instruments, hedge accounting is either not elected or the transactions are not eligible for hedge accounting; therefore, all gains or losses from these transactions are recorded in the consolidated statement of income.  As a result, fluctuations in interest rates, foreign currencies, or equity markets may cause the Company to experience volatility in net income. As such, the Company has defined adjusted operating income as net income, excluding realized and unrealized gains and losses on investments and derivatives and their related tax effect. Adjusted operating income should not be viewed as a substitute for net income prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In addition, the Company’s adjusted operating income measures may not be comparable to similarly titled measures reported by other companies.

Three months ended June 30, 2018 compared with the three months ended June 30, 2017

The Company believes that the presentation of adjusted operating income enhances the understanding of the Company’s performance by highlighting the results of operations and the underlying profitability drivers of the business. Adjusted operating income should not be viewed as a substitute for U.S. GAAP net income. The following is a summary of the contributions of each segment to net income and a reconciliation of net income to adjusted operating income:

	Three Months Ended June 30,						Increase			Percentage
Income statement data (In millions)	2018			2017			(decrease)			change
Net income
Individual Markets segment	$	42		$	17		$	25		147	%
Empower Retirement segment	53			34			19			56	%
Other segment	4			(1		)	5			500	%
Total net income	99			50			49			98	%
Adjustments to net income
Investment gains (losses), net	40			3			37			1,233	%
Pro-rata tax expense (1)	(9		)	(1		)	(8		)	(800	)%
Adjusted operating income	$	68		$	48		$	20		42	%

⁽¹⁾Current year calculated utilizing estimated tax rate of 21%. Prior year estimated tax rate of 35%.

Investment gains (losses), net, had a favorable change of $37 million, or 1,233%, from $3 million in 2017 to $40 million in 2018. The change was primarily due to favorable cross currency swaps in 2018.

The pro-rata tax expense changed by 8 million, or 800%, from $1 million in 2017 to 9 million in 2018, resulting from the increased investment gains (losses), net in 2018, offset by the U.S. corporate tax rate change from 35% to 21%.

39

Six months ended June 30, 2018 compared with the six months ended June 30, 2017

The following is a summary of the contributions of each segment to the net income and a reconciliation of net income to operating income:

	Six Months Ended June 30,						Increase			Percentage
Income statement data (In millions)	2018			2017			(decrease)			change
Net income (loss)
Individual Markets segment	$	60		$	39		$	21		54	%
Empower Retirement segment	80			56			24			43	%
Other segment	7			(10		)	17			170	%
Total net income	147			85			62			73	%
Adjustments to net income (loss)
Investment (losses) gains, net	(4		)	(11		)	7			64	%
Pro-rata tax benefit (1)	1			4			(3		)	(75	)%
Adjusted operating income	$	150		$	92		$	58		63	%

⁽¹⁾Current year calculated utilizing estimated tax rate of 21%. Prior year estimated tax rate of 35%.

Investment (losses) gains, net, had a favorable change of $7 million, or 64%, from a loss of $11 million in 2017 to a loss of $4 million in 2018. The change was primarily due to favorable cross currency swaps in 2018.

The pro-rata tax benefit changed by $3 million, or 75%, from $4 million in 2017 to $1 million in 2018,resulting from the decreased investment (losses) gains, net in 2018, offset by the U.S. corporate tax rate change from 35% to 21%.

40

Company Results of Operations

Three months ended June 30, 2018 compared with the three months ended June 30, 2017

The following is a summary of certain financial data of the Company:

	Three Months Ended June 30,				Increase			Percentage
Income statement data (In millions)	2018		2017		(decrease)			change
Premium income	$	78	$	68	$	10		15	%
Fee income	287		268		19			7	%
Other revenue	3		4		(1		)	(25	)%
Adjusted net investment income	328		316		12			4	%
Total adjusted operating revenues	696		656		40			6	%
Policyholder benefits	261		269		(8		)	(3	)%
Operating expenses	349		313		36			12	%
Total benefits and expenses	610		582		28			5	%
Adjusted operating income before income taxes	86		74		12			16	%
Adjusted income tax expense	18		26		(8		)	(31	)%
Adjusted operating income	$	68	$	48	$	20		42	%

The Company’s consolidated adjusted operating income had a favorable change of $20 million, or 42%, to $68 million for the three months ended June 30, 2018, when compared to the same period in 2017.The change was primarily due to higher fee income, higher adjusted net investment income, higher premium income, lower policyholder benefits and lower adjusted income tax expense, partially offset by higher operating expenses.

Premium income had a favorable change of $10 million, or 15%, to $78 million for the three months ended June 30, 2018, when compared to the same period in 2017 primarily related to higher net premiums collected on group health and disability policies.

Fee income had a favorable change of $19 million, or 7%, to $287 million for the three months ended June 30, 2018, when

compared to the same period in 2017. This change was primarily related to higher asset-based variable fee income. This was driven by growth in assets and an increase in participants.

Adjusted net investment income had a favorable change of $12 million, or 4%, to $328 million. The change was primarily related to higher investment income earned on bonds, mortgages, and policy loans principally as a result of higher invested asset balances and partial recoveries of impairments taken in prior years.

Policyholder benefits had a favorable change of $8 million, or 3%, to $261 million. This was primarily due to a decrease in policy reserves and a decrease in surrender benefits, partially offset by an increase in death benefits and an increase in interest paid to policy holders.

Operating expenses had an unfavorable change of $36 million, or 12%, to $349 million for the three months ended June 30, 2018, when compared to the same period in 2017. The primary driver of this change was higher litigation expenses, higher salaries and higher DAC amortization.

Adjusted income tax expense had a favorable change of $8 million, or 31%, to $18 million for the three months ended June 30, 2018, when compared to the same period in 2017 primarily due to the impact of the U.S. corporate tax rate change.

41

Six months ended June 30, 2018 compared with the six months ended June 30, 2017

The following is a summary of certain financial data of the Company:

	Six Months Ended June 30,				Increase			Percentage
Income statement data (In millions)	2018		2017		(decrease)			change
Premium income	$	223	$	220	$	3		1	%
Fee income	563		522		41			8	%
Other revenue	6		6		—			—	%
Adjusted net investment income	666		632		34			5	%
Total adjusted operating revenues	1,458		1,380		78			6	%
Policyholder benefits	599		609		(10		)	(2	)%
Operating expenses	667		632		35			6	%
Total benefits and expenses	1,266		1,241		25			2	%
Adjusted operating income before income taxes	192		139		53			38	%
Adjusted income tax expense	42		47		(5		)	(11	)%
Adjusted operating income	$	150	$	92	$	58		63	%

The Company’s consolidated adjusted operating income had a favorable change of $58 million, or 63%, to $150 million for the six months ended June 30, 2018, when compared to the same period in 2017.The change was primarily due to higher fee income, higher adjusted net investment income, lower policy holder benefits and lower adjusted income tax expense, partially offset by higher operating expenses.

Fee income had a favorable change of $41 million, or 8%, to $563 million for the six months ended June 30, 2018, when

compared to the same period in 2017. This change was primarily related to higher asset-based variable fee income. This was driven by growth in assets and an increase in participants.

Adjusted net investment income had a favorable change of $34 million, or 5%, to $666 million. The change was primarily related to higher investment income earned on bonds, mortgages, and policy loans principally as a result of higher invested asset balances and partial recoveries of impairments taken in prior years.

Policyholder benefits had a favorable change of $10 million, or 2%, to $599 million for the six months ended June 30, 2018, when compared to the same period in 2017. This was primarily related to a decrease in policy reserves, partially offset by an increase in death benefits and interest paid to policyholders.

Operating expenses had an unfavorable change of $35 million, or 6%, to $667 million for the six months ended June 30, 2018, when compared to the same period in 2017. The primary driver of this change was higher litigation expenses, higher DAC and VOBA amortization and wage inflation.

Adjusted income tax expense had a favorable change of $5 million, or 11%, to $42 million for the six months ended June 30, 2018, when compared to the same period in 2017 primarily due to the impact of the U.S. corporate tax rate change.

42

Individual Markets Segment Results of Operations

Three months ended June 30, 2018 compared with the three months ended June 30, 2017

The following is a summary of certain financial data of the Individual Markets segment:

	Three Months Ended June 30,				Increase			Percentage
Income statement data (In millions)	2018		2017		(decrease)			change
Premium income	$	50	$	45	$	5		11	%
Fee income	33		30		3			10	%
Adjusted net investment income	198		195		3			2	%
Total adjusted operating revenues	281		270		11			4	%
Policyholder benefits	202		198		4			2	%
Operating expenses	58		48		10			21	%
Total benefits and expenses	260		246		14			6	%
Adjusted operating income before income taxes	21		24		(3		)	(13	)%
Adjusted income tax expense	3		8		(5		)	(63	)%
Adjusted operating income	$	18	$	16	$	2		13	%

Adjusted operating income for the Individual Markets segment had a favorable change of $2 million, or 13%, to $18 million during the three months ended June 30, 2018, when compared to the same period in 2017. The change was primarily due to higher premium income, higher fee income, higher adjusted net investment income, and lower adjusted income tax expense, partially offset by higher operating expenses and policyholder benefits.

Premium income had a favorable change of $5 million, or 11%, to $50 million for the three months ended June 30, 2018, when compared to the same period in 2017 primarily related to higher net premiums collected on group health and disability policies.

Fee income had a favorable change of $3 million, or 10%, to $33 million for the three months ended June 30, 2018, when compared to the same period in 2017. This was primarily related to an increase in asset-based variable fee income resulting from increased average asset levels driven by the individual annuity line of business.

Adjusted net investment income had a favorable change of $3 million, or 2%, to $198 million. The change was primarily related to higher investment income earned on bonds, mortgages, and policy loans as a result of higher invested asset balances.

Policyholder benefits had an unfavorable change of $4 million, or 2%, to $202 million primarily due to an increase in death benefits and interest paid to policyholders, partially offset by a decrease in surrender benefits.

Operating expenses had an unfavorable change of $10 million, or 21%, to $58 million for the three months ended June 30, 2018, when compared to the same period in 2017. The primary driver of this change was higher DAC amortization and higher commissions.

Adjusted income tax expense had a favorable change of $5 million, or 63% to $3 million in 2018 primarilydue to the impact of the U.S. corporate tax rate changes.

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Six months ended June 30, 2018 compared with the six months ended June 30, 2017

The following is a summary of certain financial data of the Individual Markets segment:

	Six Months Ended June 30,				Increase			Percentage
Income statement data (In millions)	2018		2017		(decrease)			change
Premium income	$	174	$	176	$	(2	)	(1	)%
Fee income	65		55		10			18	%
Adjusted net investment income	395		385		10			3	%
Total revenues	634		616		18			3	%
Policyholder benefits	474		468		6			1	%
Operating expenses	101		86		15			17	%
Total benefits and expenses	575		554		21			4	%
Adjusted operating income before income taxes	59		62		(3		)	(5	)%
Adjusted income tax expense	11		21		(10		)	(48	)%
Adjusted operating income	$	48	$	41	$	7		17	%

Adjusted operating income for the Individual Markets segment had a favorable change of $7 million, or 17%, to $48 million during the six months ended June 30, 2018, when compared to the same period in 2017. The change was primarily due to higher fee income, higher adjusted net investment income, and lower adjusted income tax expense, partially offset by higher policyholder benefits and higher operating expenses.

Fee income had a favorable change of $10 million, or 18%, to $65 million for the six months ended June 30, 2018, when compared to the same period in 2017. This was primarily related to an increase in asset-based variable fee income resulting from increased average asset levels driven by the individual annuity line of business.

Adjusted net investment income had a favorable change of $10 million, or 3%, to $395 million. The change was primarily related to higher investment income earned on bonds, mortgages, and policy loans as a result of higher invested asset balances.

Policyholder benefits had an unfavorable change of $6 million, or 1%, to $474 million. This was primarily due to an increase in death benefits and interest paid to policy holders, partially offset by a decrease in policy reserves and group health and disability benefits.

Operating expenses had an unfavorable change of $15 million, or 17%, to $101 million for the six months ended June 30, 2018, when compared to the same period in 2017. The primary driver of this change is higher DAC amortization and lower deferrals.

Adjusted income tax expense had a favorable change of $10 million, or 48% to $11 million in 2018 primarily due to the impact of the U.S. corporate tax rate changes.

44

Empower Retirement Segment Results of Operations

Three months ended June 30, 2018 compared with the three months ended June 30, 2017

The following is a summary of certain financial data of the Empower Retirement segment:

	Three Months Ended June 30,				Increase			Percentage
Income statement data (In millions)	2018		2017		(decrease)			change
Premium income	$	1	$	1	$	—		—	%
Fee income	252		$	236	16			7	%
Other revenue	3		4		(1		)	(25	)%
Adjusted net investment income	117		110		7			6	%
Total adjusted operating revenues	373		351		22			6	%
Policyholder benefits	54		51		3			6	%
Operating expenses	259		249		10			4	%
Total benefits and expenses	313		300		13			4	%
Adjusted operating income before income taxes	60		51		9			18	%
Adjusted income tax expense	14		18		(4		)	(22	)%
Adjusted operating income	$	46	$	33	$	13		39	%

Adjusted operating income for the Empower Retirement segment had a favorable change of $13 million, or 39%, to $46 million for the three months ended June 30, 2018, when compared to the same period in 2017. The change was primarily due to higher fee income and higher adjusted net investment income, partially offset by higher operating expenses.

Fee income had a favorable change of $16 million, or 7%, to $252 million for the three months ended June 30, 2018, when compared to the same period in 2017. This change was primarily related to higher asset-based variable fee income. This was driven by growth in assets and an increase in participants.

Adjusted net investment income had a favorable change of $7 million, or 6%, to $117 million for the three months ended June 30, 2018, when compared to the same period in 2017. The change was primarily related to higher investment income earned on bonds and mortgages as a result of higher invested asset balances.

Operating expenses had an unfavorable change of $10 million, or 4%, to $259 million for the three months ended June 30, 2018, when compared to the same period in 2017. The primary driver of this change is higher DAC and contract cost amortization and higher general expenses due to growth in the business.

45

Six months ended June 30, 2018 compared with the six months ended June 30, 2017

The following is a summary of certain financial data of the Empower Retirement segment:

	Six Months Ended June 30,				Increase			Percentage
Income statement data (In millions)	2018		2017		(decrease)			change
Premium income	$	2	$	1	$	1		100	%
Fee income	494		464		30			6	%
Other revenue	6		6		—			—	%
Adjusted net investment income	246		224		22			10	%
Total adjusted operating revenues	748		695		53			8	%
Policyholder benefits	105		99		6			6	%
Operating expenses	519		504		15			3	%
Total benefits and expenses	624		603		21			3	%
Adjusted operating income (loss) before income taxes	124		92		32			35	%
Adjusted income tax expense (benefit)	29		31		(2		)	(6	)%
Adjusted operating income (loss)	$	95	$	61	$	34		56	%

Adjusted operating income for the Empower Retirement segment had a favorable change of $34 million, or 56%, to $95 million for the six months ended June 30, 2018, when compared to the same period in 2017. The change was primarily due to higher fee income and higher adjusted net investment income, partially offset by higher operating expenses.

Fee income had a favorable change of $30 million, or 6%, to $494 million for the six months ended June 30, 2018, when compared to the same period in 2017. This change was primarily related to higher asset-based variable fee income, which was driven by growth in assets and an increase in participants.

Adjusted net investment income had a favorable change of $22 million, or 10%, to $246 million for the six months ended June 30, 2018, when compared to the same period in 2017. The change was primarily related to higher investment income earned on bonds and mortgages principally as a result of higher invested asset balances and partial recoveries of impairments taken in prior years.

Operating expenses had an unfavorable change of $15 million, or 3%, to $519 million for the six months ended June 30, 2018, when compared to the same period in 2017. The primary driver of this change is higher DAC, VOBA and contract cost amortization and higher general expenses due to growth in the business.

46

Other Segment Results of Operations

Three months ended June 30, 2018 compared with the three months ended June 30, 2017

The following is a summary of certain financial data of the Company’s Other segment:

	Three Months Ended June 30,					Increase			Percentage
Income statement data (In millions)	2018		2017			(decrease)			change
Premium income	$	27	$	22		$	5		23	%
Fee income	2		2			—			—	%
Adjusted net investment income	13		11			2			18	%
Total adjusted operating revenues	42		35			7			20	%
Policyholder benefits	5		20			(15		)	(75	)%
Operating expenses	32		16			16			100	%
Total benefits and expenses	37		36			1			3	%
Adjusted operating income (loss) before income taxes	5		(1		)	6			600	%
Adjusted income tax expense (benefit)	1		—			1			100	%
Adjusted operating income (loss)	$	4	$	(1	)	$	5		500	%

Adjusted operating income for the Company’s Other segment had a favorable change of $5 million, or 500%, to an income of $4 million for the three months ended June 30, 2018 compared to a loss of $1 million in 2017. The change in adjusted operating income was primarily due to higher premium income and lower policyholder benefits, partially offset by higher operating expenses.

Premium income had a favorable change of $5 million, or 23%, to $27 million for the three months ended June 30, 2018 primarily due to higher premiums related to post level term policies.

Policyholder benefits expense had a favorable change of $15 million, or 75%, to $5 million for the three months ended June 30, 2018 primarily due to a release of reserves on a closed block of business.

Operating expense had an unfavorable change of $16 million, or 100%, to $32 million for the three months ended June 30, 2018 primarily due to an increase in litigation expenses.

47

Six months ended June 30, 2018 compared with the six months ended June 30, 2017

The following is a summary of certain financial data of the Company’s Other segment:

	Six Months Ended June 30,					Increase			Percentage
Income statement data (In millions)	2018		2017			(decrease)			change
Premium income	$	47	$	43		$	4		9	%
Fee income	4		3			1			33	%
Adjusted net investment income	25		23			2			9	%
Total adjusted operating revenues	76		69			7			10	%
Policyholder benefits	20		42			(22		)	(52	)%
Operating expenses	47		42			5			12	%
Total benefits and expenses	67		84			(17		)	(20	)%
Adjusted operating income (loss) before income taxes	9		(15		)	24			160	%
Adjusted income tax expense (benefit)	2		(5		)	7			140	%
Adjusted operating income (loss)	$	7	$	(10	)	$	17		170	%

Adjusted operating income for the Company’s Other segment had a favorable change of $17 million, or 170%, to an income of $7 million for the six months ended June 30, 2018 compared to a loss of $10 million in 2017. The change in adjusted operating income was primarily due to lower policyholder benefits, partially offset by higher adjusted income tax expense.

Policyholder benefits expense had a favorable change of $22 million, or 52%, to $20 million for the six months ended June 30, 2018 primarily due to a release of reserves on a closed block of business.

Adjusted income tax expense had an unfavorable change of $7 million, or 140%, to an expense of $2 million for the six months ended June 30, 2018 primarily due to higher adjusted operating income before income taxes, partially offset by the impact of the U.S. corporate tax rate changes.

48

Investment Operations

The Company’s primary investment objective is to acquire assets with duration and cash flow characteristics reflective of its liabilities, while meeting industry, size, issuer, and geographic diversification standards.  Formal liquidity and credit quality parameters have also been established.

The Company follows rigorous procedures to control interest rate risk and observes strict asset and liability matching guidelines.  These guidelines ensure that even under changing market conditions, the Company’s assets should meet the cash flow and income requirements of its liabilities. Using dynamic modeling to analyze the effects of a range of possible market changes upon investments and policyholder benefits, the Company works to ensure that its investment portfolio is appropriately structured to fulfill financial obligations to its policyholders.

The following table presents the percentage distribution of the carrying values of the Company’s general account investment portfolio: 

(In millions)	June 30, 2018				December 31, 2017
Fixed maturities, available-for-sale	$	22,763	72.0	%	$	23,593	73.4	%
Fixed maturities, held-for-trading	20		0.1	%	21		0.1	%
Mortgage loans on real estate	4,316		13.6	%	4,005		12.4	%
Policy loans	4,121		13.0	%	4,104		12.8	%
Short-term investments	294		0.9	%	350		1.1	%
Limited partnership interests	64		0.2	%	46		0.1	%
Other investments	53		0.2	%	18		0.1	%
Total investments	$	31,631	100.0	%	$	32,137	100.0	%

Fixed Maturity Investments

Fixed maturity investments include public and privately placed corporate bonds, government bonds, and mortgage-backed and asset-backed securities.  Included in available-for-sale fixed maturities are perpetual debt investments which primarily consist of junior subordinated debt instruments that have no stated maturity date but pay fixed or floating interest in perpetuity.  The Company’s strategy related to mortgage-backed and asset-backed securities is to focus on those investments with low prepayment risk and minimal credit risk.

Private placement investments are generally less marketable than publicly traded assets, yet they typically offer enhanced covenant protection that allows the Company, if necessary, to take appropriate action to protect its investment.  The Company believes that the cost of the additional monitoring and analysis required by private placement investments is more than offset by their enhanced yield.

One of the Company’s primary objectives is to ensure that its fixed maturity portfolio is maintained at a high average credit quality to limit credit risk.  All securities are internally rated by the Company on a basis intended to be similar to that of independent external rating agencies and the Company generally considers ratings from several of these major ratings agencies to develop its internal rating. In addition, the National Association of Insurance Commissioners (“NAIC”) implemented a ratings methodology for residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”), and other structured securities.  The Company may also utilize inputs from this ratings process to develop its internal rating.

The percentage distribution of the estimated fair value of the Company’s fixed maturity portfolio by the Company’s internal credit rating is summarized as follows:

Credit Rating	June 30, 2018		December 31, 2017
AAA	21.0	%	22.7	%
AA	15.5	%	14.9	%
A	33.8	%	33.8	%
BBB	29.0	%	27.7	%
BB and below (Non-investment grade)	0.7	%	0.9	%
Total	100.0	%	100.0	%

49

The June 30, 2018, AAA rating percentage decreased as compared to December 31, 2017, as the Company sold AAA-rated government agency MBS pools to enter into forward settling TBA contracts which are treated as derivatives.

The percentage distribution of the estimated fair value of the corporate sector fixed maturity portfolio, calculated as a percentage of fixed maturities, is summarized as follows:

Sector	June 30, 2018		December 31, 2017
Utility	17.1	%	17.8	%
Finance	15.7	%	14.8	%
Consumer	10.9	%	11.0	%
Natural resources	7.0	%	6.1	%
Transportation	4.8	%	4.2	%
Other	12.3	%	12.6	%

Mortgage Loans on Real Estate

The Company’s mortgage loans on real estate are comprised primarily of domestic commercial collateralized real estate loans.  The mortgage loan portfolio is diversified with regard to geographical markets and commercial real estate property types.  The Company originates, directly or through correspondents, real estate mortgages with the intent to hold to maturity.  The Company’s portfolio includes loans which are fully amortizing, amortizing with a balloon balance at maturity, interest only to maturity, and interest only for a number of years followed by an amortizing period.

Derivatives

The Company uses certain derivatives, such as futures, swaps, forwards, and interest rate swaptions, for purposes of managing the interest rate, foreign currency exchange rate, and equity market risks impacting the Company’s business.  These derivatives, when taken alone, may subject the Company to varying degrees of market and credit risk; however, since used for hedging purposes, these instruments are intended to reduce risk.  For derivative instruments where hedge accounting is either not elected or the transactions are not eligible for hedge accounting, changes in interest rates, foreign currencies, or equity markets may generate derivative gains or losses which may cause the Company to experience volatility in net income.  The Company also uses forward settling TBA securities to gain exposure to the investment risk and return of agency mortgage-backed securities (pass-throughs).  These transactions enhance the return on the Company’s investment portfolio and provide a more liquid and cost effective method of achieving these goals than purchasing or selling individual agency mortgage-backed pools.  The Company controls the credit risk of its over-the-counter derivative contracts through credit approvals, limits, monitoring procedures, and in most cases, requiring collateral.  Risk of loss is generally limited to the portion of the fair value of derivative instruments that exceeds the value of the collateral held and not to the notional or contractual amounts of the derivatives. 

50

Summary of Critical Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to adopt accounting policies to enable them to make a significant variety of accounting and actuarial estimates and assumptions.  These estimates and assumptions are evaluated on an ongoing basis based on historical developments, market conditions, industry trends, and other information that is reasonable given the facts and circumstances for the Company. These critical estimates and assumptions affect, among other things, the reported amounts of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of revenues and expenses.  Actual results can differ from the amounts previously estimated, which were based on information available at the time the estimates were made.

The Company has identified the following accounting policies, judgments, and estimates as critical in that they involve a higher degree of judgment and are subject to a significant degree of variability:

·             Valuation of investments;

·             Impairment of investments;

·             Valuation of derivatives and related hedge accounting;

·             Valuation of DAC and related amortization (including unlocking of assumptions); and

·             Valuation of policy benefit liabilities

A discussion of each of these critical accounting policies may be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Application of Recent Accounting Pronouncements

See Note 2 to the accompanying condensed consolidated financial statements for a discussion of the application of recent accounting pronouncements.

Liquidity and Capital Resources

Liquidity refers to a company’s ability to generate sufficient cash flows to meet the short-term needs of its operations.  The Company manages its operations to create stable, reliable, and cost-effective sources of cash flows to meet all of its obligations.

The principal sources of the Company’s liquidity are premiums and contract deposits, fees, investment income, and investment maturities and sales.  Funds provided from these sources are reasonably predictable and normally exceed liquidity requirements for payment of policy benefits, payments to policy and contractholders in connection with surrenders and withdrawals, and general expenses.  However, since the timing of available funds cannot always be matched precisely to commitments, imbalances may arise when demands for funds exceed those on hand.  A primary liquidity concern regarding cash flows from operations is the risk of early policyholder and contractholder withdrawals.  A primary liquidity concern regarding investment activity is the risk of defaults and market volatility.

In addition, a demand for funds may arise as a result of the Company taking advantage of current investment opportunities.  The sources of the funds that may be required in such situations include the issuance of commercial paper or other debt instruments.

Management believes that the liquidity profile of its assets is sufficient to satisfy the short-term liquidity requirements of reasonably foreseeable scenarios.

Generally, the Company has met its operating requirements by utilizing cash flows from operations and maintaining appropriate levels of liquidity in its investment portfolio.  Liquidity for the Company has remained strong, as evidenced by the amounts of short-term investments and cash and cash equivalents that totaled $301 million and $367 million as of June 30, 2018 and December 31, 2017, respectively.  The June 30, 2018 and December 31, 2017, short-term investments included above exclude any amounts held to settle TBA forward contracts.  In addition,99% of the fixed maturity portfolio carried an investment grade rating at June 30, 2018 and December 31, 2017, which provides significant liquidity to the Company’s overall investment portfolio.

The Company continues to be well capitalized, with sufficient borrowing capacity.  Additionally, the Company anticipates that cash on hand and expected net cash generated by operating activities will exceed the forecasted needs of the business over the next 12 months.  The Company’s financial strength provides the capacity and flexibility to enable it to raise funds in the capital

51

markets through the issuance of commercial paper.  The Company had $99 million and $100 million of commercial paper outstanding as of June 30, 2018 and December 31, 2017, respectively.  The commercial paper has been given a rating of A-1+ by Standard & Poor’s Ratings Services and a rating of P-1 by Moody’s Investors Service, each being the highest rating available. The Company’s issuance of commercial paper is not used to fund daily operations and does not have a significant impact on the Company’s liquidity.

The Company also has available a revolving credit facility agreement with U.S. Bank, which expires on March 1, 2023, in the amount of $50 million for general corporate purposes.  The Company had no borrowings under this credit facility as of or during the six months ended June 30, 2018.  The Company does not anticipate the need for borrowings under this facility and the loss of its availability would not significantly impact its liquidity.

Capital resources provide protection for policyholders and financial strength to support the underwriting of insurance risks and allow for continued business growth.  The amount of capital resources that may be needed is determined by the Company’s senior management and Board of Directors, as well as by regulatory requirements.  The allocation of resources to new long-term business commitments is designed to achieve an attractive return, tempered by considerations of risk and the need to support the Company’s existing business.

Off-Balance Sheet Arrangements

The Company makes commitments to fund partnership interests, mortgage loans on real estate, and other investments in the normal course of its business.  The amounts of these unfunded commitments at June 30, 2018 and December 31, 2017, were $270 million and $313 million, respectively.  The precise timing of the fulfillment of the commitment cannot be predicted; however, all $270 million of the June 30, 2018 balance, and $312 million of the December 31, 2017 balance are due within one year of the dates indicated. The remaining $1 million of the December 31, 2017 balance is due within one to three years. There are no other obligations or liabilities arising from such arrangements that are reasonably likely to become material.

The Company participates in a short-term reverse repurchase program for the purpose of enhancing the total return on its investment portfolio.  This type of transaction involves the purchase of securities with a simultaneous agreement to sell similar securities at a future date at an agreed-upon price.  In exchange, the counterparty financial institutions put non-cash collateral on deposit with a third-party custodian on behalf of the Company.  The amount of securities purchased in connection with these transactions was zero and $23 million at June 30, 2018 and December 31, 2017, respectively.  Non-cash collateral on deposit with the third-party custodian on the Company’s behalf was zero and $24 million at June 30, 2018 and December 31, 2017, respectively, which cannot be sold or re-pledged and which has not been recorded on the condensed consolidated balance sheets. Collateral related to the reverse repurchase agreements generally consists of U.S. government or U.S. government agency securities.

The Company participates in a securities lending program in which the Company lends securities that are held as part of its general account investment portfolio to third parties for the purpose of enhancing the total return on its investment portfolio.  The Company generally requires initial collateral in an amount greater than or equal to 102% of the fair value of domestic securities loaned and 105% of foreign securities loaned.  The Company received securities with a fair value of $17 million as collateral at June 30, 2018, which have not been recorded on the condensed consolidated balance sheets as the Company does not have effective control. There were no securities on loan and therefore no securities were received as collateral at December 31, 2017.

Item 3.Quantitative and Qualitative Disclosures about Market Risk

The Company has established processes and procedures to effectively identify, monitor, measure, and manage the risks associated with its invested assets and its interest rate sensitive insurance and annuity products.  Management has identified investment portfolio management, including the use of derivative instruments, insurance and annuity product design, and asset/liability management as three critical means to accomplish a successful risk management program.

The major risks to which the Company is exposed include the following: 

• Market risk - the potential of loss arising from adverse fluctuations in interest rates and equity market prices and the levels of their volatility.

• Insurance risk - the potential of loss resulting from claims, persistency, and expense experience exceeding that assumed in the liabilities held.

• Credit risk - the potential of loss arising from an obligator’s inability or unwillingness to meet its obligations to the Company.

52

• Operational and corporate risk - the potential of direct or indirect loss resulting from inadequate or failed internal processes, people and systems, or from other external events.

A discussion of each of these risk factors may be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, under Item 7A, “Quantitative and Qualitative Disclosures About Market Risk.”

Item 4.        Controls and Procedures

Disclosure Controls and Procedures

The Company’s management, with the participation of its President and Chief Executive Officer and its Principal Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”).  The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in reports it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and to ensure that the information required to be disclosed by the Company in reports that it files under the Exchange Act is accumulated and communicated to the Company’s management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, the President and Chief Executive Officer and Principal Financial Officer have concluded that the Company’s disclosure controls and procedures are effective as of June 30, 2018.

Changes in Internal Control over Financial Reporting

As disclosed in Item 9A, “Controls and Procedures,” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, management concluded that the Company maintained effective internal control over financial reporting. There has been no significant change in the control environment for the three and six months ended June 30, 2018. Management is committed to continuing to improve its internal control processes and will continue to review its financial reporting controls and procedures.

53

Part IIOther Information

Item 1.Legal Proceedings

From time to time, the Company may be threatened with, or named as a defendant in, lawsuits, arbitrations, and administrative claims. Any such claims that are decided against the Company could harm the Company’s business. The Company is also subject to periodic regulatory audits and inspections which could result in fines or other disciplinary actions. Unfavorable outcomes in such matters may result in a material impact on the Company's financial position, results of operations, or cash flows.

The Company is defending lawsuits relating to the costs and features of certain of its retirement or fund products. Management believes the claims are without merit and will defend these actions. Based on the information known, these actions will not have a material adverse effect on the consolidated financial position of the Company.

The Company is involved in other various legal proceedings that arise in the ordinary course of its business.  In the opinion of management, after consultation with counsel, the likelihood of loss from the resolution of these proceedings is remote and/or the estimated loss is not expected to have a material effect on the Company’s consolidated financial position, results of its operations or cash flows.

Item 1A. Risk Factors

In the normal course of its business, the Company is exposed to certain operational, regulatory, and financial risks and uncertainties.  The most significant risks include the following:

• Competition could negatively affect the ability of the Company to maintain or increase market share or profitability.

• The insurance and financial services industries are heavily regulated and changes in regulation may reduce profitability.

• A downgrade or potential downgrade in the Company’s financial strength or claims paying ratings could result in a loss of business and negatively affect results of operations and financial condition.

• Deviations from assumptions regarding future persistency, mortality, and interest rates used in calculating liabilities for future policyholder benefits and claims could adversely affect the Company’s results of operations and financial condition.

• The Company may be required to accelerate the amortization of DAC or VOBA, or recognize impairment in the value of goodwill or other intangible assets, which could adversely affect its results of operations and financial condition.

• If the companies that provide reinsurance default or fail to perform or the Company is unable to obtain adequate reinsurance for some of the risks underwritten, the Company could incur significant losses adversely affecting results of operations and financial condition.

• Interest rate fluctuations could have a negative impact on results of operations and financial condition.

• Market fluctuations and general economic conditions may adversely affect results of operations and financial condition.

• Changes in U.S. federal income tax law could make some of the Company’s products less attractive to consumers and increase its tax costs.

• The Company may be subject to litigation resulting in substantial awards or settlements and this may adversely affect its reputation and results of operations.

• The Company’s risk management policies and procedures may leave it exposed to unidentified or unanticipated risk, which could adversely affect its business, results of operations, and financial condition.

• The Company may experience difficulty in marketing and distributing products through its current and future distribution channels.

54

• A failure in cyber or information security systems could result in a loss or disclosure of confidential information, damage the Company’s reputation, and could impair its ability to conduct business effectively.

• The Company could face difficulties, unforeseen liabilities, or asset impairments arising from business acquisitions or integrations and managing growth of such businesses.

• Counterparties with whom the Company transfers risk may be unable or unwilling to do business with the Company.

• The Company may not be able to secure financing to meet the liquidity or capital needs of the Company.

55

Item 6.Exhibits

The documents identified below are filed as a part of this report:

Index to Exhibits

Exhibit Number	Title
3(ii)	Bylaws of Great-West Life & Annuity Insurance Company
31.1	Rule 13a-14(a)/15-d14(a) Certification
31.2	Rule 13a-14(a)/15-d14(a) Certification
32	18 U.S.C. 1350 Certification
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

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.

Great-West Life & Annuity Insurance Company

By:	/s/	Kara Roe	Date:	August 14, 2018
		Kara Roe
		Vice President, Controller, and Principal Accounting Officer

56

EX-3.II

        Exhibit 3(ii)

BYLAWS OF GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

ARTICLE I

MEETING OF SHAREHOLDERS

SECTION 1. The Annual Meeting of Shareholders shall be held at such time, on such date and at such place within or without the State of Colorado as the Board of Directors may determine from time to time.

SECTION 2. Special Meetings of Shareholders may be called by the Chairman or a majority of the Board of Directors at any time upon written notice given pursuant to law (which notice may be waived in accordance with law).

ARTICLE II

BOARD OF DIRECTORS

SECTION 1. The number of directors may be fixed by the Board of Directors from time to time to such number, not less than seven (7) nor more than twenty-five (25), as the Board may determine.

SECTION 2. Any vacancy on the Board of Directors, whether resulting from an increase in the number of directors or otherwise, may be filled by the affirmative vote of a majority of directors then in office, even though less than a quorum, or by a sole remaining director. Directors shall be elected by the Board of Directors to serve until the next annual meeting of the Shareholders.

SECTION 3. A meeting of the Board may be called by the Chairman of the Board, by the Chairman of the Executive Committee, by such other Director as may from time to time be authorized by the Chairman of the Board, or by a majority of the Directors, on not less than 48 hours notice to the members of the Board specifying the place, date and time of the meeting. Meetings may be held at any time without notice if all members of the Board waive notice. If a meeting of the Board is called by anyone other than the Chairman of the Board, the person[s] calling such a meeting shall so advise the Chairman of the Board. A meeting of a Committee of the Board may be called by the Chairman of the Committee, by the Chairman of the Board, by such other Director(s) as may from time to time be authorized by the Chairman of the Committee, or by a majority of the Committee members, on not less than 48 hours notice to the members of the Committee specifying the place, date and time of the meeting. Meetings may be held at any time without notice if all members of the Committee waive notice. If a meeting of the Committee is called by anyone other than the Chairman of the Board, the person[s] calling the meeting shall so inform the Chairman of the Board and the Chairman of the Committee.

SECTION 4. A quorum at any meeting of the Board shall be a majority of the number of Board members fixed by the Board from time to time. A quorum at any meeting of a Committee of the Board shall be a majority of the Committee members.

1

        Exhibit 3(ii)

SECTION 5. The Board shall establish an Executive Committee, an Audit Committee, a Conduct Review Committee, a Governance and Nominating Committee and a Compensation Committee, and may establish such other Committees as it deems advisable to assist it in discharging its duties, and may establish Committee charters and otherwise delegate to those Committees such duties and responsibilities as may be permitted by law and as it deems necessary or advisable.

ARTICLE III

OFFICERS

The Chairman of the Board and the President and Chief Executive Officer shall be initially appointed by the Board of Directors. Officers at the level of Senior Vice President and above shall be initially appointed by the Chairman of the Board. The Board of Directors shall annually reappoint all officers at the level of Senior Vice President and above. Officers at a level below Senior Vice President may be appointed by the President and Chief Executive Officer. Any number of offices may be held by the same person. Such officers shall have such authority and perform such duties as normally pertain to their offices or as may from time to time be determined by the Board of Directors.

ARTICLE IV

INDEMNIFICATION

SECTION 1. In this Article, the following terms shall have the following meanings:

(a) “expenses” means reasonable expenses incurred in a proceeding, including expenses of investigation and preparation, expenses in connection with an appearance as a witness, and fees and disbursement of counsel, accountants or other experts;

(b) “liability” means an obligation incurred with respect to a proceeding to pay a judgment, settlement, penalty or fine;

(c) “party” includes a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding;

(d) “proceeding” means any threatened, pending or completed action, suit, or proceeding whether civil, criminal, administrative or investigative, and whether formal or informal.

SECTION 2. Subject to applicable law, if any person who is or was a director, officer or employee of the corporation is made a party to a proceeding because the person is or was a director, officer or employee of the corporation, the corporation shall indemnify the person, or the estate or personal representative of the person, from and against all liability and expenses incurred by the person in the proceeding (and advance to the person expenses incurred in the proceeding) if, with respect to the matter(s) giving rise to the proceeding:

2

        Exhibit 3(ii)

(a) the person conducted himself or herself in good faith; and

(b) the person reasonably believed that his or her conduct was in the corporation’s best interests; and

(c) in the case of any criminal proceeding, the person had no reasonable cause to believe that his or her conduct was unlawful; and

(d) if the person is or was an employee of the corporation, the person acted in the ordinary course of the person’s employment with the corporation.

SECTION 3. Subject to applicable law, if any person who is or was serving as a director, officer, trustee, plan administrator or employee of another company or entity at the request of the corporation is made a party to a proceeding because the person is or was serving as a director, officer, trustee or employee of the other company or entity, the corporation shall indemnify the person, or the estate or personal representative of the person, from and against all liability and expenses incurred by the person in the proceeding (and advance to the person expenses incurred in the proceeding) if:

(a) the person is or was appointed to serve at the request of the corporation as a director, officer, trustee or employee of the other company or entity in accordance with Indemnification Procedures approved by the Board of Directors of the corporation; and

(b) with respect to the matter(s) giving rise to the proceeding:

(i) the person conducted himself or herself in good faith; and

(ii) the person reasonably believed that his or her conduct was at least not opposed to the corporation’s best interests (in the case of a trustee or plan administrator of one of the corporation’s staff benefits plans, this means that the person’s conduct was for a purpose the person reasonably believed to be in the interests of the plan participants); and

(iii) in the case of any criminal proceeding, the person had no reasonable cause to believe that his or her conduct was unlawful; and

(iv) if the person is or was an employee of the other company or entity, the person acted in the ordinary course of the person’s employment with the other company or entity.

**************************

3

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Robert L. Reynolds, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Great-West Life & Annuity Insurance Company (the “registrant”);

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements and other financial information included in this quarterly 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 quarterly report;

4. The registrant’s other certifying officers 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 15(d)-15(f) for the registrant and we 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 quarterly 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 quarterly report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

d) disclosed in this quarterly 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 officers and I have disclosed, based on our most recent evaluation of internal control of financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

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:	August 14, 2018
/s/	Robert L. Reynolds
	Robert L. Reynolds
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Andra Bolotin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Great-West Life & Annuity Insurance Company (the “registrant”);

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements and other financial information included in this quarterly 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 quarterly report;

4. The registrant’s other certifying officers 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 15(d)-15(f) for the registrant and we 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 quarterly 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 quarterly report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

d) disclosed in this quarterly 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 officers and I have disclosed, based on our most recent evaluation of internal control of financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

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:	August 14, 2018
/s/	Andra Bolotin
	Andra Bolotin
	Executive Vice President, Chief Financial Officer, and Principal Financial Officer

EX-32

Exhibit 32

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Great-West Life & Annuity Insurance Company, a Colorado corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 (the “Form 10-Q”) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	August 14, 2018	/s/	Robert L. Reynolds
			Robert L. Reynolds
			President and Chief Executive Officer
Dated:	August 14, 2018	/s/	Andra Bolotin
			Andra Bolotin
			Executive Vice President, Chief Financial Officer, and Principal Financial Officer

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 14, 2018
Document and Entity Information
Entity Registrant Name	GREAT WEST LIFE & ANNUITY INSURANCE CO
Entity Central Index Key	0000744455
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		7,320,176

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost $22,757,572 and $22,762,962)	$ 22,762,737	$ 23,593,139
Fixed maturities, held-for-trading, at fair value (amortized cost $19,825 and $20,512)	19,519	21,059
Mortgage loans on real estate (net of allowances of $773 and $773)	4,316,198	4,005,187
Policy loans	4,121,136	4,104,094
Short-term investments (amortized cost $294,314 and $350,266)	294,314	350,266
Limited partnership interests	63,586	45,540
Other investments	53,298	17,997
Total investments	31,630,788	32,137,282
Other assets:
Cash and cash equivalents	88,106	17,211
Reinsurance recoverable	591,657	589,080
Deferred acquisition costs (“DAC”) and value of business acquired (“VOBA”)	681,959	518,510
Investment income due and accrued	285,953	299,362
Collateral under securities lending agreements	80,013	0
Due from parent and affiliates	101,671	114,133
Goodwill	137,683	137,683
Other intangible assets	15,741	17,085
Other assets	1,039,558	954,250
Assets of discontinued operations	14,662	16,095
Separate account assets	26,676,615	27,660,571
Total assets	61,344,406	62,461,262
Policy benefit liabilities:
Future policy benefits	30,293,590	30,048,927
Policy and contract claims	388,222	389,029
Policyholders’ funds	273,319	280,578
Provision for policyholders’ dividends	40,325	41,972
Undistributed earnings on participating business	10,903	14,636
Total policy benefit liabilities	31,006,359	30,775,142
General liabilities:
Due to parent and affiliates	563,852	553,901
Commercial paper	99,381	99,886
Payable under securities lending agreements	80,013	0
Deferred income tax liabilities, net	5,643	93,203
Other liabilities	857,885	812,875
Liabilities of discontinued operations	14,662	16,095
Separate account liabilities	26,676,615	27,660,571
Total liabilities	59,304,410	60,011,673
Commitments and contingencies (See Note 14)
Stockholder’s equity:
Preferred stock, $1 par value, 50,000,000 shares authorized; none issued and outstanding	0	0
Common stock, $1 par value, 50,000,000 shares authorized; 7,320,176 shares issued and outstanding	7,320	7,320
Additional paid-in capital	951,640	949,520
Accumulated other comprehensive (loss) income	(51,100)	440,957
Retained earnings	1,132,136	1,051,792
Total stockholder’s equity	2,039,996	2,449,589
Total liabilities and stockholder’s equity	$ 61,344,406	$ 62,461,262

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Fixed maturities, available-for-sale, amortized cost	$ 22,757,572	$ 22,762,962
Fixed maturities, held for trading, amortized cost	19,825	20,512
Mortgage loans on real estate, allowances	773	773
Short-term investments, available-for-sale, amortized cost	$ 294,314	$ 350,266
Preferred stock, par value (in dollars per share)	$ 1	$ 1
Preferred stock, number of shares authorized	50,000,000	50,000,000
Preferred stock, number of shares issued	0	0
Preferred stock, number of shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, number of shares authorized	50,000,000	50,000,000
Common stock, number of shares issued	7,320,176	7,320,176
Common stock, number of shares outstanding	7,320,176	7,320,176

XML

Condensed Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenues:
Premium income	$ 78,155	$ 67,663	$ 222,836	$ 219,904
Fee income	286,696	267,338	562,660	522,453
Other revenue	3,077	3,661	6,062	6,045
Net investment income	327,471	297,221	665,612	610,691
Investment gains (losses), net	40,256	22,064	(3,487)	10,310
Total revenues	735,655	657,947	1,453,683	1,369,403
Benefits and expenses:
Life and other policy benefits	166,613	166,995	354,157	337,283
Decrease in future policy benefits	(77,381)	(63,978)	(99,390)	(63,852)
Interest credited or paid to contractholders	164,397	157,544	325,680	311,490
Provision for policyholders’ share of losses on participating business	(340)	(62)	(856)	(64)
Dividends to policyholders	7,397	9,045	19,679	24,114
Total benefits	260,686	269,544	599,270	608,971
General insurance expenses	308,545	284,364	606,677	591,495
Amortization of DAC and VOBA	30,957	20,401	42,249	25,723
Interest expense	9,588	7,646	17,397	15,276
Total benefits and expenses	609,776	581,955	1,265,593	1,241,465
Income before income taxes	125,879	75,992	188,090	127,938
Income tax expense	27,251	26,168	40,804	43,286
Net income	$ 98,628	$ 49,824	$ 147,286	$ 84,652

XML

Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 98,628	$ 49,824	$ 147,286	$ 84,652
Components of other comprehensive (loss) income
Unrealized holding (losses) gains, net, arising on available-for-sale fixed maturity investments	(353,834)	236,996	(813,514)	367,225
Unrealized holding gains (losses), net, arising on cash flow hedges	58,939	(18,245)	52,443	(25,200)
Reclassification adjustment for (gains) losses, net, realized in net income	(11,720)	(1,832)	(17,307)	(357)
Net unrealized (losses) gains related to investments	(306,615)	216,919	(778,378)	341,668
Future policy benefits, DAC and VOBA adjustments	66,954	(55,549)	154,362	(84,015)
Employee benefit plan adjustment	579	2,146	1,159	4,292
Other comprehensive (loss) income before income taxes	(239,082)	163,516	(622,857)	261,945
Income tax (benefit) expense related to items of other comprehensive income	(50,207)	57,231	(130,800)	91,681
Other comprehensive income (loss)	(188,875)	106,285	(492,057)	170,264
Total comprehensive (loss) income	$ (90,247)	$ 156,109	$ (344,771)	$ 254,916

XML

Condensed Consolidated Statements of Comprehensive (Loss) Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement of Comprehensive Income [Abstract]
Non-credit component of impaired gains (losses) on fixed maturities available-for-sale	$ 2,976	$ (520)	$ (13,246)	$ (1,609)

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Condensed Consolidated Statements of Stockholder's Equity - USD ($) $ in Thousands		Total	Calculated under revenue guidance in effect before topic 606	Difference between revenue guidance in effect before and after ASC 606	Common stock	Common stock Calculated under revenue guidance in effect before topic 606	Additional paid-in capital	Additional paid-in capital Calculated under revenue guidance in effect before topic 606	Accumulated other comprehensive income (loss)	Accumulated other comprehensive income (loss) Calculated under revenue guidance in effect before topic 606	Retained earnings	Retained earnings Calculated under revenue guidance in effect before topic 606	Retained earnings Difference between revenue guidance in effect before and after ASC 606
Beginning balance at Dec. 31, 2016		$ 2,012,321			$ 7,293		$ 863,031		$ 235,875		$ 906,122
Increase (Decrease) in Stockholder's Equity
Net income		84,652									84,652
Other comprehensive loss, net of income taxes		170,264							170,264
Dividends		(137,301)									(137,301)
Capital contribution	[1]	76,429					76,429
Capital contribution - stock-based compensation		925					925
Ending balance at Jun. 30, 2017		2,207,290			7,293		940,385		406,139		853,473
Beginning balance at Mar. 31, 2017									299,854
Increase (Decrease) in Stockholder's Equity
Net income		49,824
Other comprehensive loss, net of income taxes		106,285
Ending balance at Jun. 30, 2017		2,207,290			7,293		940,385		406,139		853,473
Beginning balance at Dec. 31, 2017		2,449,589	$ 2,449,589		7,320	$ 7,320	949,520	$ 949,520	440,957	$ 440,957		$ 1,051,792
Beginning balance (ASC 606) at Dec. 31, 2017		2,482,541		$ 32,952							1,084,744		$ 32,952
Increase (Decrease) in Stockholder's Equity
Net income		147,286									147,286
Other comprehensive loss, net of income taxes		(492,057)							(492,057)
Dividends		(99,894)									(99,894)
Capital contribution	[2]	1,688					1,688
Capital contribution - stock-based compensation		432					432
Ending balance at Jun. 30, 2018		2,039,996			7,320		951,640		(51,100)		1,132,136
Beginning balance at Mar. 31, 2018									137,775
Increase (Decrease) in Stockholder's Equity
Net income		98,628
Other comprehensive loss, net of income taxes		(188,875)
Ending balance at Jun. 30, 2018		$ 2,039,996			$ 7,320		$ 951,640		$ (51,100)		$ 1,132,136

[1] In May 2017, the Company received a capital contribution from its parent, GWL&A Financial Inc., in the amount of $76,429. No additional shares of the Company were issued in relation to this contribution.

[2] In February 2018, the Company received a capital contribution from its parent, GWL&A Financial Inc., in the amount of $848. In May 2018, an additional capital contribution was received in the amount of $840. No additional shares of the Company were issued in relation to these contributions.

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Condensed Consolidated Statements of Stockholder's Equity (Parenthetical) - USD ($) $ in Thousands	1 Months Ended			6 Months Ended
	May 31, 2018	Feb. 28, 2018	May 31, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement of Stockholders' Equity [Abstract]
Capital contribution	$ 840	$ 848	$ 76,429	$ 1,688	$ 76,429

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities:
Net cash provided by operating activities	$ 261,940	$ 481,107
Proceeds from sales, maturities and redemptions of investments:
Fixed maturities, available-for-sale	2,130,539	3,132,414
Mortgage loans on real estate	223,785	209,888
Limited partnership interests and other investments	4,438	6,425
Purchases of investments:
Fixed maturities, available-for-sale	(2,108,487)	(2,840,513)
Mortgage loans on real estate	(536,765)	(565,217)
Limited partnership interests and other investments	(15,581)	(8,114)
Net change in short-term investments	81,207	(612,835)
Net change in policy loans	3,783	(9,037)
Purchases of furniture, equipment, and software	(26,247)	(21,710)
Net cash used in investing activities	(243,328)	(708,699)
Cash flows from financing activities:
Contract deposits	1,330,196	1,405,204
Contract withdrawals	(1,176,725)	(1,087,940)
Proceeds from surplus note issued to parent	346,218	0
Redemption of surplus note issued to parent	(333,400)	0
Dividends paid	(99,894)	(137,301)
Capital contribution	1,688	76,429
Payments for and interest paid on financing element derivatives, net	(1,673)	(3,461)
Net change in commercial paper borrowings	(505)	(27,796)
Net change in book overdrafts	(13,590)	1,623
Employee taxes paid for withheld shares	(32)	(648)
Net cash provided by financing activities	52,283	226,110
Net increase (decrease) in cash and cash equivalents	70,895	(1,482)
Cash and cash equivalents, beginning of year	17,211	18,321
Cash and cash equivalents, end of period	88,106	16,839
Net cash paid during the year for:
Income taxes	(9,323)	(10,449)
Interest	(16,194)	(12,931)
Non-cash investing and financing transactions during the years:
Share-based compensation expense	432	925
Fair value of assets acquired in settlement of fixed maturity investments	$ 28,315	$ 0

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Organization and Basis of Presentation

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Basis of Presentation

Organization and Basis of Presentation

Organization

Great-West Life & Annuity Insurance Company (“GWLA”) and its subsidiaries (collectively, the “Company”) is a direct wholly-owned subsidiary of GWL&A Financial Inc. (“GWL&A Financial”), a holding company.  GWL&A Financial is a direct wholly-owned subsidiary of Great-West Lifeco U.S. LLC (“Lifeco U.S.”) and an indirect wholly-owned subsidiary of Great-West Lifeco Inc. (“Lifeco”), a Canadian holding company.  The Company offers a wide range of life insurance, retirement, and investment products to individuals, businesses, and other private and public organizations throughout the United States. The Company is an insurance company domiciled in the State of Colorado and is subject to regulation by the Colorado Division of Insurance.

Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and the accounts of its subsidiaries over which it exercises control and are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).  Intercompany transactions and balances have been eliminated in consolidation.

The condensed consolidated balance sheet as of December 31, 2017, which was derived from the Company’s audited consolidated financial statements, and the unaudited interim condensed consolidated financial statements as of and for the three and six months ended June 30, 2018, have been prepared in accordance with the instructions for Form 10-Q.  In compliance with those instructions, certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.  As such, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

In the opinion of management, these statements include all normal recurring adjustments necessary to fairly present the Company’s condensed consolidated results of operations, financial position, and cash flows as of June 30, 2018, and for all periods presented. The condensed consolidated results of operations and condensed consolidated statement of cash flows for the six months ended June 30, 2018, are not necessarily indicative of the results or cash flows expected for the full year.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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Application of Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2018

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Application of Recent Accounting Pronouncements

Application of Recent Accounting Pronouncements

Recently adopted accounting pronouncements

In May, 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, and all the related amendments to customer contracts (collectively “ASC 606”), effective for interim and annual periods beginning after December 15, 2017. ASC 606 supersedes nearly all existing revenue recognition guidance under U.S. GAAP; however, it did not impact the accounting for insurance and investment contracts within the scope of financial services insurance, leases, financial instruments and guarantees. The core principle of the model requires that an entity recognizes revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The update also requires increased disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts. See Note 10 for additional information.

On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605, Revenue Recognition (“ASC 605”).

The primary impact of ASC 606 to the Company relates to the accounting for certain contract costs and contract fulfillment costs, which were expensed as incurred under ASC 605. Under ASC 606, these costs are deferred and amortized over the expected life of the customer contract, which the Company determined to be 10 years. The Company presents these contract costs and contract fulfillment costs on the condensed consolidated balance sheet as a part of the DAC and VOBA balance.

The Company recorded a net increase to opening retained earnings of $32,952, net of tax, as of January 1, 2018 due to the cumulative impact of adopting ASC 606.

In January, 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, effective for interim and annual periods beginning after December 15, 2017. The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments including requiring equity investments (except those accounted for under the equity method of accounting) to be measured at fair value with changes in fair value recognized in net income, eliminating certain disclosure requirements related to financial instruments measured at amortized cost, and adding disclosures related to the measurement categories of financial assets and financial liabilities.  The primary impact to the Company’s condensed consolidated financial statements was that the Company’s limited partnership interests, that were accounted for under the cost method, are now measured at fair value with changes in the fair value recognized in net income. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force), effective for fiscal years and interim periods within those beginning after December 15, 2017. This ASU addresses diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The primary impacts to the Company’s condensed consolidated financial statement include reclassification of proceeds received from the settlement of corporate-owned life insurance policies (“COLI”) from cash flow from operations to cash flow from investing and reclassification of certain change in due to / from parent and affiliate from investing to operating. As the Company has retroactively applied this guidance as required by the ASU, the following updates were made to the condensed consolidated cash flow statement for the six months ended June 30, 2017 to conform to current year presentation:

• Reclassification of proceeds received from the settlement of COLIs of $1,680 from cash flow from operations to cash flows from investing; and

• Reclassification of change in due to / from parent and affiliate of $21,388 from cash flow from financing to cash flows from operations.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash (a consensus of the Emerging Issues Task Force), effective for fiscal years and interim periods within those beginning after December 15, 2017. This update requires organizations to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The adoption of this standard did not have a material impact on the condensed consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, effective for annual reporting periods beginning on or after December 15, 2017, and interim periods within those annual periods. This update requires organizations to disaggregate the service cost component from the other components of net benefit costs in the income statement and present it with other current compensation costs for the related employees while providing guidance for capitalization eligibility for service costs. The adoption of this standard did not have a material impact on the condensed consolidated financial statements.

Future adoption of new accounting pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases, and all the related amendments to leases (collectively “ASU 2016-02”) effective for annual reporting periods beginning on or after December 15, 2018, and interim periods within those annual periods. Earlier application is permitted as of the beginning of an interim or annual period. This update requires organizations to recognize lease assets and lease liabilities on the balance sheet with lease terms of more than 12 months and also disclose certain qualitative and quantitative information about leasing arrangements. The Company’s implementation efforts are primarily focused on identifying a new lease accounting system, the review of its existing lease contracts and performing a completeness assessment over the lease population. The Company continues to evaluate the impact of this update on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments: Credit Losses: Measurement of Credit Losses on Financial Instruments, effective for fiscal years and interim periods within those beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2018. This update amends guidance on the impairment of financial instruments by adding an impairment model that is based on expected losses rather than incurred losses and is intended to result in more timely recognition of losses. The standard also simplifies the accounting by decreasing the number of credit impairment models that an entity can use to account for debt instruments. The Company continues to evaluate the impact of this update on its condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other, effective for annual or any interim goodwill impairment tests after December 15, 2019.  Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The update eliminates Step 2 from the goodwill impairment test and will require management to perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.  Any amount by which the carrying amount exceeds the reporting unit’s fair value (not to exceed the goodwill allocated to that reporting unit) is recognized as an impairment charge.  The Company performs its goodwill impairment annually in the 4th quarter or more frequently if events or circumstances indicate that there may be justification for performing an interim test. The adoption of this standard is not anticipated to have a material impact on the condensed consolidated financial statements.

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Related Party Transactions

6 Months Ended

Jun. 30, 2018

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

A note payable to GWL&A Financial was issued as a surplus note on May 17, 2018, with a face and carrying amount of $346,218. The surplus note bears a fixed interest rate of 4.881%. The note matures on May 17, 2048.

On June 15, 2018, the surplus note with a principal amount of $333,400 was redeemed in full. The surplus note to GWL&A Financial was issued on May 19, 2006. The surplus note bore an interest rate of 2.588% plus the then-current three-month London Interbank Offering Rate (“LIBOR”). The surplus note became redeemable by the Company at the principal amount plus any accrued and unpaid interest after May 16, 2016.

From time to time, the Company makes direct investments in mutual funds of Great-West Funds, Inc., an open-end management investment company, which is a related party of GWL&A, to seed new investment products. As of June 30, 2018, the Company held $35,268 in seed investments. 

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Dividends

6 Months Ended

Jun. 30, 2018

Dividends [Abstract]

Dividends

Dividends

The maximum amount of dividends, which can be paid to stockholders by insurance companies domiciled in the State of Colorado, is subject to restrictions relating to statutory surplus and statutory net gain from operations.  Prior to the payment of any dividends, the Company seeks approval from the Colorado Insurance Commissioner.  During the six months ended June 30, 2018 and 2017, the Company paid dividends of $99,894 and $137,301, respectively, to its parent, GWL&A Financial.

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Summary of Investments

6 Months Ended

Jun. 30, 2018

Investments, Debt and Equity Securities [Abstract]

Summary of Investments

Summary of Investments

The following tables summarize fixed maturity investments classified as available-for-sale and the non-credit-related component of other-than-temporary impairments (“OTTI”) in accumulated other comprehensive income (loss) (“AOCI”): 

	June 30, 2018
	Amortized		Gross unrealized		Gross unrealized		Estimated fair value		OTTI (gain) loss
Fixed maturities:	cost		gains		losses		and carrying value		included in AOCI (1)
U.S. government direct obligations and U.S. agencies	$	1,362,245	$	26,310	$	32,382	$	1,356,173	$	—
Obligations of U.S. states and their subdivisions	1,841,971		165,819		4,368		2,003,422		—
Corporate debt securities (2)	15,596,700		262,319		420,281		15,438,738		(779		)
Asset-backed securities	1,609,259		68,040		23,498		1,653,801		(36,665		)
Residential mortgage-backed securities	56,655		2,056		886		57,825		(70		)
Commercial mortgage-backed securities	1,358,117		4,899		43,216		1,319,800		—
Collateralized debt obligations	932,625		1,544		1,191		932,978		—
Total fixed maturities	$	22,757,572	$	530,987	$	525,822	$	22,762,737	$	(37,514	)

⁽¹⁾  Indicates the amount of any OTTI (gain) loss included in AOCI that is included in gross unrealized gains and losses.  OTTI (gain) loss included in AOCI, as presented above, includes both the initial recognition of non-credit losses and the effects of subsequent increases and decreases in estimated fair value for those fixed maturity securities with previous non-credit impairment. The non-credit loss component of OTTI (gain) loss was in an unrealized gain position due to increases in estimated fair value subsequent to initial recognition of non-credit losses on such securities.

⁽²⁾ Includes perpetual debt investments with amortized cost of $89,267 and estimated fair value of $81,435.

	December 31, 2017
	Amortized		Gross unrealized		Gross unrealized		Estimated fair value		OTTI (gain) loss
Fixed maturities:	cost		gains		losses		and carrying value		included in AOCI (1)
U.S. government direct obligations and U.S. agencies	$	1,837,748	$	41,777	$	7,883	$	1,871,642	$	—
Obligations of U.S. states and their subdivisions	1,872,120		220,507		1,655		2,090,972		—
Corporate debt securities (2)	15,234,473		581,991		110,377		15,706,087		(1,018		)
Asset-backed securities	1,622,806		105,301		10,131		1,717,976		(56,735		)
Residential mortgage-backed securities	63,187		2,446		649		64,984		(140		)
Commercial mortgage-backed securities	1,352,906		17,692		12,989		1,357,609		—
Collateralized debt obligations	779,722		4,227		80		783,869		—
Total fixed maturities	$	22,762,962	$	973,941	$	143,764	$	23,593,139	$	(57,893	)

⁽¹⁾  Indicates the amount of any OTTI (gain) loss included in AOCI that is included in gross unrealized gains and losses.  OTTI (gain) loss included in AOCI, as presented above, includes both the initial recognition of non-credit losses and the effects of subsequent increases and decreases in estimated fair value for those fixed maturity securities with previous non-credit impairment. The non-credit loss component of OTTI (gain) loss was in an unrealized gain position due to increases in estimated fair value subsequent to initial recognition of non-credit losses on such securities.

⁽²⁾ Includes perpetual debt investments with amortized cost of $89,267 and estimated fair value of $87,348.

See Note 8 for additional discussion regarding fair value measurements.

The amortized cost and estimated fair value of fixed maturity investments classified as available-for-sale, by contractual maturity date, are shown in the table below.  Actual maturities will likely differ from these projections because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. 

	June 30, 2018
	Amortized cost		Estimated fair value
Maturing in one year or less	$	619,874	$	620,381
Maturing after one year through five years	3,447,149		3,441,249
Maturing after five years through ten years	8,216,510		8,066,134
Maturing after ten years	5,500,704		5,670,372
Mortgage-backed and asset-backed securities	4,973,335		4,964,601
Total fixed maturities	$	22,757,572	$	22,762,737

Mortgage-backed (commercial and residential) and asset-backed securities include those issued by the U.S. government and U.S. agencies.

The following table summarizes information regarding the sales of securities classified as available-for-sale:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Proceeds from sales	$	511,199	$	891,026	$	1,477,619	$	2,471,548
Gross realized gains from sales	12,452		8,488		24,726		20,921
Gross realized losses from sales	9,789		6,080		16,072		21,337

Mortgage loans on real estate — The recorded investment of the mortgage loan portfolio categorized as performing was $4,316,971 and $4,005,960 as of June 30, 2018 and December 31, 2017, respectively.

The following table summarizes activity in the mortgage provision allowance:

	Six Months Ended June 30, 2018		Year Ended December 31, 2017
	Commercial mortgages		Commercial mortgages
Beginning balance	$	773	$	2,882
Provision increases	—		157
Charge-off	—		(663		)
Recovery	—		(30		)
Provision decreases	—		(1,573		)
Ending balance	$	773	$	773
Allowance ending balance by basis of impairment method:
Collectively evaluated for impairment	773		773
Recorded investment balance in the mortgage loan portfolio, gross of allowance, by basis of impairment method:	$	4,316,971	$	4,005,960
Individually evaluated for impairment	2,799		2,942
Collectively evaluated for impairment	4,314,172		4,003,018

Limited partnershipinterests — Limited partnership interests represent the Company’s minority ownership interests in pooled investment funds that primarily make private equity investments across diverse industries and geographical focuses. The Company has determined its interest in each limited partnership to be considered a variable interest entity (“VIE”). Consolidation is not required as the Company is not deemed to be the primary beneficiary of the VIEs. The carrying value and maximum exposure to loss in relation to the activities of the VIEs was $63,586 and $45,540 at June 30, 2018 and December 31, 2017, respectively.

Securities lending — Securities with a cost or amortized cost of $98,705 and estimated fair values of $93,255 were on loan under the program at June 30, 2018. There were no securities on loan at December 31, 2017.  The Company received cash of $80,013 and securities with a fair value of $16,502 as collateral at June 30, 2018. The Company bears the risk of any deficiency in the amount of collateral available for return to a borrower due to a loss in an approved investment.

Under the securities lending program the collateral pledged is, by definition, the securities loaned against the cash borrowed. The cash collateral liability under the securities lending program is $80,013, and the class of securities loaned consists entirely of corporate debt securities.

The Company’s securities lending agreements are open agreements meaning the borrower can return and the Company can recall the loaned securities at any time. The assets and liabilities associated with securities lending program are not subject to master netting arrangements and are not offset in the condensed consolidated balance sheets.

Unrealized losses on fixed maturity investments classified as available-for-sale — The following tables summarize unrealized investment losses, including the non-credit-related portion of OTTI losses reported in AOCI, by class of investment:

	June 30, 2018
	Less than twelve months				Twelve months or longer				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
Fixed maturities:	fair value		loss and OTTI		fair value		loss and OTTI		fair value		loss and OTTI
U.S. government direct obligations and U.S. agencies	$	833,130	$	25,923	$	150,012	$	6,459	$	983,142	$	32,382
Obligations of U.S. states and their subdivisions	157,066		1,958		36,003		2,410		193,069		4,368
Corporate debt securities	8,687,225		278,236		1,591,254		142,045		10,278,479		420,281
Asset-backed securities	764,102		14,417		211,254		9,081		975,356		23,498
Residential mortgage-backed securities	3,679		63		10,029		823		13,708		886
Commercial mortgage-backed securities	838,617		24,039		280,386		19,177		1,119,003		43,216
Collateralized debt obligations	296,314		1,191		—		—		296,314		1,191
Total fixed maturities	$	11,580,133	$	345,827	$	2,278,938	$	179,995	$	13,859,071	$	525,822
Total number of securities in an unrealized loss position			1,076				268				1,344

	December 31, 2017
	Less than twelve months				Twelve months or longer				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
Fixed maturities:	fair value		loss and OTTI		fair value		loss and OTTI		fair value		loss and OTTI
U.S. government direct obligations and U.S. agencies	$	755,861	$	4,159	$	230,447	$	3,724	$	986,308	$	7,883
Obligations of U.S. states and their subdivisions	24,908		180		37,012		1,475		61,920		1,655
Corporate debt securities	2,229,585		19,568		2,036,323		90,809		4,265,908		110,377
Asset-backed securities	544,778		3,011		245,341		7,120		790,119		10,131
Residential mortgage-backed securities	4,405		23		11,416		626		15,821		649
Commercial mortgage-backed securities	342,820		2,451		295,164		10,538		637,984		12,989
Collateralized debt obligations	7,277		80		—		—		7,277		80
Total fixed maturities	$	3,909,634	$	29,472	$	2,855,703	$	114,292	$	6,765,337	$	143,764
Total number of securities in an unrealized loss position			368				293				661

Fixed maturity investments — Total unrealized losses and OTTI increased by $382,058, or 266%, from December 31, 2017 to June 30, 2018. The majority, or $316,355, of the increase was in the less than twelve months category. The overall increase in unrealized losses was across most asset classes and reflects higher interest rates at June 30, 2018, compared to December 31, 2017, resulting in generally lower valuations of these fixed maturity securities.

Total unrealized losses greater than twelve months increased by $65,703 from December 31, 2017 to June 30, 2018.  Corporate debt securities account for 79%, or $142,045, of the unrealized losses and OTTI greater than twelve months at June 30, 2018.  Non-investment grade corporate debt securities account for $6,676 of the unrealized losses and OTTI greater than twelve months. Management does not have the intent to sell these assets; therefore, an OTTI was not recognized in earnings.

Asset-backed and commercial-backed securities account for 16% of the unrealized losses and OTTI greater than twelve months at June 30, 2018.  The present value of the cash flows expected to be collected is not less than amortized cost and management does not have the intent to sell these assets; therefore, an OTTI was not recognized in earnings.

Other-than-temporary impairment recognition — The OTTI on fixed maturity securities where the loss portion is bifurcated and the credit related component is recognized in investment (losses) gains is summarized as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Beginning balance	$	52,775		$	80,359		$	62,231		$	83,665
Reductions:
Due to sales, maturities or payoffs during the period	—			—			(1,510		)	—
Due to increases in cash flows expected to be collected that are recognized over the remaining life of the security	(3,092		)	(2,948		)	(11,038		)	(6,254		)
Ending balance	$	49,683		$	77,411		$	49,683		$	77,411

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

Derivative transactions are generally entered into pursuant to International Swaps and Derivatives Association (“ISDA”) Master Agreements or Master Securities Forward Transaction Agreements (“MSFTA”) with approved counterparties that provide for a single net payment to be made by one party to the other on a daily basis, periodic payment dates, or at the due date, expiration, or termination of the agreement.

The ISDA Master Agreements contain provisions that would allow the counterparties to require immediate settlement of all derivative instruments in a net liability position if the Company were to default on any debt obligations over a certain threshold.  The MSFTA contain provisions which do not stipulate a threshold for default and only apply to debt obligations between the Company and the specific counterparty.  The aggregate fair value, inclusive of accrued income and expense, of derivative instruments with credit-risk-related contingent features that were in a net liability position was $72,759 and $93,761 as of June 30, 2018, and December 31, 2017, respectively.  The Company had pledged collateral related to these derivatives of $15,900 and $42,750 as of June 30, 2018, and December 31, 2017, respectively, in the normal course of business.  If the credit-risk-related contingent features were triggered on June 30, 2018, the fair value of assets that could be required to settle the derivatives in a net liability position was $56,859.

At June 30, 2018, and December 31, 2017, the Company had pledged $27,169 and $52,330 of unrestricted cash collateral to counterparties in the normal course of business, while other counterparties had pledged $12,696 and $5,490 of unrestricted cash collateral to the Company to satisfy collateral netting agreements, respectively.

At June 30, 2018, the Company estimated $15,222 of net derivative gains related to cash flow hedges included in AOCI will be reclassified into net income within the next twelve months. Gains and losses included in AOCI are reclassified into net income when the hedged item affects earnings.

Types of derivative instruments and derivative strategies

Interest rate contracts

Cash flow hedges

Interest rate swap agreements are used to convert the interest rate on certain debt security investments and debt obligations from a floating rate to a fixed rate. 

Not designated as hedging instruments

The Company enters into certain transactions in which derivatives are hedging an economic risk but hedge accounting is either not elected or the transactions are not eligible for hedge accounting.  These derivative instruments include:  exchange-traded interest rate swap futures, over-the-counter (“OTC”) interest rate swaptions, OTC interest rate swaps, exchange-traded Eurodollar interest rate futures, and treasury interest rate futures.  Certain of the Company’s OTC derivatives are cleared and settled through the Chicago Mercantile Exchange ("CME") while others are bilateral contracts between the Company and a counterparty.

In 2017, the CME amended its rulebook to classify variation margin transfers as settlement payments instead of collateral. The Company adjusts the fair value by the variation margin payments on derivatives cleared through the CME.

The derivative instruments mentioned above are economic hedges and used to manage risk.  These transactions are used to offset changes in liabilities including those in variable annuity products, hedge the economic effect of a large increase in interest rates, manage the potential variability in future interest payments due to a change in credited interest rates and the related change in cash flows due to increased surrenders, and manage interest rate risks of forecasted acquisitions of fixed rate maturity investments and forecasted liability pricing.

Foreign currency contracts

Cross-currency swaps and foreign currency forwards are used to manage the foreign currency exchange rate risk associated with investments denominated in other than U.S. dollars.  The Company uses cross-currency swaps to convert interest and principal payments on foreign denominated debt instruments into U.S. dollars.  Cross-currency swaps may be designated as cash flow hedges; however, some are not eligible for hedge accounting. The Company uses foreign currency forwards to reduce the risk of foreign currency exchange rate changes on proceeds received on sales of foreign denominated debt instruments; however, hedge accounting is not elected.

Equity contracts

The Company uses futures on equity indices to offset changes in guaranteed lifetime withdrawal benefit liabilities; however, they are not eligible for hedge accounting.

Other forward contracts

The Company uses forward settling to be announced (“TBA”) securities to gain exposure to the investment risk and return of agency mortgage-backed securities (pass-throughs). These transactions enhance the return on the Company’s investment portfolio and provide a more liquid and cost effective method of achieving these goals than purchasing or selling individual agency mortgage-backed pools.  As the Company does not regularly accept delivery of such securities, they are accounted for as derivatives but are not eligible for hedge accounting. 

The following tables summarize the notional amount and fair value of derivative financial instruments, excluding embedded derivatives:

	June 30, 2018
			Net derivatives			Asset derivatives		Liability derivatives
	Notional amount		Fair value			Fair value (1)		Fair value (1)
Hedge designation/derivative type:
Derivatives designated as hedges:
Cash flow hedges:
Interest rate swaps	$	22,300	$	5,917		$	5,917	$	—
Cross-currency swaps	864,154		(8,854		)	30,471		39,325
Total cash flow hedges	886,454		(2,937		)	36,388		39,325
Total derivatives designated as hedges	886,454		(2,937		)	36,388		39,325
Derivatives not designated as hedges:
Interest rate swaps	548,500		577			1,461		884
Futures on equity indices	56,521		—			—		—
Interest rate futures	34,300		—			—		—
Interest rate swaptions	190,400		163			163		—
Other forward contracts	2,460,000		3,294			4,565		1,271
Cross-currency swaps	573,703		(11,778		)	20,292		32,070
Total derivatives not designated as hedges	3,863,424		(7,744		)	26,481		34,225
Total derivative financial instruments	$	4,749,878	$	(10,681	)	$	62,869	$	73,550

⁽¹⁾ The estimated fair value includes accrued income and expense. The estimated fair value of all derivatives in an asset position is reported within other assets and the estimated fair value of all derivatives in a liability position is reported within other liabilities in the condensed consolidated balance sheets.

	December 31, 2017
			Net derivatives			Asset derivatives		Liability derivatives
	Notional amount		Fair value			Fair value (1)		Fair value (1)
Hedge designation/derivative type:
Derivatives designated as hedges:
Cash flow hedges:
Interest rate swaps	$	388,800	$	7,476		$	7,476	$	—
Cross-currency swaps	800,060		(31,358		)	19,958		51,316
Total cash flow hedges	1,188,860		(23,882		)	27,434		51,316
Total derivatives designated as hedges	1,188,860		(23,882		)	27,434		51,316
Derivatives not designated as hedges:
Interest rate swaps	519,100		1,902			3,530		1,628
Futures on equity indices	22,074		—			—		—
Interest rate futures	60,700		—			—		—
Interest rate swaptions	164,522		75			75		—
Cross-currency swaps	612,733		(21,279		)	20,320		41,599
Total derivatives not designated as hedges	1,379,129		(19,302		)	23,925		43,227
Total derivative financial instruments	$	2,567,989	$	(43,184	)	$	51,359	$	94,543

⁽¹⁾ The estimated fair value excludes accrued income and expense. The estimated fair value of all derivatives in an asset position is reported within other assets and the estimated fair value of all derivatives in a liability position is reported within other liabilities in the condensed consolidated balance sheets.

Notional amounts are used to express the extent of the Company’s involvement in derivative transactions and represent a standard measurement of the volume of its derivative activity.  Notional amounts represent those amounts used to calculate contractual flows to be exchanged and are not paid or received. The average notional outstanding during the six months endedJune 30, 2018, was $672,886, $1,451,399, $90,541, $179,348, and $1,764,286 for interest rate swaps, cross-currency swaps, futures, swaptions, and other forward contracts, respectively. The average notional outstanding during the year ended December 31, 2017, was $905,977, $1,323,398, $108,438, $162,896, and $2,231,196 for interest rate swaps, cross-currency swaps, futures, swaptions, and other forward contracts, respectively.

The following tables present the effect of derivative instruments in the condensed consolidated statements of income and comprehensive income reported by cash flow hedges and derivatives not designated as hedges, excluding embedded derivatives: 

	Gain (loss) recognized in OCI on derivatives (Effective portion)						Gain (loss) reclassified from OCI into net income (Effective portion)
	Three Months Ended June 30,						Three Months Ended June 30,
	2018			2017			2018		2017
Cash flow hedges:
Interest rate swaps	$	(319	)	$	644		$	705	$	1,186		(A)
Interest rate swaps	1			(8,193		)	887		(787		)	(B)
Cross-currency swaps	59,257			(10,696		)	7,467		(973		)	(A)
Total cash flow hedges	$	58,939		$	(18,245	)	$	9,059	$	(574	)

(A) Net investment income.

(B) Interest expense.

	Gain (loss) recognized in OCI on derivatives (Effective portion)						Gain (loss) reclassified from OCI into net income (Effective portion)
	Six Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018		2017
Cash flow hedges:
Interest rate swaps	$	(1,331	)	$	496		$	1,633	$	2,406		(A)
Interest rate swaps	29,030			(4,350		)	632		(1,667		)	(B)
Cross-currency swaps	24,744			(21,346		)	6,941		129			(A)
Total cash flow hedges	$	52,443		$	(25,200	)	$	9,206	$	868

(A) Net investment income.

(B) Interest expense.

	Gain (loss) on derivatives recognized in net income
	Three Months Ended June 30,
	2018				2017
Derivatives not designated as hedging instruments:
Futures on equity indices	$	—		(A)	$	350		(A)
Futures on equity indices	(1,504		)	(B)	(1,536		)	(B)
Interest rate swaps	—			(A)	4,976			(A)
Interest rate swaps	(3,336		)	(B)	—			(B)
Interest rate futures	—			(A)	116			(A)
Interest rate futures	67			(B)	(206		)	(B)
Interest rate swaptions	—			(A)	(4		)	(A)
Interest rate swaptions	(187		)	(B)	(77		)	(B)
Other forward contracts	—			(A)	(9,363		)	(A)
Other forward contracts	(1,575		)	(B)	18,716			(B)
Cross-currency swaps	—			(A)	(8,083		)	(A)
Cross-currency swaps	40,739			(B)	—			(B)
Total derivatives not designated as hedging instruments	$	34,204			$	4,889

(A) Net investment income.

(B) Represents investment (losses) gains, net.

	Gain (loss) on derivatives recognized in net income
	Six Months Ended June 30,
	2018				2017
Derivatives not designated as hedging instruments:
Futures on equity indices	$	—		(A)	$	(334	)	(A)
Futures on equity indices	(2,145		)	(B)	(2,820		)	(B)
Interest rate swaps	—			(A)	3,427			(A)
Interest rate swaps	(14,302		)	(B)	—			(B)
Interest rate futures	—			(A)	102			(A)
Interest rate futures	115			(B)	(201		)	(B)
Interest rate swaptions	—			(A)	(31		)	(A)
Interest rate swaptions	(151		)	(B)	(151		)	(B)
Other forward contracts	—			(A)	(2,580		)	(A)
Other forward contracts	(21,943		)	(B)	13,119			(B)
Cross-currency swaps	—			(A)	(22,251		)	(A)
Cross-currency swaps	12,595			(B)	—			(B)
Total derivatives not designated as hedging instruments	$	(25,831	)		$	(11,720	)

(A) Net investment income.

(B) Represents investment (losses) gains, net.

Embedded derivative - Guaranteed Lifetime Withdrawal Benefit

The Company offers a guaranteed lifetime withdrawal benefit (“GLWB”) through a variable annuity or a contingent deferred annuity. The GLWB is deemed to be an embedded derivative. The GLWB is recorded at fair value within future policy benefits on the condensed consolidated balance sheets. Changes in fair value of the GLWB are recorded in investment gains (losses), net in the condensed consolidated statements of income.

The estimated fair value of the GLWB was $513and $11,095 at June 30, 2018, and December 31, 2017, respectively. The changes in fair value of the GLWB were $3,480 and $(5,553) for the three months ended June 30, 2018 and 2017, respectively, and $10,582 and $(3,883) for the six months ended June 30, 2018 and 2017, respectively.

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Summary of Offsetting Assets and Liabilities

6 Months Ended

Jun. 30, 2018

Offsetting [Abstract]

Summary of Offsetting Assets and Liabilities

Summary of Offsetting Assets and Liabilities

The Company enters into derivative transactions and short-term reverse repurchase agreements with several approved counterparties. The Company’s derivative transactions are generally governed by MSFTA or ISDA Master Agreements which provide for legally enforceable set-off and close-out netting in the event of default or bankruptcy of the Company’s counterparties.  The Company’s MSFTA and ISDA Master Agreements generally include provisions which require both the pledging and accepting of collateral in connection with its derivative transactions. These provisions have the effect of securing each party’s position to the extent of collateral held. Short-term reverse repurchase agreements also include collateral provisions with the counterparty. The following tables summarize the effect of master netting arrangements on the Company’s financial position in the normal course of business and in the event of default or bankruptcy of the Company’s counterparties: 

	June 30, 2018
			Gross fair value not offset
			in balance sheets
	Gross fair value of		Financial						Net
Financial instruments:	recognized assets/liabilities (1)		instruments			Cash collateral			fair value
Derivative instruments (assets) (2)	$	62,869	$	(50,356	)	$	(10,612	)	$	1,901
Derivative instruments (liabilities) (3)	$	73,550	$	(50,356	)	$	(16,310	)	$	6,884

⁽¹⁾ The gross fair value of derivative instrument assets is not netted against offsetting liabilities for presentation on the condensed consolidated balance sheets.

⁽²⁾ The estimated fair value of derivative instrument assets is reported in other assets in the condensed consolidated balance sheets. Derivative transactions entered into under ISDA master agreements include income and expense accruals.

⁽³⁾ The estimated fair value of derivative instrument liabilities is reported in other liabilities in the condensed consolidated balance sheets. Derivative transactions entered into under ISDA master agreements include income and expense accruals.

	December 31, 2017
			Gross fair value not offset
			in balance sheets
	Gross fair value of		Financial						Net
Financial instruments (assets):	recognized assets (1)		instruments			Cash collateral			fair value
Derivative instruments (2)	$	52,738	$	(47,827	)	$	(4,911	)	$	—
Short-term reverse repurchase agreements (3)	23,200		(23,200		)	—			—
Total financial instruments (assets)	$	75,938	$	(71,027	)	$	(4,911	)	$	—
	December 31, 2017
			Gross fair value not offset
			in balance sheets
	Gross fair value of		Financial						Net
Financial instruments (liabilities):	recognized liabilities (1)		instruments			Cash collateral			fair value
Derivative instruments (4)	$	93,761	$	(47,827	)	$	(42,750	)	$	3,184

⁽¹⁾ The gross fair value of derivative instrument and short-term reverse repurchase agreement assets is not netted against offsetting liabilities for presentation on the condensed consolidated balance sheets.

⁽²⁾ The estimated fair value of derivative instrument assets is reported in other assets in the condensed consolidated balance sheets. Derivative transactions entered into under ISDA master agreements include income and expense accruals.

⁽³⁾ The estimated fair value of short-term reverse repurchase agreement assets is reported in short-term investments in the condensed consolidated balance sheets. The collateral is held by an independent third-party custodian under a tri-party agreement.

⁽⁴⁾ The estimated fair value of derivative instrument liabilities is reported in other liabilities in the condensed consolidated balance sheets. Derivative transactions entered into under ISDA master agreements include income and expense accruals.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Recurring fair value measurements

The following tables present the Company’s financial assets and liabilities carried at fair value on a recurring basis by fair value hierarchy category:

	Assets and liabilities measured at fair value on a recurring basis
	June 30, 2018
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Assets
Fixed maturities available-for-sale:
U.S. government direct obligations and U.S. agencies	$	—	$	1,356,173	$	—	$	1,356,173
Obligations of U.S. states and their subdivisions	—		2,003,422		—		2,003,422
Corporate debt securities	—		15,429,768		8,970		15,438,738
Asset-backed securities	—		1,653,801		—		1,653,801
Residential mortgage-backed securities	—		57,825		—		57,825
Commercial mortgage-backed securities	—		1,319,800		—		1,319,800
Collateralized debt obligations	—		932,978		—		932,978
Total fixed maturities available-for-sale	—		22,753,767		8,970		22,762,737
Fixed maturities held-for-trading:
U.S. government direct obligations and U.S. agencies	—		15,481		—		15,481
Corporate debt securities	—		3,001		—		3,001
Commercial mortgage-backed securities	—		1,037		—		1,037
Total fixed maturities held-for-trading	—		19,519		—		19,519
Short-term investments	260,967		33,347		—		294,314
Limited partnership interests (1)	—		—		—		63,586
Equity investments	37,564		5,011		—		42,575
Collateral under securities lending agreements	—		80,013		—		80,013
Collateral under derivative counterparty collateral agreements	39,865		—		—		39,865
Derivative instruments designated as hedges:
Interest rate swaps	—		5,917		—		5,917
Cross-currency swaps	—		30,471		—		30,471
Derivative instruments not designated as hedges:
Interest rate swaps	—		1,461		—		1,461
Interest rate swaptions	—		163		—		163
Other forward contracts	—		4,565		—		4,565
Cross-currency swaps	—		20,292		—		20,292
Total derivative instruments	—		62,869		—		62,869
Separate account assets (1)	16,089,089		10,137,807		—		26,676,615
Total assets	$	16,389,921	$	33,087,322	$	8,970	$	49,935,932
Liabilities
Payable under securities lending agreements	$	—	$	80,013	$	—	$	80,013
Collateral under derivative counterparty collateral agreements	12,696		—		—		12,696
Derivative instruments designated as hedges:
Cross-currency swaps	—		39,325		—		39,325
Derivative instruments not designated as hedges:
Interest rate swaps	—		884		—		884
Other forward contracts	—		1,271		—		1,271
Cross-currency swaps	—		32,070		—		32,070
Total derivative instruments	—		73,550		—		73,550
Embedded derivatives - GLWB	—		—		513		513
Separate account liabilities (2)	—		431,960		—		431,960
Total liabilities	$	12,696	$	585,523	$	513	$	598,732

⁽¹⁾ Included in the total fair value amount are $450 million of separate account assets and $64 million of limited partnership interests as of     June 30, 2018 for which the fair value is estimated using net asset value per unit as a practical expedient.

 ⁽²⁾ Includes only separate account instruments which are carried at the fair value of the underlying liabilities owned by the separate accounts.

	Assets and liabilities measured at fair value on a recurring basis
	December 31, 2017
	Quoted prices		Significant
	in active markets for identical assets (Level 1)		other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Assets
Fixed maturities available-for-sale:
U.S. government direct obligations and U.S. agencies	$	—	$	1,871,642	$	—	$	1,871,642
Obligations of U.S. states and their subdivisions	—		2,090,972		—		2,090,972
Corporate debt securities	—		15,696,349		9,738		15,706,087
Asset-backed securities	—		1,717,976		—		1,717,976
Residential mortgage-backed securities	—		64,984		—		64,984
Commercial mortgage-backed securities	—		1,357,609		—		1,357,609
Collateralized debt obligations	—		783,869		—		783,869
Total fixed maturities available-for-sale	—		23,583,401		9,738		23,593,139
Fixed maturities held-for-trading:
U.S. government direct obligations and U.S. agencies	—		16,836		—		16,836
Corporate debt securities	—		3,156		—		3,156
Commercial mortgage-backed securities	—		1,067		—		1,067
Total fixed maturities held-for-trading	—		21,059		—		21,059
Short-term investments	288,302		61,964		—		350,266
Collateral under derivative counterparty collateral agreements	57,820		—		—		57,820
Derivative instruments designated as hedges:
Interest rate swaps	—		7,476		—		7,476
Cross-currency swaps	—		19,958		—		19,958
Derivative instruments not designated as hedges:
Interest rate swaps	—		3,530		—		3,530
Interest rate swaptions	—		75		—		75
Cross-currency swaps	—		20,320		—		20,320
Total derivative instruments	—		51,359		—		51,359
Separate account assets (1)	16,523,630		10,736,532		—		27,660,571
Total assets	$	16,869,752	$	34,454,315	$	9,738	$	51,734,214
Liabilities
Collateral under derivative counterparty collateral agreements	$	5,490	$	—	$	—	$	5,490
Derivative instruments designated as hedges:
Cross-currency swaps	—		51,316		—		51,316
Derivative instruments not designated as hedges:
Interest rate swaps	—		1,628		—		1,628
Cross-currency swaps	—		41,599		—		41,599
Total derivative instruments	—		94,543		—		94,543
Embedded derivatives - GLWB	—		—		11,095		11,095
Separate account liabilities (2)	8		409,266		—		409,274
Total liabilities	$	5,498	$	503,809	$	11,095	$	520,402

⁽¹⁾ Included in the total fair value amounts are $400 million of investments as of December 31, 2017 for which the fair value is estimated using net asset value per unit as a practical expedient.

⁽²⁾ Includes only separate account instruments which are carried at the fair value of the underlying liabilities owned by the separate accounts.

The methods and assumptions used to estimate the fair value of the Company’s financial assets and liabilities carried at fair value on a recurring basis are as follows:

Fixed maturity investments

The fair values for fixed maturity investments are generally based upon evaluated prices from independent pricing services.  In cases where these prices are not readily available, fair values are estimated by the Company.  To determine estimated fair value for these instruments, the Company generally utilizes discounted cash flow models with market observable pricing inputs such as spreads, average life, and credit quality.  Fair value estimates are made at a specific point in time, based on available market information and judgments about financial instruments, including estimates of the timing and amounts of expected future cash flows and the credit standing of the issuer or counterparty.

Equity investments

The fair value for equity securities is generally based upon quoted market prices in active markets for identical assets

that the Company has the ability to access. 

Short-term investments and securities lending agreements

The amortized cost of short-term investments, collateral under securities lending agreements, and payable under securities lending agreements is a reasonable estimate of fair value due to their short-term nature and high credit quality of the issuers.

Derivative counterparty collateral agreements

Included in other assets is cash collateral received from or pledged to derivative counterparties and included in other liabilities is the obligation to return the cash collateral to the counterparties.  The carrying value of the collateral is a reasonable estimate of fair value.

Derivative instruments

Included in other assets and other liabilities are derivative financial instruments. The estimated fair values of OTC derivatives, primarily consisting of cross-currency swaps, interest rate swaps, interest rate swaptions, and other forward contracts, are the estimated amounts the Company would receive or pay to terminate the agreements at the end of each reporting period, taking into consideration current interest rates and other relevant factors.

Embedded derivative - GLWB

Significant unobservable inputs used in the fair value measurements of GLWB include long-term equity and interest rate implied volatility, mortality, and policyholder behavior assumptions, such as benefit utilization, lapses, and partial withdrawals.

Limited partnership interests

Limited partnership interests represent the Company’s minority ownership interests in pooled investment funds.  These funds employ varying investment strategies that primarily make private equity investments across diverse industries and geographical focuses.  The net asset value, determined using the partnership financial statement reported capital account adjusted for other relevant information which may impact the exit value of the investments, is used as a practical expedient to estimate fair value. Distributions by these investments are generated from investment gains, from operating income generated by the underlying investments of the funds, and from liquidation of the underlying assets of the funds which are estimated to be liquidated over the next one to 10 years. 

Separate account assets and liabilities

Separate account assets and liabilities primarily include investments in mutual fund, fixed maturity, and short-term securities.  Mutual funds are recorded at net asset value, which approximates fair value, on a daily basis.  The fixed maturity and short-term investments are valued in the same manner, and using the same pricing sources and inputs as the fixed maturity and short-term investments of the Company.

The following tables present additional information about assets and liabilities measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

	Recurring Level 3 financial assets and liabilities
	Three Months Ended June 30, 2018
	Assets			Liabilities
	Fixed maturities  available-for-sale			Embedded derivatives - GLWB
	Corporate debt securities
Balances, April 1, 2018	$	9,287		$	3,993
Realized and unrealized gains (losses) included in:
Net income (loss)	—			3,480
Other comprehensive income (loss)	129			—
Settlements	(446		)	—
Balances, June 30, 2018	$	8,970		$	513
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets and liabilities held at June 30, 2018	$	—		$	3,480

	Recurring Level 3 financial assets and liabilities
	Three Months Ended June 30, 2017
	Assets			Liabilities
	Fixed maturities  available-for-sale			Embedded derivatives - GLWB
	Corporate debt securities
Balances, April 1, 2017	$	10,931		$	4,042
Realized and unrealized gains (losses) included in:
Net income (loss)	—			(5,553		)
Other comprehensive income (loss)	84			—
Settlements	(312		)	—
Balances, June 30, 2017	$	10,703		$	9,595
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets and liabilities held at June 30, 2017	$	—		$	(5,553	)

	Recurring Level 3 financial assets and liabilities
	Six Months Ended June 30, 2018
	Assets			Liabilities
	Fixed maturities  available-for-sale			Embedded derivatives - GLWB
	Corporate debt securities
Balances, January 1, 2018	$	9,738		$	11,095
Realized and unrealized gains (losses) included in:
Net income (loss)	—			10,582
Other comprehensive income (loss)	116			—
Settlements	(884		)	—
Balances, June 30, 2018	$	8,970		$	513
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets and liabilities held at June 30, 2018	$	—		$	10,582

	Recurring Level 3 financial assets and liabilities
	Six Months Ended June 30, 2017
	Assets			Liabilities
	Fixed maturities  available-for-sale			Embedded derivatives - GLWB
	Corporate debt securities
Balances, January 1, 2017	$	11,639		$	5,712
Realized and unrealized gains (losses) included in:
Net income (loss)	—			(3,883		)
Other comprehensive income (loss)	(280		)	—
Settlements	(656		)	—
Balances, June 30, 2017	$	10,703		$	9,595
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets and liabilities held at June 30, 2017	$	—		$	(3,883	)

The following table presents significant unobservable inputs used during the valuation of certain liabilities categorized within Level 3 of the recurring fair value measurements table:

			Range
	Valuation Technique	Unobservable Input	June 30, 2018	December 31, 2017
Embedded derivatives - GLWB	Risk neutral stochastic valuation methodology	Equity volatility	15% - 30%	15% - 30%
		Swap curve	2.34% - 2.97%	1.69% - 2.54%
		Mortality rate	Based on the Annuity 2000 Mortality Table	Based on the Annuity 2000 Mortality Table
		Base Lapse rate	1% - 15%	1% - 15%

Fair value of financial instruments

The following tables summarize the carrying amounts and estimated fair values of the Company’s financial instruments and investments not carried at fair value on a recurring basis:

	June 30, 2018					December 31, 2017
					Fair value					Fair value
	Carrying		Estimated		hierarchy	Carrying		Estimated		hierarchy
	amount		fair value		level	amount		fair value		level
Assets
Mortgage loans on real estate	$	4,316,198	$	4,265,476	2	$	4,005,187	$	4,066,800	2
Policy loans	4,121,136		4,121,136		2	4,104,094		4,104,094		2
Limited partnership interests (1)	—		—			43,281		45,009
Other investments	10,723		39,050		3	11,507		41,588		3
Liabilities
Annuity contract benefits without life contingencies	$	12,833,068	$	12,390,980	2	$	12,704,401	$	12,647,309	2
Policyholders’ funds	273,319		273,319		2	280,578		280,578		2
Commercial paper	99,381		99,381		2	99,886		99,886		2
Notes payable	556,529		608,684		2	543,338		581,097		2

⁽¹⁾ The fair value of limited partnership interests as of December 31, 2017 is estimated using net asset value per unit as a practical expedient.

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Other Comprehensive Income

6 Months Ended

Jun. 30, 2018

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

Other Comprehensive Income

Other Comprehensive Income

The following table presents the accumulated balances for each classification of other comprehensive income (loss):

	Three Months Ended June 30, 2018
	Unrealized holding gains (losses) arising on fixed maturities, available-for-sale (1)			Unrealized holding gains (losses) arising on cash flow hedges (2)			Future policy benefits, DAC and VOBA adjustments			Employee benefit plan adjustment (3)			Total
Balances, April 1, 2018	$	286,289		$	14,475		$	(72,255	)	$	(90,734	)	$	137,775
OCI before reclassifications	(353,834		)	58,939			66,954			—			(227,941		)
Deferred income tax benefit (expense)	74,304			(12,377		)	(14,060		)	—			47,867
AOCI before reclassification, net of tax	(279,530		)	46,562			52,894			—			(180,074		)
Amounts reclassified from AOCI	(2,661		)	(9,059		)	—			579			(11,141		)
Deferred income tax benefit (expense)	559			1,902			—			(121		)	2,340
Amounts reclassified from AOCI, net of tax	(2,102		)	(7,157		)	—			458			(8,801		)
Balances, June 30, 2018	$	4,657		$	53,880		$	(19,361	)	$	(90,276	)	$	(51,100	)

⁽¹⁾ Reclassifications affect investment gains (losses), net on the condensed consolidated statements of income.

⁽²⁾ Reclassifications affect net investment income on the condensed consolidated statements of income, except for $(887) (before tax) which affected interest expense for the three months ended June 30, 2018.

⁽³⁾ The adjustments for defined benefit plans are included in the computation of net periodic (benefit) cost of employee benefit plans (see note 11 for additional details).

The following table presents the accumulated balances for each classification of other comprehensive income (loss):

	Three Months Ended June 30, 2017
	Unrealized holding gains (losses) arising on fixed maturities, available-for-sale (1)			Unrealized holding gains (losses) arising on cash flow hedges (2)			Future policy benefits, DAC and VOBA adjustments			Employee benefit plan adjustment (3)			Total
Balances, April 1, 2017	$	398,293		$	61,618		$	(77,149	)	$	(82,908	)	$	299,854
OCI before reclassifications	236,996			(18,245		)	(55,549		)	—			163,202
Deferred income tax (expense) benefit	(82,949		)	6,386			19,442			—			(57,121		)
AOCI before reclassification, net of tax	154,047			(11,859		)	(36,107		)	—			106,081
Amounts reclassified from AOCI	(2,406		)	574			—			2,146			314
Deferred income tax benefit (expense)	842			(201		)	—			(751		)	(110		)
Amounts reclassified from AOCI, net of tax	(1,564		)	373			—			1,395			204
Balances, June 30, 2017	$	550,776		$	50,132		$	(113,256	)	$	(81,513	)	$	406,139

⁽¹⁾ Reclassifications affect investment gains (losses), net on the condensed consolidated statements of income.

⁽²⁾ Reclassifications affect net investment income on the condensed consolidated statements of income, except for $787 (before tax) which affected interest expense for the three months ended June 30, 2017.

⁽³⁾ The adjustments for defined benefit plans are included in the computation of net periodic (benefit) cost of employee benefit plans (see note 11 for additional details).

	Six Months Ended June 30, 2018
	Unrealized holding gains (losses) arising on fixed maturities, available-for-sale (1)			Unrealized holding gains (losses) arising on cash flow hedges (2)			Future policy benefits, DAC and VOBA adjustments			Employee benefit plan adjustment (3)			Total
Balances, January 1, 2018	$	544,887		$	103,529		$	(116,267	)	$	(91,192	)	$	440,957
Change in estimate of tax reform impact	108,846			(83,806		)	(25,040		)	—			—
OCI before reclassifications	(813,514		)	52,443			154,362			—			(606,709		)
Deferred income tax benefit (expense)	170,838			(11,013		)	(32,416		)	—			127,409
AOCI before reclassification, net of tax	(642,676		)	41,430			121,946			—			(479,300		)
Amounts reclassified from AOCI	(8,101		)	(9,206		)	—			1,159			(16,148		)
Deferred income tax benefit (expense)	1,701			1,933			—			(243		)	3,391
Amounts reclassified from AOCI, net of tax	(6,400		)	(7,273		)	—			916			(12,757		)
Balances, June 30, 2018	$	4,657		$	53,880		$	(19,361	)	$	(90,276	)	$	(51,100	)

⁽¹⁾ Reclassifications affect investment gains (losses), net on the condensed consolidated statements of income.

⁽²⁾ Reclassifications affect net investment income on the condensed consolidated statements of income, except for $(632)(before tax) which affected interest expense for the six months ended June 30, 2018.

⁽³⁾ The adjustments for defined benefit plans are included in the computation of net periodic (benefit) cost of employee benefit plans (see note 11 for additional details).

	Six Months Ended June 30, 2017
	Unrealized holding gains (losses) arising on fixed maturities, available-for-sale (1)			Unrealized holding gains (losses) arising on cash flow hedges (2)			Future policy benefits, DAC and VOBA adjustments			Employee benefit plan adjustment (3)			Total
Balances, January 1, 2017	$	311,748		$	67,076		$	(58,646	)	$	(84,303	)	$	235,875
OCI before reclassifications	367,225			(25,200		)	(84,015		)	—			258,010
Deferred income tax (expense) benefit	(128,529		)	8,820			29,405			—			(90,304		)
AOCI before reclassification, net of tax	238,696			(16,380		)	(54,610		)	—			167,706
Amounts reclassified from AOCI	511			(868		)	—			4,292			3,935
Deferred income tax (expense) benefit	(179		)	304			—			(1,502		)	(1,377		)
Amounts reclassified from AOCI, net of tax	332			(564		)	—			2,790			2,558
Balances, June 30, 2017	$	550,776		$	50,132		$	(113,256	)	$	(81,513	)	$	406,139

⁽¹⁾ Reclassifications affect investment gains (losses), net on the condensed consolidated statements of income.

⁽²⁾ Reclassifications affect net investment income on the condensed consolidated statements of income, except for $1,667 (before tax) which affected interest expense for the six months ended June 30, 2017.

⁽³⁾ The adjustments for defined benefit plans are included in the computation of net periodic (benefit) cost of employee benefit plans (see note 11 for additional details).

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Revenues

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenues

Revenues

Fee Income Revenue Recognition

Fee income is recognized upon transfer of control of promised services when provided to customers in an amount that reflects the consideration expected to be received in exchange for those services. Fee income can be based on a rate per plan or per participant, percentage of assets under management or administration, or rate based on the services provided.

Certain recordkeeping and administrative contracts include non-performance penalties if certain customer satisfaction metrics are not met. The Company estimates a reduction in fee income for non-performance penalties based on an analysis of historical loss.

The sources of fee income from contracts with customers include:

Administration, Recordkeeping, Servicing, and Distribution Fees

Fees earned for providing recordkeeping, shareholder servicing and distribution of funds, administrative, trustee, and custodial services for retirement plan sponsors, plan participants, insurance policy holders and IRA account holders. Recordkeeping contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for the individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. These fees are primarily earned over time (i.e. services are rendered daily) and are calculated as a percentage of assets under administration or as a rate per plan or per participants in a plan. These fees also include service revenues that are recognized as services are rendered and are based upon established billing rates. Such services include loan processing and postage fees. Fees are generally invoiced quarterly and are either deducted directly from plan or participant assets or due within 30 days.

Investment Advisory and Asset Management Fees

Fees earned for investment advisory and asset management and administrative services to retirement plan sponsors, plan participants, insurance policyholders and IRA accountholders, and affiliates of the Company. These fees are primarily earned over time (i.e. services are rendered daily) and are calculated as a percentage of average daily net assets under management or are based upon established billing rates. Fees are generally invoiced quarterly and due within 30 days or are deducted directly from plan, participant, or other investment accounts.

Other Fees

Other fees includes insurance product related fees earned under the guidance of Topic 944, Financial Services - Insurance such as fees for certain variable annuity guaranteed death benefits and insurance risk charges.

The following table presents fee income disaggregated by type of services and segment:

	Three Months Ended June 30, 2018
	Individual Markets		Empower Retirement		Other		Total
Administration, recordkeeping and servicing fees	$	1,162	$	167,348	$	—	$	168,510
Investment advisory and asset management fees	3,443		68,680		1,684		73,807
Other fee income	28,562		15,817		—		44,379
Total Fee Income	$	33,167	$	251,845	$	1,684	$	286,696

	Six Months Ended June 30, 2018
	Individual Markets		Empower Retirement		Other		Total
Administration, recordkeeping and servicing fees	$	2,302	$	325,199	$	—	$	327,501
Investment advisory and asset management fees	6,698		136,970		3,563		147,231
Other fee income	55,795		32,133		—		87,928
Total Fee Income	$	64,795	$	494,302	$	3,563	$	562,660

At June 30, 2018 and December 31, 2017, included in other assets are customer contract receivables of $246,719 and $234,256, respectively. The Company did not have material bad debt expense during the three and six months ended June 30, 2018.

Assets Recognized from the Costs to Obtain and Fulfill a Contract

The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it is expected that the costs are recoverable and the benefit of those costs will be longer than one year. The Company also recognizes an asset for costs that relate directly to fulfilling a contract and are expected to be recovered. At June 30, 2018, the Company included deferred contract costs related to ASC 606 of $44,528 in the DAC and VOBA balance in the condensed consolidated balance sheet.

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2018

Retirement Benefits [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Net periodic cost (benefit) of the Defined Benefit Pension, Post-Retirement Medical, and Supplemental Executive Retirement plans included in general insurance expenses in the accompanying condensed consolidated statements of income includes the following components:

	Three Months Ended June 30,
	Defined Benefit  Pension Plan						Post-Retirement  Medical Plan						Supplemental Executive Retirement Plan						Total
	2018			2017			2018			2017			2018			2017			2018			2017
Components of net periodic cost (benefit):
Service cost	$	—		$	1,333		$	376		$	357		$	—		$	(4	)	$	376		$	1,686
Interest cost	5,709			6,121			172			188			339			405			6,220			6,714
Expected return on plan assets	(5,331		)	(5,118		)	—			—			—			—			(5,331		)	(5,118		)
Amortization of unrecognized prior service costs (benefits)	—			—			(5		)	(52		)	81			125			76			73
Amortization of losses (gains) from earlier periods	584			2,199			(70		)	(113		)	(11		)	(13		)	503			2,073
Net periodic cost (benefit)	$	962		$	4,535		$	473		$	380		$	409		$	513		$	1,844		$	5,428

	Six Months Ended June 30,
	Defined Benefit  Pension Plan						Post-Retirement  Medical Plan						Supplemental Executive Retirement Plan						Total
	2018			2017			2018			2017			2018			2017			2018			2017
Components of net periodic cost (benefit):
Service cost	$	—		$	(734	)	$	752		$	714		$	—		$	(8	)	$	752		$	(28	)
Interest cost	11,419			12,242			344			376			678			810			12,441			13,428
Expected return on plan assets	(10,661		)	(10,236		)	—			—			—			—			(10,661		)	(10,236		)
Amortization of unrecognized prior service costs (benefits)	—			—			(10		)	(104		)	162			250			152			146
Amortization of losses (gains) from earlier periods	1,168			4,398			(138		)	(226		)	(23		)	(26		)	1,007			4,146
Net periodic cost (benefit)	$	1,926		$	5,670		$	948		$	760		$	817		$	1,026		$	3,691		$	7,456

The Company expects to make payments of approximately $234 with respect to its Post-Retirement Medical Plan and $2,398 with respect to its Supplemental Executive Retirement Plan during the year ended December 31, 2018.  The Company does not expect to make contributions to its Defined Benefit Pension Plan during the year ended December 31, 2018.  A December 31 measurement date is used for the employee benefit plans.

The following table summarizes payments made to the Post-Retirement Medical Plan and the Supplemental Executive Retirement Plan:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Payments to the Post-Retirement Medical Plan	$	34	$	207	$	117	$	376
Payments to the Supplemental Executive Retirement Plan	599		834		1,199		1,668

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Income Taxes

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision for income taxes is comprised of the following:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Current expense	$	22,327	$	18,300	$	6,556	$	31,260
Deferred expense	4,924		7,868		34,248		12,026
Total income tax provision	$	27,251	$	26,168	$	40,804	$	43,286

The following table presents a reconciliation between the statutory federal income tax rate and the Company’s effective income tax rate:

	Six Months Ended June 30,
	2018		2017
Statutory federal income tax rate	21.0	%	35.0	%
Income tax effect of:
Investment income not subject to federal tax	(2.0	)%	(3.4	)%
Tax credits	(0.6	)%	(0.6	)%
State income taxes, net of federal benefit	2.7	%	2.5	%
Other, net	0.6	%	0.3	%
Effective income tax rate	21.7	%	33.8	%

The effective income tax rate from continuing operations was 21.7% for the six months endedJune 30, 2018, compared with 33.8% for the same period in 2017. The decrease in effective income tax rate for the six months endedJune 30, 2018, compared with the same period in 2017, was primarily the result of the passage of the Tax Reconciliation Act, which reduced the U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018.

The Company recorded an increase of $1,924 and an increase of $3,714 in unrecognized tax benefits during the six months ended June 30, 2018, and 2017, respectively. The Company anticipates additional increases to its unrecognized tax benefits of $3,000 to $4,000 in the next twelve months. The Company expects that the majority of the increase in its unrecognized tax benefits will not impact the effective tax rate.

The Company files income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U.S. federal income tax examinations by tax authorities for years 2013 and prior.  Tax years 2014 through 2016 are open to federal examination by the Internal Revenue Service (“IRS”).  The Company does not expect significant increases or decreases to unrecognized tax benefits relating to federal, state, or local audits.

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Segment Information

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Segment Information

Segment Information

The Chief Operating Decision Maker (“CODM”) of the Company is also the Chief Executive Officer (“CEO”) of the Company and Lifeco U.S. The CODM reviews the financial information for the purposes of assessing performance and allocating resources based upon the results of Lifeco U.S. and other U.S. affiliates prepared in accordance with International Financial Reporting Standards. The CODM, in his capacity as CEO of the Company, reviews the Company’s financial information only

in connection with the quarterly and annual reports that are filed with the Securities and Exchange Commission (“SEC”).

Consequently, the Company does not provide its discrete financial information to the CODM to be regularly reviewed to make

decisions about resources to be allocated or to assess performance. For purposes of SEC reporting requirements, the Company

has chosen to present its financial information in three segments, notwithstanding the above. The three segments are: Individual Markets, Empower Retirement, and Other. 

Individual Markets

The Individual Markets reporting and operating segment distributes life insurance and individual annuity products to both individuals and businesses through various distribution channels.  Life insurance products in-force include participating and non-participating term life, whole life, universal life, and variable universal life.

Empower Retirement

The Empower Retirement reporting and operating segment provides various retirement plan products and investment options as well as comprehensive administrative and record-keeping services for financial institutions and employers, which include educational, advisory, enrollment, and communication services for employer-sponsored defined contribution plans and associated defined benefit plans.

Other

The Company’s Other reporting segment is substantially comprised of activity under the assumption of reinsurance between Great-West Life & Annuity Insurance Company of South Carolina (“GWSC”), a wholly owned subsidiary, and The Canada Life Assurance Company (“CLAC”) (“the GWSC operating segment”), corporate items not directly allocated to the other operating segments, and interest expense on long-term debt.

The accounting principles used to determine segment results are the same as those used in the consolidated financial statements.  The Company evaluates performance of its reportable segments based on their profitability from operations after income taxes. Inter-segment transactions and balances have been eliminated in consolidation.  The Company’s operations are not materially dependent on one or a few customers, brokers, or agents. The following tables summarize segment financial information:

	Three Months Ended June 30, 2018
	Individual		Empower
	Markets		Retirement		Other		Total
Revenue:
Premium income	$	49,955	$	1,086	$	27,114	$	78,155
Fee income	33,167		251,845		1,684		286,696
Other revenue	—		3,077		—		3,077
Net investment income	197,403		117,289		12,779		327,471
Investment gains (losses), net	32,117		8,138		1		40,256
Total revenues	312,642		381,435		41,578		735,655
Benefits and expenses:
Policyholder benefits	201,554		53,968		5,164		260,686
Operating expenses	58,422		258,871		31,797		349,090
Total benefits and expenses	259,976		312,839		36,961		609,776
Income before income taxes	52,666		68,596		4,617		125,879
Income tax expense	10,135		16,009		1,107		27,251
Net income	$	42,531	$	52,587	$	3,510	$	98,628

	Three Months Ended June 30, 2017
	Individual		Empower
	Markets		Retirement		Other			Total
Revenue:
Premium income	$	44,701	$	1,052	$	21,910		$	67,663
Fee income	29,199		236,573		1,566			267,338
Other revenue	—		3,661		—			3,661
Net investment income	192,788		92,756		11,677			297,221
Realized investment gains (losses), net	4,037		18,011		16			22,064
Total revenues	270,725		352,053		35,169			657,947
Benefits and expenses:
Policyholder benefits	198,171		50,702		20,671			269,544
Operating expenses	47,420		249,178		15,813			312,411
Total benefits and expenses	245,591		299,880		36,484			581,955
Income (loss) before income taxes	25,134		52,173		(1,315		)	75,992
Income tax expense (benefit)	8,531		17,996		(359		)	26,168
Net income (loss)	$	16,603	$	34,177	$	(956	)	$	49,824

	Six Months Ended June 30, 2018
	Individual		Empower
	Markets		Retirement			Other		Total
Revenue:
Premium income	$	173,540	$	1,675		$	47,621	$	222,836
Fee income	64,795		494,302			3,563		562,660
Other revenue	—		6,062			—		6,062
Net investment income	394,732		246,297			24,583		665,612
Investment gains (losses), net	15,447		(18,984		)	50		(3,487		)
Total revenues	648,514		729,352			75,817		1,453,683
Benefits and expenses:
Policyholder benefits	473,562		105,247			20,461		599,270
Operating expenses	101,024		518,752			46,547		666,323
Total benefits and expenses	574,586		623,999			67,008		1,265,593
Income before income taxes	73,928		105,353			8,809		188,090
Income tax expense	14,033		24,777			1,994		40,804
Net income	$	59,895	$	80,576		$	6,815	$	147,286

	Six Months Ended June 30, 2017
	Individual		Empower
	Markets		Retirement		Other			Total
Revenue:
Premium income	$	176,260	$	1,143	$	42,501		$	219,904
Fee income	55,180		463,892		3,381			522,453
Other revenue	—		6,045		—			6,045
Net investment income	376,993		210,375		23,323			610,691
Realized investment gains (losses), net	4,622		5,695		(7		)	10,310
Total revenues	613,055		687,150		69,198			1,369,403
Benefits and expenses:
Policyholder benefits	468,259		98,330		42,382			608,971
Operating expenses	85,807		504,941		41,746			632,494
Total benefits and expenses	554,066		603,271		84,128			1,241,465
Income (loss) before income taxes	58,989		83,879		(14,930		)	127,938
Income tax expense (benefit)	20,182		28,421		(5,317		)	43,286
Net income (loss)	$	38,807	$	55,458	$	(9,613	)	$	84,652

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Commitments

The Company has a revolving credit facility agreement in the amount of $50,000 for general corporate purposes.  The credit facility expires on March 1, 2023.  Interest accrues at a rate dependent on various conditions and terms of borrowings.  The agreement requires, among other things, the Company to maintain a minimum adjusted net worth of $1,022,680, as defined in the credit facility agreement (compiled on the statutory accounting basis prescribed by the National Association of Insurance Commissioners), at any time.  The Company was in compliance with all covenants at June 30, 2018 and December 31, 2017.  At June 30, 2018 and December 31, 2017, there were no outstanding amounts related to the credit facility.

GWL&A Financial has a letter of credit for the benefit of GWSC for capital support in the amount of $70,000 and which

renews annually until the Company terminates it under the provisions specified in the agreement. At June 30, 2018 and December 31, 2017, there were no outstanding amounts related to the letter of credit.

In addition, the Company has other letters of credit with a total amount of $9,095, renewable annually for an indefinite period of time. At June 30, 2018 and December 31, 2017, there were no outstanding amounts related to those letters of credit.

The Company makes commitments to fund partnership interests, mortgage loans on real estate, and other investments in the normal course of its business.  The amounts of these unfunded commitments at June 30, 2018 and December 31, 2017, were as follows:

	June 30, 2018		December 31, 2017
Due in less than one year	$	269,760	$	312,152
Due within one to three years	—		1,090
Total	$	269,760	$	313,242

Included in the total unfunded commitments at June 30, 2018 and December 31, 2017, is $119,731and $114,726, respectively, related to limited partnership interests, all of which is due within one year from the dates indicated.

Contingencies

From time to time, the Company may be threatened with, or named as a defendant in, lawsuits, arbitrations, and administrative claims. Any such claims that are decided against the Company could harm the Company’s business. The Company is also subject to periodic regulatory audits and inspections which could result in fines or other disciplinary actions. Unfavorable outcomes in such matters may result in a material impact on the Company's financial position, results of operations, or cash flows.

The Company is defending lawsuits relating to the costs and features of certain retirement or fund products. Management believes the claims are without merit and will defend these actions. Based on the information known, these actions will not have a material adverse effect on the consolidated financial position of the Company.

The Company is involved in other various legal proceedings that arise in the ordinary course of its business.  In the opinion of management, after consultation with counsel, the likelihood of loss from the resolution of these proceedings is remote and/or the estimated loss is not expected to have a material effect on the Company’s consolidated financial position, results of its operations, or cash flows.

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Subsequent Events

6 Months Ended

Jun. 30, 2018

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On July 25, 2018, the Company’s Board of Directors declared dividends of$30,000, to be paid on September 28, 2018, to its sole shareholder, GWL&A Financial.

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Organization and Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and the accounts of its subsidiaries over which it exercises control and are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).  Intercompany transactions and balances have been eliminated in consolidation.

The condensed consolidated balance sheet as of December 31, 2017, which was derived from the Company’s audited consolidated financial statements, and the unaudited interim condensed consolidated financial statements as of and for the three and six months ended June 30, 2018, have been prepared in accordance with the instructions for Form 10-Q.  In compliance with those instructions, certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.  As such, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

In the opinion of management, these statements include all normal recurring adjustments necessary to fairly present the Company’s condensed consolidated results of operations, financial position, and cash flows as of June 30, 2018, and for all periods presented. The condensed consolidated results of operations and condensed consolidated statement of cash flows for the six months ended June 30, 2018, are not necessarily indicative of the results or cash flows expected for the full year.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recently Adopted and Future Adoption of Accounting Pronouncements

Recently adopted accounting pronouncements

In May, 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, and all the related amendments to customer contracts (collectively “ASC 606”), effective for interim and annual periods beginning after December 15, 2017. ASC 606 supersedes nearly all existing revenue recognition guidance under U.S. GAAP; however, it did not impact the accounting for insurance and investment contracts within the scope of financial services insurance, leases, financial instruments and guarantees. The core principle of the model requires that an entity recognizes revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The update also requires increased disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts. See Note 10 for additional information.

On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605, Revenue Recognition (“ASC 605”).

The primary impact of ASC 606 to the Company relates to the accounting for certain contract costs and contract fulfillment costs, which were expensed as incurred under ASC 605. Under ASC 606, these costs are deferred and amortized over the expected life of the customer contract, which the Company determined to be 10 years. The Company presents these contract costs and contract fulfillment costs on the condensed consolidated balance sheet as a part of the DAC and VOBA balance.

The Company recorded a net increase to opening retained earnings of $32,952, net of tax, as of January 1, 2018 due to the cumulative impact of adopting ASC 606.

In January, 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, effective for interim and annual periods beginning after December 15, 2017. The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments including requiring equity investments (except those accounted for under the equity method of accounting) to be measured at fair value with changes in fair value recognized in net income, eliminating certain disclosure requirements related to financial instruments measured at amortized cost, and adding disclosures related to the measurement categories of financial assets and financial liabilities.  The primary impact to the Company’s condensed consolidated financial statements was that the Company’s limited partnership interests, that were accounted for under the cost method, are now measured at fair value with changes in the fair value recognized in net income. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force), effective for fiscal years and interim periods within those beginning after December 15, 2017. This ASU addresses diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The primary impacts to the Company’s condensed consolidated financial statement include reclassification of proceeds received from the settlement of corporate-owned life insurance policies (“COLI”) from cash flow from operations to cash flow from investing and reclassification of certain change in due to / from parent and affiliate from investing to operating. As the Company has retroactively applied this guidance as required by the ASU, the following updates were made to the condensed consolidated cash flow statement for the six months ended June 30, 2017 to conform to current year presentation:

• Reclassification of proceeds received from the settlement of COLIs of $1,680 from cash flow from operations to cash flows from investing; and

• Reclassification of change in due to / from parent and affiliate of $21,388 from cash flow from financing to cash flows from operations.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash (a consensus of the Emerging Issues Task Force), effective for fiscal years and interim periods within those beginning after December 15, 2017. This update requires organizations to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The adoption of this standard did not have a material impact on the condensed consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, effective for annual reporting periods beginning on or after December 15, 2017, and interim periods within those annual periods. This update requires organizations to disaggregate the service cost component from the other components of net benefit costs in the income statement and present it with other current compensation costs for the related employees while providing guidance for capitalization eligibility for service costs. The adoption of this standard did not have a material impact on the condensed consolidated financial statements.

Future adoption of new accounting pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases, and all the related amendments to leases (collectively “ASU 2016-02”) effective for annual reporting periods beginning on or after December 15, 2018, and interim periods within those annual periods. Earlier application is permitted as of the beginning of an interim or annual period. This update requires organizations to recognize lease assets and lease liabilities on the balance sheet with lease terms of more than 12 months and also disclose certain qualitative and quantitative information about leasing arrangements. The Company’s implementation efforts are primarily focused on identifying a new lease accounting system, the review of its existing lease contracts and performing a completeness assessment over the lease population. The Company continues to evaluate the impact of this update on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments: Credit Losses: Measurement of Credit Losses on Financial Instruments, effective for fiscal years and interim periods within those beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2018. This update amends guidance on the impairment of financial instruments by adding an impairment model that is based on expected losses rather than incurred losses and is intended to result in more timely recognition of losses. The standard also simplifies the accounting by decreasing the number of credit impairment models that an entity can use to account for debt instruments. The Company continues to evaluate the impact of this update on its condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other, effective for annual or any interim goodwill impairment tests after December 15, 2019.  Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The update eliminates Step 2 from the goodwill impairment test and will require management to perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.  Any amount by which the carrying amount exceeds the reporting unit’s fair value (not to exceed the goodwill allocated to that reporting unit) is recognized as an impairment charge.  The Company performs its goodwill impairment annually in the 4th quarter or more frequently if events or circumstances indicate that there may be justification for performing an interim test. The adoption of this standard is not anticipated to have a material impact on the condensed consolidated financial statements.

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Summary of Investments (Tables)

6 Months Ended

Jun. 30, 2018

Investments, Debt and Equity Securities [Abstract]

Summary of fixed maturity investments classified as available-for-sale and the non-credit related components of other-than-temporary impairments (OTTI) in accumulated other comprehensive income (loss) (AOCI)

The following tables summarize fixed maturity investments classified as available-for-sale and the non-credit-related component of other-than-temporary impairments (“OTTI”) in accumulated other comprehensive income (loss) (“AOCI”): 

	June 30, 2018
	Amortized		Gross unrealized		Gross unrealized		Estimated fair value		OTTI (gain) loss
Fixed maturities:	cost		gains		losses		and carrying value		included in AOCI (1)
U.S. government direct obligations and U.S. agencies	$	1,362,245	$	26,310	$	32,382	$	1,356,173	$	—
Obligations of U.S. states and their subdivisions	1,841,971		165,819		4,368		2,003,422		—
Corporate debt securities (2)	15,596,700		262,319		420,281		15,438,738		(779		)
Asset-backed securities	1,609,259		68,040		23,498		1,653,801		(36,665		)
Residential mortgage-backed securities	56,655		2,056		886		57,825		(70		)
Commercial mortgage-backed securities	1,358,117		4,899		43,216		1,319,800		—
Collateralized debt obligations	932,625		1,544		1,191		932,978		—
Total fixed maturities	$	22,757,572	$	530,987	$	525,822	$	22,762,737	$	(37,514	)

⁽¹⁾  Indicates the amount of any OTTI (gain) loss included in AOCI that is included in gross unrealized gains and losses.  OTTI (gain) loss included in AOCI, as presented above, includes both the initial recognition of non-credit losses and the effects of subsequent increases and decreases in estimated fair value for those fixed maturity securities with previous non-credit impairment. The non-credit loss component of OTTI (gain) loss was in an unrealized gain position due to increases in estimated fair value subsequent to initial recognition of non-credit losses on such securities.

⁽²⁾ Includes perpetual debt investments with amortized cost of $89,267 and estimated fair value of $81,435.

	December 31, 2017
	Amortized		Gross unrealized		Gross unrealized		Estimated fair value		OTTI (gain) loss
Fixed maturities:	cost		gains		losses		and carrying value		included in AOCI (1)
U.S. government direct obligations and U.S. agencies	$	1,837,748	$	41,777	$	7,883	$	1,871,642	$	—
Obligations of U.S. states and their subdivisions	1,872,120		220,507		1,655		2,090,972		—
Corporate debt securities (2)	15,234,473		581,991		110,377		15,706,087		(1,018		)
Asset-backed securities	1,622,806		105,301		10,131		1,717,976		(56,735		)
Residential mortgage-backed securities	63,187		2,446		649		64,984		(140		)
Commercial mortgage-backed securities	1,352,906		17,692		12,989		1,357,609		—
Collateralized debt obligations	779,722		4,227		80		783,869		—
Total fixed maturities	$	22,762,962	$	973,941	$	143,764	$	23,593,139	$	(57,893	)

⁽¹⁾  Indicates the amount of any OTTI (gain) loss included in AOCI that is included in gross unrealized gains and losses.  OTTI (gain) loss included in AOCI, as presented above, includes both the initial recognition of non-credit losses and the effects of subsequent increases and decreases in estimated fair value for those fixed maturity securities with previous non-credit impairment. The non-credit loss component of OTTI (gain) loss was in an unrealized gain position due to increases in estimated fair value subsequent to initial recognition of non-credit losses on such securities.

⁽²⁾ Includes perpetual debt investments with amortized cost of $89,267 and estimated fair value of $87,348.

Schedule of amortized cost and estimated fair value of fixed maturity investments classified as available-for-sale

The amortized cost and estimated fair value of fixed maturity investments classified as available-for-sale, by contractual maturity date, are shown in the table below.  Actual maturities will likely differ from these projections because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. 

	June 30, 2018
	Amortized cost		Estimated fair value
Maturing in one year or less	$	619,874	$	620,381
Maturing after one year through five years	3,447,149		3,441,249
Maturing after five years through ten years	8,216,510		8,066,134
Maturing after ten years	5,500,704		5,670,372
Mortgage-backed and asset-backed securities	4,973,335		4,964,601
Total fixed maturities	$	22,757,572	$	22,762,737

Summary of information regarding the sales of securities classified as available-for-sale

The following table summarizes information regarding the sales of securities classified as available-for-sale:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Proceeds from sales	$	511,199	$	891,026	$	1,477,619	$	2,471,548
Gross realized gains from sales	12,452		8,488		24,726		20,921
Gross realized losses from sales	9,789		6,080		16,072		21,337

Summary of activity in the mortgage provision allowance

The following table summarizes activity in the mortgage provision allowance:

	Six Months Ended June 30, 2018		Year Ended December 31, 2017
	Commercial mortgages		Commercial mortgages
Beginning balance	$	773	$	2,882
Provision increases	—		157
Charge-off	—		(663		)
Recovery	—		(30		)
Provision decreases	—		(1,573		)
Ending balance	$	773	$	773
Allowance ending balance by basis of impairment method:
Collectively evaluated for impairment	773		773
Recorded investment balance in the mortgage loan portfolio, gross of allowance, by basis of impairment method:	$	4,316,971	$	4,005,960
Individually evaluated for impairment	2,799		2,942
Collectively evaluated for impairment	4,314,172		4,003,018

Schedule of unrealized investment losses, including the non-credit-related portion of OTTI losses reported in AOCI, by class of investment

The following tables summarize unrealized investment losses, including the non-credit-related portion of OTTI losses reported in AOCI, by class of investment:

	June 30, 2018
	Less than twelve months				Twelve months or longer				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
Fixed maturities:	fair value		loss and OTTI		fair value		loss and OTTI		fair value		loss and OTTI
U.S. government direct obligations and U.S. agencies	$	833,130	$	25,923	$	150,012	$	6,459	$	983,142	$	32,382
Obligations of U.S. states and their subdivisions	157,066		1,958		36,003		2,410		193,069		4,368
Corporate debt securities	8,687,225		278,236		1,591,254		142,045		10,278,479		420,281
Asset-backed securities	764,102		14,417		211,254		9,081		975,356		23,498
Residential mortgage-backed securities	3,679		63		10,029		823		13,708		886
Commercial mortgage-backed securities	838,617		24,039		280,386		19,177		1,119,003		43,216
Collateralized debt obligations	296,314		1,191		—		—		296,314		1,191
Total fixed maturities	$	11,580,133	$	345,827	$	2,278,938	$	179,995	$	13,859,071	$	525,822
Total number of securities in an unrealized loss position			1,076				268				1,344

	December 31, 2017
	Less than twelve months				Twelve months or longer				Total
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
Fixed maturities:	fair value		loss and OTTI		fair value		loss and OTTI		fair value		loss and OTTI
U.S. government direct obligations and U.S. agencies	$	755,861	$	4,159	$	230,447	$	3,724	$	986,308	$	7,883
Obligations of U.S. states and their subdivisions	24,908		180		37,012		1,475		61,920		1,655
Corporate debt securities	2,229,585		19,568		2,036,323		90,809		4,265,908		110,377
Asset-backed securities	544,778		3,011		245,341		7,120		790,119		10,131
Residential mortgage-backed securities	4,405		23		11,416		626		15,821		649
Commercial mortgage-backed securities	342,820		2,451		295,164		10,538		637,984		12,989
Collateralized debt obligations	7,277		80		—		—		7,277		80
Total fixed maturities	$	3,909,634	$	29,472	$	2,855,703	$	114,292	$	6,765,337	$	143,764
Total number of securities in an unrealized loss position			368				293				661

Other-than-temporary impairment recognition

The OTTI on fixed maturity securities where the loss portion is bifurcated and the credit related component is recognized in investment (losses) gains is summarized as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Beginning balance	$	52,775		$	80,359		$	62,231		$	83,665
Reductions:
Due to sales, maturities or payoffs during the period	—			—			(1,510		)	—
Due to increases in cash flows expected to be collected that are recognized over the remaining life of the security	(3,092		)	(2,948		)	(11,038		)	(6,254		)
Ending balance	$	49,683		$	77,411		$	49,683		$	77,411

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of derivative financial instruments

The following tables summarize the notional amount and fair value of derivative financial instruments, excluding embedded derivatives:

	June 30, 2018
			Net derivatives			Asset derivatives		Liability derivatives
	Notional amount		Fair value			Fair value (1)		Fair value (1)
Hedge designation/derivative type:
Derivatives designated as hedges:
Cash flow hedges:
Interest rate swaps	$	22,300	$	5,917		$	5,917	$	—
Cross-currency swaps	864,154		(8,854		)	30,471		39,325
Total cash flow hedges	886,454		(2,937		)	36,388		39,325
Total derivatives designated as hedges	886,454		(2,937		)	36,388		39,325
Derivatives not designated as hedges:
Interest rate swaps	548,500		577			1,461		884
Futures on equity indices	56,521		—			—		—
Interest rate futures	34,300		—			—		—
Interest rate swaptions	190,400		163			163		—
Other forward contracts	2,460,000		3,294			4,565		1,271
Cross-currency swaps	573,703		(11,778		)	20,292		32,070
Total derivatives not designated as hedges	3,863,424		(7,744		)	26,481		34,225
Total derivative financial instruments	$	4,749,878	$	(10,681	)	$	62,869	$	73,550

⁽¹⁾ The estimated fair value includes accrued income and expense. The estimated fair value of all derivatives in an asset position is reported within other assets and the estimated fair value of all derivatives in a liability position is reported within other liabilities in the condensed consolidated balance sheets.

	December 31, 2017
			Net derivatives			Asset derivatives		Liability derivatives
	Notional amount		Fair value			Fair value (1)		Fair value (1)
Hedge designation/derivative type:
Derivatives designated as hedges:
Cash flow hedges:
Interest rate swaps	$	388,800	$	7,476		$	7,476	$	—
Cross-currency swaps	800,060		(31,358		)	19,958		51,316
Total cash flow hedges	1,188,860		(23,882		)	27,434		51,316
Total derivatives designated as hedges	1,188,860		(23,882		)	27,434		51,316
Derivatives not designated as hedges:
Interest rate swaps	519,100		1,902			3,530		1,628
Futures on equity indices	22,074		—			—		—
Interest rate futures	60,700		—			—		—
Interest rate swaptions	164,522		75			75		—
Cross-currency swaps	612,733		(21,279		)	20,320		41,599
Total derivatives not designated as hedges	1,379,129		(19,302		)	23,925		43,227
Total derivative financial instruments	$	2,567,989	$	(43,184	)	$	51,359	$	94,543

⁽¹⁾ The estimated fair value excludes accrued income and expense. The estimated fair value of all derivatives in an asset position is reported within other assets and the estimated fair value of all derivatives in a liability position is reported within other liabilities in the condensed consolidated balance sheets.

Schedule of the effect of derivative instruments in the condensed consolidated statement of income reported by cash flow hedges, fair value hedges and economic hedges

The following tables present the effect of derivative instruments in the condensed consolidated statements of income and comprehensive income reported by cash flow hedges and derivatives not designated as hedges, excluding embedded derivatives: 

	Gain (loss) recognized in OCI on derivatives (Effective portion)						Gain (loss) reclassified from OCI into net income (Effective portion)
	Three Months Ended June 30,						Three Months Ended June 30,
	2018			2017			2018		2017
Cash flow hedges:
Interest rate swaps	$	(319	)	$	644		$	705	$	1,186		(A)
Interest rate swaps	1			(8,193		)	887		(787		)	(B)
Cross-currency swaps	59,257			(10,696		)	7,467		(973		)	(A)
Total cash flow hedges	$	58,939		$	(18,245	)	$	9,059	$	(574	)

(A) Net investment income.

(B) Interest expense.

	Gain (loss) recognized in OCI on derivatives (Effective portion)						Gain (loss) reclassified from OCI into net income (Effective portion)
	Six Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018		2017
Cash flow hedges:
Interest rate swaps	$	(1,331	)	$	496		$	1,633	$	2,406		(A)
Interest rate swaps	29,030			(4,350		)	632		(1,667		)	(B)
Cross-currency swaps	24,744			(21,346		)	6,941		129			(A)
Total cash flow hedges	$	52,443		$	(25,200	)	$	9,206	$	868

(A) Net investment income.

(B) Interest expense.

	Gain (loss) on derivatives recognized in net income
	Three Months Ended June 30,
	2018				2017
Derivatives not designated as hedging instruments:
Futures on equity indices	$	—		(A)	$	350		(A)
Futures on equity indices	(1,504		)	(B)	(1,536		)	(B)
Interest rate swaps	—			(A)	4,976			(A)
Interest rate swaps	(3,336		)	(B)	—			(B)
Interest rate futures	—			(A)	116			(A)
Interest rate futures	67			(B)	(206		)	(B)
Interest rate swaptions	—			(A)	(4		)	(A)
Interest rate swaptions	(187		)	(B)	(77		)	(B)
Other forward contracts	—			(A)	(9,363		)	(A)
Other forward contracts	(1,575		)	(B)	18,716			(B)
Cross-currency swaps	—			(A)	(8,083		)	(A)
Cross-currency swaps	40,739			(B)	—			(B)
Total derivatives not designated as hedging instruments	$	34,204			$	4,889

(A) Net investment income.

(B) Represents investment (losses) gains, net.

	Gain (loss) on derivatives recognized in net income
	Six Months Ended June 30,
	2018				2017
Derivatives not designated as hedging instruments:
Futures on equity indices	$	—		(A)	$	(334	)	(A)
Futures on equity indices	(2,145		)	(B)	(2,820		)	(B)
Interest rate swaps	—			(A)	3,427			(A)
Interest rate swaps	(14,302		)	(B)	—			(B)
Interest rate futures	—			(A)	102			(A)
Interest rate futures	115			(B)	(201		)	(B)
Interest rate swaptions	—			(A)	(31		)	(A)
Interest rate swaptions	(151		)	(B)	(151		)	(B)
Other forward contracts	—			(A)	(2,580		)	(A)
Other forward contracts	(21,943		)	(B)	13,119			(B)
Cross-currency swaps	—			(A)	(22,251		)	(A)
Cross-currency swaps	12,595			(B)	—			(B)
Total derivatives not designated as hedging instruments	$	(25,831	)		$	(11,720	)

(A) Net investment income.

(B) Represents investment (losses) gains, net.

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Summary of Offsetting Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2018

Offsetting [Abstract]

Summary of the Company's financial instruments that are subject to master netting arrangements

The following tables summarize the effect of master netting arrangements on the Company’s financial position in the normal course of business and in the event of default or bankruptcy of the Company’s counterparties: 

	June 30, 2018
			Gross fair value not offset
			in balance sheets
	Gross fair value of		Financial						Net
Financial instruments:	recognized assets/liabilities (1)		instruments			Cash collateral			fair value
Derivative instruments (assets) (2)	$	62,869	$	(50,356	)	$	(10,612	)	$	1,901
Derivative instruments (liabilities) (3)	$	73,550	$	(50,356	)	$	(16,310	)	$	6,884

⁽¹⁾ The gross fair value of derivative instrument assets is not netted against offsetting liabilities for presentation on the condensed consolidated balance sheets.

⁽²⁾ The estimated fair value of derivative instrument assets is reported in other assets in the condensed consolidated balance sheets. Derivative transactions entered into under ISDA master agreements include income and expense accruals.

⁽³⁾ The estimated fair value of derivative instrument liabilities is reported in other liabilities in the condensed consolidated balance sheets. Derivative transactions entered into under ISDA master agreements include income and expense accruals.

	December 31, 2017
			Gross fair value not offset
			in balance sheets
	Gross fair value of		Financial						Net
Financial instruments (assets):	recognized assets (1)		instruments			Cash collateral			fair value
Derivative instruments (2)	$	52,738	$	(47,827	)	$	(4,911	)	$	—
Short-term reverse repurchase agreements (3)	23,200		(23,200		)	—			—
Total financial instruments (assets)	$	75,938	$	(71,027	)	$	(4,911	)	$	—
	December 31, 2017
			Gross fair value not offset
			in balance sheets
	Gross fair value of		Financial						Net
Financial instruments (liabilities):	recognized liabilities (1)		instruments			Cash collateral			fair value
Derivative instruments (4)	$	93,761	$	(47,827	)	$	(42,750	)	$	3,184

⁽¹⁾ The gross fair value of derivative instrument and short-term reverse repurchase agreement assets is not netted against offsetting liabilities for presentation on the condensed consolidated balance sheets.

⁽²⁾ The estimated fair value of derivative instrument assets is reported in other assets in the condensed consolidated balance sheets. Derivative transactions entered into under ISDA master agreements include income and expense accruals.

⁽³⁾ The estimated fair value of short-term reverse repurchase agreement assets is reported in short-term investments in the condensed consolidated balance sheets. The collateral is held by an independent third-party custodian under a tri-party agreement.

⁽⁴⁾ The estimated fair value of derivative instrument liabilities is reported in other liabilities in the condensed consolidated balance sheets. Derivative transactions entered into under ISDA master agreements include income and expense accruals.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Schedule of financial assets and liabilities carried at fair value on a recurring basis

The following tables present the Company’s financial assets and liabilities carried at fair value on a recurring basis by fair value hierarchy category:

	Assets and liabilities measured at fair value on a recurring basis
	June 30, 2018
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Assets
Fixed maturities available-for-sale:
U.S. government direct obligations and U.S. agencies	$	—	$	1,356,173	$	—	$	1,356,173
Obligations of U.S. states and their subdivisions	—		2,003,422		—		2,003,422
Corporate debt securities	—		15,429,768		8,970		15,438,738
Asset-backed securities	—		1,653,801		—		1,653,801
Residential mortgage-backed securities	—		57,825		—		57,825
Commercial mortgage-backed securities	—		1,319,800		—		1,319,800
Collateralized debt obligations	—		932,978		—		932,978
Total fixed maturities available-for-sale	—		22,753,767		8,970		22,762,737
Fixed maturities held-for-trading:
U.S. government direct obligations and U.S. agencies	—		15,481		—		15,481
Corporate debt securities	—		3,001		—		3,001
Commercial mortgage-backed securities	—		1,037		—		1,037
Total fixed maturities held-for-trading	—		19,519		—		19,519
Short-term investments	260,967		33,347		—		294,314
Limited partnership interests (1)	—		—		—		63,586
Equity investments	37,564		5,011		—		42,575
Collateral under securities lending agreements	—		80,013		—		80,013
Collateral under derivative counterparty collateral agreements	39,865		—		—		39,865
Derivative instruments designated as hedges:
Interest rate swaps	—		5,917		—		5,917
Cross-currency swaps	—		30,471		—		30,471
Derivative instruments not designated as hedges:
Interest rate swaps	—		1,461		—		1,461
Interest rate swaptions	—		163		—		163
Other forward contracts	—		4,565		—		4,565
Cross-currency swaps	—		20,292		—		20,292
Total derivative instruments	—		62,869		—		62,869
Separate account assets (1)	16,089,089		10,137,807		—		26,676,615
Total assets	$	16,389,921	$	33,087,322	$	8,970	$	49,935,932
Liabilities
Payable under securities lending agreements	$	—	$	80,013	$	—	$	80,013
Collateral under derivative counterparty collateral agreements	12,696		—		—		12,696
Derivative instruments designated as hedges:
Cross-currency swaps	—		39,325		—		39,325
Derivative instruments not designated as hedges:
Interest rate swaps	—		884		—		884
Other forward contracts	—		1,271		—		1,271
Cross-currency swaps	—		32,070		—		32,070
Total derivative instruments	—		73,550		—		73,550
Embedded derivatives - GLWB	—		—		513		513
Separate account liabilities (2)	—		431,960		—		431,960
Total liabilities	$	12,696	$	585,523	$	513	$	598,732

⁽¹⁾ Included in the total fair value amount are $450 million of separate account assets and $64 million of limited partnership interests as of     June 30, 2018 for which the fair value is estimated using net asset value per unit as a practical expedient.

 ⁽²⁾ Includes only separate account instruments which are carried at the fair value of the underlying liabilities owned by the separate accounts.

	Assets and liabilities measured at fair value on a recurring basis
	December 31, 2017
	Quoted prices		Significant
	in active markets for identical assets (Level 1)		other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Assets
Fixed maturities available-for-sale:
U.S. government direct obligations and U.S. agencies	$	—	$	1,871,642	$	—	$	1,871,642
Obligations of U.S. states and their subdivisions	—		2,090,972		—		2,090,972
Corporate debt securities	—		15,696,349		9,738		15,706,087
Asset-backed securities	—		1,717,976		—		1,717,976
Residential mortgage-backed securities	—		64,984		—		64,984
Commercial mortgage-backed securities	—		1,357,609		—		1,357,609
Collateralized debt obligations	—		783,869		—		783,869
Total fixed maturities available-for-sale	—		23,583,401		9,738		23,593,139
Fixed maturities held-for-trading:
U.S. government direct obligations and U.S. agencies	—		16,836		—		16,836
Corporate debt securities	—		3,156		—		3,156
Commercial mortgage-backed securities	—		1,067		—		1,067
Total fixed maturities held-for-trading	—		21,059		—		21,059
Short-term investments	288,302		61,964		—		350,266
Collateral under derivative counterparty collateral agreements	57,820		—		—		57,820
Derivative instruments designated as hedges:
Interest rate swaps	—		7,476		—		7,476
Cross-currency swaps	—		19,958		—		19,958
Derivative instruments not designated as hedges:
Interest rate swaps	—		3,530		—		3,530
Interest rate swaptions	—		75		—		75
Cross-currency swaps	—		20,320		—		20,320
Total derivative instruments	—		51,359		—		51,359
Separate account assets (1)	16,523,630		10,736,532		—		27,660,571
Total assets	$	16,869,752	$	34,454,315	$	9,738	$	51,734,214
Liabilities
Collateral under derivative counterparty collateral agreements	$	5,490	$	—	$	—	$	5,490
Derivative instruments designated as hedges:
Cross-currency swaps	—		51,316		—		51,316
Derivative instruments not designated as hedges:
Interest rate swaps	—		1,628		—		1,628
Cross-currency swaps	—		41,599		—		41,599
Total derivative instruments	—		94,543		—		94,543
Embedded derivatives - GLWB	—		—		11,095		11,095
Separate account liabilities (2)	8		409,266		—		409,274
Total liabilities	$	5,498	$	503,809	$	11,095	$	520,402

⁽¹⁾ Included in the total fair value amounts are $400 million of investments as of December 31, 2017 for which the fair value is estimated using net asset value per unit as a practical expedient.

⁽²⁾ Includes only separate account instruments which are carried at the fair value of the underlying liabilities owned by the separate accounts.

Schedule of assets and liabilities measured at fair value on a recurring basis, for which Level 3 inputs are utilized to determine fair value

The following tables present additional information about assets and liabilities measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

	Recurring Level 3 financial assets and liabilities
	Three Months Ended June 30, 2018
	Assets			Liabilities
	Fixed maturities  available-for-sale			Embedded derivatives - GLWB
	Corporate debt securities
Balances, April 1, 2018	$	9,287		$	3,993
Realized and unrealized gains (losses) included in:
Net income (loss)	—			3,480
Other comprehensive income (loss)	129			—
Settlements	(446		)	—
Balances, June 30, 2018	$	8,970		$	513
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets and liabilities held at June 30, 2018	$	—		$	3,480

	Recurring Level 3 financial assets and liabilities
	Three Months Ended June 30, 2017
	Assets			Liabilities
	Fixed maturities  available-for-sale			Embedded derivatives - GLWB
	Corporate debt securities
Balances, April 1, 2017	$	10,931		$	4,042
Realized and unrealized gains (losses) included in:
Net income (loss)	—			(5,553		)
Other comprehensive income (loss)	84			—
Settlements	(312		)	—
Balances, June 30, 2017	$	10,703		$	9,595
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets and liabilities held at June 30, 2017	$	—		$	(5,553	)

	Recurring Level 3 financial assets and liabilities
	Six Months Ended June 30, 2018
	Assets			Liabilities
	Fixed maturities  available-for-sale			Embedded derivatives - GLWB
	Corporate debt securities
Balances, January 1, 2018	$	9,738		$	11,095
Realized and unrealized gains (losses) included in:
Net income (loss)	—			10,582
Other comprehensive income (loss)	116			—
Settlements	(884		)	—
Balances, June 30, 2018	$	8,970		$	513
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets and liabilities held at June 30, 2018	$	—		$	10,582

	Recurring Level 3 financial assets and liabilities
	Six Months Ended June 30, 2017
	Assets			Liabilities
	Fixed maturities  available-for-sale			Embedded derivatives - GLWB
	Corporate debt securities
Balances, January 1, 2017	$	11,639		$	5,712
Realized and unrealized gains (losses) included in:
Net income (loss)	—			(3,883		)
Other comprehensive income (loss)	(280		)	—
Settlements	(656		)	—
Balances, June 30, 2017	$	10,703		$	9,595
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets and liabilities held at June 30, 2017	$	—		$	(3,883	)

Schedule of significant unobservable inputs used during the valuation of liabilities categorized within Level 3 of the recurring fair value measurements table

The following table presents significant unobservable inputs used during the valuation of certain liabilities categorized within Level 3 of the recurring fair value measurements table:

			Range
	Valuation Technique	Unobservable Input	June 30, 2018	December 31, 2017
Embedded derivatives - GLWB	Risk neutral stochastic valuation methodology	Equity volatility	15% - 30%	15% - 30%
		Swap curve	2.34% - 2.97%	1.69% - 2.54%
		Mortality rate	Based on the Annuity 2000 Mortality Table	Based on the Annuity 2000 Mortality Table
		Base Lapse rate	1% - 15%	1% - 15%

Summary of the carrying amounts and estimated fair values of financial instruments not carried at fair value on a recurring basis

The following tables summarize the carrying amounts and estimated fair values of the Company’s financial instruments and investments not carried at fair value on a recurring basis:

	June 30, 2018					December 31, 2017
					Fair value					Fair value
	Carrying		Estimated		hierarchy	Carrying		Estimated		hierarchy
	amount		fair value		level	amount		fair value		level
Assets
Mortgage loans on real estate	$	4,316,198	$	4,265,476	2	$	4,005,187	$	4,066,800	2
Policy loans	4,121,136		4,121,136		2	4,104,094		4,104,094		2
Limited partnership interests (1)	—		—			43,281		45,009
Other investments	10,723		39,050		3	11,507		41,588		3
Liabilities
Annuity contract benefits without life contingencies	$	12,833,068	$	12,390,980	2	$	12,704,401	$	12,647,309	2
Policyholders’ funds	273,319		273,319		2	280,578		280,578		2
Commercial paper	99,381		99,381		2	99,886		99,886		2
Notes payable	556,529		608,684		2	543,338		581,097		2

⁽¹⁾ The fair value of limited partnership interests as of December 31, 2017 is estimated using net asset value per unit as a practical expedient.

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Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2018

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

Schedule of accumulated balances for each classification of other comprehensive income (loss)

The following table presents the accumulated balances for each classification of other comprehensive income (loss):

	Three Months Ended June 30, 2018
	Unrealized holding gains (losses) arising on fixed maturities, available-for-sale (1)			Unrealized holding gains (losses) arising on cash flow hedges (2)			Future policy benefits, DAC and VOBA adjustments			Employee benefit plan adjustment (3)			Total
Balances, April 1, 2018	$	286,289		$	14,475		$	(72,255	)	$	(90,734	)	$	137,775
OCI before reclassifications	(353,834		)	58,939			66,954			—			(227,941		)
Deferred income tax benefit (expense)	74,304			(12,377		)	(14,060		)	—			47,867
AOCI before reclassification, net of tax	(279,530		)	46,562			52,894			—			(180,074		)
Amounts reclassified from AOCI	(2,661		)	(9,059		)	—			579			(11,141		)
Deferred income tax benefit (expense)	559			1,902			—			(121		)	2,340
Amounts reclassified from AOCI, net of tax	(2,102		)	(7,157		)	—			458			(8,801		)
Balances, June 30, 2018	$	4,657		$	53,880		$	(19,361	)	$	(90,276	)	$	(51,100	)

⁽¹⁾ Reclassifications affect investment gains (losses), net on the condensed consolidated statements of income.

⁽²⁾ Reclassifications affect net investment income on the condensed consolidated statements of income, except for $(887) (before tax) which affected interest expense for the three months ended June 30, 2018.

⁽³⁾ The adjustments for defined benefit plans are included in the computation of net periodic (benefit) cost of employee benefit plans (see note 11 for additional details).

The following table presents the accumulated balances for each classification of other comprehensive income (loss):

	Three Months Ended June 30, 2017
	Unrealized holding gains (losses) arising on fixed maturities, available-for-sale (1)			Unrealized holding gains (losses) arising on cash flow hedges (2)			Future policy benefits, DAC and VOBA adjustments			Employee benefit plan adjustment (3)			Total
Balances, April 1, 2017	$	398,293		$	61,618		$	(77,149	)	$	(82,908	)	$	299,854
OCI before reclassifications	236,996			(18,245		)	(55,549		)	—			163,202
Deferred income tax (expense) benefit	(82,949		)	6,386			19,442			—			(57,121		)
AOCI before reclassification, net of tax	154,047			(11,859		)	(36,107		)	—			106,081
Amounts reclassified from AOCI	(2,406		)	574			—			2,146			314
Deferred income tax benefit (expense)	842			(201		)	—			(751		)	(110		)
Amounts reclassified from AOCI, net of tax	(1,564		)	373			—			1,395			204
Balances, June 30, 2017	$	550,776		$	50,132		$	(113,256	)	$	(81,513	)	$	406,139

⁽¹⁾ Reclassifications affect investment gains (losses), net on the condensed consolidated statements of income.

⁽²⁾ Reclassifications affect net investment income on the condensed consolidated statements of income, except for $787 (before tax) which affected interest expense for the three months ended June 30, 2017.

⁽³⁾ The adjustments for defined benefit plans are included in the computation of net periodic (benefit) cost of employee benefit plans (see note 11 for additional details).

	Six Months Ended June 30, 2018
	Unrealized holding gains (losses) arising on fixed maturities, available-for-sale (1)			Unrealized holding gains (losses) arising on cash flow hedges (2)			Future policy benefits, DAC and VOBA adjustments			Employee benefit plan adjustment (3)			Total
Balances, January 1, 2018	$	544,887		$	103,529		$	(116,267	)	$	(91,192	)	$	440,957
Change in estimate of tax reform impact	108,846			(83,806		)	(25,040		)	—			—
OCI before reclassifications	(813,514		)	52,443			154,362			—			(606,709		)
Deferred income tax benefit (expense)	170,838			(11,013		)	(32,416		)	—			127,409
AOCI before reclassification, net of tax	(642,676		)	41,430			121,946			—			(479,300		)
Amounts reclassified from AOCI	(8,101		)	(9,206		)	—			1,159			(16,148		)
Deferred income tax benefit (expense)	1,701			1,933			—			(243		)	3,391
Amounts reclassified from AOCI, net of tax	(6,400		)	(7,273		)	—			916			(12,757		)
Balances, June 30, 2018	$	4,657		$	53,880		$	(19,361	)	$	(90,276	)	$	(51,100	)

⁽¹⁾ Reclassifications affect investment gains (losses), net on the condensed consolidated statements of income.

⁽²⁾ Reclassifications affect net investment income on the condensed consolidated statements of income, except for $(632)(before tax) which affected interest expense for the six months ended June 30, 2018.

⁽³⁾ The adjustments for defined benefit plans are included in the computation of net periodic (benefit) cost of employee benefit plans (see note 11 for additional details).

	Six Months Ended June 30, 2017
	Unrealized holding gains (losses) arising on fixed maturities, available-for-sale (1)			Unrealized holding gains (losses) arising on cash flow hedges (2)			Future policy benefits, DAC and VOBA adjustments			Employee benefit plan adjustment (3)			Total
Balances, January 1, 2017	$	311,748		$	67,076		$	(58,646	)	$	(84,303	)	$	235,875
OCI before reclassifications	367,225			(25,200		)	(84,015		)	—			258,010
Deferred income tax (expense) benefit	(128,529		)	8,820			29,405			—			(90,304		)
AOCI before reclassification, net of tax	238,696			(16,380		)	(54,610		)	—			167,706
Amounts reclassified from AOCI	511			(868		)	—			4,292			3,935
Deferred income tax (expense) benefit	(179		)	304			—			(1,502		)	(1,377		)
Amounts reclassified from AOCI, net of tax	332			(564		)	—			2,790			2,558
Balances, June 30, 2017	$	550,776		$	50,132		$	(113,256	)	$	(81,513	)	$	406,139

⁽¹⁾ Reclassifications affect investment gains (losses), net on the condensed consolidated statements of income.

⁽²⁾ Reclassifications affect net investment income on the condensed consolidated statements of income, except for $1,667 (before tax) which affected interest expense for the six months ended June 30, 2017.

⁽³⁾ The adjustments for defined benefit plans are included in the computation of net periodic (benefit) cost of employee benefit plans (see note 11 for additional details).

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Revenues (Tables)

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Fee income disaggregated by type of services and segment

The following table presents fee income disaggregated by type of services and segment:

	Three Months Ended June 30, 2018
	Individual Markets		Empower Retirement		Other		Total
Administration, recordkeeping and servicing fees	$	1,162	$	167,348	$	—	$	168,510
Investment advisory and asset management fees	3,443		68,680		1,684		73,807
Other fee income	28,562		15,817		—		44,379
Total Fee Income	$	33,167	$	251,845	$	1,684	$	286,696

	Six Months Ended June 30, 2018
	Individual Markets		Empower Retirement		Other		Total
Administration, recordkeeping and servicing fees	$	2,302	$	325,199	$	—	$	327,501
Investment advisory and asset management fees	6,698		136,970		3,563		147,231
Other fee income	55,795		32,133		—		87,928
Total Fee Income	$	64,795	$	494,302	$	3,563	$	562,660

XML

Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2018

Retirement Benefits [Abstract]

Schedule of net periodic cost (benefit)

Net periodic cost (benefit) of the Defined Benefit Pension, Post-Retirement Medical, and Supplemental Executive Retirement plans included in general insurance expenses in the accompanying condensed consolidated statements of income includes the following components:

	Three Months Ended June 30,
	Defined Benefit  Pension Plan						Post-Retirement  Medical Plan						Supplemental Executive Retirement Plan						Total
	2018			2017			2018			2017			2018			2017			2018			2017
Components of net periodic cost (benefit):
Service cost	$	—		$	1,333		$	376		$	357		$	—		$	(4	)	$	376		$	1,686
Interest cost	5,709			6,121			172			188			339			405			6,220			6,714
Expected return on plan assets	(5,331		)	(5,118		)	—			—			—			—			(5,331		)	(5,118		)
Amortization of unrecognized prior service costs (benefits)	—			—			(5		)	(52		)	81			125			76			73
Amortization of losses (gains) from earlier periods	584			2,199			(70		)	(113		)	(11		)	(13		)	503			2,073
Net periodic cost (benefit)	$	962		$	4,535		$	473		$	380		$	409		$	513		$	1,844		$	5,428

	Six Months Ended June 30,
	Defined Benefit  Pension Plan						Post-Retirement  Medical Plan						Supplemental Executive Retirement Plan						Total
	2018			2017			2018			2017			2018			2017			2018			2017
Components of net periodic cost (benefit):
Service cost	$	—		$	(734	)	$	752		$	714		$	—		$	(8	)	$	752		$	(28	)
Interest cost	11,419			12,242			344			376			678			810			12,441			13,428
Expected return on plan assets	(10,661		)	(10,236		)	—			—			—			—			(10,661		)	(10,236		)
Amortization of unrecognized prior service costs (benefits)	—			—			(10		)	(104		)	162			250			152			146
Amortization of losses (gains) from earlier periods	1,168			4,398			(138		)	(226		)	(23		)	(26		)	1,007			4,146
Net periodic cost (benefit)	$	1,926		$	5,670		$	948		$	760		$	817		$	1,026		$	3,691		$	7,456

Schedule of contributions to the Defined Benefit Pension Plan and payments made to the Post-Retirement Medical Plan and the Supplemental Executive Retirement Plan

The following table summarizes payments made to the Post-Retirement Medical Plan and the Supplemental Executive Retirement Plan:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Payments to the Post-Retirement Medical Plan	$	34	$	207	$	117	$	376
Payments to the Supplemental Executive Retirement Plan	599		834		1,199		1,668

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Schedule of the provision for income taxes

The provision for income taxes is comprised of the following:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Current expense	$	22,327	$	18,300	$	6,556	$	31,260
Deferred expense	4,924		7,868		34,248		12,026
Total income tax provision	$	27,251	$	26,168	$	40,804	$	43,286

Schedule of reconciliation between the statutory federal income tax rate and the Company's effective federal income tax rate

The following table presents a reconciliation between the statutory federal income tax rate and the Company’s effective income tax rate:

	Six Months Ended June 30,
	2018		2017
Statutory federal income tax rate	21.0	%	35.0	%
Income tax effect of:
Investment income not subject to federal tax	(2.0	)%	(3.4	)%
Tax credits	(0.6	)%	(0.6	)%
State income taxes, net of federal benefit	2.7	%	2.5	%
Other, net	0.6	%	0.3	%
Effective income tax rate	21.7	%	33.8	%

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Summary of financial information related to segments

The following tables summarize segment financial information:

	Three Months Ended June 30, 2018
	Individual		Empower
	Markets		Retirement		Other		Total
Revenue:
Premium income	$	49,955	$	1,086	$	27,114	$	78,155
Fee income	33,167		251,845		1,684		286,696
Other revenue	—		3,077		—		3,077
Net investment income	197,403		117,289		12,779		327,471
Investment gains (losses), net	32,117		8,138		1		40,256
Total revenues	312,642		381,435		41,578		735,655
Benefits and expenses:
Policyholder benefits	201,554		53,968		5,164		260,686
Operating expenses	58,422		258,871		31,797		349,090
Total benefits and expenses	259,976		312,839		36,961		609,776
Income before income taxes	52,666		68,596		4,617		125,879
Income tax expense	10,135		16,009		1,107		27,251
Net income	$	42,531	$	52,587	$	3,510	$	98,628

	Three Months Ended June 30, 2017
	Individual		Empower
	Markets		Retirement		Other			Total
Revenue:
Premium income	$	44,701	$	1,052	$	21,910		$	67,663
Fee income	29,199		236,573		1,566			267,338
Other revenue	—		3,661		—			3,661
Net investment income	192,788		92,756		11,677			297,221
Realized investment gains (losses), net	4,037		18,011		16			22,064
Total revenues	270,725		352,053		35,169			657,947
Benefits and expenses:
Policyholder benefits	198,171		50,702		20,671			269,544
Operating expenses	47,420		249,178		15,813			312,411
Total benefits and expenses	245,591		299,880		36,484			581,955
Income (loss) before income taxes	25,134		52,173		(1,315		)	75,992
Income tax expense (benefit)	8,531		17,996		(359		)	26,168
Net income (loss)	$	16,603	$	34,177	$	(956	)	$	49,824

	Six Months Ended June 30, 2018
	Individual		Empower
	Markets		Retirement			Other		Total
Revenue:
Premium income	$	173,540	$	1,675		$	47,621	$	222,836
Fee income	64,795		494,302			3,563		562,660
Other revenue	—		6,062			—		6,062
Net investment income	394,732		246,297			24,583		665,612
Investment gains (losses), net	15,447		(18,984		)	50		(3,487		)
Total revenues	648,514		729,352			75,817		1,453,683
Benefits and expenses:
Policyholder benefits	473,562		105,247			20,461		599,270
Operating expenses	101,024		518,752			46,547		666,323
Total benefits and expenses	574,586		623,999			67,008		1,265,593
Income before income taxes	73,928		105,353			8,809		188,090
Income tax expense	14,033		24,777			1,994		40,804
Net income	$	59,895	$	80,576		$	6,815	$	147,286

	Six Months Ended June 30, 2017
	Individual		Empower
	Markets		Retirement		Other			Total
Revenue:
Premium income	$	176,260	$	1,143	$	42,501		$	219,904
Fee income	55,180		463,892		3,381			522,453
Other revenue	—		6,045		—			6,045
Net investment income	376,993		210,375		23,323			610,691
Realized investment gains (losses), net	4,622		5,695		(7		)	10,310
Total revenues	613,055		687,150		69,198			1,369,403
Benefits and expenses:
Policyholder benefits	468,259		98,330		42,382			608,971
Operating expenses	85,807		504,941		41,746			632,494
Total benefits and expenses	554,066		603,271		84,128			1,241,465
Income (loss) before income taxes	58,989		83,879		(14,930		)	127,938
Income tax expense (benefit)	20,182		28,421		(5,317		)	43,286
Net income (loss)	$	38,807	$	55,458	$	(9,613	)	$	84,652

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Contractual Obligation, Fiscal Year Maturity Schedule

The amounts of these unfunded commitments at June 30, 2018 and December 31, 2017, were as follows:

	June 30, 2018		December 31, 2017
Due in less than one year	$	269,760	$	312,152
Due within one to three years	—		1,090
Total	$	269,760	$	313,242

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Application of Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jan. 01, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total stockholder’s equity	$ 2,039,996	$ 2,207,290		$ 2,449,589	$ 2,012,321
Retained earnings	1,132,136			1,051,792
Cash flows from operating	261,940	481,107
Cash flows from investing	(243,328)	(708,699)
Cash flows from financing	$ 52,283	226,110
Expected life of customer contract	10 years
Retained earnings
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total stockholder’s equity	$ 1,132,136	853,473			$ 906,122
ASC 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total stockholder’s equity				2,482,541
ASC 606 | Retained earnings
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total stockholder’s equity				1,084,744
ASC 606 | Difference between revenue guidance in effect before and after ASC 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total stockholder’s equity				32,952
Retained earnings			$ 32,952
ASC 606 | Difference between revenue guidance in effect before and after ASC 606 | Retained earnings
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total stockholder’s equity				$ 32,952
ASU 2016-15, COLI
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Cash flows from operating		1,680
Cash flows from investing		1,680
ASU 2016-15, Due to / from parent and affiliate
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Cash flows from operating		21,388
Cash flows from financing		$ 21,388

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Related Party Transactions (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 15, 2018	May 17, 2018	Dec. 31, 2017
Related party transactions
Seed investment	$ 53,298			$ 17,997
GWL&A Financial | Surplus note due May 2048
Related party transactions
Surplus note			$ 346,218
Fixed interest rate			4.881%
GWL&A Financial | Surplus note issued May 19, 2006
Related party transactions
Surplus note		$ 333,400
GWL&A Financial | Surplus note issued May 19, 2006 | 3 month LIBOR rate
Related party transactions
Variable interest rate		2.588%
Great-West Funds, Inc.
Related party transactions
Seed investment	$ 35,268

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Dividends (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Dividends [Abstract]
Dividends paid to parent, GWL&A Financial	$ 99,894	$ 137,301

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Summary of Investments - Fixed Maturity AFS and non-credit OTTI in AOCI (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Securities available-for-sale
Amortized cost	$ 22,757,572	$ 22,762,962
Fixed maturities available-for-sale:	22,762,737	23,593,139
Fixed maturities
Securities available-for-sale
Amortized cost	22,757,572	22,762,962
Gross unrealized gains	530,987	973,941
Gross unrealized losses	525,822	143,764
Fixed maturities available-for-sale:	22,762,737	23,593,139
OTTI (gain) loss included in AOCI	(37,514)	57,893
U.S. government direct obligations and U.S. agencies
Securities available-for-sale
Amortized cost	1,362,245	1,837,748
Gross unrealized gains	26,310	41,777
Gross unrealized losses	32,382	7,883
Fixed maturities available-for-sale:	1,356,173	1,871,642
OTTI (gain) loss included in AOCI	0	0
Obligations of U.S. states and their subdivisions
Securities available-for-sale
Amortized cost	1,841,971	1,872,120
Gross unrealized gains	165,819	220,507
Gross unrealized losses	4,368	1,655
Fixed maturities available-for-sale:	2,003,422	2,090,972
OTTI (gain) loss included in AOCI	0	0
Corporate debt securities
Securities available-for-sale
Amortized cost	15,596,700	15,234,473
Gross unrealized gains	262,319	581,991
Gross unrealized losses	420,281	110,377
Fixed maturities available-for-sale:	15,438,738	15,706,087
OTTI (gain) loss included in AOCI	(779)	(1,018)
Perpetual debt investments
Securities available-for-sale
Amortized cost	89,267	89,267
Fixed maturities available-for-sale:	81,435	87,348
Asset-backed securities
Securities available-for-sale
Amortized cost	1,609,259	1,622,806
Gross unrealized gains	68,040	105,301
Gross unrealized losses	23,498	10,131
Fixed maturities available-for-sale:	1,653,801	1,717,976
OTTI (gain) loss included in AOCI	(36,665)	(56,735)
Residential mortgage-backed securities
Securities available-for-sale
Amortized cost	56,655	63,187
Gross unrealized gains	2,056	2,446
Gross unrealized losses	886	649
Fixed maturities available-for-sale:	57,825	64,984
OTTI (gain) loss included in AOCI	(70)	(140)
Commercial mortgage-backed securities
Securities available-for-sale
Amortized cost	1,358,117	1,352,906
Gross unrealized gains	4,899	17,692
Gross unrealized losses	43,216	12,989
Fixed maturities available-for-sale:	1,319,800	1,357,609
OTTI (gain) loss included in AOCI	0	0
Collateralized debt obligations
Securities available-for-sale
Amortized cost	932,625	779,722
Gross unrealized gains	1,544	4,227
Gross unrealized losses	1,191	80
Fixed maturities available-for-sale:	932,978	783,869
OTTI (gain) loss included in AOCI	$ 0	$ 0

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Summary of Investments - Fixed Maturity AFS aging (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Amortized cost
Maturing in one year or less	$ 619,874
Maturing after one year through five years	3,447,149
Maturing after five years through ten years	8,216,510
Maturing after ten years	5,500,704
Mortgage-backed and asset-backed securities	4,973,335
Amortized cost	22,757,572	$ 22,762,962
Estimated fair value
Maturing in one year or less	620,381
Maturing after one year through five years	3,441,249
Maturing after five years through ten years	8,066,134
Maturing after ten years	5,670,372
Mortgage-backed and asset-backed securities	4,964,601
Estimated fair value	$ 22,762,737	$ 23,593,139

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Summary of Investments - AFS Proceeds from sales (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Investments, Debt and Equity Securities [Abstract]
Proceeds from sales	$ 511,199	$ 891,026	$ 1,477,619	$ 2,471,548
Gross realized gains from sales	12,452	8,488	24,726	20,921
Gross realized losses from sales	$ 9,789	$ 6,080	$ 16,072	$ 21,337

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Summary of Investments - Mortgage loans on real estate (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Mortgages
Financing Receivable, Recorded Investment [Line Items]
Recorded investment	$ 4,316,971	$ 4,005,960

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Summary of Investments - Mortgage provision allowance rollforward (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	$ 773	$ 2,882
Provision increases	0	157
Charge-off	0	(663)
Recovery	0	(30)
Provision decreases	0	(1,573)
Ending balance	773	773
Allowance ending balance by basis of impairment method:
Collectively evaluated for impairment	773	773
Mortgage Loans on Real Estate
Recorded investment balance in the mortgage loan portfolio, gross of allowance, by basis of impairment method:
Recorded investment balance in the mortgage loan portfolio, gross of allowance, by basis of impairment method:	4,316,971	4,005,960
Individually evaluated for impairment	2,799	2,942
Collectively evaluated for impairment	$ 4,314,172	$ 4,003,018

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Summary of Investments - Ltd partnership Sec lending Special deposits (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Nature and activities of the VIEs and the effect on financial statements
Carrying value to loss in relation to the activities of VIEs	$ 63,586,000	$ 45,540,000
Maximum exposure to loss in relation to the activities of the VIEs	63,586,000	45,540,000
Special deposits and securities lending
Amortized cost	98,705,000
Securities loaned to third parties at fair value	93,255,000	0
Collateral received	80,013,000	0
Collateral fair value	16,502,000
Payable under securities lending agreements	80,013,000	$ 0
Corporate debt securities
Special deposits and securities lending
Payable under securities lending agreements	$ 80,013,000

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Summary of Investments - Unrealized losses fixed maturities AFS (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($) position	Dec. 31, 2017 USD ($) position
Fixed maturities
Unrealized losses on fixed maturity and equity investments classified as available-for-sale
Less than twelve months, Estimated fair value	$ 11,580,133	$ 3,909,634
Less than twelve months, Unrealized loss and OTTI	345,827	29,472
Twelve months or longer, Estimated fair value	2,278,938	2,855,703
Twelve months or longer, Unrealized loss and OTTI	179,995	114,292
Total Estimated fair value	13,859,071	6,765,337
Total Unrealized losses and OTTI	$ 525,822	$ 143,764
Additional disclosure
Total number of securities in an unrealized loss position, Less than twelve months | position	1,076	368
Total number of securities in an unrealized loss position, twelve months or longer | position	268	293
Total number of securities in an unrealized loss position | position	1,344	661
Decrease (increase) in total unrealized losses and other-than-temporary impairment losses	$ (382,058)
Decrease (increase) in total unrealized losses and other-than-temporary impairment losses (as a percent)	(266.00%)
Increase (decrease) in the less than twelve months category	$ 316,355
Increase (decrease) in greater than twelve months unrealized losses and other-than-temporary impairment losses	65,703
U.S. government direct obligations and U.S. agencies
Unrealized losses on fixed maturity and equity investments classified as available-for-sale
Less than twelve months, Estimated fair value	833,130	$ 755,861
Less than twelve months, Unrealized loss and OTTI	25,923	4,159
Twelve months or longer, Estimated fair value	150,012	230,447
Twelve months or longer, Unrealized loss and OTTI	6,459	3,724
Total Estimated fair value	983,142	986,308
Total Unrealized losses and OTTI	32,382	7,883
Obligations of U.S. states and their subdivisions
Unrealized losses on fixed maturity and equity investments classified as available-for-sale
Less than twelve months, Estimated fair value	157,066	24,908
Less than twelve months, Unrealized loss and OTTI	1,958	180
Twelve months or longer, Estimated fair value	36,003	37,012
Twelve months or longer, Unrealized loss and OTTI	2,410	1,475
Total Estimated fair value	193,069	61,920
Total Unrealized losses and OTTI	4,368	1,655
Corporate debt securities
Unrealized losses on fixed maturity and equity investments classified as available-for-sale
Less than twelve months, Estimated fair value	8,687,225	2,229,585
Less than twelve months, Unrealized loss and OTTI	278,236	19,568
Twelve months or longer, Estimated fair value	1,591,254	2,036,323
Twelve months or longer, Unrealized loss and OTTI	142,045	90,809
Total Estimated fair value	10,278,479	4,265,908
Total Unrealized losses and OTTI	$ 420,281	110,377
Additional disclosure
Unrealized losses and OTTI over twelve months on securities (as a percent)	79.00%
Corporate debt securities | Non-investment grade
Unrealized losses on fixed maturity and equity investments classified as available-for-sale
Twelve months or longer, Unrealized loss and OTTI	$ 6,676
Asset-backed securities
Unrealized losses on fixed maturity and equity investments classified as available-for-sale
Less than twelve months, Estimated fair value	764,102	544,778
Less than twelve months, Unrealized loss and OTTI	14,417	3,011
Twelve months or longer, Estimated fair value	211,254	245,341
Twelve months or longer, Unrealized loss and OTTI	9,081	7,120
Total Estimated fair value	975,356	790,119
Total Unrealized losses and OTTI	$ 23,498	10,131
Additional disclosure
Unrealized losses and OTTI over twelve months on securities (as a percent)	16.00%
Residential mortgage-backed securities
Unrealized losses on fixed maturity and equity investments classified as available-for-sale
Less than twelve months, Estimated fair value	$ 3,679	4,405
Less than twelve months, Unrealized loss and OTTI	63	23
Twelve months or longer, Estimated fair value	10,029	11,416
Twelve months or longer, Unrealized loss and OTTI	823	626
Total Estimated fair value	13,708	15,821
Total Unrealized losses and OTTI	886	649
Commercial mortgage-backed securities
Unrealized losses on fixed maturity and equity investments classified as available-for-sale
Less than twelve months, Estimated fair value	838,617	342,820
Less than twelve months, Unrealized loss and OTTI	24,039	2,451
Twelve months or longer, Estimated fair value	280,386	295,164
Twelve months or longer, Unrealized loss and OTTI	19,177	10,538
Total Estimated fair value	1,119,003	637,984
Total Unrealized losses and OTTI	43,216	12,989
Collateralized debt obligations
Unrealized losses on fixed maturity and equity investments classified as available-for-sale
Less than twelve months, Estimated fair value	296,314	7,277
Less than twelve months, Unrealized loss and OTTI	1,191	80
Twelve months or longer, Estimated fair value	0	0
Twelve months or longer, Unrealized loss and OTTI	0	0
Total Estimated fair value	296,314	7,277
Total Unrealized losses and OTTI	$ 1,191	$ 80

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Summary of Investments - Other-than-temporary impairment table (Details) - Fixed maturities - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Beginning balance	$ 52,775	$ 80,359	$ 62,231	$ 83,665
Due to sales, maturities or payoffs during the period	0	0	(1,510)	0
Due to increases in cash flows expected to be collected that are recognized over the remaining life of the security	(3,092)	(2,948)	(11,038)	(6,254)
Ending balance	$ 49,683	$ 77,411	$ 49,683	$ 77,411

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Derivative Financial Instruments - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Derivative financial instruments
Aggregate fair value of derivative instruments with credit-risk-related contingent features, in case of net liability position	$ 72,759		$ 72,759		$ 93,761
Collateral under derivative counterparty collateral agreements	16,310		16,310		42,750
Fair value of assets required to settle the derivatives in, net liability position	56,859		56,859
Additional collateral to satisfy collateral netting arrangements	27,169		27,169		52,330
Unrestricted cash collateral pledged	10,612		10,612		4,911
Net derivative gains estimated to be reclassified from accumulated other comprehensive income (loss) into net income within the next twelve months	15,222		15,222
Net investment income
Derivative financial instruments
Change in fair value of GLWB	3,480	$ (5,553)	10,582	$ (3,883)
Policyholders' Funds
Derivative financial instruments
Embedded derivatives - GLWB	513		513		11,095
Interest rate swaps
Derivative financial instruments
Average notional amount of the derivative instruments			672,886		905,977
Cross-currency swaps
Derivative financial instruments
Average notional amount of the derivative instruments			1,451,399		1,323,398
Future
Derivative financial instruments
Average notional amount of the derivative instruments			90,541		108,438
Swaption
Derivative financial instruments
Average notional amount of the derivative instruments			179,348		162,896
Other forward contracts
Derivative financial instruments
Average notional amount of the derivative instruments			1,764,286		2,231,196
Other counterparties
Derivative financial instruments
Unrestricted cash collateral pledged	12,696		12,696		5,490
Pledged collateral
Derivative financial instruments
Collateral under derivative counterparty collateral agreements	$ 15,900		$ 15,900		$ 42,750

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Derivative Financial Instruments - Notional and Fair Value (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Effect of derivative instruments in the condensed consolidated statement of income and comprehensive income
Notional amount	$ 4,749,878		$ 4,749,878		$ 2,567,989
Net derivatives, Fair value	(10,681)		(10,681)		(43,184)
Asset derivatives, Fair value	62,869		62,869		51,359
Liability derivatives, Fair value	73,550		73,550		94,543
Derivatives not designated as hedging instruments
Gain (loss) on derivatives recognized in net income	34,204	$ 4,889	(25,831)	$ (11,720)
Interest rate swaps | Net investment income
Derivatives not designated as hedging instruments
Gain (loss) on derivatives recognized in net income	0	4,976	0	3,427
Interest rate swaps | Realized investment gains (losses)
Derivatives not designated as hedging instruments
Gain (loss) on derivatives recognized in net income	(3,336)	0	(14,302)	0
Cross-currency swaps | Net investment income
Derivatives not designated as hedging instruments
Gain (loss) on derivatives recognized in net income	0	(8,083)	0	(22,251)
Cross-currency swaps | Realized investment gains (losses)
Derivatives not designated as hedging instruments
Gain (loss) on derivatives recognized in net income	40,739	0	12,595	0
Futures on equity indices | Net investment income
Derivatives not designated as hedging instruments
Gain (loss) on derivatives recognized in net income	0	350	0	(334)
Futures on equity indices | Realized investment gains (losses)
Derivatives not designated as hedging instruments
Gain (loss) on derivatives recognized in net income	(1,504)	(1,536)	(2,145)	(2,820)
Interest rate futures | Net investment income
Derivatives not designated as hedging instruments
Gain (loss) on derivatives recognized in net income	0	116	0	102
Interest rate futures | Realized investment gains (losses)
Derivatives not designated as hedging instruments
Gain (loss) on derivatives recognized in net income	67	(206)	115	(201)
Interest rate swaptions | Net investment income
Derivatives not designated as hedging instruments
Gain (loss) on derivatives recognized in net income	0	(4)	0	(31)
Interest rate swaptions | Realized investment gains (losses)
Derivatives not designated as hedging instruments
Gain (loss) on derivatives recognized in net income	(187)	(77)	(151)	(151)
Other forward contracts | Net investment income
Derivatives not designated as hedging instruments
Gain (loss) on derivatives recognized in net income	0	(9,363)	0	(2,580)
Other forward contracts | Realized investment gains (losses)
Derivatives not designated as hedging instruments
Gain (loss) on derivatives recognized in net income	(1,575)	18,716	(21,943)	13,119
Cash flow hedges:
Derivatives not designated as hedging instruments
Gain (loss) recognized in OCI on derivatives (Effective portion)	58,939	(18,245)	52,443	(25,200)
Gain (loss) reclassified from OCI into net income (Effective portion)	9,059	(574)	9,206	868
Cash flow hedges: | Interest rate swaps | Net investment income
Derivatives not designated as hedging instruments
Gain (loss) recognized in OCI on derivatives (Effective portion)	(319)	644	(1,331)	496
Gain (loss) reclassified from OCI into net income (Effective portion)	705	1,186	1,633	2,406
Cash flow hedges: | Interest rate swaps | Interest Expense
Derivatives not designated as hedging instruments
Gain (loss) recognized in OCI on derivatives (Effective portion)	1	(8,193)	29,030	(4,350)
Gain (loss) reclassified from OCI into net income (Effective portion)	887	(787)	632	(1,667)
Cash flow hedges: | Cross-currency swaps | Net investment income
Derivatives not designated as hedging instruments
Gain (loss) recognized in OCI on derivatives (Effective portion)	59,257	(10,696)	24,744	(21,346)
Gain (loss) reclassified from OCI into net income (Effective portion)	7,467	$ (973)	6,941	$ 129
Derivatives designated as hedges:
Effect of derivative instruments in the condensed consolidated statement of income and comprehensive income
Notional amount	886,454		886,454		1,188,860
Net derivatives, Fair value	(2,937)		(2,937)		(23,882)
Asset derivatives, Fair value	36,388		36,388		27,434
Liability derivatives, Fair value	39,325		39,325		51,316
Derivatives designated as hedges: | Cash flow hedges:
Effect of derivative instruments in the condensed consolidated statement of income and comprehensive income
Notional amount	886,454		886,454		1,188,860
Net derivatives, Fair value	(2,937)		(2,937)		(23,882)
Asset derivatives, Fair value	36,388		36,388		27,434
Liability derivatives, Fair value	39,325		39,325		51,316
Derivatives designated as hedges: | Cash flow hedges: | Interest rate swaps
Effect of derivative instruments in the condensed consolidated statement of income and comprehensive income
Notional amount	22,300		22,300		388,800
Net derivatives, Fair value	5,917		5,917		7,476
Asset derivatives, Fair value	5,917		5,917		7,476
Liability derivatives, Fair value	0		0		0
Derivatives designated as hedges: | Cash flow hedges: | Cross-currency swaps
Effect of derivative instruments in the condensed consolidated statement of income and comprehensive income
Notional amount	864,154		864,154		800,060
Net derivatives, Fair value	(8,854)		(8,854)		(31,358)
Asset derivatives, Fair value	30,471		30,471		19,958
Liability derivatives, Fair value	39,325		39,325		51,316
Derivatives not designated as hedges:
Effect of derivative instruments in the condensed consolidated statement of income and comprehensive income
Notional amount	3,863,424		3,863,424		1,379,129
Net derivatives, Fair value	(7,744)		(7,744)		(19,302)
Asset derivatives, Fair value	26,481		26,481		23,925
Liability derivatives, Fair value	34,225		34,225		43,227
Derivatives not designated as hedges: | Interest rate swaps
Effect of derivative instruments in the condensed consolidated statement of income and comprehensive income
Notional amount	548,500		548,500		519,100
Net derivatives, Fair value	577		577		1,902
Asset derivatives, Fair value	1,461		1,461		3,530
Liability derivatives, Fair value	884		884		1,628
Derivatives not designated as hedges: | Cross-currency swaps
Effect of derivative instruments in the condensed consolidated statement of income and comprehensive income
Notional amount	573,703		573,703		612,733
Net derivatives, Fair value	(11,778)		(11,778)		(21,279)
Asset derivatives, Fair value	20,292		20,292		20,320
Liability derivatives, Fair value	32,070		32,070		41,599
Derivatives not designated as hedges: | Futures on equity indices
Effect of derivative instruments in the condensed consolidated statement of income and comprehensive income
Notional amount	56,521		56,521		22,074
Net derivatives, Fair value	0		0		0
Asset derivatives, Fair value	0		0		0
Liability derivatives, Fair value	0		0		0
Derivatives not designated as hedges: | Interest rate futures
Effect of derivative instruments in the condensed consolidated statement of income and comprehensive income
Notional amount	34,300		34,300		60,700
Net derivatives, Fair value	0		0		0
Asset derivatives, Fair value	0		0		0
Liability derivatives, Fair value	0		0		0
Derivatives not designated as hedges: | Interest rate swaptions
Effect of derivative instruments in the condensed consolidated statement of income and comprehensive income
Notional amount	190,400		190,400		164,522
Net derivatives, Fair value	163		163		75
Asset derivatives, Fair value	163		163		75
Liability derivatives, Fair value	0		0		$ 0
Derivatives not designated as hedges: | Other forward contracts
Effect of derivative instruments in the condensed consolidated statement of income and comprehensive income
Notional amount	2,460,000		2,460,000
Net derivatives, Fair value	3,294		3,294
Asset derivatives, Fair value	4,565		4,565
Liability derivatives, Fair value	$ 1,271		$ 1,271

XML

Summary of Offsetting Assets and Liabilities - Netting Arrangements (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Financial instruments (assets):
Gross fair value of recognized assets	$ 62,869	$ 52,738
Financial instruments	(50,356)	(47,827)
Cash collateral	(10,612)	(4,911)
Net fair value	1,901	0
Securities purchased under agreements to resell, gross		23,200
Securities purchased under agreements to resell, not offset		(23,200)
Securities purchased under agreements to resell, collateral, obligation to return cash		0
Securities purchased under agreements to resell, offset against collateral, net of not subject to master netting arrangement, policy election		0
Derivative asset, securities purchased under agreements to resell, securities borrowed		75,938
Derivative asset, securities purchased under agreements to resell, securities borrowed, not offset		(71,027)
Derivative asset, securities purchased under agreements to resell, securities borrowed, collateral, obligation to return cash		(4,911)
Derivative asset, securities purchased under agreements to resell, securities borrowed, amount offset against collateral		0
Financial instruments (liabilities):
Gross fair value of recognized liabilities	73,550	93,761
Financial instruments	(50,356)	(47,827)
Amount of unrestricted cash collateral to counterparties in the normal course of business	(16,310)	(42,750)
Net fair value	$ 6,884	$ 3,184

XML

Fair Value Measurements - Recurring by FV hierarchy (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Assets
Fixed maturities available-for-sale:	$ 22,762,737	$ 23,593,139
Fixed maturities held-for-trading:	19,519	21,059
Short-term investments	294,314	350,266
Limited partnership interests	63,586	45,540
Collateral under securities lending agreements	80,013	0
Collateral under derivative counterparty collateral agreements	16,310	42,750
Total derivative instruments	62,869	51,359
Separate account assets	26,676,615	27,660,571
Liabilities
Payable under securities lending agreements	80,013	0
Collateral under derivative counterparty collateral agreements	10,612	4,911
Total derivative instruments	73,550	94,543
Separate account liabilities	26,676,615	27,660,571
Derivative instruments designated as hedges:
Assets
Total derivative instruments	36,388	27,434
Liabilities
Total derivative instruments	39,325	51,316
Derivative instruments not designated as hedges:
Assets
Total derivative instruments	26,481	23,925
Liabilities
Total derivative instruments	34,225	43,227
Derivative instruments not designated as hedges: | Interest rate swaps
Assets
Total derivative instruments	1,461	3,530
Liabilities
Total derivative instruments	884	1,628
Derivative instruments not designated as hedges: | Cross-currency swaps
Assets
Total derivative instruments	20,292	20,320
Liabilities
Total derivative instruments	32,070	41,599
Derivative instruments not designated as hedges: | Interest rate swaptions
Assets
Total derivative instruments	163	75
Liabilities
Total derivative instruments	0	0
Derivative instruments not designated as hedges: | Other forward contracts
Assets
Total derivative instruments	4,565
Liabilities
Total derivative instruments	1,271
U.S. government direct obligations and U.S. agencies
Assets
Fixed maturities available-for-sale:	1,356,173	1,871,642
Obligations of U.S. states and their subdivisions
Assets
Fixed maturities available-for-sale:	2,003,422	2,090,972
Corporate debt securities
Assets
Fixed maturities available-for-sale:	15,438,738	15,706,087
Liabilities
Payable under securities lending agreements	80,013
Asset-backed securities
Assets
Fixed maturities available-for-sale:	1,653,801	1,717,976
Residential mortgage-backed securities
Assets
Fixed maturities available-for-sale:	57,825	64,984
Commercial mortgage-backed securities
Assets
Fixed maturities available-for-sale:	1,319,800	1,357,609
Collateralized debt obligations
Assets
Fixed maturities available-for-sale:	932,978	783,869
Recurring basis
Assets
Fixed maturities available-for-sale:	22,762,737	23,593,139
Fixed maturities held-for-trading:	19,519	21,059
Short-term investments	294,314	350,266
Limited partnership interests	63,586
Equity investments	42,575
Collateral under securities lending agreements	80,013
Collateral under derivative counterparty collateral agreements	39,865	57,820
Total derivative instruments	62,869	51,359
Separate account assets	26,676,615	27,660,571
Total assets	49,935,932	51,734,214
Separate account assets excluded	450,000	400,000
Liabilities
Payable under securities lending agreements	80,013
Collateral under derivative counterparty collateral agreements	12,696	5,490
Total derivative instruments	73,550	94,543
Embedded derivatives - GLWB	513	11,095
Separate account liabilities	431,960	409,274
Total liabilities	598,732	520,402
Recurring basis | Derivative instruments designated as hedges: | Interest rate swaps
Assets
Total derivative instruments	5,917	7,476
Recurring basis | Derivative instruments designated as hedges: | Cross-currency swaps
Assets
Total derivative instruments	30,471	19,958
Liabilities
Total derivative instruments	39,325	51,316
Recurring basis | Derivative instruments not designated as hedges: | Interest rate swaps
Assets
Total derivative instruments	1,461	3,530
Liabilities
Total derivative instruments	884	1,628
Recurring basis | Derivative instruments not designated as hedges: | Cross-currency swaps
Assets
Total derivative instruments	20,292	20,320
Liabilities
Total derivative instruments	32,070	41,599
Recurring basis | Derivative instruments not designated as hedges: | Interest rate swaptions
Assets
Total derivative instruments	163	75
Recurring basis | Derivative instruments not designated as hedges: | Other forward contracts
Assets
Total derivative instruments	4,565
Liabilities
Total derivative instruments	1,271
Recurring basis | U.S. government direct obligations and U.S. agencies
Assets
Fixed maturities available-for-sale:	1,356,173	1,871,642
Fixed maturities held-for-trading:	15,481	16,836
Recurring basis | Obligations of U.S. states and their subdivisions
Assets
Fixed maturities available-for-sale:	2,003,422	2,090,972
Recurring basis | Corporate debt securities
Assets
Fixed maturities available-for-sale:	15,438,738	15,706,087
Fixed maturities held-for-trading:	3,001	3,156
Recurring basis | Asset-backed securities
Assets
Fixed maturities available-for-sale:	1,653,801	1,717,976
Recurring basis | Residential mortgage-backed securities
Assets
Fixed maturities available-for-sale:	57,825	64,984
Recurring basis | Commercial mortgage-backed securities
Assets
Fixed maturities available-for-sale:	1,319,800	1,357,609
Fixed maturities held-for-trading:	1,037	1,067
Recurring basis | Collateralized debt obligations
Assets
Fixed maturities available-for-sale:	932,978	783,869
Recurring basis | Quoted prices in active markets for identical assets (Level 1)
Assets
Fixed maturities available-for-sale:	0	0
Fixed maturities held-for-trading:	0	0
Short-term investments	260,967	288,302
Limited partnership interests	0
Equity investments	37,564
Collateral under securities lending agreements	0
Collateral under derivative counterparty collateral agreements	39,865	57,820
Total derivative instruments	0	0
Separate account assets	16,089,089	16,523,630
Total assets	16,389,921	16,869,752
Liabilities
Payable under securities lending agreements	0
Collateral under derivative counterparty collateral agreements	12,696	5,490
Total derivative instruments	0	0
Embedded derivatives - GLWB	0	0
Separate account liabilities	0	8
Total liabilities	12,696	5,498
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Derivative instruments designated as hedges: | Interest rate swaps
Assets
Total derivative instruments	0	0
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Derivative instruments designated as hedges: | Cross-currency swaps
Assets
Total derivative instruments	0	0
Liabilities
Total derivative instruments	0	0
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Derivative instruments not designated as hedges: | Interest rate swaps
Assets
Total derivative instruments	0	0
Liabilities
Total derivative instruments	0	0
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Derivative instruments not designated as hedges: | Cross-currency swaps
Assets
Total derivative instruments	0	0
Liabilities
Total derivative instruments	0	0
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Derivative instruments not designated as hedges: | Interest rate swaptions
Assets
Total derivative instruments	0	0
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Derivative instruments not designated as hedges: | Other forward contracts
Assets
Total derivative instruments	0
Liabilities
Total derivative instruments	0
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | U.S. government direct obligations and U.S. agencies
Assets
Fixed maturities available-for-sale:	0	0
Fixed maturities held-for-trading:	0	0
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Obligations of U.S. states and their subdivisions
Assets
Fixed maturities available-for-sale:	0	0
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Corporate debt securities
Assets
Fixed maturities available-for-sale:	0	0
Fixed maturities held-for-trading:	0	0
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Asset-backed securities
Assets
Fixed maturities available-for-sale:	0	0
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Residential mortgage-backed securities
Assets
Fixed maturities available-for-sale:	0	0
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Commercial mortgage-backed securities
Assets
Fixed maturities available-for-sale:	0	0
Fixed maturities held-for-trading:	0	0
Recurring basis | Quoted prices in active markets for identical assets (Level 1) | Collateralized debt obligations
Assets
Fixed maturities available-for-sale:	0	0
Recurring basis | Significant other observable inputs (Level 2)
Assets
Fixed maturities available-for-sale:	22,753,767	23,583,401
Fixed maturities held-for-trading:	19,519	21,059
Short-term investments	33,347	61,964
Limited partnership interests	0
Equity investments	5,011
Collateral under securities lending agreements	80,013
Collateral under derivative counterparty collateral agreements	0	0
Total derivative instruments	62,869	51,359
Separate account assets	10,137,807	10,736,532
Total assets	33,087,322	34,454,315
Liabilities
Payable under securities lending agreements	80,013
Collateral under derivative counterparty collateral agreements	0	0
Total derivative instruments	73,550	94,543
Embedded derivatives - GLWB	0	0
Separate account liabilities	431,960	409,266
Total liabilities	585,523	503,809
Recurring basis | Significant other observable inputs (Level 2) | Derivative instruments designated as hedges: | Interest rate swaps
Assets
Total derivative instruments	5,917	7,476
Recurring basis | Significant other observable inputs (Level 2) | Derivative instruments designated as hedges: | Cross-currency swaps
Assets
Total derivative instruments	30,471	19,958
Liabilities
Total derivative instruments	39,325	51,316
Recurring basis | Significant other observable inputs (Level 2) | Derivative instruments not designated as hedges: | Interest rate swaps
Assets
Total derivative instruments	1,461	3,530
Liabilities
Total derivative instruments	884	1,628
Recurring basis | Significant other observable inputs (Level 2) | Derivative instruments not designated as hedges: | Cross-currency swaps
Assets
Total derivative instruments	20,292	20,320
Liabilities
Total derivative instruments	32,070	41,599
Recurring basis | Significant other observable inputs (Level 2) | Derivative instruments not designated as hedges: | Interest rate swaptions
Assets
Total derivative instruments	163	75
Recurring basis | Significant other observable inputs (Level 2) | Derivative instruments not designated as hedges: | Other forward contracts
Assets
Total derivative instruments	4,565
Liabilities
Total derivative instruments	1,271
Recurring basis | Significant other observable inputs (Level 2) | U.S. government direct obligations and U.S. agencies
Assets
Fixed maturities available-for-sale:	1,356,173	1,871,642
Fixed maturities held-for-trading:	15,481	16,836
Recurring basis | Significant other observable inputs (Level 2) | Obligations of U.S. states and their subdivisions
Assets
Fixed maturities available-for-sale:	2,003,422	2,090,972
Recurring basis | Significant other observable inputs (Level 2) | Corporate debt securities
Assets
Fixed maturities available-for-sale:	15,429,768	15,696,349
Fixed maturities held-for-trading:	3,001	3,156
Recurring basis | Significant other observable inputs (Level 2) | Asset-backed securities
Assets
Fixed maturities available-for-sale:	1,653,801	1,717,976
Recurring basis | Significant other observable inputs (Level 2) | Residential mortgage-backed securities
Assets
Fixed maturities available-for-sale:	57,825	64,984
Recurring basis | Significant other observable inputs (Level 2) | Commercial mortgage-backed securities
Assets
Fixed maturities available-for-sale:	1,319,800	1,357,609
Fixed maturities held-for-trading:	1,037	1,067
Recurring basis | Significant other observable inputs (Level 2) | Collateralized debt obligations
Assets
Fixed maturities available-for-sale:	932,978	783,869
Recurring basis | Significant unobservable inputs (Level 3)
Assets
Fixed maturities available-for-sale:	8,970	9,738
Fixed maturities held-for-trading:	0	0
Short-term investments	0	0
Limited partnership interests	0
Equity investments	0
Collateral under securities lending agreements	0
Collateral under derivative counterparty collateral agreements	0	0
Total derivative instruments	0	0
Separate account assets	0	0
Total assets	8,970	9,738
Liabilities
Payable under securities lending agreements	0
Collateral under derivative counterparty collateral agreements	0	0
Total derivative instruments	0	0
Embedded derivatives - GLWB	513	11,095
Separate account liabilities	0	0
Total liabilities	513	11,095
Recurring basis | Significant unobservable inputs (Level 3) | Derivative instruments designated as hedges: | Interest rate swaps
Assets
Total derivative instruments	0	0
Recurring basis | Significant unobservable inputs (Level 3) | Derivative instruments designated as hedges: | Cross-currency swaps
Assets
Total derivative instruments	0	0
Liabilities
Total derivative instruments	0	0
Recurring basis | Significant unobservable inputs (Level 3) | Derivative instruments not designated as hedges: | Interest rate swaps
Assets
Total derivative instruments	0	0
Liabilities
Total derivative instruments	0	0
Recurring basis | Significant unobservable inputs (Level 3) | Derivative instruments not designated as hedges: | Cross-currency swaps
Assets
Total derivative instruments	0	0
Liabilities
Total derivative instruments	0	0
Recurring basis | Significant unobservable inputs (Level 3) | Derivative instruments not designated as hedges: | Interest rate swaptions
Assets
Total derivative instruments	0	0
Recurring basis | Significant unobservable inputs (Level 3) | Derivative instruments not designated as hedges: | Other forward contracts
Assets
Total derivative instruments	0
Liabilities
Total derivative instruments	0
Recurring basis | Significant unobservable inputs (Level 3) | U.S. government direct obligations and U.S. agencies
Assets
Fixed maturities available-for-sale:	0	0
Fixed maturities held-for-trading:	0	0
Recurring basis | Significant unobservable inputs (Level 3) | Obligations of U.S. states and their subdivisions
Assets
Fixed maturities available-for-sale:	0	0
Recurring basis | Significant unobservable inputs (Level 3) | Corporate debt securities
Assets
Fixed maturities available-for-sale:	8,970	9,738
Fixed maturities held-for-trading:	0	0
Recurring basis | Significant unobservable inputs (Level 3) | Asset-backed securities
Assets
Fixed maturities available-for-sale:	0	0
Recurring basis | Significant unobservable inputs (Level 3) | Residential mortgage-backed securities
Assets
Fixed maturities available-for-sale:	0	0
Recurring basis | Significant unobservable inputs (Level 3) | Commercial mortgage-backed securities
Assets
Fixed maturities available-for-sale:	0	0
Fixed maturities held-for-trading:	0	0
Recurring basis | Significant unobservable inputs (Level 3) | Collateralized debt obligations
Assets
Fixed maturities available-for-sale:	$ 0	$ 0

XML

Fair Value Measurements - Narrative (Details)	6 Months Ended
	Jun. 30, 2018
Minimum
Carrying amounts and estimated fair values of the financial instruments
Estimated liquidation period of underlying assets of the funds	1 year
Maximum
Carrying amounts and estimated fair values of the financial instruments
Estimated liquidation period of underlying assets of the funds	10 years

XML

Fair Value Measurements - Recurring basis Level 3 rollforward (Details) - Recurring basis - Level 3 - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Fixed maturities available-for-sale, Corporate debt securities
Recurring Level 3 financial assets and liabilities
Balance at the beginning of the period	$ 9,287	$ 10,931	$ 9,738	$ 11,639
Net income (loss)	0	0	0	0
Other comprehensive income (loss)	129	84	116	(280)
Settlements	(446)	(312)	(884)	(656)
Balance at the end of the period	8,970	10,703	8,970	10,703
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets and liabilities	0	0	0	0
Embedded derivatives - GLWB
Recurring Level 3 financial assets and liabilities
Balance at the beginning of the period	3,993	4,042	11,095	5,712
Net income (loss)	3,480	(5,553)	10,582	(3,883)
Other comprehensive income (loss)	0	0	0	0
Settlements	0	0	0	0
Balance at the end of the period	513	9,595	513	9,595
Total gains (losses) for the period included in net income attributable to the change in unrealized gains and losses relating to assets and liabilities	$ 3,480	$ (5,553)	$ 10,582	$ (3,883)

XML

Fair Value Measurements - Level 3 unobservable inputs (Details) - Recurring basis - Level 3 - Internal model pricing	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Minimum
Unobservable Input
Equity volatility	15.00%	15.00%
Swap curve	2.34%	1.69%
Base Lapse rate	1.00%	1.00%
Maximum
Unobservable Input
Equity volatility	30.00%	30.00%
Swap curve	2.97%	2.54%
Base Lapse rate	15.00%	15.00%

XML

Fair Value Measurements - Recurring not carried at FV (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Assets
Mortgage loans on real estate	$ 4,316,198	$ 4,005,187
Policy loans	4,121,136	4,104,094
Liabilities
Policyholders’ funds	273,319	280,578
Commercial paper	99,381	99,886
Carrying amount
Assets
Limited partnership interests (1)	0	43,281
Carrying amount | Level 2
Assets
Mortgage loans on real estate	4,316,198	4,005,187
Policy loans	4,121,136	4,104,094
Liabilities
Annuity contract benefits without life contingencies	12,833,068	12,704,401
Policyholders’ funds	273,319	280,578
Commercial paper	99,381	99,886
Notes payable	556,529	543,338
Carrying amount | Level 3
Assets
Other investments	10,723	11,507
Estimated fair value
Assets
Limited partnership interests (1)	0	45,009
Estimated fair value | Level 2
Assets
Mortgage loans on real estate	4,265,476	4,066,800
Policy loans	4,121,136	4,104,094
Liabilities
Annuity contract benefits without life contingencies	12,390,980	12,647,309
Policyholders’ funds	273,319	280,578
Commercial paper	99,381	99,886
Notes payable	608,684	581,097
Estimated fair value | Level 3
Assets
Other investments	$ 39,050	$ 41,588

XML

Other Comprehensive Income - OCI - Changes in Accumulated Other comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Other Comprehensive Income [Roll Forward]
Beginning balance			$ 2,449,589	$ 2,012,321
Deferred income tax benefit (expense)	$ (27,251)	$ (26,168)	(40,804)	(43,286)
Ending balance	2,039,996	2,207,290	2,039,996	2,207,290
Interest expense	(9,588)	(7,646)	(17,397)	(15,276)
Unrealized holding gains / losses arising on fixed maturities, available-for- sale
Other Comprehensive Income [Roll Forward]
Beginning balance	286,289	398,293	544,887	311,748
Change in estimate of tax reform impact			108,846
OCI before reclassifications	(353,834)	236,996	(813,514)	367,225
Deferred income tax benefit (expense)	74,304	(82,949)	170,838	(128,529)
AOCI before reclassification, net of tax	(279,530)	154,047	(642,676)	238,696
Amounts reclassified from AOCI	(2,661)	(2,406)	(8,101)	511
Deferred income tax benefit (expense)	559	842	1,701	(179)
Amounts reclassified from AOCI, net of tax	(2,102)	(1,564)	(6,400)	332
Ending balance	4,657	550,776	4,657	550,776
Unrealized holding gains / losses arising on cash flow hedges
Other Comprehensive Income [Roll Forward]
Beginning balance	14,475	61,618	103,529	67,076
Change in estimate of tax reform impact			(83,806)
OCI before reclassifications	58,939	(18,245)	52,443	(25,200)
Deferred income tax benefit (expense)	(12,377)	6,386	(11,013)	8,820
AOCI before reclassification, net of tax	46,562	(11,859)	41,430	(16,380)
Amounts reclassified from AOCI	(9,059)	574	(9,206)	(868)
Deferred income tax benefit (expense)	1,902	(201)	1,933	304
Amounts reclassified from AOCI, net of tax	(7,157)	373	(7,273)	(564)
Ending balance	53,880	50,132	53,880	50,132
Unrealized holding gains / losses arising on cash flow hedges | Amount reclassified from accumulated other comprehensive income (loss)
Other Comprehensive Income [Roll Forward]
Interest expense	(887)	787	(632)	1,667
Future policy benefits, DAC and VOBA adjustments
Other Comprehensive Income [Roll Forward]
Beginning balance	(72,255)	(77,149)	(116,267)	(58,646)
Change in estimate of tax reform impact			(25,040)
OCI before reclassifications	66,954	(55,549)	154,362	(84,015)
Deferred income tax benefit (expense)	(14,060)	19,442	(32,416)	29,405
AOCI before reclassification, net of tax	52,894	(36,107)	121,946	(54,610)
Amounts reclassified from AOCI	0	0	0	0
Deferred income tax benefit (expense)	0	0	0	0
Amounts reclassified from AOCI, net of tax	0	0	0	0
Ending balance	(19,361)	(113,256)	(19,361)	(113,256)
Employee benefit plan adjustment
Other Comprehensive Income [Roll Forward]
Beginning balance	(90,734)	(82,908)	(91,192)	(84,303)
Change in estimate of tax reform impact			0
OCI before reclassifications	0	0	0	0
Deferred income tax benefit (expense)	0	0	0	0
AOCI before reclassification, net of tax	0	0	0	0
Amounts reclassified from AOCI	579	2,146	1,159	4,292
Deferred income tax benefit (expense)	(121)	(751)	(243)	(1,502)
Amounts reclassified from AOCI, net of tax	458	1,395	916	2,790
Ending balance	(90,276)	(81,513)	(90,276)	(81,513)
Total
Other Comprehensive Income [Roll Forward]
Beginning balance	137,775	299,854	440,957	235,875
Change in estimate of tax reform impact			0
OCI before reclassifications	(227,941)	163,202	(606,709)	258,010
Deferred income tax benefit (expense)	47,867	(57,121)	127,409	(90,304)
AOCI before reclassification, net of tax	(180,074)	106,081	(479,300)	167,706
Amounts reclassified from AOCI	(11,141)	314	(16,148)	3,935
Deferred income tax benefit (expense)	2,340	(110)	3,391	(1,377)
Amounts reclassified from AOCI, net of tax	(8,801)	204	(12,757)	2,558
Ending balance	$ (51,100)	$ 406,139	$ (51,100)	$ 406,139

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Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Disaggregation of Revenue [Line Items]
Administration, recordkeeping and servicing fees	$ 168,510		$ 327,501
Investment advisory and asset management fees	73,807		147,231
Other fee income	44,379		87,928
Total Fee Income	286,696	$ 267,338	562,660	$ 522,453
Customer contract receivables	246,719		246,719		$ 234,256
Deferred contract costs	44,528		44,528
Individual Markets
Disaggregation of Revenue [Line Items]
Administration, recordkeeping and servicing fees	1,162		2,302
Investment advisory and asset management fees	3,443		6,698
Other fee income	28,562		55,795
Total Fee Income	33,167	29,199	64,795	55,180
Empower Retirement
Disaggregation of Revenue [Line Items]
Administration, recordkeeping and servicing fees	167,348		325,199
Investment advisory and asset management fees	68,680		136,970
Other fee income	15,817		32,133
Total Fee Income	251,845	236,573	494,302	463,892
Other
Disaggregation of Revenue [Line Items]
Administration, recordkeeping and servicing fees	0		0
Investment advisory and asset management fees	1,684		3,563
Other fee income	0		0
Total Fee Income	$ 1,684	$ 1,566	$ 3,563	$ 3,381

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Employee Benefit Plans - Net Periodic Benefits (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Components of net periodic cost (benefit):
Service cost	$ 376	$ 1,686	$ 752	$ (28)
Interest cost	6,220	6,714	12,441	13,428
Expected return on plan assets	(5,331)	(5,118)	(10,661)	(10,236)
Amortization of unrecognized prior service costs (benefits)	76	73	152	146
Amortization of losses (gains) from earlier periods	503	2,073	1,007	4,146
Net periodic cost (benefit)	1,844	5,428	3,691	7,456
Defined Benefit Pension Plan
Components of net periodic cost (benefit):
Service cost	0	1,333	0	(734)
Interest cost	5,709	6,121	11,419	12,242
Expected return on plan assets	(5,331)	(5,118)	(10,661)	(10,236)
Amortization of unrecognized prior service costs (benefits)	0	0	0	0
Amortization of losses (gains) from earlier periods	584	2,199	1,168	4,398
Net periodic cost (benefit)	962	4,535	1,926	5,670
Post-Retirement Medical Plan
Components of net periodic cost (benefit):
Service cost	376	357	752	714
Interest cost	172	188	344	376
Expected return on plan assets	0	0	0	0
Amortization of unrecognized prior service costs (benefits)	(5)	(52)	(10)	(104)
Amortization of losses (gains) from earlier periods	(70)	(113)	(138)	(226)
Net periodic cost (benefit)	473	380	948	760
Payments made	34	207	117	376
Supplemental Executive Retirement Plan
Components of net periodic cost (benefit):
Service cost	0	(4)	0	(8)
Interest cost	339	405	678	810
Expected return on plan assets	0	0	0	0
Amortization of unrecognized prior service costs (benefits)	81	125	162	250
Amortization of losses (gains) from earlier periods	(11)	(13)	(23)	(26)
Net periodic cost (benefit)	409	513	817	1,026
Payments made	$ 599	$ 834	$ 1,199	$ 1,668

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Employee Benefit Plans - Additional Information (Details)	Jun. 30, 2018 USD ($)
Post-Retirement Medical Plan
Defined Benefit Plan Disclosure [Line Items]
Expected contributions	$ 234,000
Supplemental Employee Retirement Plan
Defined Benefit Plan Disclosure [Line Items]
Expected contributions	2,398,000
Defined Benefit Pension Plan
Defined Benefit Plan Disclosure [Line Items]
Expected contributions	$ 0

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Tax Contingency [Line Items]
Current expense	$ 22,327	$ 18,300	$ 6,556	$ 31,260
Deferred expense	4,924	7,868	34,248	12,026
Total income tax provision	27,251	$ 26,168	$ 40,804	$ 43,286
Reconciliation between the statutory federal income tax rate and the effective income tax rate from continuing operations
Statutory federal income tax rate			21.00%	35.00%
Investment income not subject to federal tax			(2.00%)	(3.40%)
Tax credits			(0.60%)	(0.60%)
State income taxes, net of federal benefit			2.70%	2.50%
Other, net			0.60%	0.30%
Effective income tax rate			21.70%	33.80%
Reconciliation of unrecognized tax benefits
Increase (decrease) in unrecognized tax benefit			$ 1,924	$ 3,714
Minimum
Reconciliation of unrecognized tax benefits
Additional increase to unrecognized tax benefits	3,000		3,000
Maximum
Reconciliation of unrecognized tax benefits
Additional increase to unrecognized tax benefits	$ 4,000		$ 4,000

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Segment Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) segment	Jun. 30, 2017 USD ($)
Segment Reporting [Abstract]
Number of reportable segments | segment			3
Revenues
Premium income	$ 78,155	$ 67,663	$ 222,836	$ 219,904
Fee income	286,696	267,338	562,660	522,453
Other revenue	3,077	3,661	6,062	6,045
Net investment income	327,471	297,221	665,612	610,691
Investment gains (losses), net	40,256	22,064	(3,487)	10,310
Total revenues	735,655	657,947	1,453,683	1,369,403
Benefits and expenses:
Policyholder benefits	260,686	269,544	599,270	608,971
Operating expenses	349,090	312,411	666,323	632,494
Total benefits and expenses	609,776	581,955	1,265,593	1,241,465
Income before income taxes	125,879	75,992	188,090	127,938
Income tax expense	27,251	26,168	40,804	43,286
Net income	98,628	49,824	147,286	84,652
Individual Markets
Revenues
Premium income	49,955	44,701	173,540	176,260
Fee income	33,167	29,199	64,795	55,180
Other revenue	0	0	0	0
Net investment income	197,403	192,788	394,732	376,993
Investment gains (losses), net	32,117	4,037	15,447	4,622
Total revenues	312,642	270,725	648,514	613,055
Benefits and expenses:
Policyholder benefits	201,554	198,171	473,562	468,259
Operating expenses	58,422	47,420	101,024	85,807
Total benefits and expenses	259,976	245,591	574,586	554,066
Income before income taxes	52,666	25,134	73,928	58,989
Income tax expense	10,135	8,531	14,033	20,182
Net income	42,531	16,603	59,895	38,807
Empower Retirement
Revenues
Premium income	1,086	1,052	1,675	1,143
Fee income	251,845	236,573	494,302	463,892
Other revenue	3,077	3,661	6,062	6,045
Net investment income	117,289	92,756	246,297	210,375
Investment gains (losses), net	8,138	18,011	(18,984)	5,695
Total revenues	381,435	352,053	729,352	687,150
Benefits and expenses:
Policyholder benefits	53,968	50,702	105,247	98,330
Operating expenses	258,871	249,178	518,752	504,941
Total benefits and expenses	312,839	299,880	623,999	603,271
Income before income taxes	68,596	52,173	105,353	83,879
Income tax expense	16,009	17,996	24,777	28,421
Net income	52,587	34,177	80,576	55,458
Other
Revenues
Premium income	27,114	21,910	47,621	42,501
Fee income	1,684	1,566	3,563	3,381
Other revenue	0	0	0	0
Net investment income	12,779	11,677	24,583	23,323
Investment gains (losses), net	1	16	50	(7)
Total revenues	41,578	35,169	75,817	69,198
Benefits and expenses:
Policyholder benefits	5,164	20,671	20,461	42,382
Operating expenses	31,797	15,813	46,547	41,746
Total benefits and expenses	36,961	36,484	67,008	84,128
Income before income taxes	4,617	(1,315)	8,809	(14,930)
Income tax expense	1,107	(359)	1,994	(5,317)
Net income	$ 3,510	$ (956)	$ 6,815	$ (9,613)

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Commitments and Contingencies - Additional Information (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Commitments
Unfunded commitments related to cost basis limited partnership interests, due in one year	$ 119,731,000	$ 114,726,000
Revolving credit facility
Commitments
Amount of credit facility under agreement for general corporate purposes	50,000,000
Adjusted net worth required for each quarter	1,022,680,000
Amount outstanding	0	0
Letter of credit | GWL&A Financial Inc.
Commitments
Amount of credit facility under agreement for general corporate purposes	70,000,000
Amount outstanding	0	0
Other Letters of Credit
Commitments
Amount of credit facility under agreement for general corporate purposes	9,095,000
Amount outstanding	$ 0	$ 0

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Commitments and Contingencies - Unfunded Commitments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Due in less than one year	$ 269,760	$ 312,152
Due within one to three years	0	1,090
Total	$ 269,760	$ 313,242

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Subsequent Events (Details) $ in Millions	Jul. 25, 2018 USD ($)
Subsequent event
Subsequent Event [Line Items]
Dividends payable	$ 30