Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Deferred policy acquisition costs asset by segment

The Company's deferred policy acquisition costs (DAC) by reporting segment was as follows:



($ in thousands)	December 31,
	2019		2018
Property and Casualty	$	28,616	$	30,033
Supplemental	1,967		N/A
Retirement (annuity)	185,294		209,231
Life	60,791		59,478
Total	$	276,668	$	298,742

Adjustment to amortization expenses

The Company recognized the following adjustments to amortization expense as a result of evaluating actual experience and prospective assumptions, the impact of unlocking:



($ in thousands)	Year Ended December 31,
	2019			2018		2017
Increase (decrease) to DAC amortization expense:
Retirement	$	3,480		$	3,948	$	1,081
Life	(267		)	283		(200		)
Total	$	3,213		$	4,231	$	881

Property and equipment

The following amounts are included in Other assets in the Consolidated Balance Sheets:



($ in thousands)	December 31,
	2019		2018
Property and equipment	$	166,583	$	142,243
Less: accumulated depreciation	106,458		101,267
Total	$	60,125	$	40,976

Investment contract and life policy reserves

This table summarizes the Company's investment contract and policy reserves.



($ in thousands)	December 31,
	2019		2018
Investment contract reserves	$	4,675,774	$	4,555,856
Policy reserves	1,558,678		1,155,337
Total	$	6,234,452	$	5,711,193

Summary of guaranteed minimum death benefit

The Company regularly monitors the GMDB reserve considering fluctuations in financial markets. The Company has a relatively low exposure to GMDB risk as shown below.



($ in thousands)	December 31,
	2019			2018
GMDB reserve	$	126		$	258
Aggregate in-the-money death benefits under the GMDB provision	29,367			48,083
Variable annuity contract value distribution based on GMDB feature:
No guarantee	28		%	30		%
Return of premium guarantee	67		%	65		%
Guarantee of premium roll-up at an annual rate of 3% or 5%	5		%	5		%
Total	100		%	100		%

Stock options fair value pricing model weighted-average assumptions

The fair value of stock options granted was estimated on the respective dates of grant using the Black-Scholes option pricing model with the weighted average assumptions shown in the following table.



	Year Ended December 31,
	2019			2018			2017
Number of stock options granted	282,040			223,208			222,828
Weighted average grant date fair value of stock options granted	$	6.26		$	7.16		$	6.57
Weighted average assumptions:
Risk-free interest rate	2.5		%	2.6		%	2.0		%
Expected dividend yield	2.9		%	2.6		%	2.5		%
Expected life, in years	5.0			4.8			4.9
Expected volatility (based on historical volatility)	21.9		%	21.5		%	21.4		%

Computations of net income per share on both basic and diluted bases, including reconciliations of the numerators and denominators

The computations of net income per share on both basic and diluted bases, including reconciliations of the numerators and denominators, were as follows:



($ in thousands)	Year Ended December 31,
	2019		2018		2017
Basic:
Net income for the period	$	184,443	$	18,343	$	169,459
Weighted average number of common shares during the period (in thousands)	41,738		41,570		41,365
Net income per share - basic	$	4.42	$	0.44	$	4.10

Diluted:
Net income for the period	$	184,443	$	18,343	$	169,459
Weighted average number of common shares during the period (in thousands)	41,738		41,570		41,365
Weighted average number of common equivalent shares to reflect the dilutive effect of common stock equivalent securities (in thousands):
Stock options	79		100		112
CSUs related to deferred compensation for employees	—		25		25
RSUs related to incentive compensation	132		199		63
Total common and common equivalent shares adjusted to calculate diluted earnings per share (in thousands)	41,949		41,894		41,565
Net income per share - diluted	$	4.40	$	0.44	$	4.08

Components of comprehensive income

The components of comprehensive income (loss) were as follows:



($ in thousands)	Year Ended December 31,
	2019		2018			2017
Net income	$	184,443	$	18,343		$	169,459
Other comprehensive income (loss):
Change in net unrealized investment gains (losses) on securities:
Net unrealized investment gains (losses) on securities arising during the period	327,363		(275,094		)	105,475
Less: reclassification adjustment for net investment gains (losses) included in income before income tax	157,423		(16,363		)	(4,863		)
Total, before tax	169,940		(258,731		)	110,338
Income tax expense (benefit)	36,433		(55,495		)	35,933
Total, net of tax	133,507		(203,236		)	74,405
Change in net funded status of benefit plans:
Before tax	1,805		1,294			1,461
Income tax expense	387		262			727
Total, net of tax	1,418		1,032			734
Total comprehensive income (loss)	$	319,368	$	(183,861	)	$	244,598

Accumulated other comprehensive income (loss)

The following table reconciles the components of AOCI for the periods indicated.



($ in thousands)	Net Unrealized Investment Gains (Losses) on Securities ⁽¹⁾⁽²⁾			Net Funded Status of Benefit Plans ⁽¹⁾			Total⁽¹⁾⁽³⁾
Beginning balance, January 1, 2019	$	96,941		$	(12,185	)	$	84,756
Other comprehensive income (loss) before reclassifications	257,871			1,418			259,289
Amounts reclassified from AOCI	(124,364		)	—			(124,364		)
Net current period other comprehensive income (loss)	133,507			1,418			134,925
Ending balance, December 31, 2019	$	230,448		$	(10,767	)	$	219,681

Beginning balance, January 1, 2018	$	300,177		$	(13,217	)	$	286,960
Other comprehensive income (loss) before reclassifications	(201,122		)	1,032			(200,090		)
Amounts reclassified from AOCI	12,927			—			12,927
Cumulative effect of change in accounting principle ⁽⁴⁾	(15,041		)	—			(15,041		)
Net current period other comprehensive income (loss)	(203,236		)	1,032			(202,204		)
Ending balance, December 31, 2018	$	96,941		$	(12,185	)	$	84,756

Beginning balance, January 1, 2017	$	175,738		$	(11,817	)	$	163,921
Other comprehensive income (loss) before reclassifications	71,244			734			71,978
Amounts reclassified from AOCI	3,161			—			3,161
Reclassification of deferred taxes ⁽³⁾	50,034			(2,134		)	47,900
Net current period other comprehensive income (loss)	124,439			(1,400		)	123,039
Ending balance, December 31, 2017	$	300,177		$	(13,217	)	$	286,960

⁽¹⁾ All amounts are net of tax.


⁽²⁾	The pretax amounts reclassified from AOCI, $157.4 million, $(16.4) million and $(4.9) million, are included in net investment gains (losses) and the related tax expenses, $33.1 million, $(3.4) million and $(1.7) million, are included in income tax expense in the Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017, respectively.

⁽³⁾

Forthe period ended December 31, 2017, deferred taxes attributable to net unrealized investment gains (losses) on fixed maturity and equity securities and Defined benefit plans were re-measured as a result of the enactment of the Tax Cuts and Jobs Act of 2017 (TCJA). ASC 740, Income Taxes, requires that the income tax effect from the deferred tax re-measurement be reflected in the Company’s income tax expense, even if the deferred taxes being re-measured were originally established through AOCI. The mismatch between deferred taxes established in AOCI at 35% and re-measuring these same deferred taxes at 21% through income tax expense results in stranded deferred taxes in AOCI. On February 14, 2018, the Financial Accounting Standards Board (FASB) issued accounting guidance that permits recognition of a reclassification adjustment between AOCI and Retained earnings for stranded deferred tax amounts related to the reduced corporate tax rate enacted under the TCJA. As permitted under its provisions, the Company early adopted the accounting guidance effective for the quarterly period that ended December 31, 2017 and has elected to reclassify the stranded deferred tax amounts. The impact from early adoption resulted in an increase to AOCI and a reduction to Retained earnings of approximately $47.9 million; representing the stranded deferred tax liabilities of $50.0 million and $(2.1) million for net unrealized investment gains (losses) on fixed maturity and equity securities and Defined benefit plans, respectively.


⁽⁴⁾	The Company adopted guidance on January 1, 2018 that resulted in reclassifying $15.0 million of after tax net unrealized gains on equity securities from AOCI to Retained earnings.