x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Missouri
|
44-0308260
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
3520 Broadway, Kansas City, Missouri
|
64111-2565
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Name of each exchange on
which registered
|
$1.25 par value common stock
|
NASDAQ Capital Market LLC
|
Yes
¨
|
No
x
|
Yes
¨
|
No
x
|
Yes
x
|
No
¨
|
Yes
x
|
No
¨
|
Large accelerated filer
¨
|
Accelerated filer
x
|
Non-accelerated filer
¨
|
Smaller reporting company
¨
|
Yes
¨
|
No
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
%
of Total |
|
2012
|
|
%
of Total |
|
2011
|
|
%
of Total |
|||||||||
Individual life insurance
|
$
|
120,891
|
|
|
25
|
%
|
|
$
|
117,834
|
|
|
28
|
%
|
|
$
|
115,316
|
|
|
27
|
%
|
Immediate annuities
|
55,915
|
|
|
12
|
%
|
|
12,497
|
|
|
3
|
%
|
|
7,151
|
|
|
2
|
%
|
|||
Group life insurance
|
12,114
|
|
|
2
|
%
|
|
10,971
|
|
|
3
|
%
|
|
10,701
|
|
|
3
|
%
|
|||
Group accident & health insurance
|
54,264
|
|
|
11
|
%
|
|
51,030
|
|
|
12
|
%
|
|
50,507
|
|
|
12
|
%
|
|||
Other
|
804
|
|
|
—
|
%
|
|
1,060
|
|
|
—
|
%
|
|
1,335
|
|
|
—
|
%
|
|||
Total premiums
|
243,988
|
|
|
50
|
%
|
|
193,392
|
|
|
46
|
%
|
|
185,010
|
|
|
44
|
%
|
|||
Universal life insurance
|
101,117
|
|
|
21
|
%
|
|
96,776
|
|
|
23
|
%
|
|
95,946
|
|
|
23
|
%
|
|||
Variable universal life insurance
|
27,513
|
|
|
6
|
%
|
|
10,984
|
|
|
3
|
%
|
|
11,682
|
|
|
3
|
%
|
|||
Fixed annuities
|
80,040
|
|
|
17
|
%
|
|
93,432
|
|
|
22
|
%
|
|
100,646
|
|
|
24
|
%
|
|||
Variable annuities
|
30,831
|
|
|
6
|
%
|
|
26,640
|
|
|
6
|
%
|
|
25,681
|
|
|
6
|
%
|
|||
Total deposits
|
239,501
|
|
|
50
|
%
|
|
227,832
|
|
|
54
|
%
|
|
233,955
|
|
|
56
|
%
|
|||
Total
|
$
|
483,489
|
|
|
100
|
%
|
|
$
|
421,224
|
|
|
100
|
%
|
|
$
|
418,965
|
|
|
100
|
%
|
|
2013
|
|
|
2012
|
|
|
2011
|
|||
Missouri
|
9
|
%
|
|
Missouri
|
8
|
%
|
|
Missouri
|
9
|
%
|
Texas
|
7
|
%
|
|
Texas
|
7
|
%
|
|
Texas
|
7
|
%
|
California
|
6
|
%
|
|
California
|
6
|
%
|
|
California
|
6
|
%
|
Colorado
|
6
|
%
|
|
Kansas
|
6
|
%
|
|
Kansas
|
6
|
%
|
All others
|
72
|
%
|
|
Colorado
|
6
|
%
|
|
Colorado
|
5
|
%
|
Total
|
100
|
%
|
|
Florida
|
5
|
%
|
|
All others
|
67
|
%
|
|
|
|
All others
|
62
|
%
|
|
Total
|
100
|
%
|
|
|
|
|
Total
|
100
|
%
|
|
|
|
|
2013
|
|
%
of Total |
|
2012
|
|
%
of Total |
|
2011
|
|
%
of Total |
|||||||||
Individual life insurance
|
$
|
46,639
|
|
|
14
|
%
|
|
$
|
46,262
|
|
|
16
|
%
|
|
$
|
46,597
|
|
|
16
|
%
|
Immediate annuities
|
55,915
|
|
|
16
|
%
|
|
12,497
|
|
|
4
|
%
|
|
7,151
|
|
|
3
|
%
|
|||
Other
|
183
|
|
|
—
|
%
|
|
285
|
|
|
—
|
%
|
|
405
|
|
|
—
|
%
|
|||
Total premiums
|
102,737
|
|
|
30
|
%
|
|
59,044
|
|
|
20
|
%
|
|
54,153
|
|
|
19
|
%
|
|||
Universal life insurance
|
101,117
|
|
|
30
|
%
|
|
96,776
|
|
|
34
|
%
|
|
95,946
|
|
|
33
|
%
|
|||
Variable universal life insurance
|
27,513
|
|
|
8
|
%
|
|
10,984
|
|
|
4
|
%
|
|
11,682
|
|
|
4
|
%
|
|||
Fixed annuities
|
80,040
|
|
|
23
|
%
|
|
93,432
|
|
|
33
|
%
|
|
100,646
|
|
|
35
|
%
|
|||
Variable annuities
|
30,831
|
|
|
9
|
%
|
|
26,640
|
|
|
9
|
%
|
|
25,681
|
|
|
9
|
%
|
|||
Total deposits
|
239,501
|
|
|
70
|
%
|
|
227,832
|
|
|
80
|
%
|
|
233,955
|
|
|
81
|
%
|
|||
Total
|
$
|
342,238
|
|
|
100
|
%
|
|
$
|
286,876
|
|
|
100
|
%
|
|
$
|
288,108
|
|
|
100
|
%
|
|
2013
|
|
|
2012
|
|
|
2011
|
|||
Missouri
|
10
|
%
|
|
California
|
7
|
%
|
|
Missouri
|
9
|
%
|
California
|
7
|
%
|
|
Missouri
|
7
|
%
|
|
Kansas
|
7
|
%
|
Colorado
|
7
|
%
|
|
Colorado
|
7
|
%
|
|
Colorado
|
7
|
%
|
Florida
|
6
|
%
|
|
Florida
|
7
|
%
|
|
California
|
7
|
%
|
Texas
|
6
|
%
|
|
Kansas
|
6
|
%
|
|
Texas
|
6
|
%
|
Washington
|
6
|
%
|
|
Texas
|
6
|
%
|
|
Washington
|
5
|
%
|
All others
|
58
|
%
|
|
Washington
|
5
|
%
|
|
Iowa
|
5
|
%
|
Total
|
100
|
%
|
|
All others
|
55
|
%
|
|
All others
|
54
|
%
|
|
|
|
|
Total
|
100
|
%
|
|
Total
|
100
|
%
|
•
|
Employer contributions towards the cost of coverage;
|
•
|
Employee participation levels;
|
•
|
Benefits desired versus product cost;
|
•
|
Number of employees; and
|
•
|
Plan design features, such as coinsurance percentages, deductibles, waiting periods, plan maximums, and more.
|
•
|
Spouse and dependent benefits;
|
•
|
Annual enrollments;
|
•
|
Accidental death and dismemberment and waiver of premium benefit coverage; and
|
•
|
Policy conversion and portability privileges.
|
|
2013
|
|
%
of Total |
|
2012
|
|
%
of Total |
|
2011
|
|
%
of Total |
|||||||||
Group life insurance
|
$
|
12,114
|
|
|
18
|
%
|
|
$
|
10,971
|
|
|
18
|
%
|
|
$
|
10,701
|
|
|
18
|
%
|
Group dental insurance
|
30,627
|
|
|
46
|
%
|
|
27,194
|
|
|
44
|
%
|
|
28,497
|
|
|
47
|
%
|
|||
Group disability insurance
|
21,694
|
|
|
33
|
%
|
|
21,819
|
|
|
35
|
%
|
|
19,882
|
|
|
32
|
%
|
|||
Other group insurance
|
1,943
|
|
|
3
|
%
|
|
2,017
|
|
|
3
|
%
|
|
2,128
|
|
|
3
|
%
|
|||
Total
|
$
|
66,378
|
|
|
100
|
%
|
|
$
|
62,001
|
|
|
100
|
%
|
|
$
|
61,208
|
|
|
100
|
%
|
|
2013
|
|
|
2012
|
|
|
2011
|
|||
Missouri
|
9
|
%
|
|
Missouri
|
10
|
%
|
|
Missouri
|
10
|
%
|
Texas
|
7
|
%
|
|
Texas
|
8
|
%
|
|
Texas
|
9
|
%
|
Michigan
|
7
|
%
|
|
North Carolina
|
7
|
%
|
|
North Carolina
|
7
|
%
|
North Carolina
|
6
|
%
|
|
Indiana
|
6
|
%
|
|
Georgia
|
6
|
%
|
All others
|
71
|
%
|
|
All others
|
69
|
%
|
|
Indiana
|
5
|
%
|
Total
|
100
|
%
|
|
Total
|
100
|
%
|
|
Pennsylvania
|
5
|
%
|
|
|
|
|
|
|
All others
|
58
|
%
|
||
|
|
|
|
|
|
Total
|
100
|
%
|
|
2013
|
|
|
2012
|
|
|
2011
|
|||
Texas
|
7
|
%
|
|
Texas
|
7
|
%
|
|
Missouri
|
7
|
%
|
Missouri
|
7
|
%
|
|
Missouri
|
7
|
%
|
|
Texas
|
7
|
%
|
California
|
6
|
%
|
|
California
|
6
|
%
|
|
Illinois
|
6
|
%
|
Illinois
|
6
|
%
|
|
Illinois
|
6
|
%
|
|
California
|
5
|
%
|
All others
|
74
|
%
|
|
All others
|
74
|
%
|
|
Kansas
|
5
|
%
|
Total
|
100
|
%
|
|
Total
|
100
|
%
|
|
All others
|
70
|
%
|
|
|
|
|
|
|
Total
|
100
|
%
|
•
|
In 1991, the Company purchased Old American Insurance Company. Old American had an existing coinsurance agreement in place that ceded on a 100% coinsurance basis certain whole life policies issued by Old American prior to December 1, 1986. These policies had life insurance in force of $26.3 million at December 31, 2013 (2012 - $29.6 million) with a ceded reserve for future policy benefits under this agreement of $15.1 million (2012 - $16.7 million).
|
•
|
In 1998, Old American executed a coinsurance agreement resulting in the ceding of 100% of its retained risk on a closed block of individual accident and health business. At December 31, 2013, the reserve credit on these policies was $16.5
million (2012 - $18.4 million).
|
•
|
In 2002, Sunset Life entered into a yearly renewal term bulk reinsurance agreement whereby it ceded 80% of its retained mortality risk on traditional and universal life policies. This was accomplished through a reinsurance pool involving four primary reinsurers. In June 2012, Sunset Life recaptured approximately 9% of the outstanding bulk reinsurance agreement. The net impact of this recapture event to the Consolidated Statements of Comprehensive Income was less than $0.5 million. At December 31, 2013, the ceded insurance in force was approximately $1.0 billion (2012 - $1.1 billion) with reserves of $4.0 million (2012 - $4.0 million).
|
•
|
In 1997, the Company acquired a block of traditional life and universal life products by way of a coinsurance and servicing agreement with another insurer. Investments equal to the statutory policy reserves are held in a trust to secure payment of the estimated liabilities relating to the policies. At December 31, 2013, the block had $1.1 billion of life insurance in force (2012 - $1.2 billion), future policy benefits of $49.0 million (2012 - $51.4 million) and policyholder account balances of $139.8 million (2012 - $148.6 million).
|
•
|
In 2013, the Company completed a 100% modified coinsurance agreement for separate accounts, a 100% coinsurance agreement for the fixed fund general account and a servicing agreement for a block of variable universal life insurance policies and variable annuity contracts from American Family. At December 31, 2013, the block had $3.2 billion of life insurance in force, future policy benefits of $0.8 million, and policyholder account balances of $26.0 million.
|
•
|
Grant and revoke licenses to companies to transact business and to license agents;
|
•
|
Regulate and supervise trade practices and market conduct;
|
•
|
Establish guaranty associations which levy mandatory fees used for insurers with solvency issues;
|
•
|
Approve policy forms, advertising, and marketing materials;
|
•
|
Establish reserve requirements;
|
•
|
Prescribe the form and content of required financial statements and reports;
|
•
|
Determine the reasonableness and adequacy of statutory capital and surplus;
|
•
|
Perform financial, market conduct, and other examinations;
|
•
|
Define acceptable accounting principles for statutory reporting purposes;
|
•
|
Regulate the type and amount of permitted investment activity; and
|
•
|
Limit the amount of dividends that can be paid without prior regulatory approval.
|
•
|
The Sarbanes-Oxley Act (SOX) regarding financial reporting internal controls;
|
•
|
Pension regulations and other qualified retirement plans such as 401(k) plans;
|
•
|
Certain employer hiring considerations, specifically including but not limited to race, age, and sexual discrimination;
|
•
|
The sale of securities and investment-related products;
|
•
|
Corporate and individual taxation;
|
•
|
Prescribe the form and content of required financial statements and reports;
|
•
|
Define acceptable accounting principles for reporting purposes;
|
•
|
Health care reform; and
|
•
|
Other federal initiatives.
|
|
2013
|
|
2012
|
|
2011
|
Kansas City Life
|
A (Excellent) Stable
|
|
A (Excellent) Stable
|
|
A (Excellent) Stable
|
Sunset Life
|
A- (Excellent) Stable
|
|
A- (Excellent) Stable
|
|
A- (Excellent) Stable
|
Old American
|
B++ (Good) Positive
|
|
B++ (Good) Stable
|
|
B++ (Good) Positive
|
•
|
The Company has exposure to equity price risk through investments, but this exposure is limited due to the relatively small equity portfolio held during the periods presented.
|
•
|
The Company earns investment management fees and mortality and expense fee income based upon the value of assets held in the Company’s separate accounts from both its direct and reinsurance arrangements. Revenues from these sources fluctuate with changes in the fair value of the separate accounts.
|
•
|
Volatility in equity markets may discourage purchasers of variable universal life and annuity products that have returns linked to the performance of the equity markets and may also result in existing customers withdrawing cash values or reducing investments in those products.
|
•
|
The Company has equity price risk to the extent that it may affect the liability recognized under guaranteed minimum death benefits and guaranteed minimum withdrawal benefit provisions of the variable contracts. Periods of significant and sustained downturns in equity markets, increased equity volatility or reduced interest rates could result in an increase in the valuation of the future policy benefit or policyholder account balance liabilities associated with such products, which ultimately results in a reduction to net income.
|
•
|
The amortization of DAC relating to variable products can fluctuate with changes in the performance of the underlying separate accounts due to the impact on estimated gross profits.
|
|
High
|
|
Low
|
|
Dividends
Paid |
||||||
2013:
|
|
|
|
|
|
||||||
First quarter
|
$
|
39.93
|
|
|
$
|
36.35
|
|
|
$
|
0.27
|
|
Second quarter
|
39.06
|
|
|
34.01
|
|
|
0.27
|
|
|||
Third quarter
|
45.31
|
|
|
38.10
|
|
|
0.27
|
|
|||
Fourth quarter
|
49.95
|
|
|
43.15
|
|
|
0.27
|
|
|||
|
|
|
|
|
$
|
1.08
|
|
||||
2012:
|
|
|
|
|
|
||||||
First quarter
|
$
|
34.54
|
|
|
$
|
31.29
|
|
|
$
|
0.27
|
|
Second quarter
|
34.94
|
|
|
30.82
|
|
|
0.27
|
|
|||
Third quarter
|
38.84
|
|
|
34.31
|
|
|
0.27
|
|
|||
Fourth quarter*
|
39.36
|
|
|
34.61
|
|
|
0.54
|
|
|||
|
|
|
|
|
$
|
1.35
|
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
||||||||||||
Kansas City Life
|
$
|
100.00
|
|
|
$
|
71.08
|
|
|
$
|
81.68
|
|
|
$
|
83.96
|
|
|
$
|
101.31
|
|
|
$
|
130.03
|
|
S&P 500
|
$
|
100.00
|
|
|
$
|
126.37
|
|
|
$
|
145.36
|
|
|
$
|
148.44
|
|
|
$
|
172.08
|
|
|
$
|
227.69
|
|
Peer Group
|
$
|
100.00
|
|
|
$
|
123.32
|
|
|
$
|
133.29
|
|
|
$
|
157.63
|
|
|
$
|
174.21
|
|
|
$
|
274.64
|
|
American Equity Investment Life Holding Co.
|
|
Primerica, Inc.
|
American National Insurance Co.
|
|
Protective Life Corporation
|
FBL Financial Group, Inc.
|
|
StanCorp Financial Group, Inc.
|
Horace Mann Educators Corp.
|
|
Symetra Financial Corporation
|
Kemper Corporation
|
|
Torchmark Corporation
|
National Western Life Insurance Co.
|
|
United Fire and Casualty
|
The Phoenix Companies, Inc.
|
|
Universal American Corp.
|
Period
|
|
Total Number of
Shares Purchased Open Market/Benefit Plans |
|
Average
Purchase Price Paid per Share |
|
Total Number of
Shares Purchased as a Part of Publicly Announced Plans or Programs |
|
Maximum Number
of Shares that May Yet be Purchased Under the Plans or Programs |
|||||
|
|
|
|
|
|
|
|
|
|||||
1/1/13 - 1/31/13
|
|
9,924
|
|
1
|
$
|
37.50
|
|
|
9,924
|
|
|
990,076
|
|
|
|
—
|
|
2
|
—
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||||
2/1/13 - 2/28/13
|
|
—
|
|
1
|
—
|
|
|
—
|
|
|
990,076
|
|
|
|
|
—
|
|
2
|
—
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||||
3/1/13 - 3/31/13
|
|
—
|
|
1
|
—
|
|
|
—
|
|
|
990,076
|
|
|
|
|
—
|
|
2
|
—
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||||
4/1/13 - 4/30/13
|
|
—
|
|
1
|
—
|
|
|
—
|
|
|
990,076
|
|
|
|
|
530
|
|
2
|
39.13
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||||
5/1/13 - 5/31/13
|
|
—
|
|
1
|
—
|
|
|
—
|
|
|
990,076
|
|
|
|
|
—
|
|
2
|
—
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||||
6/1/13 - 6/30/13
|
|
—
|
|
1
|
—
|
|
|
—
|
|
|
990,076
|
|
|
|
|
—
|
|
2
|
—
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||||
7/1/13 - 7/31/13
|
|
—
|
|
1
|
—
|
|
|
—
|
|
|
990,076
|
|
|
|
|
693
|
|
2
|
41.94
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||||
8/1/13 - 8/31/13
|
|
29,833
|
|
1
|
43.74
|
|
|
29,833
|
|
|
960,243
|
|
|
|
|
51
|
|
2
|
42.43
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||||
9/1/13 - 9/30/13
|
|
8,091
|
|
1
|
44.02
|
|
|
8,091
|
|
|
952,152
|
|
|
|
|
—
|
|
2
|
—
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||||
10/1/13 - 10/31/13
|
|
15,670
|
|
1
|
44.44
|
|
|
15,670
|
|
|
936,482
|
|
|
|
|
—
|
|
2
|
—
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||||
11/1/13 - 11/30/13
|
|
—
|
|
1
|
—
|
|
|
—
|
|
|
936,482
|
|
|
|
|
—
|
|
2
|
—
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||||
12/1/13 - 12/31/13
|
|
—
|
|
1
|
—
|
|
|
—
|
|
|
936,482
|
|
|
|
|
—
|
|
2
|
—
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||||
Total
|
|
64,792
|
|
|
|
|
63,518
|
|
|
|
|
Year Ended December 31
|
||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance revenues
|
$
|
299,984
|
|
|
$
|
235,983
|
|
|
$
|
228,399
|
|
|
$
|
245,830
|
|
|
$
|
242,802
|
|
Net investment income
|
169,740
|
|
|
176,154
|
|
|
177,228
|
|
|
175,859
|
|
|
177,428
|
|
|||||
Realized investment gains (losses)
|
3,872
|
|
|
18,436
|
|
|
3,142
|
|
|
535
|
|
|
(10,076
|
)
|
|||||
Other revenues
|
9,997
|
|
|
9,354
|
|
|
10,274
|
|
|
9,139
|
|
|
10,491
|
|
|||||
Total revenues
|
$
|
483,593
|
|
|
$
|
439,927
|
|
|
$
|
419,043
|
|
|
$
|
431,363
|
|
|
$
|
420,645
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
$
|
29,567
|
|
|
$
|
39,867
|
|
|
$
|
26,133
|
|
|
$
|
22,302
|
|
|
$
|
10,732
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Per Common Share Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income, basic and diluted
|
$
|
2.69
|
|
|
$
|
3.59
|
|
|
$
|
2.29
|
|
|
$
|
1.95
|
|
|
$
|
0.93
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends to stockholders
|
$
|
1.08
|
|
|
$
|
1.35
|
|
|
$
|
1.08
|
|
|
$
|
1.08
|
|
|
$
|
1.08
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Stockholders’ equity
|
$
|
66.13
|
|
|
$
|
68.02
|
|
|
$
|
62.84
|
|
|
$
|
59.25
|
|
|
$
|
54.33
|
|
|
December 31
|
||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets
|
$
|
4,514,666
|
|
|
$
|
4,525,745
|
|
|
$
|
4,398,242
|
|
|
$
|
4,333,102
|
|
|
$
|
4,175,981
|
|
Notes payable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stockholders’ equity
|
725,404
|
|
|
750,401
|
|
|
710,705
|
|
|
679,472
|
|
|
628,363
|
|
|||||
Life insurance in force
|
32,023,747
|
|
|
28,701,373
|
|
|
29,202,126
|
|
|
29,708,102
|
|
|
30,683,571
|
|
•
|
The sale of life, interest sensitive, annuity, and accident and health products;
|
•
|
The rate of mortality, lapse, and surrenders of future policy benefits and policyholder account balances;
|
•
|
The rate of morbidity, disability, and incurrence of other policyholder benefits;
|
•
|
Persistency of existing insurance policies;
|
•
|
Interest rates credited to policyholders;
|
•
|
The effectiveness of reinsurance programs;
|
•
|
The amount of investment assets under management;
|
•
|
The ability to maximize investment returns and minimize risks such as interest rate risk, credit risk, and equity risk;
|
•
|
Timely and cost-effective access to liquidity; and
|
•
|
Management of distribution costs and operating expenses.
|
•
|
Changes in general economic conditions, including the performance of financial markets and interest rates;
|
•
|
Increasing competition and changes in consumer behavior, which may affect the Company’s ability to sell its products and retain business;
|
•
|
Increasing competition in the recruiting of new general agents and agents;
|
•
|
Customer and agent response to new products, distribution channels, and marketing initiatives;
|
•
|
Fluctuations in experience regarding current mortality, morbidity, persistency, and interest rates relative to expected amounts used in pricing the Company’s products;
|
•
|
Changes in assumptions related to DAC and VOBA;
|
•
|
Regulatory, accounting, or tax changes that may affect the cost of, or the demand for, the Company’s products or services; and
|
•
|
Unanticipated changes in industry trends and ratings assigned by nationally recognized rating organizations.
|
Critical Accounting
Estimate |
|
Determination Methodology
|
|
Potential One-Time Effect on DAC and
Related Items |
|
|
|
|
|
Mortality Experience
|
|
Based on Company mortality experience. Industry experience and trends are also considered.
|
|
A 2.5% increase in expected mortality experience for all future years would result in a reduction in DAC and an increase in current period amortization expense of $2.5 million.
|
|
|
|
|
|
Surrender Rates
|
|
Based on Company surrender experience. Industry experience and trends are also considered.
|
|
A 10% increase in expected surrender rates for all future years would result in a reduction in DAC and an increase in current period amortization expense of $1.6 million.
|
|
|
|
|
|
Interest Spreads
|
|
Based on expected future investment returns and expected future crediting rates applied to policyholder account balances; future crediting rates include constraints imposed by policy guarantees.
|
|
A 10 basis point reduction in future interest rate spreads would result in a reduction in DAC and an increase in current period amortization expense of $2.7 million.
|
|
|
|
|
|
Maintenance Expenses
|
|
Based on Company experience using an internal expense allocation methodology.
|
|
A 10% increase in future maintenance expenses would result in a reduction in DAC and an increase in current period amortization expense of $1.7 million.
|
Critical Accounting
Estimate |
|
Determination Methodology
|
|
Potential One-Time Effect on VOBA and
Related Items |
|
|
|
|
|
Mortality Experience
|
|
Based on Company mortality experience. Industry experience and trends are also considered.
|
|
A 2.5% increase in expected mortality experience for all future years would result in a reduction in VOBA and an increase in current period amortization expense of $1.1 million.
|
|
|
|
|
|
Surrender Rates
|
|
Based on Company surrender experience. Industry experience and trends are also considered.
|
|
A 10% increase in expected surrender rates for all future years would result in a reduction in VOBA and an increase in current period amortization expense of $0.6 million.
|
|
|
|
|
|
Interest Spreads
|
|
Based on expected future investment returns and expected future crediting rates applied to policyholder account balances; future crediting rates include constraints imposed by policy guarantees.
|
|
A 10 basis point reduction in future interest rate spreads would result in a reduction in VOBA and an increase in current period amortization expense of $0.6 million.
|
|
|
|
|
|
Maintenance Expenses
|
|
Based on Company experience using an internal expense allocation methodology.
|
|
A 10% increase in future maintenance expenses would result in a reduction in VOBA and an increase in current period amortization expense of $0.3 million.
|
|
2013 Versus 2012
|
|
2012 Versus 2011
|
||||
Insurance and other revenues
|
$
|
64,644
|
|
|
$
|
6,664
|
|
Net investment income
|
(6,414
|
)
|
|
(1,074
|
)
|
||
Net realized investment gains (losses)
|
(14,564
|
)
|
|
15,294
|
|
||
Policyholder benefits and interest credited to
policyholder account balances |
(49,067
|
)
|
|
(2,962
|
)
|
||
Amortization of deferred acquisition costs
|
(9,186
|
)
|
|
5,924
|
|
||
Operating expenses
|
(453
|
)
|
|
(4,049
|
)
|
||
Income tax expense
|
4,740
|
|
|
(6,063
|
)
|
||
Total variance
|
$
|
(10,300
|
)
|
|
$
|
13,734
|
|
|
2013
|
|
% Change
|
|
2012
|
|
% Change
|
|
2011
|
||||||||
New premiums:
|
|
|
|
|
|
|
|
|
|
||||||||
Individual life insurance
|
$
|
17,784
|
|
|
1
|
%
|
|
$
|
17,560
|
|
|
2
|
%
|
|
$
|
17,222
|
|
Immediate annuities
|
55,892
|
|
|
348
|
%
|
|
12,470
|
|
|
82
|
%
|
|
6,860
|
|
|||
Group life insurance
|
2,960
|
|
|
20
|
%
|
|
2,459
|
|
|
26
|
%
|
|
1,951
|
|
|||
Group accident and health insurance
|
14,576
|
|
|
25
|
%
|
|
11,681
|
|
|
(10
|
)%
|
|
12,978
|
|
|||
Total new premiums
|
91,212
|
|
|
107
|
%
|
|
44,170
|
|
|
13
|
%
|
|
39,011
|
|
|||
Renewal premiums
|
152,776
|
|
|
2
|
%
|
|
149,222
|
|
|
2
|
%
|
|
145,999
|
|
|||
Total premiums
|
243,988
|
|
|
26
|
%
|
|
193,392
|
|
|
5
|
%
|
|
185,010
|
|
|||
Reinsurance ceded
|
(57,458
|
)
|
|
—
|
%
|
|
(57,303
|
)
|
|
(1
|
)%
|
|
(57,672
|
)
|
|||
Net premiums
|
$
|
186,530
|
|
|
37
|
%
|
|
$
|
136,089
|
|
|
7
|
%
|
|
$
|
127,338
|
|
|
2013
|
|
% Change
|
|
2012
|
|
% Change
|
|
2011
|
||||||||
New deposits:
|
|
|
|
|
|
|
|
|
|
||||||||
Universal life insurance
|
$
|
17,627
|
|
|
42
|
%
|
|
$
|
12,388
|
|
|
11
|
%
|
|
$
|
11,159
|
|
Variable universal life insurance
|
1,429
|
|
|
154
|
%
|
|
563
|
|
|
(32
|
)%
|
|
834
|
|
|||
Fixed annuities
|
46,040
|
|
|
(19
|
)%
|
|
56,788
|
|
|
(8
|
)%
|
|
62,060
|
|
|||
Variable annuities
|
19,791
|
|
|
10
|
%
|
|
18,039
|
|
|
11
|
%
|
|
16,291
|
|
|||
Total new deposits
|
84,887
|
|
|
(3
|
)%
|
|
87,778
|
|
|
(3
|
)%
|
|
90,344
|
|
|||
Renewal deposits
|
154,614
|
|
|
10
|
%
|
|
140,054
|
|
|
(2
|
)%
|
|
143,611
|
|
|||
Total deposits
|
$
|
239,501
|
|
|
5
|
%
|
|
$
|
227,832
|
|
|
(3
|
)%
|
|
$
|
233,955
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Insurance revenues:
|
|
|
|
|
|
||||||
Net premiums
|
$
|
60,369
|
|
|
$
|
16,885
|
|
|
$
|
10,320
|
|
Contract charges
|
113,454
|
|
|
99,894
|
|
|
101,061
|
|
|||
Total insurance revenues
|
173,823
|
|
|
116,779
|
|
|
111,381
|
|
|||
Investment revenues:
|
|
|
|
|
|
||||||
Net investment income
|
157,580
|
|
|
163,706
|
|
|
164,595
|
|
|||
Net realized investment gains, excluding
other-than-temporary impairment losses |
4,680
|
|
|
20,714
|
|
|
5,184
|
|
|||
Net impairment losses recognized in earnings:
|
|
|
|
|
|
||||||
Total other-than-temporary impairment losses
|
(1,031
|
)
|
|
(2,491
|
)
|
|
(2,832
|
)
|
|||
Portion of impairment losses recognized in
other comprehensive income (loss) |
(73
|
)
|
|
809
|
|
|
930
|
|
|||
Net other-than-temporary impairment losses
recognized in earnings |
(1,104
|
)
|
|
(1,682
|
)
|
|
(1,902
|
)
|
|||
Total investment revenues
|
161,156
|
|
|
182,738
|
|
|
167,877
|
|
|||
Other revenues
|
9,847
|
|
|
9,196
|
|
|
10,110
|
|
|||
Total revenues
|
344,826
|
|
|
308,713
|
|
|
289,368
|
|
|||
|
|
|
|
|
|
||||||
Policyholder benefits
|
136,114
|
|
|
86,627
|
|
|
81,859
|
|
|||
Interest credited to policyholder account balances
|
79,294
|
|
|
82,043
|
|
|
83,446
|
|
|||
Amortization of deferred acquisition costs
|
20,440
|
|
|
14,712
|
|
|
21,645
|
|
|||
Operating expenses
|
71,267
|
|
|
70,711
|
|
|
63,700
|
|
|||
Total benefits and expenses
|
307,115
|
|
|
254,093
|
|
|
250,650
|
|
|||
|
|
|
|
|
|
||||||
Income before income tax expense
|
37,711
|
|
|
54,620
|
|
|
38,718
|
|
|||
|
|
|
|
|
|
||||||
Income tax expense
|
12,379
|
|
|
17,762
|
|
|
13,107
|
|
|||
|
|
|
|
|
|
||||||
Net income
|
$
|
25,332
|
|
|
$
|
36,858
|
|
|
$
|
25,611
|
|
|
2013
|
|
% Change
|
|
2012
|
|
% Change
|
|
2011
|
||||||||
New premiums:
|
|
|
|
|
|
|
|
|
|
||||||||
Individual life insurance
|
$
|
4,801
|
|
|
3
|
%
|
|
$
|
4,640
|
|
|
(6
|
)%
|
|
$
|
4,934
|
|
Immediate annuities
|
55,892
|
|
|
348
|
%
|
|
12,470
|
|
|
82
|
%
|
|
6,860
|
|
|||
Total new premiums
|
60,693
|
|
|
255
|
%
|
|
17,110
|
|
|
45
|
%
|
|
11,794
|
|
|||
Renewal premiums
|
42,044
|
|
|
—
|
%
|
|
41,934
|
|
|
(1
|
)%
|
|
42,359
|
|
|||
Total premiums
|
102,737
|
|
|
74
|
%
|
|
59,044
|
|
|
9
|
%
|
|
54,153
|
|
|||
Reinsurance ceded
|
(42,368
|
)
|
|
—
|
%
|
|
(42,159
|
)
|
|
(4
|
)%
|
|
(43,833
|
)
|
|||
Net premiums
|
$
|
60,369
|
|
|
258
|
%
|
|
$
|
16,885
|
|
|
64
|
%
|
|
$
|
10,320
|
|
|
2013
|
|
% Change
|
|
2012
|
|
% Change
|
|
2011
|
||||||||
New deposits:
|
|
|
|
|
|
|
|
|
|
||||||||
Universal life insurance
|
$
|
17,627
|
|
|
42
|
%
|
|
$
|
12,388
|
|
|
11
|
%
|
|
$
|
11,159
|
|
Variable universal life insurance
|
1,429
|
|
|
154
|
%
|
|
563
|
|
|
(32
|
)%
|
|
834
|
|
|||
Fixed annuities
|
46,040
|
|
|
(19
|
)%
|
|
56,788
|
|
|
(8
|
)%
|
|
62,060
|
|
|||
Variable annuities
|
19,791
|
|
|
10
|
%
|
|
18,039
|
|
|
11
|
%
|
|
16,291
|
|
|||
Total new deposits
|
84,887
|
|
|
(3
|
)%
|
|
87,778
|
|
|
(3
|
)%
|
|
90,344
|
|
|||
Renewal deposits
|
154,614
|
|
|
10
|
%
|
|
140,054
|
|
|
(2
|
)%
|
|
143,611
|
|
|||
Total deposits
|
$
|
239,501
|
|
|
5
|
%
|
|
$
|
227,832
|
|
|
(3
|
)%
|
|
$
|
233,955
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Insurance revenues:
|
|
|
|
|
|
||||||
Net premiums
|
$
|
53,021
|
|
|
$
|
48,823
|
|
|
$
|
49,684
|
|
Total insurance revenues
|
53,021
|
|
|
48,823
|
|
|
49,684
|
|
|||
Investment revenues:
|
|
|
|
|
|
||||||
Net investment income
|
488
|
|
|
524
|
|
|
547
|
|
|||
Other revenues
|
147
|
|
|
145
|
|
|
149
|
|
|||
Total revenues
|
53,656
|
|
|
49,492
|
|
|
50,380
|
|
|||
|
|
|
|
|
|
||||||
Policyholder benefits
|
29,144
|
|
|
26,803
|
|
|
27,777
|
|
|||
Operating expenses
|
23,702
|
|
|
23,699
|
|
|
23,675
|
|
|||
Total benefits and expenses
|
52,846
|
|
|
50,502
|
|
|
51,452
|
|
|||
|
|
|
|
|
|
||||||
Income (loss) before income tax expense (benefit)
|
810
|
|
|
(1,010
|
)
|
|
(1,072
|
)
|
|||
|
|
|
|
|
|
||||||
Income tax expense (benefit)
|
284
|
|
|
(354
|
)
|
|
(375
|
)
|
|||
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
526
|
|
|
$
|
(656
|
)
|
|
$
|
(697
|
)
|
|
2013
|
|
% Change
|
|
2012
|
|
% Change
|
|
2011
|
||||||||
New premiums:
|
|
|
|
|
|
|
|
|
|
||||||||
Group life insurance
|
$
|
2,960
|
|
|
20
|
%
|
|
$
|
2,459
|
|
|
26
|
%
|
|
$
|
1,951
|
|
Group dental insurance
|
8,330
|
|
|
83
|
%
|
|
4,553
|
|
|
13
|
%
|
|
4,018
|
|
|||
Group disability insurance
|
6,162
|
|
|
(12
|
)%
|
|
6,996
|
|
|
(21
|
)%
|
|
8,819
|
|
|||
Other group insurance
|
84
|
|
|
(36
|
)%
|
|
132
|
|
|
(6
|
)%
|
|
141
|
|
|||
Total new premiums
|
17,536
|
|
|
24
|
%
|
|
14,140
|
|
|
(5
|
)%
|
|
14,929
|
|
|||
Renewal premiums
|
48,842
|
|
|
2
|
%
|
|
47,861
|
|
|
3
|
%
|
|
46,279
|
|
|||
Total premiums
|
66,378
|
|
|
7
|
%
|
|
62,001
|
|
|
1
|
%
|
|
61,208
|
|
|||
Reinsurance ceded
|
(13,357
|
)
|
|
1
|
%
|
|
(13,178
|
)
|
|
14
|
%
|
|
(11,524
|
)
|
|||
Net premiums
|
$
|
53,021
|
|
|
9
|
%
|
|
$
|
48,823
|
|
|
(2
|
)%
|
|
$
|
49,684
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Insurance revenues:
|
|
|
|
|
|
||||||
Net premiums
|
$
|
73,535
|
|
|
$
|
70,773
|
|
|
$
|
67,869
|
|
Total insurance revenues
|
73,535
|
|
|
70,773
|
|
|
67,869
|
|
|||
Investment revenues:
|
|
|
|
|
|
||||||
Net investment income
|
11,672
|
|
|
11,924
|
|
|
12,086
|
|
|||
Net realized investment gains (losses), excluding
other-than-temporary impairment losses |
325
|
|
|
(560
|
)
|
|
(33
|
)
|
|||
Net impairment losses recognized in earnings:
|
|
|
|
|
|
||||||
Total other-than-temporary impairment losses
|
(1
|
)
|
|
(35
|
)
|
|
(120
|
)
|
|||
Portion of impairment losses recognized in
other comprehensive income (loss) |
(28
|
)
|
|
(1
|
)
|
|
13
|
|
|||
Net other-than-temporary impairment losses
recognized in earnings |
(29
|
)
|
|
(36
|
)
|
|
(107
|
)
|
|||
Total investment revenues
|
11,968
|
|
|
11,328
|
|
|
11,946
|
|
|||
Other revenues
|
3
|
|
|
13
|
|
|
15
|
|
|||
Total revenues
|
85,506
|
|
|
82,114
|
|
|
79,830
|
|
|||
Policyholder benefits
|
46,736
|
|
|
46,748
|
|
|
46,177
|
|
|||
Amortization of deferred acquisition costs
|
16,788
|
|
|
13,330
|
|
|
12,321
|
|
|||
Operating expenses
|
16,048
|
|
|
16,151
|
|
|
19,280
|
|
|||
Total benefits and expenses
|
79,572
|
|
|
76,229
|
|
|
77,778
|
|
|||
Income before income tax expense
|
5,934
|
|
|
5,885
|
|
|
2,052
|
|
|||
Income tax expense
|
2,225
|
|
|
2,220
|
|
|
833
|
|
|||
Net income
|
$
|
3,709
|
|
|
$
|
3,665
|
|
|
$
|
1,219
|
|
|
2013
|
|
% Change
|
|
2012
|
|
% Change
|
|
2011
|
||||||||
New individual life premiums
|
$
|
12,983
|
|
|
—
|
%
|
|
$
|
12,920
|
|
|
5
|
%
|
|
$
|
12,288
|
|
Renewal premiums
|
62,285
|
|
|
4
|
%
|
|
59,819
|
|
|
3
|
%
|
|
57,896
|
|
|||
Total premiums
|
75,268
|
|
|
3
|
%
|
|
72,739
|
|
|
4
|
%
|
|
70,184
|
|
|||
Reinsurance ceded
|
(1,733
|
)
|
|
(12
|
)%
|
|
(1,966
|
)
|
|
(15
|
)%
|
|
(2,315
|
)
|
|||
Net premiums
|
$
|
73,535
|
|
|
4
|
%
|
|
$
|
70,773
|
|
|
4
|
%
|
|
$
|
67,869
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Total revenue
|
$
|
85,506
|
|
|
$
|
82,114
|
|
|
$
|
79,830
|
|
Less: Realized investment gains (losses)
|
296
|
|
|
(596
|
)
|
|
(140
|
)
|
|||
Revenue excluding realized investment gains (losses)
|
85,210
|
|
|
82,710
|
|
|
79,970
|
|
|||
|
|
|
|
|
|
||||||
Policyholder benefits
|
46,736
|
|
|
46,748
|
|
|
46,177
|
|
|||
|
|
|
|
|
|
||||||
Policyholder benefit ratio
|
55%
|
|
57%
|
|
58%
|
|
2013
|
|
%
of Total |
|
2012
|
|
%
of Total |
||||||
Fixed maturity securities
|
$
|
2,618,620
|
|
|
74
|
%
|
|
$
|
2,788,141
|
|
|
75
|
%
|
Equity securities
|
34,386
|
|
|
1
|
%
|
|
20,061
|
|
|
1
|
%
|
||
Mortgage loans
|
629,256
|
|
|
18
|
%
|
|
674,034
|
|
|
18
|
%
|
||
Real estate
|
142,536
|
|
|
4
|
%
|
|
124,742
|
|
|
3
|
%
|
||
Policy loans
|
83,518
|
|
|
2
|
%
|
|
77,133
|
|
|
2
|
%
|
||
Short-term investments
|
40,712
|
|
|
1
|
%
|
|
24,902
|
|
|
1
|
%
|
||
Other investments
|
1,247
|
|
|
—
|
|
|
2,572
|
|
|
—
|
|
||
Total
|
$
|
3,550,275
|
|
|
100
|
%
|
|
$
|
3,711,585
|
|
|
100
|
%
|
|
Amortized
Cost |
|
Fair
Value |
|
Gross
Unrealized Losses |
||||||
Securities owned without realized impairment:
|
|
|
|
|
|
||||||
Unrealized losses of 10% or less
|
$
|
578,006
|
|
|
$
|
553,790
|
|
|
$
|
24,216
|
|
Unrealized losses of 20% or less and greater than 10%
|
40,186
|
|
|
34,087
|
|
|
6,099
|
|
|||
Subtotal
|
618,192
|
|
|
587,877
|
|
|
30,315
|
|
|||
Unrealized losses greater than 20%:
|
|
|
|
|
|
||||||
Investment grade:
|
|
|
|
|
|
||||||
Less than twelve months
|
9,047
|
|
|
6,993
|
|
|
2,054
|
|
|||
Twelve months or greater
|
908
|
|
|
680
|
|
|
228
|
|
|||
Total investment grade
|
9,955
|
|
|
7,673
|
|
|
2,282
|
|
|||
Below investment grade:
|
|
|
|
|
|
||||||
Less than twelve months
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
173
|
|
|
131
|
|
|
42
|
|
|||
Total below investment grade
|
173
|
|
|
131
|
|
|
42
|
|
|||
Unrealized losses greater than 20%
|
10,128
|
|
|
7,804
|
|
|
2,324
|
|
|||
Subtotal
|
628,320
|
|
|
595,681
|
|
|
32,639
|
|
|||
|
|
|
|
|
|
||||||
Securities owned with realized impairment:
|
|
|
|
|
|
||||||
Unrealized losses of 10% or less
|
41,367
|
|
|
40,125
|
|
|
1,242
|
|
|||
Unrealized losses of 20% or less and greater than 10%
|
—
|
|
|
—
|
|
|
—
|
|
|||
Subtotal
|
41,367
|
|
|
40,125
|
|
|
1,242
|
|
|||
Unrealized losses greater than 20%:
|
|
|
|
|
|
||||||
Investment grade:
|
|
|
|
|
|
||||||
Less than twelve months
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total investment grade
|
—
|
|
|
—
|
|
|
—
|
|
|||
Below investment grade:
|
|
|
|
|
|
||||||
Less than twelve months
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total below investment grade
|
—
|
|
|
—
|
|
|
—
|
|
|||
Unrealized losses greater than 20%
|
—
|
|
|
—
|
|
|
—
|
|
|||
Subtotal
|
41,367
|
|
|
40,125
|
|
|
1,242
|
|
|||
Total
|
$
|
669,687
|
|
|
$
|
635,806
|
|
|
$
|
33,881
|
|
|
Amortized
Cost |
|
Fair
Value |
|
Gross
Unrealized Losses |
||||||
Securities owned without realized impairment:
|
|
|
|
|
|
||||||
Unrealized losses of 10% or less
|
$
|
72,980
|
|
|
$
|
72,154
|
|
|
$
|
826
|
|
Unrealized losses of 20% or less and greater than 10%
|
40,283
|
|
|
34,300
|
|
|
5,983
|
|
|||
Subtotal
|
113,263
|
|
|
106,454
|
|
|
6,809
|
|
|||
Unrealized losses greater than 20%:
|
|
|
|
|
|
||||||
Investment grade:
|
|
|
|
|
|
||||||
Less than twelve months
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
908
|
|
|
500
|
|
|
408
|
|
|||
Total investment grade
|
908
|
|
|
500
|
|
|
408
|
|
|||
Below investment grade:
|
|
|
|
|
|
||||||
Less than twelve months
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
173
|
|
|
98
|
|
|
75
|
|
|||
Total below investment grade
|
173
|
|
|
98
|
|
|
75
|
|
|||
Unrealized losses greater than 20%
|
1,081
|
|
|
598
|
|
|
483
|
|
|||
Subtotal
|
114,344
|
|
|
107,052
|
|
|
7,292
|
|
|||
|
|
|
|
|
|
||||||
Securities owned with realized impairment:
|
|
|
|
|
|
||||||
Unrealized losses of 10% or less
|
14,803
|
|
|
14,050
|
|
|
753
|
|
|||
Unrealized losses of 20% or less and greater than 10%
|
2,289
|
|
|
1,928
|
|
|
361
|
|
|||
Subtotal
|
17,092
|
|
|
15,978
|
|
|
1,114
|
|
|||
Unrealized losses greater than 20%:
|
|
|
|
|
|
||||||
Investment grade:
|
|
|
|
|
|
||||||
Less than twelve months
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total investment grade
|
—
|
|
|
—
|
|
|
—
|
|
|||
Below investment grade:
|
|
|
|
|
|
||||||
Less than twelve months
|
—
|
|
|
—
|
|
|
—
|
|
|||
Twelve months or greater
|
10,377
|
|
|
7,629
|
|
|
2,748
|
|
|||
Total below investment grade
|
10,377
|
|
|
7,629
|
|
|
2,748
|
|
|||
Unrealized losses greater than 20%
|
10,377
|
|
|
7,629
|
|
|
2,748
|
|
|||
Subtotal
|
27,469
|
|
|
23,607
|
|
|
3,862
|
|
|||
Total
|
$
|
141,813
|
|
|
$
|
130,659
|
|
|
$
|
11,154
|
|
|
Fair
Value |
|
%
of Total |
|
Gross
Unrealized Losses |
|
%
of Total |
||||||
AAA
|
$
|
21,794
|
|
|
4
|
%
|
|
$
|
1,206
|
|
|
4
|
%
|
AA
|
112,762
|
|
|
18
|
%
|
|
5,668
|
|
|
18
|
%
|
||
A
|
214,381
|
|
|
34
|
%
|
|
9,179
|
|
|
29
|
%
|
||
BBB
|
220,890
|
|
|
35
|
%
|
|
12,294
|
|
|
39
|
%
|
||
Total investment grade
|
569,827
|
|
|
91
|
%
|
|
28,347
|
|
|
90
|
%
|
||
BB
|
13,350
|
|
|
2
|
%
|
|
1,650
|
|
|
5
|
%
|
||
B and below
|
42,767
|
|
|
7
|
%
|
|
1,438
|
|
|
5
|
%
|
||
Total below investment grade
|
56,117
|
|
|
9
|
%
|
|
3,088
|
|
|
10
|
%
|
||
|
$
|
625,944
|
|
|
100
|
%
|
|
$
|
31,435
|
|
|
100
|
%
|
|
Fair
Value |
|
%
of Total |
|
Gross
Unrealized Losses |
|
%
of Total |
||||||
AAA
|
$
|
518
|
|
|
—
|
%
|
|
$
|
5
|
|
|
—
|
%
|
AA
|
31,910
|
|
|
25
|
%
|
|
4,586
|
|
|
41
|
%
|
||
A
|
12,325
|
|
|
9
|
%
|
|
542
|
|
|
5
|
%
|
||
BBB
|
54,461
|
|
|
42
|
%
|
|
1,387
|
|
|
13
|
%
|
||
Total investment grade
|
99,214
|
|
|
76
|
%
|
|
6,520
|
|
|
59
|
%
|
||
BB
|
5,249
|
|
|
4
|
%
|
|
161
|
|
|
1
|
%
|
||
B and below
|
25,923
|
|
|
20
|
%
|
|
4,383
|
|
|
40
|
%
|
||
Total below investment grade
|
31,172
|
|
|
24
|
%
|
|
4,544
|
|
|
41
|
%
|
||
|
$
|
130,386
|
|
|
100
|
%
|
|
$
|
11,064
|
|
|
100
|
%
|
|
|
2013
|
||||||||||||||||
|
|
Initial Default Rate
|
|
Initial Severity Rate
|
|
Prepayment Speed
|
||||||||||||
Vintage
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
High
|
||||||
2003
|
|
0.8
|
%
|
|
5.5
|
%
|
|
35
|
%
|
|
41
|
%
|
|
16.0
|
%
|
|
30.0
|
%
|
2004
|
|
1.0
|
%
|
|
6.9
|
%
|
|
35
|
%
|
|
51
|
%
|
|
8.0
|
%
|
|
20.0
|
%
|
2005
|
|
3.9
|
%
|
|
13.2
|
%
|
|
40
|
%
|
|
64
|
%
|
|
6.0
|
%
|
|
18.0
|
%
|
2006
|
|
5.7
|
%
|
|
7.5
|
%
|
|
35
|
%
|
|
85
|
%
|
|
8.0
|
%
|
|
16.0
|
%
|
2007
|
|
11.4
|
%
|
|
11.4
|
%
|
|
52
|
%
|
|
52
|
%
|
|
8.0
|
%
|
|
8.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
2012
|
||||||||||||||||
|
|
Initial Default Rate
|
|
Initial Severity Rate
|
|
Prepayment Speed
|
||||||||||||
Vintage
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
High
|
||||||
2003
|
|
1.0
|
%
|
|
4.6
|
%
|
|
35
|
%
|
|
56
|
%
|
|
16.0
|
%
|
|
28.0
|
%
|
2004
|
|
1.0
|
%
|
|
6.8
|
%
|
|
35
|
%
|
|
53
|
%
|
|
8.0
|
%
|
|
18.0
|
%
|
2005
|
|
4.7
|
%
|
|
15.1
|
%
|
|
40
|
%
|
|
74
|
%
|
|
6.0
|
%
|
|
15.0
|
%
|
2006
|
|
5.9
|
%
|
|
6.2
|
%
|
|
49
|
%
|
|
90
|
%
|
|
8.0
|
%
|
|
16.0
|
%
|
2007
|
|
10.5
|
%
|
|
10.5
|
%
|
|
58
|
%
|
|
58
|
%
|
|
8.0
|
%
|
|
8.0
|
%
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Unrealized
Gains (Losses)
|
||||||
Residential & non-agency MBS:
1
|
|
|
|
|
|
||||||
Investment grade:
|
|
|
|
|
|
||||||
Vintage 2003 and earlier
|
$
|
12,641
|
|
|
$
|
12,178
|
|
|
$
|
463
|
|
2004
|
8,939
|
|
|
8,808
|
|
|
131
|
|
|||
2005
|
—
|
|
|
—
|
|
|
—
|
|
|||
2006
|
—
|
|
|
—
|
|
|
—
|
|
|||
2007
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total investment grade
|
21,580
|
|
|
20,986
|
|
|
594
|
|
|||
Below investment grade:
|
|
|
|
|
|
||||||
Vintage 2003 and earlier
|
—
|
|
|
—
|
|
|
—
|
|
|||
2004
|
36,094
|
|
|
34,718
|
|
|
1,376
|
|
|||
2005
|
63,398
|
|
|
63,873
|
|
|
(475
|
)
|
|||
2006
|
5,884
|
|
|
4,906
|
|
|
978
|
|
|||
2007
|
3,787
|
|
|
3,609
|
|
|
178
|
|
|||
Total below investment grade
|
109,163
|
|
|
107,106
|
|
|
2,057
|
|
|||
Other structured securities:
|
|
|
|
|
|
||||||
Investment grade
|
52,560
|
|
|
53,410
|
|
|
(850
|
)
|
|||
Below investment grade
|
15,323
|
|
|
16,509
|
|
|
(1,186
|
)
|
|||
Total other
|
67,883
|
|
|
69,919
|
|
|
(2,036
|
)
|
|||
Total structured securities
|
$
|
198,626
|
|
|
$
|
198,011
|
|
|
$
|
615
|
|
1
|
This chart accounts for all vintages owned by the Company.
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Unrealized
Gains (Losses)
|
||||||
Residential & non-agency MBS:
1
|
|
|
|
|
|
||||||
Investment grade:
|
|
|
|
|
|
||||||
Vintage 2003 and earlier
|
$
|
19,426
|
|
|
$
|
18,667
|
|
|
$
|
759
|
|
2004
|
26,163
|
|
|
25,186
|
|
|
977
|
|
|||
2005
|
—
|
|
|
—
|
|
|
—
|
|
|||
2006
|
—
|
|
|
—
|
|
|
—
|
|
|||
2007
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total investment grade
|
45,589
|
|
|
43,853
|
|
|
1,736
|
|
|||
Below investment grade:
|
|
|
|
|
|
||||||
Vintage 2003 and earlier
|
—
|
|
|
—
|
|
|
—
|
|
|||
2004
|
31,415
|
|
|
30,760
|
|
|
655
|
|
|||
2005
|
75,636
|
|
|
78,334
|
|
|
(2,698
|
)
|
|||
2006
|
7,369
|
|
|
6,536
|
|
|
833
|
|
|||
2007
|
4,359
|
|
|
4,209
|
|
|
150
|
|
|||
Total below investment grade
|
118,779
|
|
|
119,839
|
|
|
(1,060
|
)
|
|||
Other structured securities:
|
|
|
|
|
|
||||||
Investment grade
|
65,481
|
|
|
67,250
|
|
|
(1,769
|
)
|
|||
Below investment grade
|
2,559
|
|
|
2,378
|
|
|
181
|
|
|||
Total other
|
68,040
|
|
|
69,628
|
|
|
(1,588
|
)
|
|||
Total structured securities
|
$
|
232,408
|
|
|
$
|
233,320
|
|
|
$
|
(912
|
)
|
1
|
This chart accounts for all vintages owned by the Company.
|
|
2013
|
|
2012
|
||||
Total assets, excluding separate accounts
|
$
|
4,121,250
|
|
|
$
|
4,185,652
|
|
Total stockholders' equity
|
725,404
|
|
|
750,401
|
|
||
Ratio of stockholders' equity to assets, excluding separate accounts
|
18%
|
|
18%
|
|
Total
|
|
Less than
1 year |
|
1-3 years
|
|
4-5 years
|
|
After 5 years
|
||||||||||
Borrowings
1
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating lease obligations
2
|
14.0
|
|
|
2.8
|
|
|
3.9
|
|
|
2.8
|
|
|
4.5
|
|
|||||
Purchase obligations
3
|
0.9
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Mortgage loan commitments
4
|
2.5
|
|
|
2.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Annuity certain contracts
5
|
51.6
|
|
|
11.5
|
|
|
16.4
|
|
|
10.5
|
|
|
13.2
|
|
|||||
Deferred annuity contracts with life contingencies
6
|
1,027.2
|
|
|
91.7
|
|
|
176.9
|
|
|
166.6
|
|
|
592.0
|
|
|||||
Life insurance liabilities
6
|
1,927.6
|
|
|
211.3
|
|
|
409.1
|
|
|
384.8
|
|
|
922.4
|
|
|||||
Total contractual obligations
|
$
|
3,023.8
|
|
|
$
|
320.7
|
|
|
$
|
606.3
|
|
|
$
|
564.7
|
|
|
$
|
1,532.1
|
|
1
|
The Company had no outstanding borrowings at December 31, 2013.
|
2
|
The Company leases its mainframe computer and certain related support equipment.
|
3
|
Purchase obligations include contracts where the Company has a non-cancelable commitment to purchase goods and services and where the Company has received goods and services but not yet paid for them.
|
4
|
The Company's mortgage loan commitments provide funding to originate commercial mortgage loans. Mortgage loan commitments generally do not extend beyond 90 days.
|
5
|
Annuity certain contracts are those insurance liabilities (included in future policy benefits and policyholder account balances on the balance sheet) which do not have life contingencies and have scheduled payments. Annuity certain contracts without life contingencies consist of single premium immediate annuities, supplementary contracts, and structured settlements.
|
6
|
Insurance liabilities consist primarily of future policy benefits and policyholder account balances for which the timing of cash flows is uncertain and which have life contingencies. The schedule of payments for these liabilities can vary significantly because of the uncertainty of the timing of cash flows, which depend upon insurable events or policyholder surrenders. Projected amounts shown in the table are derived from dynamic projection models used for asset adequacy analysis. These provide projections of liability benefit cash flows by calendar year and incorporate mortality, persistency and other policyholder behavior assumptions. Projection amounts reflect current balance sheet values and do not include an expectation of future sales.
|
|
December 31, 2013
|
||||||||||||||||||
|
Fixed
Deferred Annuities |
|
Universal Life
|
|
Variable Life
and Annuities |
|
Supplemental
Contracts and Annuities NILC |
|
Total
|
||||||||||
0% to 1%
|
$
|
112,144
|
|
|
$
|
—
|
|
|
$
|
630
|
|
|
$
|
5,391
|
|
|
$
|
118,165
|
|
Greater than 1% to 3%
|
403,567
|
|
|
180,279
|
|
|
90,898
|
|
|
20,660
|
|
|
695,404
|
|
|||||
Greater than 3% to 4%
|
444,314
|
|
|
300,449
|
|
|
6,491
|
|
|
19,679
|
|
|
770,933
|
|
|||||
Greater than 4%
|
67,131
|
|
|
438,685
|
|
|
—
|
|
|
5,894
|
|
|
511,710
|
|
|||||
Total
|
$
|
1,027,156
|
|
|
$
|
919,413
|
|
|
$
|
98,019
|
|
|
$
|
51,624
|
|
|
$
|
2,096,212
|
|
|
December 31, 2012
|
||||||||||||||||||
|
Fixed
Deferred Annuities |
|
Universal Life
|
|
Variable Life
and Annuities |
|
Supplemental
Contracts and Annuities NILC |
|
Total
|
||||||||||
0% to 1%
|
$
|
73,097
|
|
|
$
|
—
|
|
|
$
|
406
|
|
|
$
|
4,434
|
|
|
$
|
77,937
|
|
Greater than 1% to 3%
|
435,705
|
|
|
141,619
|
|
|
60,453
|
|
|
21,063
|
|
|
658,840
|
|
|||||
Greater than 3% to 4%
|
476,315
|
|
|
333,427
|
|
|
11,214
|
|
|
22,172
|
|
|
843,128
|
|
|||||
Greater than 4%
|
84,406
|
|
|
457,039
|
|
|
—
|
|
|
6,652
|
|
|
548,097
|
|
|||||
Total
|
$
|
1,069,523
|
|
|
$
|
932,085
|
|
|
$
|
72,073
|
|
|
$
|
54,321
|
|
|
$
|
2,128,002
|
|
|
2013
|
|
%
of Total
|
|
2012
|
|
%
of Total
|
||||||
One year or less
|
$
|
133,530
|
|
|
13
|
%
|
|
$
|
226,056
|
|
|
21
|
%
|
Two years
|
61,629
|
|
|
6
|
%
|
|
60,288
|
|
|
6
|
%
|
||
Three years
|
30,815
|
|
|
3
|
%
|
|
36,111
|
|
|
4
|
%
|
||
Four Years
|
30,815
|
|
|
3
|
%
|
|
33,240
|
|
|
3
|
%
|
||
Five Years
|
41,086
|
|
|
4
|
%
|
|
35,528
|
|
|
3
|
%
|
||
Six years or more
|
729,281
|
|
|
71
|
%
|
|
678,300
|
|
|
63
|
%
|
||
Total
|
$
|
1,027,156
|
|
|
100
|
%
|
|
$
|
1,069,523
|
|
|
100
|
%
|
|
2013
|
|
%
of Total
|
|
2012
|
|
%
of Total
|
||||||
None
|
$
|
677,923
|
|
|
66
|
%
|
|
$
|
727,276
|
|
|
68
|
%
|
Less than 5%
|
61,629
|
|
|
6
|
%
|
|
96,257
|
|
|
9
|
%
|
||
5% and greater
|
287,604
|
|
|
28
|
%
|
|
245,990
|
|
|
23
|
%
|
||
Total
|
$
|
1,027,156
|
|
|
100
|
%
|
|
$
|
1,069,523
|
|
|
100
|
%
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
There-
after |
|
Total
Principal |
|
Fair
Value |
||||||||||||||||
Fixed maturity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate bonds currently
callable |
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
4
|
|
Average interest rate
|
6.92
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.96
|
%
|
|
6.20
|
%
|
|
|
|||||||||
Residential mortgage-backed
securities and CMOs |
41
|
|
|
29
|
|
|
24
|
|
|
18
|
|
|
13
|
|
|
67
|
|
|
192
|
|
|
192
|
|
||||||||
Average interest rate
|
6.21
|
%
|
|
6.26
|
%
|
|
6.22
|
%
|
|
6.18
|
%
|
|
6.29
|
%
|
|
6.35
|
%
|
|
6.27
|
%
|
|
|
|||||||||
All other securities
|
111
|
|
|
192
|
|
|
155
|
|
|
267
|
|
|
203
|
|
|
1,370
|
|
|
2,298
|
|
|
2,423
|
|
||||||||
Average interest rate
|
6.17
|
%
|
|
4.80
|
%
|
|
5.30
|
%
|
|
7.17
|
%
|
|
5.85
|
%
|
|
4.08
|
%
|
|
4.84
|
%
|
|
|
|||||||||
Total fixed maturity securities
|
153
|
|
|
221
|
|
|
179
|
|
|
285
|
|
|
216
|
|
|
1,440
|
|
|
2,494
|
|
|
2,619
|
|
||||||||
Average interest rate
|
6.19
|
%
|
|
4.99
|
%
|
|
5.42
|
%
|
|
7.11
|
%
|
|
5.88
|
%
|
|
4.19
|
%
|
|
4.95
|
%
|
|
|
|||||||||
Mortgage loans
|
52
|
|
|
69
|
|
|
72
|
|
|
73
|
|
|
63
|
|
|
300
|
|
|
629
|
|
|
658
|
|
||||||||
Average interest rate
|
6.28
|
%
|
|
6.73
|
%
|
|
5.82
|
%
|
|
5.45
|
%
|
|
5.68
|
%
|
|
5.76
|
%
|
|
5.87
|
%
|
|
|
|||||||||
Total
|
$
|
205
|
|
|
$
|
290
|
|
|
$
|
251
|
|
|
$
|
358
|
|
|
$
|
279
|
|
|
$
|
1,740
|
|
|
$
|
3,123
|
|
|
$
|
3,277
|
|
Average interest rate
|
6.21
|
%
|
|
5.41
|
%
|
|
5.54
|
%
|
|
6.77
|
%
|
|
5.83
|
%
|
|
4.46
|
%
|
|
5.14
|
%
|
|
|
|
December 31
|
||||||
|
2013
|
|
2012
|
||||
ASSETS
|
|
|
|
||||
Investments:
|
|
|
|
||||
Fixed maturity securities available for sale, at fair value
(amortized cost: 2013 - $2,493,618; 2012 - $2,520,466) |
$
|
2,618,620
|
|
|
$
|
2,788,141
|
|
Equity securities available for sale, at fair value
(amortized cost: 2013 - $34,961; 2012 - $18,195) |
34,386
|
|
|
20,061
|
|
||
Mortgage loans
|
629,256
|
|
|
674,034
|
|
||
Real estate
|
142,536
|
|
|
124,742
|
|
||
Policy loans
|
83,518
|
|
|
77,133
|
|
||
Short-term investments
|
40,712
|
|
|
24,902
|
|
||
Other investments
|
1,247
|
|
|
2,572
|
|
||
Total investments
|
3,550,275
|
|
|
3,711,585
|
|
||
|
|
|
|
||||
Cash
|
8,197
|
|
|
7,026
|
|
||
Accrued investment income
|
33,795
|
|
|
34,747
|
|
||
Deferred acquisition costs
|
256,386
|
|
|
176,275
|
|
||
Reinsurance recoverables
|
191,055
|
|
|
190,613
|
|
||
Property and equipment
|
17,524
|
|
|
18,343
|
|
||
Other assets
|
64,018
|
|
|
47,063
|
|
||
Separate account assets
|
393,416
|
|
|
340,093
|
|
||
Total assets
|
$
|
4,514,666
|
|
|
$
|
4,525,745
|
|
|
|
|
|
||||
LIABILITIES
|
|
|
|
||||
Future policy benefits
|
$
|
910,228
|
|
|
$
|
889,107
|
|
Policyholder account balances
|
2,096,212
|
|
|
2,128,002
|
|
||
Policy and contract claims
|
36,783
|
|
|
29,813
|
|
||
Other policyholder funds
|
160,421
|
|
|
155,749
|
|
||
Other liabilities
|
192,202
|
|
|
232,580
|
|
||
Separate account liabilities
|
393,416
|
|
|
340,093
|
|
||
Total liabilities
|
3,789,262
|
|
|
3,775,344
|
|
||
|
|
|
|
||||
STOCKHOLDERS' EQUITY
|
|
|
|
||||
Common stock, par value $1.25 per share
|
|
|
|
||||
Authorized 36,000,000 shares, issued 18,496,680 shares
|
23,121
|
|
|
23,121
|
|
||
Additional paid in capital
|
40,989
|
|
|
40,969
|
|
||
Retained earnings
|
823,408
|
|
|
805,730
|
|
||
Accumulated other comprehensive income
|
14,170
|
|
|
54,094
|
|
||
Treasury stock, at cost (2013 - 7,527,841 shares; 2012 - 7,463,823 shares)
|
(176,284
|
)
|
|
(173,513
|
)
|
||
Total stockholders’ equity
|
725,404
|
|
|
750,401
|
|
||
Total liabilities and stockholders’ equity
|
$
|
4,514,666
|
|
|
$
|
4,525,745
|
|
|
Year Ended December 31
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
REVENUES
|
|
|
|
|
|
||||||
Insurance revenues:
|
|
|
|
|
|
||||||
Net premiums
|
$
|
186,530
|
|
|
$
|
136,089
|
|
|
$
|
127,338
|
|
Contract charges
|
113,454
|
|
|
99,894
|
|
|
101,061
|
|
|||
Total insurance revenues
|
299,984
|
|
|
235,983
|
|
|
228,399
|
|
|||
Investment revenues:
|
|
|
|
|
|
||||||
Net investment income
|
169,740
|
|
|
176,154
|
|
|
177,228
|
|
|||
Net realized investment gains, excluding other-
than-temporary impairment losses |
5,005
|
|
|
20,154
|
|
|
5,151
|
|
|||
Net impairment losses recognized in earnings:
|
|
|
|
|
|
||||||
Total other-than-temporary impairment losses
|
(1,032
|
)
|
|
(2,526
|
)
|
|
(2,952
|
)
|
|||
Portion of impairment losses recognized in
other comprehensive income (loss) |
(101
|
)
|
|
808
|
|
|
943
|
|
|||
Net other-than-temporary impairment losses
recognized in earnings |
(1,133
|
)
|
|
(1,718
|
)
|
|
(2,009
|
)
|
|||
Total investment revenues
|
173,612
|
|
|
194,590
|
|
|
180,370
|
|
|||
Other revenues
|
9,997
|
|
|
9,354
|
|
|
10,274
|
|
|||
Total revenues
|
483,593
|
|
|
439,927
|
|
|
419,043
|
|
|||
|
|
|
|
|
|
||||||
BENEFITS AND EXPENSES
|
|
|
|
|
|
||||||
Policyholder benefits
|
211,994
|
|
|
160,178
|
|
|
155,813
|
|
|||
Interest credited to policyholder account balances
|
79,294
|
|
|
82,043
|
|
|
83,446
|
|
|||
Amortization of deferred acquisition costs
|
37,228
|
|
|
28,042
|
|
|
33,966
|
|
|||
Operating expenses
|
110,622
|
|
|
110,169
|
|
|
106,120
|
|
|||
Total benefits and expenses
|
439,138
|
|
|
380,432
|
|
|
379,345
|
|
|||
|
|
|
|
|
|
||||||
Income before income tax expense
|
44,455
|
|
|
59,495
|
|
|
39,698
|
|
|||
|
|
|
|
|
|
||||||
Income tax expense
|
14,888
|
|
|
19,628
|
|
|
13,565
|
|
|||
|
|
|
|
|
|
||||||
NET INCOME
|
$
|
29,567
|
|
|
$
|
39,867
|
|
|
$
|
26,133
|
|
COMPREHENSIVE INCOME (LOSS),
NET OF TAXES |
|
|
|
|
|
||||||
Change in net unrealized gains on securities
available for sale |
$
|
(63,538
|
)
|
|
$
|
35,088
|
|
|
$
|
43,266
|
|
Change in future policy benefits
|
8,421
|
|
|
(8,562
|
)
|
|
(5,721
|
)
|
|||
Change in policyholder account balances
|
408
|
|
|
(362
|
)
|
|
(162
|
)
|
|||
Change in benefit plan obligations
|
14,785
|
|
|
(2,156
|
)
|
|
(15,104
|
)
|
|||
Other comprehensive income (loss)
|
(39,924
|
)
|
|
24,008
|
|
|
22,279
|
|
|||
|
|
|
|
|
|
||||||
COMPREHENSIVE INCOME (LOSS)
|
$
|
(10,357
|
)
|
|
$
|
63,875
|
|
|
$
|
48,412
|
|
|
|
|
|
|
|
||||||
Basic and diluted earnings per share:
|
|
|
|
|
|
||||||
Net income
|
$
|
2.69
|
|
|
$
|
3.59
|
|
|
$
|
2.29
|
|
|
Year Ended December 31
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
|
|
|
|
|
|
||||||
COMMON STOCK
, beginning and end of year
|
$
|
23,121
|
|
|
$
|
23,121
|
|
|
$
|
23,121
|
|
|
|
|
|
|
|
||||||
ADDITIONAL PAID IN CAPITAL
|
|
|
|
|
|
||||||
Beginning of year
|
40,969
|
|
|
41,101
|
|
|
41,085
|
|
|||
Increase (decrease) of proceeds over cost of treasury stock sold
|
20
|
|
|
(132
|
)
|
|
16
|
|
|||
|
|
|
|
|
|
||||||
End of year
|
40,989
|
|
|
40,969
|
|
|
41,101
|
|
|||
|
|
|
|
|
|
||||||
RETAINED EARNINGS
|
|
|
|
|
|
||||||
Beginning of year
|
805,730
|
|
|
780,918
|
|
|
767,126
|
|
|||
Net income
|
29,567
|
|
|
39,867
|
|
|
26,133
|
|
|||
Stockholder dividends of $1.08 per share (2012 - $1.35; 2011 - $1.08)
|
(11,889
|
)
|
|
(15,055
|
)
|
|
(12,341
|
)
|
|||
|
|
|
|
|
|
||||||
End of year
|
823,408
|
|
|
805,730
|
|
|
780,918
|
|
|||
|
|
|
|
|
|
||||||
ACCUMULATED OTHER COMPREHENSIVE
|
|
|
|
|
|
||||||
INCOME
, net of taxes
|
|
|
|
|
|
||||||
Beginning of year
|
54,094
|
|
|
30,086
|
|
|
7,807
|
|
|||
Other comprehensive income (loss)
|
(39,924
|
)
|
|
24,008
|
|
|
22,279
|
|
|||
|
|
|
|
|
|
||||||
End of year
|
14,170
|
|
|
54,094
|
|
|
30,086
|
|
|||
|
|
|
|
|
|
||||||
TREASURY STOCK
, at cost
|
|
|
|
|
|
||||||
Beginning of year
|
(173,513
|
)
|
|
(164,521
|
)
|
|
(159,667
|
)
|
|||
Cost of 64,792 shares acquired (2012 - 107,511 shares; 2011 - 158,694 shares)
|
(2,782
|
)
|
|
(3,979
|
)
|
|
(4,868
|
)
|
|||
Cost of 774 shares sold (2012 - 19,624 shares; 2011 - 954 shares)
|
11
|
|
|
1,177
|
|
|
14
|
|
|||
Immaterial correction (see Note 1)
|
—
|
|
|
(6,190
|
)
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
End of year
|
(176,284
|
)
|
|
(173,513
|
)
|
|
(164,521
|
)
|
|||
|
|
|
|
|
|
||||||
TOTAL STOCKHOLDERS’ EQUITY
|
$
|
725,404
|
|
|
$
|
750,401
|
|
|
$
|
710,705
|
|
|
Year Ended December 31
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net income
|
$
|
29,567
|
|
|
$
|
39,867
|
|
|
$
|
26,133
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
||||||
Amortization of investment premium and discount
|
5,447
|
|
|
3,926
|
|
|
3,314
|
|
|||
Depreciation
|
4,279
|
|
|
7,236
|
|
|
3,204
|
|
|||
Acquisition costs capitalized
|
(36,709
|
)
|
|
(36,919
|
)
|
|
(34,140
|
)
|
|||
Amortization of deferred acquisition costs
|
37,228
|
|
|
28,042
|
|
|
33,966
|
|
|||
Realized investment gains
|
(3,872
|
)
|
|
(18,436
|
)
|
|
(3,142
|
)
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Reinsurance recoverables
|
(442
|
)
|
|
(728
|
)
|
|
(2,762
|
)
|
|||
Future policy benefits
|
33,497
|
|
|
(3,081
|
)
|
|
(14,167
|
)
|
|||
Policyholder account balances
|
(24,161
|
)
|
|
(12,127
|
)
|
|
(10,563
|
)
|
|||
Income taxes payable and deferred
|
7,589
|
|
|
6,255
|
|
|
7,561
|
|
|||
Other, net
|
4,393
|
|
|
1,208
|
|
|
8,504
|
|
|||
Net cash provided
|
56,816
|
|
|
15,243
|
|
|
17,908
|
|
|||
|
|
|
|
|
|
||||||
INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Purchases:
|
|
|
|
|
|
||||||
Fixed maturity securities
|
(261,006
|
)
|
|
(338,277
|
)
|
|
(235,593
|
)
|
|||
Equity securities
|
(13,766
|
)
|
|
(5,572
|
)
|
|
(106
|
)
|
|||
Mortgage loans
|
(72,656
|
)
|
|
(178,710
|
)
|
|
(132,877
|
)
|
|||
Real estate
|
(24,435
|
)
|
|
(37,119
|
)
|
|
(9,548
|
)
|
|||
Policy loans
|
(10,517
|
)
|
|
(15,148
|
)
|
|
(14,652
|
)
|
|||
Other investments
|
—
|
|
|
(507
|
)
|
|
(2
|
)
|
|||
Sales or maturities, calls, and principal paydowns:
|
|
|
|
|
|
||||||
Fixed maturity securities
|
282,742
|
|
|
300,984
|
|
|
290,719
|
|
|||
Equity securities
|
1,459
|
|
|
22,163
|
|
|
1,453
|
|
|||
Mortgage loans
|
116,680
|
|
|
105,125
|
|
|
85,122
|
|
|||
Real estate
|
370
|
|
|
53,480
|
|
|
—
|
|
|||
Policy loans
|
13,078
|
|
|
18,390
|
|
|
18,558
|
|
|||
Other investments
|
181
|
|
|
8
|
|
|
—
|
|
|||
Net sales (purchases) of short-term investments
|
(15,810
|
)
|
|
24,414
|
|
|
(33,603
|
)
|
|||
Net acquisition of property and equipment
|
(830
|
)
|
|
(793
|
)
|
|
(255
|
)
|
|||
Reinsurance transaction
|
(34,279
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash used
|
(18,789
|
)
|
|
(51,562
|
)
|
|
(30,784
|
)
|
|
Year Ended December 31
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Proceeds from borrowings
|
$
|
—
|
|
|
$
|
75,500
|
|
|
$
|
—
|
|
Repayment of borrowings
|
—
|
|
|
(75,500
|
)
|
|
—
|
|
|||
Deposits on policyholder account balances
|
239,501
|
|
|
227,832
|
|
|
233,955
|
|
|||
Withdrawals from policyholder account balances
|
(276,327
|
)
|
|
(177,674
|
)
|
|
(199,960
|
)
|
|||
Net transfers from separate accounts
|
5,962
|
|
|
5,082
|
|
|
5,282
|
|
|||
Change in other deposits
|
8,648
|
|
|
(4,342
|
)
|
|
(4,231
|
)
|
|||
Cash dividends to stockholders
|
(11,889
|
)
|
|
(15,055
|
)
|
|
(12,341
|
)
|
|||
Net change in treasury stock
|
(2,751
|
)
|
|
(2,934
|
)
|
|
(4,838
|
)
|
|||
Net cash provided (used)
|
(36,856
|
)
|
|
32,909
|
|
|
17,867
|
|
|||
|
|
|
|
|
|
||||||
Increase (decrease) in cash
|
1,171
|
|
|
(3,410
|
)
|
|
4,991
|
|
|||
Cash at beginning of year
|
7,026
|
|
|
10,436
|
|
|
5,445
|
|
|||
Cash at end of year
|
$
|
8,197
|
|
|
$
|
7,026
|
|
|
$
|
10,436
|
|
|
|
|
|
|
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
Income taxes
|
7,590
|
|
|
14,000
|
|
|
8,257
|
|
|
2013
|
|
2012
|
||||
Life insurance
|
$
|
617,503
|
|
|
$
|
616,355
|
|
Immediate annuities and supplementary
contracts with life contingencies |
255,423
|
|
|
231,882
|
|
||
Accident and health insurance
|
37,302
|
|
|
40,870
|
|
||
Total future policy benefits
|
$
|
910,228
|
|
|
$
|
889,107
|
|
|
2013
|
|
2012
|
||||
Universal life insurance
|
$
|
944,093
|
|
|
$
|
943,649
|
|
Fixed deferred annuities
|
1,100,495
|
|
|
1,130,032
|
|
||
Supplementary contracts without life contingencies
|
51,624
|
|
|
54,321
|
|
||
Policyholder account balances
|
$
|
2,096,212
|
|
|
$
|
2,128,002
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Balance at beginning of year
|
$
|
176,275
|
|
|
$
|
181,564
|
|
|
$
|
192,943
|
|
Capitalization of commissions, sales, issue expenses and reinsurance transaction
|
85,929
|
|
|
36,919
|
|
|
34,140
|
|
|||
Gross amortization
|
(50,923
|
)
|
|
(39,786
|
)
|
|
(45,730
|
)
|
|||
Accrual of interest
|
13,695
|
|
|
11,744
|
|
|
11,764
|
|
|||
Amortization due to realized investment gains
|
(66
|
)
|
|
(61
|
)
|
|
(201
|
)
|
|||
Change in DAC due to unrealized investment gains
|
31,477
|
|
|
(14,105
|
)
|
|
(11,352
|
)
|
|||
Balance at end of year
|
$
|
256,387
|
|
|
$
|
176,275
|
|
|
$
|
181,564
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Balance at beginning of year
|
$
|
21,165
|
|
|
$
|
31,545
|
|
|
$
|
49,271
|
|
Gross amortization
|
(7,566
|
)
|
|
(9,635
|
)
|
|
(10,673
|
)
|
|||
Accrual of interest
|
2,220
|
|
|
2,595
|
|
|
3,197
|
|
|||
Amortization due to realized investment (gains) losses
|
(58
|
)
|
|
(74
|
)
|
|
(169
|
)
|
|||
Change in VOBA due to unrealized investment gains
|
12,781
|
|
|
(3,266
|
)
|
|
(10,081
|
)
|
|||
Balance at end of year
|
$
|
28,542
|
|
|
$
|
21,165
|
|
|
$
|
31,545
|
|
|
DAC
|
|
VOBA
|
|
DRL
|
|
Total
|
||||||||
2013
|
|
|
|
|
|
|
|
||||||||
Unlocking
|
$
|
(155
|
)
|
|
$
|
(877
|
)
|
|
$
|
1,141
|
|
|
$
|
109
|
|
Refinement in estimate
|
(291
|
)
|
|
(306
|
)
|
|
—
|
|
|
(597
|
)
|
||||
|
$
|
(446
|
)
|
|
$
|
(1,183
|
)
|
|
$
|
1,141
|
|
|
$
|
(488
|
)
|
2012
|
|
|
|
|
|
|
|
||||||||
Unlocking
|
$
|
1,259
|
|
|
$
|
(2,391
|
)
|
|
$
|
1,761
|
|
|
$
|
629
|
|
Refinement in estimate
|
175
|
|
|
—
|
|
|
6
|
|
|
181
|
|
||||
|
$
|
1,434
|
|
|
$
|
(2,391
|
)
|
|
$
|
1,767
|
|
|
$
|
810
|
|
2011
|
|
|
|
|
|
|
|
||||||||
Unlocking
|
$
|
9,722
|
|
|
$
|
(939
|
)
|
|
$
|
(1,889
|
)
|
|
$
|
6,894
|
|
Refinement in estimate
|
(7,954
|
)
|
|
—
|
|
|
153
|
|
|
(7,801
|
)
|
||||
|
$
|
1,768
|
|
|
$
|
(939
|
)
|
|
$
|
(1,736
|
)
|
|
$
|
(907
|
)
|
|
Amortized
Cost
|
|
Gross
Unrealized
|
|
Fair
Value
|
||||||||||
|
Gains
|
|
Losses
|
|
|||||||||||
U.S. Treasury securities and
obligations of U.S. Government |
$
|
134,198
|
|
|
$
|
6,653
|
|
|
$
|
1,831
|
|
|
$
|
139,020
|
|
Federal agencies
1
|
19,756
|
|
|
2,312
|
|
|
—
|
|
|
22,068
|
|
||||
Federal agency issued
|
|
|
|
|
|
|
|
||||||||
residential mortgage-backed securities
1
|
56,738
|
|
|
5,392
|
|
|
2
|
|
|
62,128
|
|
||||
Subtotal
|
210,692
|
|
|
14,357
|
|
|
1,833
|
|
|
223,216
|
|
||||
Corporate obligations:
|
|
|
|
|
|
|
|
||||||||
Industrial
|
515,395
|
|
|
27,051
|
|
|
7,667
|
|
|
534,779
|
|
||||
Energy
|
211,115
|
|
|
15,462
|
|
|
3,832
|
|
|
222,745
|
|
||||
Communications and technology
|
222,277
|
|
|
12,938
|
|
|
1,672
|
|
|
233,543
|
|
||||
Financial
|
266,693
|
|
|
18,824
|
|
|
2,040
|
|
|
283,477
|
|
||||
Consumer
|
473,627
|
|
|
25,936
|
|
|
5,807
|
|
|
493,756
|
|
||||
Public utilities
|
228,551
|
|
|
24,780
|
|
|
954
|
|
|
252,377
|
|
||||
Subtotal
|
1,917,658
|
|
|
124,991
|
|
|
21,972
|
|
|
2,020,677
|
|
||||
Corporate private-labeled residential
mortgage-backed securities |
114,219
|
|
|
3,179
|
|
|
916
|
|
|
116,482
|
|
||||
Municipal securities
|
138,136
|
|
|
9,488
|
|
|
5
|
|
|
147,619
|
|
||||
Other
|
97,769
|
|
|
4,422
|
|
|
4,317
|
|
|
97,874
|
|
||||
Redeemable preferred stocks
|
15,144
|
|
|
—
|
|
|
2,392
|
|
|
12,752
|
|
||||
Fixed maturity securities
|
2,493,618
|
|
|
156,437
|
|
|
31,435
|
|
|
2,618,620
|
|
||||
Equity securities
|
34,961
|
|
|
1,871
|
|
|
2,446
|
|
|
34,386
|
|
||||
Total
|
$
|
2,528,579
|
|
|
$
|
158,308
|
|
|
$
|
33,881
|
|
|
$
|
2,653,006
|
|
1
|
Federal agency securities are not backed by the full faith and credit of the U.S. Government.
|
|
Amortized
Cost
|
|
Gross
Unrealized
|
|
Fair
Value
|
||||||||||
|
Gains
|
|
Losses
|
|
|||||||||||
U.S. Treasury securities and
obligations of U.S. Government
|
$
|
121,774
|
|
|
$
|
14,302
|
|
|
$
|
25
|
|
|
$
|
136,051
|
|
Federal agencies
1
|
22,070
|
|
|
3,999
|
|
|
—
|
|
|
26,069
|
|
||||
Federal agency issued
|
|
|
|
|
|
|
|
||||||||
residential mortgage-backed securities
1
|
83,608
|
|
|
8,381
|
|
|
4
|
|
|
91,985
|
|
||||
Subtotal
|
227,452
|
|
|
26,682
|
|
|
29
|
|
|
254,105
|
|
||||
Corporate obligations:
|
|
|
|
|
|
|
|
||||||||
Industrial
|
494,615
|
|
|
51,645
|
|
|
377
|
|
|
545,883
|
|
||||
Energy
|
188,790
|
|
|
22,473
|
|
|
14
|
|
|
211,249
|
|
||||
Communications and technology
|
198,332
|
|
|
23,283
|
|
|
15
|
|
|
221,600
|
|
||||
Financial
|
287,854
|
|
|
27,487
|
|
|
1,467
|
|
|
313,874
|
|
||||
Consumer
|
476,913
|
|
|
49,395
|
|
|
70
|
|
|
526,238
|
|
||||
Public utilities
|
246,389
|
|
|
39,840
|
|
|
102
|
|
|
286,127
|
|
||||
Subtotal
|
1,892,893
|
|
|
214,123
|
|
|
2,045
|
|
|
2,104,971
|
|
||||
Corporate private-labeled residential
mortgage-backed securities |
144,852
|
|
|
4,033
|
|
|
754
|
|
|
148,131
|
|
||||
Municipal securities
|
140,843
|
|
|
27,141
|
|
|
—
|
|
|
167,984
|
|
||||
Other
|
106,442
|
|
|
6,494
|
|
|
8,192
|
|
|
104,744
|
|
||||
Redeemable preferred stocks
|
7,984
|
|
|
266
|
|
|
44
|
|
|
8,206
|
|
||||
Fixed maturity securities
|
2,520,466
|
|
|
278,739
|
|
|
11,064
|
|
|
2,788,141
|
|
||||
Equity securities
|
18,195
|
|
|
1,956
|
|
|
90
|
|
|
20,061
|
|
||||
Total
|
$
|
2,538,661
|
|
|
$
|
280,695
|
|
|
$
|
11,154
|
|
|
$
|
2,808,202
|
|
1
|
Federal agency securities are not backed by the full faith and credit of the U.S. Government.
|
|
2013
|
|
2012
|
||||||||||||
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
||||||||
Due in one year or less
|
$
|
77,035
|
|
|
$
|
78,751
|
|
|
$
|
108,125
|
|
|
$
|
110,257
|
|
Due after one year through five years
|
734,129
|
|
|
802,809
|
|
|
667,743
|
|
|
735,257
|
|
||||
Due after five years through ten years
|
963,141
|
|
|
982,923
|
|
|
972,886
|
|
|
1,086,082
|
|
||||
Due after ten years
|
473,973
|
|
|
498,220
|
|
|
459,279
|
|
|
521,714
|
|
||||
Securities with variable principal payments
|
230,196
|
|
|
243,165
|
|
|
304,448
|
|
|
326,625
|
|
||||
Redeemable preferred stocks
|
15,144
|
|
|
12,752
|
|
|
7,985
|
|
|
8,206
|
|
||||
Total
|
$
|
2,493,618
|
|
|
$
|
2,618,620
|
|
|
$
|
2,520,466
|
|
|
$
|
2,788,141
|
|
•
|
The current fair value of the security as compared to amortized cost;
|
•
|
The credit rating of the security;
|
•
|
The extent and the length of time the fair value has been below amortized cost;
|
•
|
The financial position of the issuer, including the current and future impact of any specific events, material declines in the issuer’s revenues, margins, cash positions, liquidity issues, asset quality, debt levels, and income results;
|
•
|
Significant management or organizational changes;
|
•
|
Significant uncertainty regarding the issuer’s industry;
|
•
|
Violation of financial covenants;
|
•
|
Consideration of information or evidence that supports timely recovery;
|
•
|
The Company’s intent and ability to hold an equity security until it recovers in value;
|
•
|
Whether the Company intends to sell a debt security and whether it is more likely than not that the Company will be required to sell a debt security before recovery of the amortized cost basis; and
|
•
|
Other business factors related to the issuer’s industry.
|
•
|
The risk that the Company’s assessment of an issuer’s ability to meet all of its contractual obligations will change based on changes in the credit characteristics of that issuer;
|
•
|
The risk that the economic outlook will be worse than expected or have more of an impact on the issuer than anticipated;
|
•
|
The risk that the performance of the underlying collateral for securities could deteriorate in the future and the Company’s credit enhancement levels and recovery values do not provide sufficient protection to the Company’s contractual principal and interest;
|
•
|
The risk that fraudulent, inaccurate, or misleading information could be provided to the Company’s credit, investment, and accounting professionals who determine the fair value estimates and accounting treatment for securities;
|
•
|
The risk that actions of trustees, custodians, or other parties with interests in the security may have an unforeseen adverse impact on the Company’s investments;
|
•
|
The risk that new information obtained by the Company or changes in other facts and circumstances may lead the Company to change its intent to sell the security before it recovers in value;
|
•
|
The risk that facts and circumstances change such that it becomes more likely than not that the Company will be required to sell the investment before recovery of the amortized cost basis; and
|
•
|
The risk that the methodology or assumptions used to develop estimates of the portion of impairments due to credit prove, over time, to be inaccurate or insufficient.
|
|
Less Than 12 Months
|
|
12 Months or Longer
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
U.S. Treasury securities and
obligations of U.S. Government
|
$
|
44,951
|
|
|
$
|
1,795
|
|
|
$
|
749
|
|
|
$
|
36
|
|
|
$
|
45,700
|
|
|
$
|
1,831
|
|
Federal agency issued residential
mortgage-backed securities
1
|
37
|
|
|
—
|
|
|
288
|
|
|
2
|
|
|
325
|
|
|
2
|
|
||||||
Subtotal
|
44,988
|
|
|
1,795
|
|
|
1,037
|
|
|
38
|
|
|
46,025
|
|
|
1,833
|
|
||||||
Corporate obligations:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Industrial
|
146,454
|
|
|
5,718
|
|
|
22,071
|
|
|
1,949
|
|
|
168,525
|
|
|
7,667
|
|
||||||
Energy
|
70,015
|
|
|
3,366
|
|
|
5,518
|
|
|
466
|
|
|
75,533
|
|
|
3,832
|
|
||||||
Communications and technology
|
43,477
|
|
|
1,672
|
|
|
—
|
|
|
—
|
|
|
43,477
|
|
|
1,672
|
|
||||||
Financial
|
25,300
|
|
|
866
|
|
|
4,680
|
|
|
1,174
|
|
|
29,980
|
|
|
2,040
|
|
||||||
Consumer
|
136,745
|
|
|
5,807
|
|
|
—
|
|
|
—
|
|
|
136,745
|
|
|
5,807
|
|
||||||
Public utilities
|
17,476
|
|
|
575
|
|
|
3,617
|
|
|
379
|
|
|
21,093
|
|
|
954
|
|
||||||
Subtotal
|
439,467
|
|
|
18,004
|
|
|
35,886
|
|
|
3,968
|
|
|
475,353
|
|
|
21,972
|
|
||||||
Corporate private-labeled residential
mortgage-backed securities |
33,179
|
|
|
916
|
|
|
—
|
|
|
—
|
|
|
33,179
|
|
|
916
|
|
||||||
Municipal securities
|
2,044
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
2,044
|
|
|
5
|
|
||||||
Other
|
16,691
|
|
|
726
|
|
|
39,900
|
|
|
3,591
|
|
|
56,591
|
|
|
4,317
|
|
||||||
Redeemable preferred stocks
|
12,752
|
|
|
2,392
|
|
|
—
|
|
|
—
|
|
|
12,752
|
|
|
2,392
|
|
||||||
Fixed maturity securities
|
549,121
|
|
|
23,838
|
|
|
76,823
|
|
|
7,597
|
|
|
625,944
|
|
|
31,435
|
|
||||||
Equity securities
|
9,731
|
|
|
2,404
|
|
|
131
|
|
|
42
|
|
|
9,862
|
|
|
2,446
|
|
||||||
Total
|
$
|
558,852
|
|
|
$
|
26,242
|
|
|
$
|
76,954
|
|
|
$
|
7,639
|
|
|
$
|
635,806
|
|
|
$
|
33,881
|
|
1
|
Federal agency securities are not backed by the full faith and credit of the U.S. Government.
|
|
Less Than 12 Months
|
|
12 Months or Longer
|
|
Total
|
||||||||||||||||||
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
||||||||||||
U.S. Treasury securities and
obligations of U.S. Government
|
$
|
1,328
|
|
|
$
|
18
|
|
|
$
|
661
|
|
|
$
|
7
|
|
|
$
|
1,989
|
|
|
$
|
25
|
|
Federal agency issued residential
mortgage-backed securities
1
|
124
|
|
|
3
|
|
|
292
|
|
|
1
|
|
|
416
|
|
|
4
|
|
||||||
Subtotal
|
1,452
|
|
|
21
|
|
|
953
|
|
|
8
|
|
|
2,405
|
|
|
29
|
|
||||||
Corporate obligations:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Industrial
|
28,866
|
|
|
377
|
|
|
—
|
|
|
—
|
|
|
28,866
|
|
|
377
|
|
||||||
Energy
|
1,982
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
1,982
|
|
|
14
|
|
||||||
Communications and technology
|
2,709
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
2,709
|
|
|
15
|
|
||||||
Financial
|
—
|
|
|
—
|
|
|
8,241
|
|
|
1,467
|
|
|
8,241
|
|
|
1,467
|
|
||||||
Consumer
|
17,143
|
|
|
70
|
|
|
—
|
|
|
—
|
|
|
17,143
|
|
|
70
|
|
||||||
Public utilities
|
11,584
|
|
|
102
|
|
|
—
|
|
|
—
|
|
|
11,584
|
|
|
102
|
|
||||||
Subtotal
|
62,284
|
|
|
578
|
|
|
8,241
|
|
|
1,467
|
|
|
70,525
|
|
|
2,045
|
|
||||||
Corporate private-labeled residential
mortgage-backed securities
|
—
|
|
|
—
|
|
|
14,050
|
|
|
754
|
|
|
14,050
|
|
|
754
|
|
||||||
Municipal securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other
|
—
|
|
|
—
|
|
|
41,895
|
|
|
8,192
|
|
|
41,895
|
|
|
8,192
|
|
||||||
Redeemable preferred stocks
|
—
|
|
|
—
|
|
|
1,511
|
|
|
44
|
|
|
1,511
|
|
|
44
|
|
||||||
Fixed maturity securities
|
63,736
|
|
|
599
|
|
|
66,650
|
|
|
10,465
|
|
|
130,386
|
|
|
11,064
|
|
||||||
Equity securities
|
—
|
|
|
—
|
|
|
273
|
|
|
90
|
|
|
273
|
|
|
90
|
|
||||||
Total
|
$
|
63,736
|
|
|
$
|
599
|
|
|
$
|
66,923
|
|
|
$
|
10,555
|
|
|
$
|
130,659
|
|
|
$
|
11,154
|
|
1
|
Federal agency securities are not backed by the full faith and credit of the U.S. Government.
|
|
2013
|
|
2012
|
||||||||||||
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Gross
Unrealized
Losses
|
||||||||
Fixed maturity securities available for sale:
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,141
|
|
|
$
|
2
|
|
Due after one year through five years
|
29,812
|
|
|
268
|
|
|
8,038
|
|
|
45
|
|
||||
Due after five years through ten years
|
417,859
|
|
|
20,118
|
|
|
43,335
|
|
|
578
|
|
||||
Due after ten years
|
132,018
|
|
|
7,740
|
|
|
58,895
|
|
|
9,637
|
|
||||
Total
|
579,689
|
|
|
28,126
|
|
|
114,409
|
|
|
10,262
|
|
||||
Securities with variable principal payments
|
33,503
|
|
|
917
|
|
|
14,466
|
|
|
758
|
|
||||
Redeemable preferred stocks
|
12,752
|
|
|
2,392
|
|
|
1,511
|
|
|
44
|
|
||||
Total
|
$
|
625,944
|
|
|
$
|
31,435
|
|
|
$
|
130,386
|
|
|
$
|
11,064
|
|
|
2013
|
|
2012
|
||||
Credit losses on securities held at beginning of the period
in accumulated other comprehensive income |
$
|
15,260
|
|
|
$
|
13,559
|
|
Additions for credit losses not previously recognized in other-than-
temporary impairment |
27
|
|
|
30
|
|
||
Additions for increases in the credit loss for which an other-than-
temporary impairment was previously recognized when there was no intent to sell the security before recovery of its amortized cost basis |
1,106
|
|
|
1,688
|
|
||
Reductions for securities sold during the period
|
—
|
|
|
—
|
|
||
Reductions for securities previously recognized in other comprehensive
income (loss) because of intent to sell the security before recovery of its amortized cost basis |
—
|
|
|
—
|
|
||
Reductions for increases in cash flows expected to be collected that are
recognized over the remaining life of the security |
(18
|
)
|
|
(17
|
)
|
||
Credit losses on securities held at the end of the period
in accumulated other comprehensive income |
$
|
16,375
|
|
|
$
|
15,260
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Net unrealized gains
|
$
|
124,427
|
|
|
$
|
269,541
|
|
|
$
|
198,188
|
|
Amounts resulting from:
|
|
|
|
|
|
||||||
DAC and VOBA
|
(26,979
|
)
|
|
(74,342
|
)
|
|
(56,971
|
)
|
|||
Future policy benefits
|
(16,119
|
)
|
|
(29,075
|
)
|
|
(15,903
|
)
|
|||
Policyholder account balances
|
(507
|
)
|
|
(1,135
|
)
|
|
(578
|
)
|
|||
Deferred income taxes
|
(28,287
|
)
|
|
(57,745
|
)
|
|
(43,657
|
)
|
|||
Total
|
$
|
52,535
|
|
|
$
|
107,244
|
|
|
$
|
81,079
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Gross investment income:
|
|
|
|
|
|
||||||
Fixed maturity securities
|
$
|
122,448
|
|
|
$
|
132,578
|
|
|
$
|
136,534
|
|
Equity securities
|
1,953
|
|
|
1,684
|
|
|
267
|
|
|||
Mortgage loans
|
40,605
|
|
|
38,189
|
|
|
38,089
|
|
|||
Real estate
|
10,652
|
|
|
9,475
|
|
|
7,685
|
|
|||
Policy loans
|
5,753
|
|
|
5,433
|
|
|
5,626
|
|
|||
Short-term investments
|
5
|
|
|
7
|
|
|
45
|
|
|||
Other
|
357
|
|
|
244
|
|
|
486
|
|
|||
Total
|
181,773
|
|
|
187,610
|
|
|
188,732
|
|
|||
Less investment expenses
|
(12,033
|
)
|
|
(11,456
|
)
|
|
(11,504
|
)
|
|||
Net investment income
|
$
|
169,740
|
|
|
$
|
176,154
|
|
|
$
|
177,228
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Realized investment gains (losses):
|
|
|
|
|
|
||||||
Fixed maturity securities
|
$
|
3,464
|
|
|
$
|
1,407
|
|
|
$
|
3,409
|
|
Equity securities
|
626
|
|
|
(165
|
)
|
|
4
|
|
|||
Real estate
|
(69
|
)
|
|
18,046
|
|
|
—
|
|
|||
Mortgage loans
|
(49
|
)
|
|
(717
|
)
|
|
99
|
|
|||
|
3,972
|
|
|
18,571
|
|
|
3,512
|
|
|||
Amortization of DAC and VOBA
|
(100
|
)
|
|
(135
|
)
|
|
(370
|
)
|
|||
|
$
|
3,872
|
|
|
$
|
18,436
|
|
|
$
|
3,142
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Gross gains resulting from:
|
|
|
|
|
|
||||||
Sales of investment securities
|
$
|
261
|
|
|
$
|
2,670
|
|
|
$
|
3,945
|
|
Investment securities called and other
|
5,627
|
|
|
3,806
|
|
|
3,519
|
|
|||
Real estate
|
20
|
|
|
18,884
|
|
|
—
|
|
|||
Total gross gains
|
5,908
|
|
|
25,360
|
|
|
7,464
|
|
|||
Gross losses resulting from:
|
|
|
|
|
|
||||||
Sales of investment securities
|
(5
|
)
|
|
(2,651
|
)
|
|
(1,666
|
)
|
|||
Investment securities called and other
|
(660
|
)
|
|
(865
|
)
|
|
(376
|
)
|
|||
Mortgage loans
|
(144
|
)
|
|
(220
|
)
|
|
(3
|
)
|
|||
Sale of real estate and joint venture
|
(89
|
)
|
|
—
|
|
|
—
|
|
|||
Impairment losses on real estate
|
—
|
|
|
(838
|
)
|
|
—
|
|
|||
Total gross losses
|
(898
|
)
|
|
(4,574
|
)
|
|
(2,045
|
)
|
|||
Change in allowance for potential future losses on
mortgage loans |
95
|
|
|
(497
|
)
|
|
102
|
|
|||
Amortization of DAC and VOBA
|
(100
|
)
|
|
(135
|
)
|
|
(370
|
)
|
|||
Net realized investment gains, excluding other-than-
temporary impairment losses |
5,005
|
|
|
20,154
|
|
|
5,151
|
|
|||
|
|
|
|
|
|
||||||
Net impairment losses recognized in earnings:
|
|
|
|
|
|
||||||
Other-than-temporary impairment losses on fixed
maturity and equity securities |
(1,032
|
)
|
|
(2,526
|
)
|
|
(2,952
|
)
|
|||
Portion of loss recognized in other comprehensive
income (loss) |
(101
|
)
|
|
808
|
|
|
943
|
|
|||
Net other-than-temporary impairment losses
recognized in earnings |
(1,133
|
)
|
|
(1,718
|
)
|
|
(2,009
|
)
|
|||
Net realized investment gains
|
$
|
3,872
|
|
|
$
|
18,436
|
|
|
$
|
3,142
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Proceeds
|
$
|
12,292
|
|
|
$
|
99,371
|
|
|
$
|
61,494
|
|
|
2013
|
|
2012
|
||||
Principal outstanding
|
$
|
632,507
|
|
|
$
|
677,380
|
|
Allowance for potential future losses
|
(3,251
|
)
|
|
(3,346
|
)
|
||
Carrying value
|
$
|
629,256
|
|
|
$
|
674,034
|
|
|
2013
|
|
%
of Total
|
|
2012
|
|
%
of Total
|
||||||
Prior to 2004
|
$
|
27,899
|
|
|
4
|
%
|
|
$
|
48,973
|
|
|
7
|
%
|
2004
|
13,425
|
|
|
2
|
%
|
|
19,699
|
|
|
3
|
%
|
||
2005
|
28,111
|
|
|
4
|
%
|
|
32,666
|
|
|
5
|
%
|
||
2006
|
24,744
|
|
|
4
|
%
|
|
39,321
|
|
|
6
|
%
|
||
2007
|
27,009
|
|
|
4
|
%
|
|
31,484
|
|
|
5
|
%
|
||
2008
|
28,051
|
|
|
4
|
%
|
|
35,747
|
|
|
5
|
%
|
||
2009
|
37,723
|
|
|
6
|
%
|
|
41,691
|
|
|
6
|
%
|
||
2010
|
61,236
|
|
|
10
|
%
|
|
90,236
|
|
|
13
|
%
|
||
2011
|
118,459
|
|
|
19
|
%
|
|
130,590
|
|
|
19
|
%
|
||
2012
|
184,749
|
|
|
29
|
%
|
|
206,973
|
|
|
31
|
%
|
||
2013
|
81,101
|
|
|
14
|
%
|
|
—
|
|
|
—
|
%
|
||
Total
|
$
|
632,507
|
|
|
100
|
%
|
|
$
|
677,380
|
|
|
100
|
%
|
|
2013
|
|
%
of Total |
|
2012
|
|
%
of Total |
||||||
Pacific
|
$
|
181,690
|
|
|
29
|
%
|
|
$
|
183,198
|
|
|
27
|
%
|
West north central
|
91,687
|
|
|
14
|
%
|
|
106,004
|
|
|
16
|
%
|
||
West south central
|
101,019
|
|
|
16
|
%
|
|
110,336
|
|
|
16
|
%
|
||
Mountain
|
78,116
|
|
|
12
|
%
|
|
95,626
|
|
|
14
|
%
|
||
South Atlantic
|
66,686
|
|
|
11
|
%
|
|
61,815
|
|
|
9
|
%
|
||
Middle Atlantic
|
31,495
|
|
|
5
|
%
|
|
48,523
|
|
|
7
|
%
|
||
East north central
|
57,395
|
|
|
9
|
%
|
|
55,938
|
|
|
8
|
%
|
||
East south central
|
24,419
|
|
|
4
|
%
|
|
15,940
|
|
|
3
|
%
|
||
Total
|
$
|
632,507
|
|
|
100
|
%
|
|
$
|
677,380
|
|
|
100
|
%
|
|
2013
|
|
%
of Total |
|
2012
|
|
%
of Total |
||||||
California
|
$
|
149,065
|
|
|
24
|
%
|
|
$
|
156,032
|
|
|
23
|
%
|
Texas
|
95,205
|
|
|
15
|
%
|
|
100,307
|
|
|
15
|
%
|
||
Minnesota
|
64,464
|
|
|
10
|
%
|
|
63,402
|
|
|
9
|
%
|
||
Florida
|
34,334
|
|
|
5
|
%
|
|
36,521
|
|
|
5
|
%
|
||
All others
|
289,439
|
|
|
46
|
%
|
|
321,118
|
|
|
48
|
%
|
||
Total
|
$
|
632,507
|
|
|
100
|
%
|
|
$
|
677,380
|
|
|
100
|
%
|
|
2013
|
|
%
of Total |
|
2012
|
|
%
of Total |
||||||
Industrial
|
$
|
328,478
|
|
|
52
|
%
|
|
$
|
348,807
|
|
|
51
|
%
|
Office
|
184,529
|
|
|
29
|
%
|
|
210,518
|
|
|
31
|
%
|
||
Medical
|
39,531
|
|
|
6
|
%
|
|
45,971
|
|
|
7
|
%
|
||
Other
|
79,969
|
|
|
13
|
%
|
|
72,084
|
|
|
11
|
%
|
||
Total
|
$
|
632,507
|
|
|
100
|
%
|
|
$
|
677,380
|
|
|
100
|
%
|
|
2013
|
|
%
of Total |
|
2012
|
|
%
of Total |
||||||
Due in one year or less
|
$
|
22,464
|
|
|
4
|
%
|
|
$
|
29,663
|
|
|
4
|
%
|
Due after one year through five years
|
169,146
|
|
|
27
|
%
|
|
195,336
|
|
|
29
|
%
|
||
Due after five years through ten years
|
244,667
|
|
|
38
|
%
|
|
282,453
|
|
|
42
|
%
|
||
Due after ten years
|
196,230
|
|
|
31
|
%
|
|
169,928
|
|
|
25
|
%
|
||
Total
|
$
|
632,507
|
|
|
100
|
%
|
|
$
|
677,380
|
|
|
100
|
%
|
|
2013
|
|
%
of Total |
|
2012
|
|
%
of Total |
||||||
$5 million or greater
|
$
|
108,588
|
|
|
17
|
%
|
|
$
|
136,396
|
|
|
20
|
%
|
$4 million to less than $5 million
|
39,301
|
|
|
6
|
%
|
|
48,041
|
|
|
7
|
%
|
||
$3 million to less than $4 million
|
64,527
|
|
|
10
|
%
|
|
58,692
|
|
|
9
|
%
|
||
$2 million to less than $3 million
|
138,580
|
|
|
22
|
%
|
|
146,279
|
|
|
21
|
%
|
||
$1 million to less than $2 million
|
187,187
|
|
|
30
|
%
|
|
181,745
|
|
|
27
|
%
|
||
Less than $1 million
|
94,324
|
|
|
15
|
%
|
|
106,227
|
|
|
16
|
%
|
||
Total
|
$
|
632,507
|
|
|
100
|
%
|
|
$
|
677,380
|
|
|
100
|
%
|
|
2013
|
|
%
of Total |
|
2012
|
|
%
of Total |
||||||
70% or greater
|
$
|
65,033
|
|
|
10
|
%
|
|
$
|
56,611
|
|
|
8
|
%
|
50% to 69%
|
327,996
|
|
|
52
|
%
|
|
383,573
|
|
|
57
|
%
|
||
Less than 50%
|
239,478
|
|
|
38
|
%
|
|
237,196
|
|
|
35
|
%
|
||
Total
|
$
|
632,507
|
|
|
100
|
%
|
|
$
|
677,380
|
|
|
100
|
%
|
|
2013
|
|
2012
|
||||
Land
|
$
|
26,481
|
|
|
$
|
23,051
|
|
Buildings
|
104,703
|
|
|
84,142
|
|
||
Less accumulated depreciation
|
(30,949
|
)
|
|
(28,322
|
)
|
||
Real estate, commercial
|
100,235
|
|
|
78,871
|
|
||
Real estate, joint ventures
|
42,301
|
|
|
45,871
|
|
||
Total
|
$
|
142,536
|
|
|
$
|
124,742
|
|
|
2013
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities and
obligations of U.S. Government
|
$
|
12,458
|
|
|
$
|
126,562
|
|
|
$
|
—
|
|
|
$
|
139,020
|
|
Federal agencies
1
|
—
|
|
|
22,068
|
|
|
—
|
|
|
22,068
|
|
||||
Federal agency issued
residential mortgage-backed securities
1
|
—
|
|
|
62,128
|
|
|
—
|
|
|
62,128
|
|
||||
Subtotal
|
12,458
|
|
|
210,758
|
|
|
—
|
|
|
223,216
|
|
||||
Corporate obligations:
|
|
|
|
|
|
|
|
||||||||
Industrial
|
—
|
|
|
534,779
|
|
|
—
|
|
|
534,779
|
|
||||
Energy
|
—
|
|
|
222,745
|
|
|
—
|
|
|
222,745
|
|
||||
Communications and technology
|
—
|
|
|
233,543
|
|
|
—
|
|
|
233,543
|
|
||||
Financial
|
—
|
|
|
283,477
|
|
|
—
|
|
|
283,477
|
|
||||
Consumer
|
—
|
|
|
493,756
|
|
|
—
|
|
|
493,756
|
|
||||
Public utilities
|
—
|
|
|
252,364
|
|
|
13
|
|
|
252,377
|
|
||||
Subtotal
|
—
|
|
|
2,020,664
|
|
|
13
|
|
|
2,020,677
|
|
||||
Corporate private-labeled residential
mortgage-backed securities
|
—
|
|
|
116,482
|
|
|
—
|
|
|
116,482
|
|
||||
Municipal securities
|
—
|
|
|
147,619
|
|
|
—
|
|
|
147,619
|
|
||||
Other
|
—
|
|
|
96,454
|
|
|
1,420
|
|
|
97,874
|
|
||||
Redeemable preferred stocks
|
—
|
|
|
12,752
|
|
|
—
|
|
|
12,752
|
|
||||
Fixed maturity securities
|
12,458
|
|
|
2,604,729
|
|
|
1,433
|
|
|
2,618,620
|
|
||||
Equity securities
|
4,812
|
|
|
29,574
|
|
|
—
|
|
|
34,386
|
|
||||
Total
|
$
|
17,270
|
|
|
$
|
2,634,303
|
|
|
$
|
1,433
|
|
|
$
|
2,653,006
|
|
|
|
|
|
|
|
|
|
||||||||
Percent of total
|
1
|
%
|
|
99
|
%
|
|
—
|
%
|
|
100
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Other policyholder funds
|
|
|
|
|
|
|
|
||||||||
Guaranteed minimum withdrawal benefits
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(4,703
|
)
|
|
$
|
(4,703
|
)
|
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(4,703
|
)
|
|
$
|
(4,703
|
)
|
1
|
Federal agency securities are not backed by the full faith and credit of the U.S. Government.
|
|
2012
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities and
obligations of U.S. Government
|
$
|
12,698
|
|
|
$
|
120,544
|
|
|
$
|
2,809
|
|
|
$
|
136,051
|
|
Federal agencies
1
|
—
|
|
|
26,069
|
|
|
—
|
|
|
26,069
|
|
||||
Federal agency issued
residential mortgage-backed securities
1
|
—
|
|
|
91,985
|
|
|
—
|
|
|
91,985
|
|
||||
Subtotal
|
12,698
|
|
|
238,598
|
|
|
2,809
|
|
|
254,105
|
|
||||
Corporate obligations:
|
|
|
|
|
|
|
|
||||||||
Industrial
|
—
|
|
|
542,561
|
|
|
3,322
|
|
|
545,883
|
|
||||
Energy
|
—
|
|
|
208,887
|
|
|
2,362
|
|
|
211,249
|
|
||||
Communications and technology
|
—
|
|
|
221,600
|
|
|
—
|
|
|
221,600
|
|
||||
Financial
|
—
|
|
|
302,690
|
|
|
11,184
|
|
|
313,874
|
|
||||
Consumer
|
—
|
|
|
509,953
|
|
|
16,285
|
|
|
526,238
|
|
||||
Public utilities
|
—
|
|
|
286,127
|
|
|
—
|
|
|
286,127
|
|
||||
Subtotal
|
—
|
|
|
2,071,818
|
|
|
33,153
|
|
|
2,104,971
|
|
||||
Corporate private-labeled residential
mortgage-backed securities |
—
|
|
|
148,131
|
|
|
—
|
|
|
148,131
|
|
||||
Municipal securities
|
—
|
|
|
163,661
|
|
|
4,323
|
|
|
167,984
|
|
||||
Other
|
—
|
|
|
98,896
|
|
|
5,848
|
|
|
104,744
|
|
||||
Redeemable preferred stocks
|
8,206
|
|
|
—
|
|
|
—
|
|
|
8,206
|
|
||||
Fixed maturity securities
|
20,904
|
|
|
2,721,104
|
|
|
46,133
|
|
|
2,788,141
|
|
||||
Equity securities
|
1,336
|
|
|
17,470
|
|
|
1,255
|
|
|
20,061
|
|
||||
Total
|
$
|
22,240
|
|
|
$
|
2,738,574
|
|
|
$
|
47,388
|
|
|
$
|
2,808,202
|
|
Percent of total
|
1
|
%
|
|
97
|
%
|
|
2
|
%
|
|
100
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Other policyholder funds
|
|
|
|
|
|
|
|
||||||||
Guaranteed minimum withdrawal
benefits |
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,080
|
)
|
|
$
|
(1,080
|
)
|
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,080
|
)
|
|
$
|
(1,080
|
)
|
1
|
Federal agency securities are not backed by the full faith and credit of the U.S. Government.
|
|
2013
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Fixed maturity securities available for sale:
|
|
|
|
|
|
|
|
||||||||
Priced from external pricing services
|
$
|
12,458
|
|
|
$
|
2,519,332
|
|
|
$
|
—
|
|
|
$
|
2,531,790
|
|
Priced from independent broker quotations
|
—
|
|
|
41,642
|
|
|
—
|
|
|
41,642
|
|
||||
Priced from internal matrices and calculations
|
—
|
|
|
43,755
|
|
|
1,433
|
|
|
45,188
|
|
||||
Subtotal
|
12,458
|
|
|
2,604,729
|
|
|
1,433
|
|
|
2,618,620
|
|
||||
Equity securities available for sale:
|
|
|
|
|
|
|
|
||||||||
Priced from external pricing services
|
4,812
|
|
|
18,253
|
|
|
—
|
|
|
23,065
|
|
||||
Priced from independent broker quotations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Priced from internal matrices and calculations
|
—
|
|
|
11,321
|
|
|
—
|
|
|
11,321
|
|
||||
Subtotal
|
4,812
|
|
|
29,574
|
|
|
—
|
|
|
34,386
|
|
||||
Total
|
$
|
17,270
|
|
|
$
|
2,634,303
|
|
|
$
|
1,433
|
|
|
$
|
2,653,006
|
|
Percent of total
|
1
|
%
|
|
99
|
%
|
|
—
|
%
|
|
100
|
%
|
|
2012
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Fixed maturity securities available for sale:
|
|
|
|
|
|
|
|
||||||||
Priced from external pricing services
|
$
|
20,904
|
|
|
$
|
2,676,943
|
|
|
$
|
—
|
|
|
$
|
2,697,847
|
|
Priced from independent broker quotations
|
—
|
|
|
44,161
|
|
|
—
|
|
|
44,161
|
|
||||
Priced from internal matrices and calculations
|
—
|
|
|
—
|
|
|
46,133
|
|
|
46,133
|
|
||||
Subtotal
|
20,904
|
|
|
2,721,104
|
|
|
46,133
|
|
|
2,788,141
|
|
||||
Equity securities available for sale:
|
|
|
|
|
|
|
|
||||||||
Priced from external pricing services
|
1,336
|
|
|
7,254
|
|
|
—
|
|
|
8,590
|
|
||||
Priced from independent broker quotations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Priced from internal matrices and calculations
|
—
|
|
|
10,216
|
|
|
1,255
|
|
|
11,471
|
|
||||
Subtotal
|
1,336
|
|
|
17,470
|
|
|
1,255
|
|
|
20,061
|
|
||||
Total
|
$
|
22,240
|
|
|
$
|
2,738,574
|
|
|
$
|
47,388
|
|
|
$
|
2,808,202
|
|
Percent of total
|
1
|
%
|
|
97
|
%
|
|
2
|
%
|
|
100
|
%
|
|
2013
|
||||||||||||||
|
Assets
|
|
Liabilities
|
||||||||||||
|
Fixed maturity
securities available
for sale
|
|
Equity securities
available
for sale
|
|
Total
|
|
GMWB
|
||||||||
Beginning balance
|
$
|
46,133
|
|
|
$
|
1,255
|
|
|
$
|
47,388
|
|
|
$
|
(1,080
|
)
|
Included in earnings
|
(59
|
)
|
|
641
|
|
|
582
|
|
|
(4,208
|
)
|
||||
Included in other comprehensive income
(loss) |
287
|
|
|
(627
|
)
|
|
(340
|
)
|
|
—
|
|
||||
Purchases, issuances, sales and other
dispositions: |
|
|
|
|
|
|
|
||||||||
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Issuances
|
—
|
|
|
—
|
|
|
—
|
|
|
737
|
|
||||
Sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other dispositions
|
(839
|
)
|
|
(1,269
|
)
|
|
(2,108
|
)
|
|
(152
|
)
|
||||
Transfers into Level 3
|
116
|
|
|
—
|
|
|
116
|
|
|
—
|
|
||||
Transfers out of Level 3
|
(44,205
|
)
|
|
—
|
|
|
(44,205
|
)
|
|
—
|
|
||||
Ending balance
|
$
|
1,433
|
|
|
$
|
—
|
|
|
$
|
1,433
|
|
|
$
|
(4,703
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net unrealized gains
|
$
|
287
|
|
|
$
|
—
|
|
|
$
|
287
|
|
|
|
|
2012
|
||||||||||||||
|
Assets
|
|
Liabilities
|
||||||||||||
|
Fixed maturity
securities available
for sale
|
|
Equity securities
available
for sale
|
|
Total
|
|
GMWB
|
||||||||
Beginning balance
|
$
|
43,759
|
|
|
$
|
1,123
|
|
|
$
|
44,882
|
|
|
$
|
(187
|
)
|
Included in earnings
|
109
|
|
|
—
|
|
|
109
|
|
|
(1,228
|
)
|
||||
Included in other comprehensive income
(loss) |
(160
|
)
|
|
132
|
|
|
(28
|
)
|
|
—
|
|
||||
Purchases, issuances, sales and other
dispositions: |
|
|
|
|
|
|
|
||||||||
Purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Issuances
|
—
|
|
|
—
|
|
|
—
|
|
|
1,592
|
|
||||
Sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other dispositions
|
(5,406
|
)
|
|
—
|
|
|
(5,406
|
)
|
|
(1,257
|
)
|
||||
Transfers into Level 3
|
7,831
|
|
|
—
|
|
|
7,831
|
|
|
—
|
|
||||
Transfers out of Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Ending balance
|
$
|
46,133
|
|
|
$
|
1,255
|
|
|
$
|
47,388
|
|
|
$
|
(1,080
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net unrealized gains (losses)
|
$
|
(172
|
)
|
|
$
|
132
|
|
|
$
|
(40
|
)
|
|
|
|
Fair Value
|
|
Valuation Technique
|
|
Unobservable Inputs
|
|
Range
|
||
Embedded Derivative - GMWB
|
$
|
(4,703
|
)
|
|
Actuarial cash flow model
|
|
Mortality
|
|
80% of US Annuity Basic Table (2000)
|
|
|
|
|
|
Lapse
|
|
0%-16% depending on product/duration/funded status of guarantee
|
||
|
|
|
|
|
Benefit Utilization
|
|
0%-80% depending on age/duration/funded status of guarantee
|
||
|
|
|
|
|
Nonperformance Risk
|
|
0.47%-1.40%
|
|
2013
|
|
2012
|
||||||||||||
|
Carrying
Value |
|
Fair Value
|
|
Carrying
Value |
|
Fair Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investments:
|
|
|
|
|
|
|
|
||||||||
Fixed maturity securities available for sale
|
$
|
2,618,620
|
|
|
$
|
2,618,620
|
|
|
$
|
2,788,141
|
|
|
$
|
2,788,141
|
|
Equity securities available for sale
|
34,386
|
|
|
34,386
|
|
|
20,061
|
|
|
20,061
|
|
||||
Mortgage loans
|
629,256
|
|
|
658,142
|
|
|
674,034
|
|
|
722,098
|
|
||||
Policy loans
|
83,518
|
|
|
83,518
|
|
|
77,133
|
|
|
77,133
|
|
||||
Cash and short-term financial assets
|
48,909
|
|
|
48,909
|
|
|
31,928
|
|
|
31,928
|
|
||||
Separate account assets
|
393,416
|
|
|
393,416
|
|
|
340,093
|
|
|
340,093
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Individual and group annuities
|
1,100,495
|
|
|
1,078,618
|
|
|
1,130,032
|
|
|
1,108,987
|
|
||||
Supplementary contracts without
life contingencies |
51,624
|
|
|
50,097
|
|
|
54,321
|
|
|
53,389
|
|
||||
Separate account liabilities
|
393,416
|
|
|
393,416
|
|
|
340,093
|
|
|
340,093
|
|
||||
Other policyholder funds - GMWB
|
(4,703
|
)
|
|
(4,703
|
)
|
|
(1,080
|
)
|
|
(1,080
|
)
|
|
2013
|
|
2012
|
||||
Receivables:
|
|
|
|
||||
Agent receivables, net (allowance $2,245; 2012 - $2,261)
|
$
|
1,660
|
|
|
$
|
1,697
|
|
Investment-related financing receivables:
|
|
|
|
||||
Mortgage loans, net (allowance $3,251; 2012 - $3,346)
|
629,256
|
|
|
674,034
|
|
||
Total financing receivables
|
$
|
630,916
|
|
|
$
|
675,731
|
|
|
2013
|
|
2012
|
||||
Beginning of year
|
$
|
2,261
|
|
|
$
|
2,226
|
|
Additions
|
69
|
|
|
229
|
|
||
Deductions
|
(85
|
)
|
|
(194
|
)
|
||
End of period
|
$
|
2,245
|
|
|
$
|
2,261
|
|
|
2013
|
|
2012
|
||||
Mortgage loans collectively evaluated for impairment
|
$
|
582,679
|
|
|
$
|
622,381
|
|
Mortgage loans individually evaluated for impairment
|
49,828
|
|
|
54,999
|
|
||
Allowance for potential future losses
|
(3,251
|
)
|
|
(3,346
|
)
|
||
Carrying value
|
$
|
629,256
|
|
|
$
|
674,034
|
|
|
2013
|
|
2012
|
||||
Beginning of year
|
$
|
3,346
|
|
|
$
|
2,849
|
|
Provision
|
—
|
|
|
497
|
|
||
Deductions
|
(95
|
)
|
|
—
|
|
||
End of period
|
$
|
3,251
|
|
|
$
|
3,346
|
|
•
|
Agent specific loans. At both
December 31, 2013
and
December 31, 2012
, these loans totaled
$1.1 million
, with an allowance for doubtful accounts of
$0.3 million
.
|
•
|
Various agent commission advances and other commission receivables. Gross agent receivables in this category totaled
$2.8 million
, with an allowance for doubtful accounts of
$1.9 million
at
December 31, 2013
. Gross agent receivables totaled
$2.9 million
and the allowance for doubtful accounts was
$2.0 million
at
December 31, 2012
.
|
|
|
|
Amount of Payments Past Due
|
||||||||||||||||
|
Book Value
|
|
30-59 Days
|
|
60-89 Days
|
|
> 90 Days
|
|
Total
|
||||||||||
December 31, 2013
|
|
|
|
|
|
|
|
|
|
||||||||||
Industrial
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Office
|
8,497
|
|
|
24
|
|
|
—
|
|
|
829
|
|
|
853
|
|
|||||
Medical
|
3,921
|
|
|
32
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
12,418
|
|
|
$
|
56
|
|
|
$
|
—
|
|
|
$
|
829
|
|
|
$
|
885
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2012
|
|
|
|
|
|
|
|
|
|
||||||||||
Industrial
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Office
|
6,053
|
|
|
9
|
|
|
—
|
|
|
201
|
|
|
210
|
|
|||||
Medical
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
6,053
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
201
|
|
|
$
|
210
|
|
•
|
Current industry conditions that are affecting the market, including rental and vacancy rates;
|
•
|
Perceived market liquidity;
|
•
|
Analysis of the markets and sub-markets in which the Company has mortgage loans;
|
•
|
Analysis of industry historical loss and delinquency experience;
|
•
|
Other factors that the Company may perceive as important or critical given its portfolio; and
|
•
|
Analysis of the Company’s loan portfolio based on loan size concentrations, geographic concentrations, property type concentrations, maturity concentrations, origination loan-to-value concentrations, and borrower concentrations.
|
•
|
The payment history of each borrower;
|
•
|
Negative reports from property inspectors; and
|
•
|
Each loan’s property financial statement including net operating income, debt service coverage, and occupancy level.
|
•
|
The risk
that
the Company’s assessment of a borrower to meet all of its contractual obligations will change based on changes in the credit characteristics of the borrower or property;
|
•
|
The risk that the economic outlook will be worse than expected or have more of an impact on the borrower than anticipated;
|
•
|
The risk that the performance of the underlying property could deteriorate in the future;
|
•
|
The risk that fraudulent, inaccurate, or misleading information could be provided to the Company;
|
•
|
The risk that the methodology or assumptions used to develop estimates of the portion of the impairment of the loan prove over time to be inaccurate; and
|
•
|
The risk that other facts and circumstances change such that it becomes more likely than not that the Company will not obtain all of it contractual payments.
|
|
2013
|
|
2012
|
||||||||||||
|
Carrying
Amount
|
|
Maximum
Exposure
to Loss
|
|
Carrying
Amount
|
|
Maximum
Exposure
to Loss
|
||||||||
Real estate joint ventures
|
$
|
22,104
|
|
|
$
|
22,104
|
|
|
$
|
22,440
|
|
|
$
|
22,440
|
|
Affordable housing real estate joint ventures
|
19,422
|
|
|
61,624
|
|
|
22,704
|
|
|
60,527
|
|
||||
Total
|
$
|
41,526
|
|
|
$
|
83,728
|
|
|
$
|
45,144
|
|
|
$
|
82,967
|
|
|
2013
|
|
2012
|
||||
Land
|
$
|
766
|
|
|
$
|
766
|
|
Home office complex
|
20,775
|
|
|
20,828
|
|
||
Furniture and equipment
|
46,176
|
|
|
45,308
|
|
||
|
67,717
|
|
|
66,902
|
|
||
Accumulated depreciation
|
(50,193
|
)
|
|
(48,559
|
)
|
||
|
$
|
17,524
|
|
|
$
|
18,343
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Balance at beginning of year
|
$
|
340,093
|
|
|
$
|
316,609
|
|
|
$
|
339,029
|
|
Deposits on variable policyholder contracts
|
36,471
|
|
|
33,748
|
|
|
33,139
|
|
|||
Transfers to general account
|
(4,349
|
)
|
|
(5,082
|
)
|
|
(5,282
|
)
|
|||
Investment performance
|
69,545
|
|
|
43,399
|
|
|
(2,180
|
)
|
|||
Policyholder benefits and withdrawals
|
(35,236
|
)
|
|
(35,799
|
)
|
|
(35,285
|
)
|
|||
Contract charges
|
(13,108
|
)
|
|
(12,782
|
)
|
|
(12,812
|
)
|
|||
Balance at end of year
|
$
|
393,416
|
|
|
$
|
340,093
|
|
|
$
|
316,609
|
|
|
2013
|
|
2012
|
||||||||||||
|
Separate
Account
Balance
|
|
Net
Amount
at Risk
|
|
Separate
Account
Balance
|
|
Net
Amount
at Risk
|
||||||||
Return of net deposits
|
$
|
221,905
|
|
|
$
|
684
|
|
|
$
|
195,557
|
|
|
$
|
1,374
|
|
Return of the greater of the highest
anniversary contract value or net deposits |
8,918
|
|
|
9
|
|
|
7,816
|
|
|
53
|
|
||||
Return of the greater of every fifth year highest
anniversary contract value or net deposits |
6,726
|
|
|
57
|
|
|
5,714
|
|
|
70
|
|
||||
Return of the greater of net deposits
accumulated annually at 5% or the highest anniversary contract value |
42,083
|
|
|
1,579
|
|
|
33,991
|
|
|
2,725
|
|
||||
Total
|
$
|
279,632
|
|
|
$
|
2,329
|
|
|
$
|
243,078
|
|
|
$
|
4,222
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Variable annuity incurred death benefits
|
$
|
2,900
|
|
|
$
|
2,296
|
|
|
$
|
1,145
|
|
Variable annuity paid death benefits
|
3,744
|
|
|
2,029
|
|
|
1,016
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Money market
|
$
|
4,770
|
|
|
$
|
5,408
|
|
|
$
|
5,325
|
|
Fixed income
|
40,036
|
|
|
42,086
|
|
|
42,004
|
|
|||
Balanced
|
64,015
|
|
|
47,673
|
|
|
43,795
|
|
|||
International equity
|
24,745
|
|
|
25,384
|
|
|
25,401
|
|
|||
Intermediate equity
|
116,770
|
|
|
95,487
|
|
|
80,755
|
|
|||
Aggressive equity
|
29,296
|
|
|
27,040
|
|
|
27,591
|
|
|||
Total
|
$
|
279,632
|
|
|
$
|
243,078
|
|
|
$
|
224,871
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Gross liability at beginning of year
|
$
|
36,219
|
|
|
$
|
32,921
|
|
|
$
|
38,196
|
|
Less reinsurance recoverable
|
(29,938
|
)
|
|
(26,797
|
)
|
|
(30,893
|
)
|
|||
Net liability at beginning of year
|
6,281
|
|
|
6,124
|
|
|
7,303
|
|
|||
Incurred benefits related to:
|
|
|
|
|
|
||||||
Current year
|
24,333
|
|
|
22,061
|
|
|
23,218
|
|
|||
Prior years
1
|
(937
|
)
|
|
(356
|
)
|
|
(1,242
|
)
|
|||
Total incurred benefits
|
23,396
|
|
|
21,705
|
|
|
21,976
|
|
|||
Paid benefits related to:
|
|
|
|
|
|
||||||
Current year
|
20,906
|
|
|
18,667
|
|
|
20,289
|
|
|||
Prior years
|
2,450
|
|
|
2,881
|
|
|
2,866
|
|
|||
Total paid benefits
|
23,356
|
|
|
21,548
|
|
|
23,155
|
|
|||
Net liability at end of year
|
6,321
|
|
|
6,281
|
|
|
6,124
|
|
|||
Reinsurance recoverable
|
27,567
|
|
|
29,938
|
|
|
26,797
|
|
|||
Gross liability at end of year
|
$
|
33,888
|
|
|
$
|
36,219
|
|
|
$
|
32,921
|
|
1
|
The incurred benefits related to prior years’ unpaid accident and health claims reflect the change in these liabilities.
|
|
2013
|
|
2012
|
|
2011
|
||||||
Current income tax expense
|
$
|
7,855
|
|
|
$
|
18,926
|
|
|
$
|
10,011
|
|
Deferred income tax expense
|
7,033
|
|
|
702
|
|
|
3,554
|
|
|||
Total income tax expense
|
$
|
14,888
|
|
|
$
|
19,628
|
|
|
$
|
13,565
|
|
|
|
|
|
|
|
||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Federal income tax rate
|
35
|
%
|
|
35
|
%
|
|
35
|
%
|
|||
Tax credits, net of equity adjustment
|
(2
|
)%
|
|
(1
|
)%
|
|
—
|
%
|
|||
Permanent differences
|
—
|
%
|
|
(1
|
)%
|
|
(1
|
)%
|
|||
Effective income tax rate
|
33
|
%
|
|
33
|
%
|
|
34
|
%
|
|
2013
|
|
2012
|
||||
Deferred tax assets:
|
|
|
|
||||
Future policy benefits
|
$
|
27,721
|
|
|
$
|
26,319
|
|
Employee retirement benefits
|
26,506
|
|
|
33,296
|
|
||
Tax carryovers
|
326
|
|
|
418
|
|
||
Other
|
—
|
|
|
2,418
|
|
||
Deferred tax assets
|
54,553
|
|
|
62,451
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Basis differences between tax and
|
|
|
|
||||
GAAP accounting for investments
|
6,215
|
|
|
9,853
|
|
||
Unrealized investment gains
|
43,550
|
|
|
94,339
|
|
||
Capitalization of deferred acquisition costs, net of amortization
|
55,818
|
|
|
27,706
|
|
||
Value of business acquired
|
9,990
|
|
|
7,408
|
|
||
Property and equipment, net
|
5,211
|
|
|
5,606
|
|
||
Other
|
1,765
|
|
|
—
|
|
||
Deferred tax liabilities
|
122,549
|
|
|
144,912
|
|
||
Net deferred tax liability
|
67,996
|
|
|
82,461
|
|
||
Current tax liability (asset)
|
(709
|
)
|
|
1,996
|
|
||
Income taxes payable
|
$
|
67,287
|
|
|
$
|
84,457
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
Income tax expense
|
$
|
14,888
|
|
|
$
|
19,628
|
|
|
$
|
13,565
|
|
Stockholders’ equity:
|
|
|
|
|
|
||||||
Related to:
|
|
|
|
|
|
||||||
Change in net unrealized gains on securities available
for sale |
(50,790
|
)
|
|
24,974
|
|
|
30,799
|
|
|||
Effect on DAC and VOBA
|
16,577
|
|
|
(6,080
|
)
|
|
(7,501
|
)
|
|||
Change in future policy benefits
|
4,534
|
|
|
(4,611
|
)
|
|
(3,081
|
)
|
|||
Change in policyholder account balances
|
220
|
|
|
(195
|
)
|
|
(87
|
)
|
|||
Change in benefit plan obligations
|
7,961
|
|
|
(1,161
|
)
|
|
(8,133
|
)
|
|||
Total income tax expense (benefit) included in financial statements
|
$
|
(6,610
|
)
|
|
$
|
32,555
|
|
|
$
|
25,562
|
|
|
2013
|
|
2012
|
|
Target Allocation
|
||
|
|
|
|
|
|
||
Equity securities
|
39
|
%
|
|
39
|
%
|
|
33% - 43%
|
Asset allocation and alternative assets
|
28
|
%
|
|
29
|
%
|
|
23% - 33%
|
Debt securities
|
30
|
%
|
|
31
|
%
|
|
26% - 42%
|
Cash and cash equivalents
|
3
|
%
|
|
1
|
%
|
|
0% - 2%
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Change in projected benefit obligation:
|
|
|
|
|
|
|
|
||||||||
Benefit obligation at beginning of year
|
$
|
159,201
|
|
|
$
|
153,094
|
|
|
$
|
36,403
|
|
|
$
|
35,425
|
|
Service cost
|
—
|
|
|
—
|
|
|
786
|
|
|
879
|
|
||||
Interest cost
|
5,338
|
|
|
5,796
|
|
|
1,368
|
|
|
1,529
|
|
||||
Plan participants' contributions
|
—
|
|
|
—
|
|
|
496
|
|
|
556
|
|
||||
Curtailments and plan changes
|
—
|
|
|
—
|
|
|
(4,357
|
)
|
|
—
|
|
||||
Actuarial (gain) loss
|
(9,394
|
)
|
|
9,844
|
|
|
(1,922
|
)
|
|
(567
|
)
|
||||
Benefits paid
|
(9,145
|
)
|
|
(9,533
|
)
|
|
(1,595
|
)
|
|
(1,419
|
)
|
||||
Benefit obligation at end of year
|
$
|
146,000
|
|
|
$
|
159,201
|
|
|
$
|
31,179
|
|
|
$
|
36,403
|
|
|
|
|
|
|
|
|
|
||||||||
Change in plan assets:
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of year
|
$
|
125,153
|
|
|
$
|
113,931
|
|
|
$
|
—
|
|
|
$
|
586
|
|
Reduction of plan assets
|
—
|
|
|
—
|
|
|
—
|
|
|
(586
|
)
|
||||
Return on plan assets
|
14,671
|
|
|
14,723
|
|
|
—
|
|
|
—
|
|
||||
Plan participants' contributions
|
—
|
|
|
—
|
|
|
496
|
|
|
556
|
|
||||
Company contributions
|
6,028
|
|
|
6,032
|
|
|
1,099
|
|
|
863
|
|
||||
Benefits paid
|
(9,145
|
)
|
|
(9,533
|
)
|
|
(1,595
|
)
|
|
(1,419
|
)
|
||||
Fair value of plan assets at end of year
|
$
|
136,707
|
|
|
$
|
125,153
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Unfunded status at end of year
|
$
|
9,293
|
|
|
$
|
34,048
|
|
|
$
|
31,179
|
|
|
$
|
36,403
|
|
|
|
|
|
|
|
|
|
||||||||
Amounts recognized in accumulated other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
59,241
|
|
|
$
|
76,472
|
|
|
$
|
3,974
|
|
|
$
|
6,000
|
|
Prior service credit
|
—
|
|
|
—
|
|
|
(4,194
|
)
|
|
(705
|
)
|
||||
Total accumulated other comprehensive income
|
$
|
59,241
|
|
|
$
|
76,472
|
|
|
$
|
(220
|
)
|
|
$
|
5,295
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Unrecognized actuarial net (gain) loss
|
$
|
(14,838
|
)
|
|
$
|
4,010
|
|
|
$
|
(1,923
|
)
|
|
$
|
(566
|
)
|
Unrecognized prior service credit
|
—
|
|
|
—
|
|
|
(4,357
|
)
|
|
—
|
|
||||
Amortization of net loss
|
(2,393
|
)
|
|
(133
|
)
|
|
(103
|
)
|
|
(247
|
)
|
||||
Curtailments and plan changes
|
—
|
|
|
—
|
|
|
116
|
|
|
—
|
|
||||
Amortization of prior service cost
|
—
|
|
|
—
|
|
|
752
|
|
|
252
|
|
||||
Total (gain) loss recognized in other comprehensive income
|
$
|
(17,231
|
)
|
|
$
|
3,877
|
|
|
$
|
(5,515
|
)
|
|
$
|
(561
|
)
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Plans with underfunded accumulated benefit
obligation: |
|
|
|
|
|
|
|
||||||||
Projected benefit obligation
|
$
|
146,000
|
|
|
$
|
159,201
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accumulated benefit obligation
|
146,000
|
|
|
159,201
|
|
|
—
|
|
|
—
|
|
||||
Fair value of plan assets
|
136,707
|
|
|
125,153
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Weighted average assumptions used to
determine benefit obligations at December 31: |
|
|
|
|
|
|
|
||||||||
Discount rate
|
4.42
|
%
|
|
3.47
|
%
|
|
4.88
|
%
|
|
4.03
|
%
|
||||
Expected return on plan assets
|
7.70
|
%
|
|
8.00
|
%
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Weighted average assumptions used to determine net periodic benefit cost for years ended December 31:
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
3.47
|
%
|
|
3.96
|
%
|
|
4.03
|
%
|
|
4.46
|
%
|
||||
Expected return on plan assets
|
7.70
|
%
|
|
8.00
|
%
|
|
—
|
|
|
—
|
|
|
Pension Plan
|
|
||||||
|
2013
|
|
2012
|
|
||||
Debt securities:
|
|
|
|
|
||||
United States Government fixed maturity securities
|
$
|
2,210
|
|
|
$
|
2,315
|
|
|
Industrial and public utility fixed maturity securities
|
18,651
|
|
|
20,559
|
|
|
||
Investment funds:
|
|
|
|
|
||||
Hedge funds
|
17,839
|
|
|
16,272
|
|
|
||
Stock and bond funds:
|
|
|
|
|
||||
Domestic equity
|
27,382
|
|
|
24,453
|
|
|
||
International equity
|
19,709
|
|
|
18,068
|
|
|
||
Emerging markets
|
5,957
|
|
|
6,491
|
|
|
||
Global asset allocation
|
20,350
|
|
|
19,562
|
|
|
||
Fixed income
|
19,911
|
|
|
15,692
|
|
|
||
Other invested assets
|
53
|
|
|
81
|
|
|
||
Cash and cash equivalents
|
4,412
|
|
|
1,322
|
|
|
||
Receivables
|
233
|
|
|
338
|
|
|
||
Fair value of assets at end of year
|
$
|
136,707
|
|
|
$
|
125,153
|
|
|
|
2013
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Debt securities:
|
|
|
|
|
|
|
|
||||||||
United States Government fixed maturity securities
|
$
|
—
|
|
|
$
|
2,210
|
|
|
$
|
—
|
|
|
$
|
2,210
|
|
Industrial and public utility fixed maturity securities
|
—
|
|
|
18,651
|
|
|
—
|
|
|
18,651
|
|
||||
Investment funds:
|
|
|
|
|
|
|
|
||||||||
Hedge funds
|
—
|
|
|
17,839
|
|
|
—
|
|
|
17,839
|
|
||||
Stock and bond funds
|
—
|
|
|
93,309
|
|
|
—
|
|
|
93,309
|
|
||||
Other invested assets
|
—
|
|
|
—
|
|
|
53
|
|
|
53
|
|
||||
Cash and cash equivalents
|
4,412
|
|
|
—
|
|
|
—
|
|
|
4,412
|
|
||||
Receivables
|
233
|
|
|
—
|
|
|
—
|
|
|
233
|
|
||||
Total
|
$
|
4,645
|
|
|
$
|
132,009
|
|
|
$
|
53
|
|
|
$
|
136,707
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
2012
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Debt securities:
|
|
|
|
|
|
|
|
||||||||
United States Government fixed maturity
securities
|
$
|
—
|
|
|
$
|
2,315
|
|
|
$
|
—
|
|
|
$
|
2,315
|
|
Industrial and public utility fixed maturity
securities
|
—
|
|
|
20,435
|
|
|
124
|
|
|
20,559
|
|
||||
Investment funds:
|
|
|
|
|
|
|
|
||||||||
Hedge funds
|
—
|
|
|
16,272
|
|
|
—
|
|
|
16,272
|
|
||||
Stock and bond funds
|
—
|
|
|
84,266
|
|
|
—
|
|
|
84,266
|
|
||||
Other invested assets
|
—
|
|
|
—
|
|
|
81
|
|
|
81
|
|
||||
Cash and cash equivalents
|
1,322
|
|
|
—
|
|
|
—
|
|
|
1,322
|
|
||||
Receivables
|
338
|
|
|
—
|
|
|
—
|
|
|
338
|
|
||||
Total
|
$
|
1,660
|
|
|
$
|
123,288
|
|
|
$
|
124
|
|
|
$
|
125,153
|
|
|
Pension Plan
|
|
||||||
|
2013
|
|
2012
|
|
||||
Beginning balance
|
$
|
205
|
|
|
$
|
1,366
|
|
|
Losses realized and unrealized
|
(29
|
)
|
|
(5
|
)
|
|
||
Transfers in
|
—
|
|
|
—
|
|
|
||
Transfers out
|
(123
|
)
|
|
(1,156
|
)
|
|
||
Ending balance
|
$
|
53
|
|
|
$
|
205
|
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
786
|
|
|
$
|
879
|
|
|
$
|
676
|
|
Interest cost
|
5,338
|
|
|
5,796
|
|
|
6,775
|
|
|
1,368
|
|
|
1,529
|
|
|
1,529
|
|
||||||
Expected return on plan assets
|
(9,227
|
)
|
|
(8,889
|
)
|
|
(9,141
|
)
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Unrecognized actuarial net loss
|
2,393
|
|
|
133
|
|
|
3,476
|
|
|
103
|
|
|
247
|
|
|
21
|
|
||||||
Unrecognized prior service credit
|
—
|
|
|
—
|
|
|
—
|
|
|
(752
|
)
|
|
(252
|
)
|
|
(252
|
)
|
||||||
Curtailment
|
—
|
|
|
—
|
|
|
—
|
|
|
(116
|
)
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost
|
(1,496
|
)
|
|
(2,960
|
)
|
|
1,110
|
|
|
1,389
|
|
|
2,403
|
|
|
1,940
|
|
||||||
Total recognized in other comprehensive income (loss)
|
(17,231
|
)
|
|
3,877
|
|
|
16,624
|
|
|
(5,515
|
)
|
|
(561
|
)
|
|
6,613
|
|
||||||
Total recognized in net periodic benefit cost and other comprehensive income (loss)
|
$
|
(18,727
|
)
|
|
$
|
917
|
|
|
$
|
17,734
|
|
|
$
|
(4,126
|
)
|
|
$
|
1,842
|
|
|
$
|
8,553
|
|
|
Pension
Benefits
|
|
Other
Benefits
|
||||
Actuarial net loss
|
$
|
1,718
|
|
|
$
|
87
|
|
Prior service credit
|
—
|
|
|
(1,147
|
)
|
|
One Percentage Point
Change in the Growth Rate
|
||||||
|
Increase
|
|
Decrease
|
||||
|
|
|
|
||||
Service and interest cost components
|
$
|
474
|
|
|
$
|
(366
|
)
|
Postretirement benefit obligation
|
5,278
|
|
|
(4,226
|
)
|
Defined
Measurement Period |
|
Number
of Units |
|
Grant
Price |
2011-2013
|
|
200,060
|
|
$32.45
|
2012-2014
|
|
206,389
|
|
$31.70
|
2013-2015
|
|
212,734
|
|
$37.86
|
2014-2016*
|
|
162,063
|
|
$48.06
|
*
|
Effective January 1, 2014.
|
|
2013
|
|
2012
|
|
2011
|
||||||
Life insurance in force (in millions) :
|
|
|
|
|
|
||||||
Direct
|
$
|
27,753
|
|
|
$
|
27,515
|
|
|
$
|
27,926
|
|
Ceded
|
(13,689
|
)
|
|
(13,622
|
)
|
|
(13,978
|
)
|
|||
Assumed
|
4,271
|
|
|
1,187
|
|
|
1,276
|
|
|||
Net
|
$
|
18,335
|
|
|
$
|
15,080
|
|
|
$
|
15,224
|
|
|
|
|
|
|
|
||||||
Premiums:
|
|
|
|
|
|
||||||
Life insurance:
|
|
|
|
|
|
||||||
Direct
|
$
|
166,364
|
|
|
$
|
138,544
|
|
|
$
|
130,004
|
|
Ceded
|
(45,061
|
)
|
|
(44,760
|
)
|
|
(46,315
|
)
|
|||
Assumed
|
22,556
|
|
|
2,758
|
|
|
3,164
|
|
|||
Net
|
$
|
143,859
|
|
|
$
|
96,542
|
|
|
$
|
86,853
|
|
|
|
|
|
|
|
||||||
Accident and health:
|
|
|
|
|
|
||||||
Direct
|
$
|
55,068
|
|
|
$
|
52,090
|
|
|
$
|
51,842
|
|
Ceded
|
(12,397
|
)
|
|
(12,543
|
)
|
|
(11,357
|
)
|
|||
Net
|
$
|
42,671
|
|
|
$
|
39,547
|
|
|
$
|
40,485
|
|
|
A. M. Best
Rating
|
|
Reinsurance
Recoverable
|
|
% of
Recoverable
|
|||
TransAmerica Life Insurance Company
|
A+
|
|
$
|
44,863
|
|
|
23
|
%
|
Security Life of Denver
|
A
|
|
27,734
|
|
|
15
|
%
|
|
RGA Reinsurance Company
|
A+
|
|
18,887
|
|
|
10
|
%
|
|
Employers Reassurance Corporation
|
A-
|
|
15,010
|
|
|
8
|
%
|
|
Union Security Insurance Company
|
A-
|
|
12,418
|
|
|
6
|
%
|
|
Lewer Life Insurance Company
|
B
|
|
10,047
|
|
|
5
|
%
|
|
Lincoln National Life Insurance Company
|
A+
|
|
9,339
|
|
|
5
|
%
|
|
Swiss Re Life & Health America, Inc
|
A+
|
|
9,165
|
|
|
5
|
%
|
|
Swiss Re America Corporation
|
A+
|
|
8,863
|
|
|
5
|
%
|
|
UNUM Life Insurance Company of America
|
A
|
|
8,863
|
|
|
5
|
%
|
|
Other (20 Companies)
|
|
|
25,866
|
|
|
13
|
%
|
|
Total
|
|
|
$
|
191,055
|
|
|
100
|
%
|
|
Pre-Tax
Amount
|
|
Tax Expense
or (Benefit)
|
|
Net-of-Tax
Amount
|
||||||
2013:
|
|
|
|
|
|
||||||
Net unrealized gains (losses) arising during the year:
|
|
|
|
|
|
||||||
Fixed maturity securities
|
$
|
(139,206
|
)
|
|
$
|
(48,721
|
)
|
|
$
|
(90,485
|
)
|
Equity securities
|
(1,816
|
)
|
|
(636
|
)
|
|
(1,180
|
)
|
|||
Less reclassification adjustments:
|
|
|
|
|
|
||||||
Net realized investment gains, excluding impairment
losses |
5,225
|
|
|
1,829
|
|
|
3,396
|
|
|||
Other-than-temporary impairment losses recognized in
earnings |
(1,032
|
)
|
|
(361
|
)
|
|
(671
|
)
|
|||
Other-than-temporary impairment losses recognized in
other comprehensive income (loss) |
(101
|
)
|
|
(35
|
)
|
|
(66
|
)
|
|||
Net unrealized gains excluding impairment losses
|
(145,114
|
)
|
|
(50,790
|
)
|
|
(94,324
|
)
|
|||
Change in benefit plan obligations
|
22,745
|
|
|
7,960
|
|
|
14,785
|
|
|||
Effect on DAC and VOBA
|
47,363
|
|
|
16,577
|
|
|
30,786
|
|
|||
Future policy benefits
|
12,956
|
|
|
4,535
|
|
|
8,421
|
|
|||
Policyholder account balances
|
628
|
|
|
220
|
|
|
408
|
|
|||
Other comprehensive loss
|
$
|
(61,422
|
)
|
|
$
|
(21,498
|
)
|
|
$
|
(39,924
|
)
|
Net income
|
|
|
|
|
29,567
|
|
|||||
Comprehensive loss
|
|
|
|
|
$
|
(10,357
|
)
|
|
Pre-Tax
Amount
|
|
Tax Expense
or (Benefit) |
|
Net-of-Tax
Amount
|
||||||
2012:
|
|
|
|
|
|
||||||
Net unrealized gains (losses) arising during the year:
|
|
|
|
|
|
||||||
Fixed maturity securities
|
$
|
72,768
|
|
|
$
|
25,469
|
|
|
$
|
47,299
|
|
Equity securities
|
(173
|
)
|
|
(61
|
)
|
|
(112
|
)
|
|||
Less reclassification adjustments:
|
|
|
|
|
|
||||||
Net realized investment gains, excluding impairment
losses |
2,961
|
|
|
1,036
|
|
|
1,925
|
|
|||
Other-than-temporary impairment losses recognized in
earnings |
(2,526
|
)
|
|
(884
|
)
|
|
(1,642
|
)
|
|||
Other-than-temporary impairment losses recognized in
other comprehensive income (loss) |
808
|
|
|
282
|
|
|
526
|
|
|||
Net unrealized gains excluding impairment losses
|
71,352
|
|
|
24,974
|
|
|
46,378
|
|
|||
Change in benefit plan obligations
|
(3,317
|
)
|
|
(1,161
|
)
|
|
(2,156
|
)
|
|||
Effect on DAC and VOBA
|
(17,371
|
)
|
|
(6,080
|
)
|
|
(11,291
|
)
|
|||
Future policy benefits
|
(13,172
|
)
|
|
(4,611
|
)
|
|
(8,561
|
)
|
|||
Policyholder account balances
|
(557
|
)
|
|
(195
|
)
|
|
(362
|
)
|
|||
Other comprehensive income
|
$
|
36,935
|
|
|
$
|
12,927
|
|
|
$
|
24,008
|
|
Net income
|
|
|
|
|
39,867
|
|
|||||
Comprehensive income
|
|
|
|
|
$
|
63,875
|
|
|
Pre-Tax
Amount
|
|
Tax Expense
or (Benefit) |
|
Net-of-Tax
Amount
|
||||||
2011:
|
|
|
|
|
|
||||||
Net unrealized gains (losses) arising during the year:
|
|
|
|
|
|
||||||
Fixed maturity securities
|
$
|
91,750
|
|
|
$
|
32,113
|
|
|
$
|
59,637
|
|
Equity securities
|
(340
|
)
|
|
(119
|
)
|
|
(221
|
)
|
|||
Less reclassification adjustments:
|
|
|
|
|
|
||||||
Net realized investment gains, excluding impairment
losses |
5,422
|
|
|
1,898
|
|
|
3,524
|
|
|||
Other-than-temporary impairment losses recognized
in earnings |
(2,952
|
)
|
|
(1,033
|
)
|
|
(1,919
|
)
|
|||
Other-than-temporary impairment losses recognized in
other comprehensive income (loss) |
943
|
|
|
330
|
|
|
613
|
|
|||
Net unrealized gains excluding impairment losses
|
87,997
|
|
|
30,799
|
|
|
57,198
|
|
|||
Change in benefit plan obligations
|
(23,237
|
)
|
|
(8,133
|
)
|
|
(15,104
|
)
|
|||
Effect on DAC and VOBA
|
(21,433
|
)
|
|
(7,501
|
)
|
|
(13,932
|
)
|
|||
Future policy benefits
|
(8,802
|
)
|
|
(3,081
|
)
|
|
(5,721
|
)
|
|||
Policyholder account balances
|
(249
|
)
|
|
(87
|
)
|
|
(162
|
)
|
|||
Other comprehensive income
|
$
|
34,276
|
|
|
$
|
11,997
|
|
|
$
|
22,279
|
|
Net income
|
|
|
|
|
26,133
|
|
|||||
Comprehensive income
|
|
|
|
|
$
|
48,412
|
|
|
Unrealized
Gain (Loss) on Non-Impaired Securities |
|
Unrealized
Gain (Loss) on Impaired Securities |
|
Benefit
Plan Obligations |
|
DAC/
VOBA Impact |
|
Future Policy Benefits
|
|
Policyholder
Account Balances |
|
Total
|
||||||||||||||
2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Beginning of year
|
$
|
174,495
|
|
|
$
|
706
|
|
|
$
|
(53,148
|
)
|
|
$
|
(48,322
|
)
|
|
$
|
(18,899
|
)
|
|
$
|
(738
|
)
|
|
$
|
54,094
|
|
Other comprehensive
income (loss) before reclassification |
(99,395
|
)
|
|
2,412
|
|
|
14,785
|
|
|
30,851
|
|
|
8,421
|
|
|
408
|
|
|
(42,518
|
)
|
|||||||
Amounts reclassified
from accumulated other comprehensive income |
3,396
|
|
|
(737
|
)
|
|
—
|
|
|
(65
|
)
|
|
—
|
|
|
—
|
|
|
2,594
|
|
|||||||
Net current-period other
comprehensive income (loss) |
(95,999
|
)
|
|
1,675
|
|
|
14,785
|
|
|
30,786
|
|
|
8,421
|
|
|
408
|
|
|
(39,924
|
)
|
|||||||
End of year
|
$
|
78,496
|
|
|
$
|
2,381
|
|
|
$
|
(38,363
|
)
|
|
$
|
(17,536
|
)
|
|
$
|
(10,478
|
)
|
|
$
|
(330
|
)
|
|
$
|
14,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Beginning of year
|
$
|
138,970
|
|
|
$
|
(10,147
|
)
|
|
$
|
(50,992
|
)
|
|
$
|
(37,031
|
)
|
|
$
|
(10,338
|
)
|
|
$
|
(376
|
)
|
|
$
|
30,086
|
|
Other comprehensive
income (loss) before reclassification |
33,600
|
|
|
11,970
|
|
|
(2,156
|
)
|
|
(11,203
|
)
|
|
(8,561
|
)
|
|
(362
|
)
|
|
23,288
|
|
|||||||
Amounts reclassified
from accumulated other comprehensive income |
1,925
|
|
|
(1,117
|
)
|
|
—
|
|
|
(88
|
)
|
|
—
|
|
|
—
|
|
|
720
|
|
|||||||
Net current-period other
comprehensive income (loss) |
35,525
|
|
|
10,853
|
|
|
(2,156
|
)
|
|
(11,291
|
)
|
|
(8,561
|
)
|
|
(362
|
)
|
|
24,008
|
|
|||||||
End of year
|
$
|
174,495
|
|
|
$
|
706
|
|
|
$
|
(53,148
|
)
|
|
$
|
(48,322
|
)
|
|
$
|
(18,899
|
)
|
|
$
|
(738
|
)
|
|
$
|
54,094
|
|
|
|
Year Ended December 31
2013 |
||
Reclassification adjustments related to unrealized gains (losses)
on investment securities: |
|
|
||
Having impairments recognized in the Consolidated Statements
of Comprehensive Income
1
|
|
$
|
5,225
|
|
Income tax expense
2
|
|
(1,829
|
)
|
|
Net of taxes
|
|
3,396
|
|
|
|
|
|
||
Having no impairments recognized in the Consolidated Statements
of Comprehensive Income
1
|
|
(1,133
|
)
|
|
Income tax benefit
2
|
|
396
|
|
|
Net of taxes
|
|
(737
|
)
|
|
|
|
|
||
Reclassification adjustment related to DAC and VOBA
1
|
|
(100
|
)
|
|
Income tax benefit
2
|
|
35
|
|
|
Net of taxes
|
|
(65
|
)
|
|
|
|
|
||
Total pretax reclassifications
|
|
3,992
|
|
|
Total income tax expense
|
|
(1,398
|
)
|
|
Total reclassification, net taxes
|
|
$
|
2,594
|
|
1
|
(Increases) decreases net realized investment gains (losses) on the Consolidated Statements of Comprehensive Income.
|
2
|
(Increases) decreases income tax expense on the Consolidated Statements of Comprehensive Income.
|
|
Individual
Insurance
|
|
Group
Insurance
|
|
Old
American
|
|
Intercompany
Eliminations
1
|
|
Consolidated
|
|
||||||||||
2013:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance revenues (customer revenues)
|
$
|
173,823
|
|
2
|
$
|
53,021
|
|
|
$
|
73,535
|
|
|
$
|
(395
|
)
|
|
$
|
299,984
|
|
2
|
Net investment income
|
157,580
|
|
|
488
|
|
|
11,672
|
|
|
—
|
|
|
169,740
|
|
|
|||||
Realized investment gains
|
3,576
|
|
|
—
|
|
|
296
|
|
|
—
|
|
|
3,872
|
|
|
|||||
Other revenues
|
9,847
|
|
|
147
|
|
|
3
|
|
|
—
|
|
|
9,997
|
|
|
|||||
Total revenues
|
344,826
|
|
|
53,656
|
|
|
85,506
|
|
|
(395
|
)
|
|
483,593
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Policyholder benefits
|
136,114
|
|
|
29,144
|
|
|
46,736
|
|
|
—
|
|
|
211,994
|
|
|
|||||
Interest credited to policyholder account balances
|
79,294
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79,294
|
|
|
|||||
Amortization of deferred acquisition costs
|
20,440
|
|
|
—
|
|
|
16,788
|
|
|
—
|
|
|
37,228
|
|
|
|||||
Operating expenses
|
71,267
|
|
|
23,702
|
|
|
16,048
|
|
|
(395
|
)
|
|
110,622
|
|
|
|||||
Total benefits and expenses
|
307,115
|
|
|
52,846
|
|
|
79,572
|
|
|
(395
|
)
|
|
439,138
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income tax expense
|
37,711
|
|
|
810
|
|
|
5,934
|
|
|
—
|
|
|
44,455
|
|
|
|||||
Income tax expense
|
12,379
|
|
|
284
|
|
|
2,225
|
|
|
—
|
|
|
14,888
|
|
|
|||||
Segment net income
|
$
|
25,332
|
|
2
|
$
|
526
|
|
|
$
|
3,709
|
|
|
$
|
—
|
|
|
$
|
29,567
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Segment assets
|
$
|
4,134,133
|
|
|
$
|
8,731
|
|
|
$
|
371,802
|
|
|
$
|
—
|
|
|
$
|
4,514,666
|
|
|
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
Elimination entries to remove intercompany transactions for life and accident and health insurance that the Company purchases for its employees and agents were as follows: insurance revenues from the Group Insurance segment and operating expenses from the Individual Insurance segment to arrive at Consolidated Statements of Comprehensive Income.
|
2
|
Includes amounts attributable to the American Family reinsurance transaction.
|
|
Individual
Insurance
|
|
Group
Insurance
|
|
Old
American
|
|
Intercompany
Eliminations
1
|
|
Consolidated
|
||||||||||
2012:
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance revenues (customer revenues)
|
$
|
116,779
|
|
|
$
|
48,823
|
|
|
$
|
70,773
|
|
|
$
|
(392
|
)
|
|
$
|
235,983
|
|
Net investment income
|
163,706
|
|
|
524
|
|
|
11,924
|
|
|
—
|
|
|
176,154
|
|
|||||
Realized investment gains (losses)
|
19,032
|
|
|
—
|
|
|
(596
|
)
|
|
—
|
|
|
18,436
|
|
|||||
Other revenues
|
9,196
|
|
|
145
|
|
|
13
|
|
|
—
|
|
|
9,354
|
|
|||||
Total revenues
|
308,713
|
|
|
49,492
|
|
|
82,114
|
|
|
(392
|
)
|
|
439,927
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Policyholder benefits
|
86,627
|
|
|
26,803
|
|
|
46,748
|
|
|
—
|
|
|
160,178
|
|
|||||
Interest credited to policyholder account balances
|
82,043
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
82,043
|
|
|||||
Amortization of deferred acquisition costs
|
14,712
|
|
|
—
|
|
|
13,330
|
|
|
—
|
|
|
28,042
|
|
|||||
Operating expenses
|
70,711
|
|
|
23,699
|
|
|
16,151
|
|
|
(392
|
)
|
|
110,169
|
|
|||||
Total benefits and expenses
|
254,093
|
|
|
50,502
|
|
|
76,229
|
|
|
(392
|
)
|
|
380,432
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) before income tax expense (benefit)
|
54,620
|
|
|
(1,010
|
)
|
|
5,885
|
|
|
—
|
|
|
59,495
|
|
|||||
Income tax expense (benefit)
|
17,762
|
|
|
(354
|
)
|
|
2,220
|
|
|
—
|
|
|
19,628
|
|
|||||
Segment net income (loss)
|
$
|
36,858
|
|
|
$
|
(656
|
)
|
|
$
|
3,665
|
|
|
$
|
—
|
|
|
$
|
39,867
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Segment assets
|
$
|
4,140,048
|
|
|
$
|
8,793
|
|
|
$
|
376,904
|
|
|
$
|
—
|
|
|
$
|
4,525,745
|
|
Interest expense
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
1
|
Elimination entries to remove intercompany transactions for life and accident and health insurance that the Company purchases for its employees and agents were as follows: insurance revenues from the Group Insurance segment and operating expenses from the Individual Insurance segment to arrive at Consolidated Statements of Comprehensive Income.
|
|
Individual
Insurance
|
|
Group
Insurance
|
|
Old
American
|
|
Intercompany
Eliminations
1
|
|
Consolidated
|
||||||||||
2011:
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance revenues (customer revenues)
|
$
|
111,381
|
|
|
$
|
49,684
|
|
|
$
|
67,869
|
|
|
$
|
(535
|
)
|
|
$
|
228,399
|
|
Net investment income
|
164,595
|
|
|
547
|
|
|
12,086
|
|
|
—
|
|
|
177,228
|
|
|||||
Realized investment gains (losses)
|
3,282
|
|
|
—
|
|
|
(140
|
)
|
|
—
|
|
|
3,142
|
|
|||||
Other revenues
|
10,110
|
|
|
149
|
|
|
15
|
|
|
—
|
|
|
10,274
|
|
|||||
Total revenues
|
289,368
|
|
|
50,380
|
|
|
79,830
|
|
|
(535
|
)
|
|
419,043
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Policyholder benefits
|
81,859
|
|
|
27,777
|
|
|
46,177
|
|
|
—
|
|
|
155,813
|
|
|||||
Interest credited to policyholder account balances
|
83,446
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83,446
|
|
|||||
Amortization of deferred acquisition costs
|
21,645
|
|
|
—
|
|
|
12,321
|
|
|
—
|
|
|
33,966
|
|
|||||
Operating expenses
|
63,700
|
|
|
23,675
|
|
|
19,280
|
|
|
(535
|
)
|
|
106,120
|
|
|||||
Total benefits and expenses
|
250,650
|
|
|
51,452
|
|
|
77,778
|
|
|
(535
|
)
|
|
379,345
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) before income tax expense (benefit)
|
38,718
|
|
|
(1,072
|
)
|
|
2,052
|
|
|
—
|
|
|
39,698
|
|
|||||
Income tax expense (benefit)
|
13,107
|
|
|
(375
|
)
|
|
833
|
|
|
—
|
|
|
13,565
|
|
|||||
Segment net income (loss)
|
$
|
25,611
|
|
|
$
|
(697
|
)
|
|
$
|
1,219
|
|
|
$
|
—
|
|
|
$
|
26,133
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Segment assets
|
$
|
4,018,545
|
|
|
$
|
9,161
|
|
|
$
|
370,536
|
|
|
$
|
—
|
|
|
$
|
4,398,242
|
|
Interest expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
1
|
Elimination entries to remove intercompany transactions for life and accident and health insurance that the Company purchases for its employees and agents were as follows: insurance revenues from the Group Insurance segment and operating expenses from the Individual Insurance segment to arrive at Consolidated Statements of Comprehensive Income.
|
|
2013
|
|
2012
|
|
2011
|
||||||
Customer revenues by line of business:
|
|
|
|
|
|
||||||
Traditional individual insurance products, net
|
$
|
133,509
|
|
|
$
|
87,266
|
|
|
$
|
77,654
|
|
Interest sensitive products
|
86,618
|
|
|
84,904
|
|
|
86,112
|
|
|||
Variable universal life insurance and annuities
|
26,836
|
|
|
14,990
|
|
|
14,949
|
|
|||
Group life and accident and health products, net
|
53,021
|
|
|
48,823
|
|
|
49,684
|
|
|||
Insurance revenues
|
$
|
299,984
|
|
|
$
|
235,983
|
|
|
$
|
228,399
|
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
2013:
|
|
|
|
|
|
|
|
||||||||
Total revenues
|
$
|
123,724
|
|
1
|
$
|
120,898
|
|
1
|
$
|
119,449
|
|
|
$
|
119,522
|
|
|
|
|
|
|
|
|
|
||||||||
Total benefits and expenses
|
116,180
|
|
1
|
104,858
|
|
1
|
108,643
|
|
|
109,457
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income
|
5,188
|
|
|
10,851
|
|
|
7,110
|
|
|
6,418
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Per common share,
|
|
|
|
|
|
|
|
||||||||
basic and diluted
|
0.47
|
|
|
0.98
|
|
|
0.65
|
|
|
0.59
|
|
||||
|
|
|
|
|
|
|
|
||||||||
2012:
|
|
|
|
|
|
|
|
||||||||
Total revenues
|
$
|
119,908
|
|
|
$
|
106,757
|
|
|
$
|
104,260
|
|
|
$
|
109,002
|
|
|
|
|
|
|
|
|
|
||||||||
Total benefits and expenses
|
90,891
|
|
|
93,852
|
|
|
98,030
|
|
|
97,659
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income
|
19,441
|
|
|
8,397
|
|
|
4,132
|
|
|
7,897
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Per common share,
|
|
|
|
|
|
|
|
||||||||
basic and diluted
|
1.72
|
|
|
0.78
|
|
|
0.38
|
|
|
0.71
|
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
|
|
|
|
|
||||||
Net gain from operations
|
$
|
535
|
|
|
$
|
32,102
|
|
|
$
|
26,856
|
|
|
|
|
|
|
|
||||||
Net income
|
335
|
|
|
46,474
|
|
|
22,639
|
|
|||
|
|
|
|
|
|
||||||
Capital and surplus
|
330,599
|
|
|
327,444
|
|
|
307,153
|
|
Type of Investment
|
|
Cost
|
|
Fair Value
|
|
Amount
Recognized
in Consolidated
Balance Sheets
|
||||||
Fixed maturity securities, available for sale:
|
|
|
|
|
|
|
||||||
Bonds:
|
|
|
|
|
|
|
||||||
United States government and government agencies
and authorities |
|
$
|
149,954
|
|
|
$
|
157,147
|
|
|
$
|
157,147
|
|
Residential mortgage-backed securities
|
|
170,957
|
|
|
178,610
|
|
|
178,610
|
|
|||
Public utilities
|
|
228,551
|
|
|
252,377
|
|
|
252,377
|
|
|||
Corporate
|
|
1,689,107
|
|
|
1,768,300
|
|
|
1,768,300
|
|
|||
All other bonds
|
|
239,905
|
|
|
249,434
|
|
|
249,434
|
|
|||
Redeemable preferred stocks
|
|
15,144
|
|
|
12,752
|
|
|
12,752
|
|
|||
Total
|
|
$
|
2,493,618
|
|
|
$
|
2,618,620
|
|
|
$
|
2,618,620
|
|
|
|
|
|
|
|
|
||||||
Equity securities, available for sale:
|
|
|
|
|
|
|
||||||
Common stocks
|
|
16,524
|
|
|
17,187
|
|
|
17,187
|
|
|||
Perpetual preferred stocks
|
|
18,437
|
|
|
17,199
|
|
|
17,199
|
|
|||
Total
|
|
$
|
34,961
|
|
|
$
|
34,386
|
|
|
$
|
34,386
|
|
|
|
|
|
|
|
|
||||||
Mortgage loans
|
|
629,256
|
|
|
|
|
629,256
|
|
||||
Real estate
|
|
142,536
|
|
|
|
|
142,536
|
|
||||
Policy loans
|
|
83,518
|
|
|
|
|
83,518
|
|
||||
Short-term investments
|
|
40,712
|
|
|
|
|
40,712
|
|
||||
Other investments
|
|
1,247
|
|
|
|
|
1,247
|
|
||||
Total investments
|
|
$
|
3,425,848
|
|
|
|
|
$
|
3,550,275
|
|
|
December 31
|
||||||
|
2013
|
|
2012
|
||||
ASSETS
|
|
|
|
||||
Investments:
|
|
|
|
||||
Fixed maturity securities available for sale, at fair value
|
$
|
2,155,152
|
|
|
$
|
2,301,142
|
|
Equity securities available for sale, at fair value:
|
|
|
|
||||
Investment in unconsolidated subsidiaries
|
162,834
|
|
|
175,683
|
|
||
Other
|
24,855
|
|
|
13,321
|
|
||
Mortgage loans
|
529,156
|
|
|
563,931
|
|
||
Real estate
|
140,642
|
|
|
122,337
|
|
||
Policy loans
|
65,097
|
|
|
58,115
|
|
||
Short-term investments
|
34,701
|
|
|
20,664
|
|
||
Total investments
|
3,112,437
|
|
|
3,255,193
|
|
||
|
|
|
|
||||
Cash
|
4,004
|
|
|
4,316
|
|
||
Accrued investment income
|
28,053
|
|
|
28,722
|
|
||
Deferred acquisition costs
|
152,747
|
|
|
77,030
|
|
||
Reinsurance recoverables
|
135,193
|
|
|
131,186
|
|
||
Property and equipment
|
17,478
|
|
|
18,313
|
|
||
Other assets
|
63,712
|
|
|
44,486
|
|
||
Separate account assets
|
393,416
|
|
|
340,093
|
|
||
Total assets
|
$
|
3,907,040
|
|
|
$
|
3,899,339
|
|
|
|
|
|
||||
LIABILITIES
|
|
|
|
||||
Future policy benefits
|
$
|
630,497
|
|
|
$
|
606,877
|
|
Policyholder account balances
|
1,830,756
|
|
|
1,853,439
|
|
||
Policy and contract claims
|
27,467
|
|
|
20,822
|
|
||
Other policyholder funds
|
143,379
|
|
|
138,747
|
|
||
Other liabilities
|
156,121
|
|
|
188,960
|
|
||
Separate account liabilities
|
393,416
|
|
|
340,093
|
|
||
Total liabilities
|
3,181,636
|
|
|
3,148,938
|
|
||
|
|
|
|
||||
STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Common stock, par value $1.25 per share
Authorized 36,000,000 shares, issued 18,496,680 shares |
23,121
|
|
|
23,121
|
|
||
Additional paid in capital
|
40,989
|
|
|
40,969
|
|
||
Retained earnings
|
823,408
|
|
|
805,730
|
|
||
Accumulated other comprehensive income
|
14,170
|
|
|
54,094
|
|
||
Treasury stock, at cost (2013 - 7,527,841 shares; 2012 - 7,463,823 shares)
|
(176,284
|
)
|
|
(173,513
|
)
|
||
|
|
|
|
||||
Total stockholders’ equity
|
725,404
|
|
|
750,401
|
|
||
|
|
|
|
||||
Total liabilities and stockholders’ equity
|
$
|
3,907,040
|
|
|
$
|
3,899,339
|
|
|
Year Ended December 31
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
REVENUES
|
|
|
|
|
|
||||||
Insurance revenues:
|
|
|
|
|
|
||||||
Net premiums
|
$
|
118,990
|
|
|
$
|
73,480
|
|
|
$
|
69,027
|
|
Contract charges
|
99,697
|
|
|
85,662
|
|
|
86,199
|
|
|||
Total insurance revenues
|
218,687
|
|
|
159,142
|
|
|
155,226
|
|
|||
Investment revenues:
|
|
|
|
|
|
||||||
Net investment income
|
139,916
|
|
|
144,701
|
|
|
144,754
|
|
|||
Net realized investment gains, excluding other-than-temporary
impairment losses |
4,417
|
|
|
21,365
|
|
|
4,906
|
|
|||
Net impairment losses recognized in earnings:
|
|
|
|
|
|
||||||
Total other-than-temporary impairment losses
|
(1,016
|
)
|
|
(1,582
|
)
|
|
(2,035
|
)
|
|||
Portion of impairment losses recognized in other
comprehensive income (loss) |
25
|
|
|
600
|
|
|
676
|
|
|||
Net other-than-temporary impairment losses recognized in earnings
|
(991
|
)
|
|
(982
|
)
|
|
(1,359
|
)
|
|||
Total investment revenues
|
143,342
|
|
|
165,084
|
|
|
148,301
|
|
|||
Other revenues
|
4,896
|
|
|
4,358
|
|
|
4,654
|
|
|||
Total revenues
|
366,925
|
|
|
328,584
|
|
|
308,181
|
|
|||
BENEFITS AND EXPENSES
|
|
|
|
|
|
||||||
Policyholder benefits
|
160,210
|
|
|
108,853
|
|
|
109,598
|
|
|||
Interest credited to policyholder account balances
|
68,205
|
|
|
70,546
|
|
|
71,737
|
|
|||
Amortization of deferred acquisition costs
|
18,267
|
|
|
14,184
|
|
|
14,242
|
|
|||
Operating expenses
|
87,181
|
|
|
85,836
|
|
|
78,679
|
|
|||
Total benefits and expenses
|
333,863
|
|
|
279,419
|
|
|
274,256
|
|
|||
Income before income tax expense and equity in
undistributed net income of subsidiaries |
33,062
|
|
|
49,165
|
|
|
33,925
|
|
|||
Income tax expense
|
11,145
|
|
|
16,308
|
|
|
11,960
|
|
|||
Income before equity in undistributed net income of subsidiaries
|
21,917
|
|
|
32,857
|
|
|
21,965
|
|
|||
Equity in undistributed net income of subsidiaries
|
7,650
|
|
|
7,010
|
|
|
4,168
|
|
|||
NET INCOME
|
$
|
29,567
|
|
|
$
|
39,867
|
|
|
$
|
26,133
|
|
COMPREHENSIVE INCOME (LOSS), NET OF TAXES
|
|
|
|
|
|
||||||
Change in net unrealized gains on securities available for sale
|
$
|
(52,494
|
)
|
|
$
|
28,171
|
|
|
$
|
36,382
|
|
Change in future policy benefits
|
8,153
|
|
|
(8,105
|
)
|
|
(5,463
|
)
|
|||
Change in policyholder account balances
|
397
|
|
|
(347
|
)
|
|
(159
|
)
|
|||
Change in benefit plan obligations
|
14,785
|
|
|
(2,156
|
)
|
|
(15,104
|
)
|
|||
Other comprehensive income (loss) of subsidiaries
|
(10,765
|
)
|
|
6,445
|
|
|
6,623
|
|
|||
Other comprehensive income (loss)
|
(39,924
|
)
|
|
24,008
|
|
|
22,279
|
|
|||
COMPREHENSIVE INCOME (LOSS)
|
$
|
(10,357
|
)
|
|
$
|
63,875
|
|
|
$
|
48,412
|
|
|
Year Ended December 31
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net income
|
$
|
29,567
|
|
|
$
|
39,867
|
|
|
$
|
26,133
|
|
Equity in undistributed net income of subsidiaries
|
(7,650
|
)
|
|
(7,010
|
)
|
|
(4,168
|
)
|
|||
Adjustments to reconcile net income to net cash provided
by operating activities: |
|
|
|
|
|
||||||
Amortization of investment premium and discount
|
4,466
|
|
|
3,507
|
|
|
2,860
|
|
|||
Depreciation
|
4,265
|
|
|
7,236
|
|
|
3,204
|
|
|||
Acquisition costs capitalized
|
(17,516
|
)
|
|
(17,226
|
)
|
|
(16,552
|
)
|
|||
Amortization of deferred acquisition costs
|
18,267
|
|
|
14,184
|
|
|
14,242
|
|
|||
Realized investment gains
|
(3,426
|
)
|
|
(20,383
|
)
|
|
(3,547
|
)
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Reinsurance recoverables
|
(4,007
|
)
|
|
(7,039
|
)
|
|
(7,735
|
)
|
|||
Future policy benefits
|
35,583
|
|
|
686
|
|
|
(10,389
|
)
|
|||
Policyholder account balances
|
(19,167
|
)
|
|
(8,534
|
)
|
|
(2,429
|
)
|
|||
Income taxes payable and deferred
|
6,271
|
|
|
4,711
|
|
|
7,087
|
|
|||
Other, net
|
3,069
|
|
|
3,489
|
|
|
4,223
|
|
|||
Net cash provided
|
49,722
|
|
|
13,488
|
|
|
12,929
|
|
|||
|
|
|
|
|
|
||||||
INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Purchases:
|
|
|
|
|
|
||||||
Fixed maturity securities
|
(223,996
|
)
|
|
(298,758
|
)
|
|
(203,583
|
)
|
|||
Equity securities
|
(11,943
|
)
|
|
(3,897
|
)
|
|
(104
|
)
|
|||
Mortgage loans
|
(57,907
|
)
|
|
(148,725
|
)
|
|
(99,208
|
)
|
|||
Real estate
|
(24,435
|
)
|
|
(37,119
|
)
|
|
(9,548
|
)
|
|||
Policy loans
|
(8,513
|
)
|
|
(11,231
|
)
|
|
(10,655
|
)
|
|||
Sales or maturities, calls, and principal paydowns:
|
|
|
|
|
|
||||||
Fixed maturity securities
|
243,871
|
|
|
246,817
|
|
|
213,069
|
|
|||
Equity securities
|
4,644
|
|
|
24,481
|
|
|
1,348
|
|
|||
Mortgage loans
|
92,041
|
|
|
90,217
|
|
|
81,523
|
|
|||
Real estate
|
336
|
|
|
53,459
|
|
|
—
|
|
|||
Policy loans
|
10,478
|
|
|
13,805
|
|
|
14,139
|
|
|||
Net sales (purchases) of short-term investments
|
(14,037
|
)
|
|
17,200
|
|
|
(26,812
|
)
|
|||
Net acquisition of property and equipment
|
(800
|
)
|
|
(771
|
)
|
|
(260
|
)
|
|||
Reinsurance transaction
|
(34,279
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash used
|
(24,540
|
)
|
|
(54,522
|
)
|
|
(40,091
|
)
|
|
Year Ended December 31
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Proceeds from borrowings
|
$
|
—
|
|
|
$
|
65,000
|
|
|
$
|
—
|
|
Repayment of borrowings
|
—
|
|
|
(65,000
|
)
|
|
—
|
|
|||
Deposits on policyholder account balances
|
218,134
|
|
|
208,589
|
|
|
211,888
|
|
|||
Withdrawals from policyholder account balances
|
(250,962
|
)
|
|
(159,712
|
)
|
|
(175,329
|
)
|
|||
Net transfers from separate accounts
|
5,962
|
|
|
5,082
|
|
|
5,282
|
|
|||
Change in other deposits
|
8,477
|
|
|
(2,653
|
)
|
|
(2,521
|
)
|
|||
Cash dividends to stockholders
|
(11,889
|
)
|
|
(15,055
|
)
|
|
(12,341
|
)
|
|||
Dividends from subsidiaries
|
7,535
|
|
|
6,715
|
|
|
6,455
|
|
|||
Net change in treasury stock
|
(2,751
|
)
|
|
(2,934
|
)
|
|
(4,838
|
)
|
|||
Net cash provided (used)
|
(25,494
|
)
|
|
40,032
|
|
|
28,596
|
|
|||
|
|
|
|
|
|
||||||
Increase (decrease) in cash
|
(312
|
)
|
|
(1,002
|
)
|
|
1,434
|
|
|||
Cash at beginning of year
|
4,316
|
|
|
5,318
|
|
|
3,884
|
|
|||
|
|
|
|
|
|
||||||
Cash at end of year
|
$
|
4,004
|
|
|
$
|
4,316
|
|
|
$
|
5,318
|
|
|
|
|
|
|
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
Income taxes
|
5,165
|
|
|
12,050
|
|
|
7,882
|
|
Segment
|
|
Deferred
acquisition
costs
|
|
Future policy
benefits, policy-
holder account
balances, and
policy and
contract claims
|
|
Unearned
premiums
|
|
Other
policyholder
funds
|
||||||||
December 31, 2013:
|
|
|
|
|
|
|
|
|
||||||||
Individual
|
|
$
|
158,634
|
|
|
$
|
2,772,349
|
|
|
$
|
345
|
|
|
$
|
154,228
|
|
Group
|
|
—
|
|
|
31,359
|
|
|
1,509
|
|
|
—
|
|
||||
Old American
|
|
97,752
|
|
|
239,515
|
|
|
130
|
|
|
4,209
|
|
||||
Total
|
|
$
|
256,386
|
|
|
$
|
3,043,223
|
|
|
$
|
1,984
|
|
|
$
|
158,437
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2012:
|
|
|
|
|
|
|
|
|
||||||||
Individual
|
|
$
|
80,912
|
|
|
$
|
2,771,940
|
|
|
$
|
321
|
|
|
$
|
150,479
|
|
Group
|
|
—
|
|
|
32,885
|
|
|
1,228
|
|
|
—
|
|
||||
Old American
|
|
95,363
|
|
|
242,097
|
|
|
144
|
|
|
3,577
|
|
||||
Total
|
|
$
|
176,275
|
|
|
$
|
3,046,922
|
|
|
$
|
1,693
|
|
|
$
|
154,056
|
|
Segment
|
|
Premium
revenue
2
|
|
Net
investment
income
3
|
|
Policyholder
benefits and
interest
credited to
policyholder
account
balances
|
|
Amortization
of deferred
policy
acquisition
costs
|
|
Operating
expenses
4
|
||||||||||
Year Ended December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Individual
|
|
$
|
60,369
|
|
|
$
|
157,580
|
|
|
$
|
215,408
|
|
|
$
|
20,440
|
|
|
$
|
71,267
|
|
Group
|
|
53,021
|
|
|
488
|
|
|
29,144
|
|
|
—
|
|
|
23,702
|
|
|||||
Old American
|
|
73,535
|
|
|
11,672
|
|
|
46,736
|
|
|
16,788
|
|
|
16,048
|
|
|||||
Intercompany eliminations
1
|
|
(395
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(395
|
)
|
|||||
Total
|
|
$
|
186,530
|
|
|
$
|
169,740
|
|
|
$
|
291,288
|
|
|
$
|
37,228
|
|
|
$
|
110,622
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year Ended December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Individual
|
|
$
|
16,885
|
|
|
$
|
163,706
|
|
|
$
|
168,670
|
|
|
$
|
14,712
|
|
|
$
|
70,711
|
|
Group
|
|
48,823
|
|
|
524
|
|
|
26,803
|
|
|
—
|
|
|
23,699
|
|
|||||
Old American
|
|
70,773
|
|
|
11,924
|
|
|
46,748
|
|
|
13,330
|
|
|
16,151
|
|
|||||
Intercompany eliminations
1
|
|
(392
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(392
|
)
|
|||||
Total
|
|
$
|
136,089
|
|
|
$
|
176,154
|
|
|
$
|
242,221
|
|
|
$
|
28,042
|
|
|
$
|
110,169
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year Ended December 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Individual
|
|
$
|
10,320
|
|
|
$
|
164,595
|
|
|
$
|
165,305
|
|
|
$
|
21,645
|
|
|
$
|
63,700
|
|
Group
|
|
49,684
|
|
|
547
|
|
|
27,777
|
|
|
—
|
|
|
23,675
|
|
|||||
Old American
|
|
67,869
|
|
|
12,086
|
|
|
46,177
|
|
|
12,321
|
|
|
19,280
|
|
|||||
Intercompany eliminations
1
|
|
(535
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(535
|
)
|
|||||
Total
|
|
$
|
127,338
|
|
|
$
|
177,228
|
|
|
$
|
239,259
|
|
|
$
|
33,966
|
|
|
$
|
106,120
|
|
1
|
Elimination entries to remove intercompany transactions for life and accident and health insurance that the Company purchases for its employees and agents were as follows: insurance revenues from the Group Insurance segment and operating expenses from the Individual Insurance segment to arrive at Consolidated Statements of Comprehensive Income.
|
2
|
Premium revenue includes direct premiums and premiums from reinsurance assumed, reduced by premiums on reinsurance ceded.
|
3
|
Separate investment portfolios are maintained for each of the three life insurance companies. However, investment income is allocated to the Group Insurance segment based upon its cash flows and future policy benefit liabilities.
|
4
|
Operating expenses are allocated to the segments based upon internal cost studies, which are consistent with industry cost methodologies.
|
|
Life Insurance Premiums
|
|
Accident and Health
Premiums
|
||||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Direct:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Individual
|
$
|
79,998
|
|
|
$
|
56,001
|
|
|
$
|
50,584
|
|
|
$
|
183
|
|
|
$
|
285
|
|
|
$
|
405
|
|
Group
|
12,114
|
|
|
10,971
|
|
|
10,701
|
|
|
54,264
|
|
|
51,030
|
|
|
50,507
|
|
||||||
Old American
|
74,464
|
|
|
71,781
|
|
|
69,044
|
|
|
804
|
|
|
958
|
|
|
1,140
|
|
||||||
Intercompany Eliminations
1
|
(212
|
)
|
|
(209
|
)
|
|
(325
|
)
|
|
(183
|
)
|
|
(183
|
)
|
|
(210
|
)
|
||||||
Total
|
166,364
|
|
|
138,544
|
|
|
130,004
|
|
|
55,068
|
|
|
52,090
|
|
|
51,842
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ceded:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Individual
|
(41,968
|
)
|
|
(41,700
|
)
|
|
(43,300
|
)
|
|
(401
|
)
|
|
(459
|
)
|
|
(533
|
)
|
||||||
Group
|
(1,883
|
)
|
|
(1,713
|
)
|
|
(1,454
|
)
|
|
(11,473
|
)
|
|
(11,465
|
)
|
|
(10,070
|
)
|
||||||
Old American
|
(1,210
|
)
|
|
(1,347
|
)
|
|
(1,561
|
)
|
|
(523
|
)
|
|
(619
|
)
|
|
(754
|
)
|
||||||
Total
|
(45,061
|
)
|
|
(44,760
|
)
|
|
(46,315
|
)
|
|
(12,397
|
)
|
|
(12,543
|
)
|
|
(11,357
|
)
|
||||||
Assumed:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Individual
|
22,556
|
|
2
|
2,758
|
|
|
3,164
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Group
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Old American
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
22,556
|
|
|
2,758
|
|
|
3,164
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net
|
$
|
143,859
|
|
|
$
|
96,542
|
|
|
$
|
86,853
|
|
|
$
|
42,671
|
|
|
$
|
39,547
|
|
|
$
|
40,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
% of Assumed to Net
|
16
|
%
|
|
3
|
%
|
|
4
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
1
|
Elimination entries to remove intercompany transactions for life and accident and health insurance that the Company purchases for its employees and agents were as follows: insurance revenues from the Group Insurance segment to arrive at Consolidated Statements of Comprehensive Income.
|
2
|
Includes amounts attributable to the American Family reinsurance transaction.
|
|
Life Insurance In Force
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
|
(in millions)
|
||||||||||
Direct:
|
|
|
|
|
|
||||||
Individual
|
$
|
22,985
|
|
|
$
|
23,122
|
|
|
$
|
23,438
|
|
Group
|
3,752
|
|
|
3,396
|
|
|
3,530
|
|
|||
Old American
|
1,016
|
|
|
997
|
|
|
958
|
|
|||
Total
|
27,753
|
|
|
27,515
|
|
|
27,926
|
|
|||
|
|
|
|
|
|
||||||
Ceded:
|
|
|
|
|
|
||||||
Individual
|
(13,029
|
)
|
|
(13,078
|
)
|
|
(13,428
|
)
|
|||
Group
|
(634
|
)
|
|
(514
|
)
|
|
(517
|
)
|
|||
Old American
|
(26
|
)
|
|
(30
|
)
|
|
(33
|
)
|
|||
Total
|
(13,689
|
)
|
|
(13,622
|
)
|
|
(13,978
|
)
|
|||
|
|
|
|
|
|
||||||
Assumed:
|
|
|
|
|
|
||||||
Individual
|
4,271
|
|
1
|
1,187
|
|
|
1,276
|
|
|||
Group
|
—
|
|
|
—
|
|
|
—
|
|
|||
Old American
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total
|
4,271
|
|
|
1,187
|
|
|
1,276
|
|
|||
Net
|
$
|
18,335
|
|
|
$
|
15,080
|
|
|
$
|
15,224
|
|
|
|
|
|
|
|
||||||
% of Assumed to Net
|
23
|
%
|
|
8
|
%
|
|
8
|
%
|
1
|
Includes amounts attributable to the American Family reinsurance transaction.
|
|
Year Ended December 31
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Mortgage loan allowance for loss:
|
|
|
|
|
|
||||||
Beginning of year
|
$
|
3,346
|
|
|
$
|
2,849
|
|
|
$
|
3,410
|
|
Additions
|
—
|
|
|
497
|
|
|
—
|
|
|||
Deductions
|
(95
|
)
|
|
—
|
|
|
(561
|
)
|
|||
End of year
|
$
|
3,251
|
|
|
$
|
3,346
|
|
|
$
|
2,849
|
|
|
|
|
|
|
|
||||||
Allowance for uncollectible accounts:
|
|
|
|
|
|
||||||
Beginning of year
|
$
|
2,261
|
|
|
$
|
2,226
|
|
|
$
|
644
|
|
Additions
|
69
|
|
|
229
|
|
|
1,724
|
|
|||
Deductions
|
(85
|
)
|
|
(194
|
)
|
|
(142
|
)
|
|||
End of year
|
$
|
2,245
|
|
|
$
|
2,261
|
|
|
$
|
2,226
|
|
3520 Broadway, Kansas City, MO 64111
|
Contact:
|
|
Tracy W. Knapp, Chief Financial Officer,
(816) 753-7299, Ext. 8216
|
|
Quarter ended
December 31 |
|
Year ended
December 31 |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Revenues
|
$
|
119,522
|
|
|
$
|
109,002
|
|
|
$
|
483,593
|
|
|
$
|
439,927
|
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
6,418
|
|
|
$
|
7,897
|
|
|
$
|
29,567
|
|
|
$
|
39,867
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share, basic and diluted
|
$
|
0.59
|
|
|
$
|
0.71
|
|
|
$
|
2.69
|
|
|
$
|
3.59
|
|
|
|
|
|
|
|
|
|
||||||||
Dividends paid
|
$
|
0.27
|
|
|
$
|
0.54
|
|
|
$
|
1.08
|
|
|
$
|
1.35
|
|
|
|
|
|
|
|
|
|
||||||||
Average number of shares outstanding
|
10,972,682
|
|
|
11,046,815
|
|
|
11,005,799
|
|
|
11,095,777
|
|
|
Page
Number
|
I - Summary of Investments—Other than Investments in Related Parties, December 31, 2013
|
|
II - Condensed Financial Information of Registrant, Years ended December 31, 2013, 2012 and 2011
|
|
III - Supplementary Insurance Information, Years ended December 31, 2013, 2012 and 2011
|
|
IV - Reinsurance Information, Years ended December 31, 2013, 2012 and 2011
|
|
V - Valuation and Qualifying Accounts, Years ended December 31, 2013, 2012 and 2011
|
Exhibit
Number:
|
|
Basic Documents:
|
|
|
|
3(a)
|
|
Articles of Incorporation (as Restated in 1986 and Amended in 1999). [Filed as Exhibit 3(a) to the Company’s 10-Q for the quarter ended September 30, 1999 and incorporated herein by reference]
|
|
|
|
3(b)
|
|
Bylaws as Amended and Restated October 29, 2007. [Filed as Exhibits 3.1 and 3.2 to the Company's 8-K for October 30, 2007 and incorporated herein by reference]
|
|
|
|
4(a)
|
|
Specimen copy of Stock Certificate. [Filed as Exhibit 4(a) to the Company’s 10-Q for the quarter ended September 30, 1999 and incorporated herein by reference]
|
|
|
|
10(a)
|
|
Kansas City Life Deferred Compensation Plan, as amended and restated effective July 2, 2012. [Filed as Exhibit 10(a) to the Company's 2012 10-K and incorporated herein by reference]
|
|
|
|
10(b)
|
|
Kansas City Life Insurance Company Savings and Profit Sharing Plan, as amended and restated effective January 1, 2012. [Filed as Exhibit 10(b) to the Company's 2012 10-K and incorporated herein by reference]
|
|
|
|
10(c)
|
|
Seventeenth Amendment, Kansas City Life Employee Stock Plan. [Filed as Exhibit 10(c) to the Company's 2011 10-K and incorporated herein by reference]
|
|
|
|
10(d)
|
|
Fourth Amendment, Kansas City Life Excess Benefit Plan. [Filed as Exhibit 10(d) to the Company’s 2010 10-K and incorporated herein by reference]
|
|
|
|
10(e)
|
|
The Coinsurance Agreement between Kansas City Life Insurance Company and Transamerica Occidental Life Insurance Company of Cedar Rapids, Iowa effective January 19, 2005. [Filed as Exhibit 10(e) to the Company’s 2009 10-K/A and incorporated herein by reference]
1
|
|
|
|
10(f)
|
|
The Automatic YRT Reinsurance Agreement between Sunset Life Insurance Company of America and RGA Reinsurance Company effective January 1, 2002. [Filed as Exhibit 10(f) to the Company’s 2009 10-K/A and incorporated herein by reference]
1
|
|
|
|
10(g)
|
|
The Automatic and Facultative Reinsurance Agreement (Coinsurance Basis) between Kansas City Life Insurance Company and Security Life of Denver Insurance Company effective May 1, 2002. [Filed as Exhibit 10(g) to the Company’s 2009 10-K/A and incorporated herein by reference]
1
|
|
|
|
10(h)
|
|
The Automatic and Facultative Coinsurance Reinsurance Agreement between Kansas City Life Insurance Company and RGA Reinsurance Company effective May 1, 2002. [Filed as Exhibit 10(h) to the Company’s 2009 10-K/A and incorporated herein by reference]
1
|
|
|
|
10(i)
|
|
The Coinsurance Life Reinsurance Agreement between Old American Insurance Company and Employers Reassurance Corporation effective December 1, 1989. [Filed as Exhibit 10(i) to the Company’s 2009 10-K/A and incorporated herein by reference]
1
|
|
|
|
10(j)
|
|
Kansas City Life Insurance Company Voting Agreement. [Filed in the Company’s 8-K on November 3, 2004 and incorporated herein by reference]
|
|
|
|
10(k)
|
|
Kansas City Life Insurance Company Annual Incentive Plan Agreement. [Filed as Exhibit 10(k) to the Company's 2011 10-K and incorporated herein by reference]
|
|
|
|
10(l)
|
|
Kansas City Life Insurance Company Long Term Incentive Plan Agreement. [Filed as Exhibit 10(l) to the Company’s 2009 10-K/A and incorporated herein by reference]
|
|
|
|
10(m)
|
|
Kansas City Life Insurance Company Severance Plan. [Filed as Exhibit 10(m) to the Company’s 2010 10-K and incorporated herein by reference]
|
|
|
|
10(n)
|
|
Kansas City Life Insurance Company Cash Balance Pension Plan and Amendment dated August 1, 2013.
|
|
|
|
10(o)
|
|
Kansas City Life Insurance Company Employee Medical Plan.
|
|
|
|
14
|
|
Kansas City Life Insurance Company Code of Ethics for Officers, Directors and Employees.
|
|
|
|
21
|
|
Subsidiaries.
|
|
|
|
23
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
31(a)
|
|
Section 302 Certification.
|
|
|
|
31(b)
|
|
Section 302 Certification.
|
|
|
|
32(a)
|
|
Section 1350 Certification.
|
|
|
|
99(a)
|
|
Prospectus for Kansas City Life Insurance Company Savings and Profit Sharing Plan. [Filed as Exhibit 99(e) to the Company’s 10-K Report for 2009 and incorporated herein by reference]
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
1
|
Certain portions of this Exhibit have been omitted pursuant to an application for confidential treatment filed with the Securities and Exchange Commission.
|
KANSAS CITY LIFE INSURANCE COMPANY
|
|
|
|
By:
/s/ David A. Laird
|
|
David A. Laird
|
|
Vice President and Controller
|
|
(Principal Accounting Officer)
|
|
Date: February 26, 2014
|
By:
/s/ R. Philip Bixby
|
|
By:
/s/ Tracy W. Knapp
|
R. Philip Bixby
|
|
Tracy W. Knapp
|
Director; President, Chief Executive Officer and
|
|
Director; Senior Vice President, Finance
|
Chairman of the Board
|
|
(Principal Financial Officer)
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
By:
/s/ William A. Schalekamp
|
By:
/s/ Walter E. Bixby
|
|
William A. Schalekamp
|
Walter E. Bixby
|
|
Director
|
Director, Executive Vice President and
|
|
|
Vice Chairman of the Board
|
|
|
|
|
By:
/s/ Cecil R. Miller
|
|
|
Cecil R. Miller
|
By:
/s/ John C. Cozad
|
|
Director
|
John C. Cozad
|
|
|
Director
|
|
|
|
|
By:
/s/ Michael Braude
|
|
|
Michael Braude
|
By:
/s/ Kevin G. Barth
|
|
Director
|
Kevin G. Barth
|
|
|
Director
|
|
|
|
|
By:
/s/ Richard L. Finn
|
|
|
Richard L. Finn
|
By:
/s/ Mark A. Milton
|
|
Director
|
Mark A. Milton
|
|
|
Director; Senior Vice President, Actuary
|
|
|
|
|
By:
/s/ William R. Blessing
|
|
|
William R. Blessing
|
|
|
Director
|
|
|
|
Date: February 26, 2014
|
|
|