CNO FINANCIAL GROUP, INC., 10-Q filed on 11/1/2017
Quarterly Report
DOCUMENT AND ENTITY INFORMATION
9 Months Ended
Sep. 30, 2017
Oct. 19, 2017
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
CNO Financial Group, Inc. 
 
Entity Central Index Key
0001224608 
 
Document Type
10-Q 
 
Document Period End Date
Sep. 30, 2017 
 
Current Fiscal Year End Date
--12-31 
 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q3 
 
Entity Filer Category
Large Accelerated Filer 
 
Amendment Flag
false 
 
Entity Common Stock, Shares Outstanding
 
167,762,323 
CONSOLIDATED BALANCE SHEET (unaudited) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Investments:
 
 
Fixed maturities, available for sale, at fair value (amortized cost: September 30, 2017 - $20,092.5; December 31, 2016 - $19,803.1)
$ 22,129.9 
$ 21,096.2 
Equity securities at fair value (cost: September 30, 2017 - $688.7; December 31, 2016 - $580.7)
713.3 
584.2 
Mortgage loans
1,667.8 
1,768.0 
Policy loans
114.6 
112.0 
Trading securities
294.4 
363.4 
Investments held by variable interest entities
1,382.5 
1,724.3 
Other invested assets
752.1 
589.5 
Total investments
27,054.6 
26,237.6 
Cash and cash equivalents - unrestricted
765.9 
478.9 
Cash and cash equivalents held by variable interest entities
105.9 
189.3 
Accrued investment income
268.0 
239.6 
Present value of future profits
368.5 
401.8 
Deferred acquisition costs
1,023.8 
1,044.7 
Reinsurance receivables
2,195.5 
2,260.4 
Income tax assets, net
567.4 
789.7 
Assets held in separate accounts
4.8 
4.7 
Other assets
350.2 
328.5 
Total assets
32,704.6 
31,975.2 
Liabilities for insurance products:
 
 
Policyholder account balances
11,113.5 
10,912.7 
Future policy benefits
11,374.1 
10,953.3 
Liability for policy and contract claims
519.5 
500.6 
Unearned and advanced premiums
262.4 
282.5 
Liabilities related to separate accounts
4.8 
4.7 
Other liabilities
789.1 
611.4 
Investment borrowings
1,646.9 
1,647.4 
Borrowings related to variable interest entities
1,198.2 
1,662.8 
Notes payable – direct corporate obligations
914.4 
912.9 
Total liabilities
27,822.9 
27,488.3 
Commitments and Contingencies
   
   
Shareholders' equity:
 
 
Common stock ($0.01 par value, 8,000,000,000 shares authorized, shares issued and outstanding: September 30, 2017 – 167,762,323; December 31, 2016 – 173,753,614)
1.7 
1.7 
Additional paid-in capital
3,094.5 
3,212.1 
Accumulated other comprehensive income
933.6 
622.4 
Retained earnings
851.9 
650.7 
Total shareholders' equity
4,881.7 
4,486.9 
Total liabilities and shareholders' equity
$ 32,704.6 
$ 31,975.2 
CONSOLIDATED BALANCE SHEET (unaudited) (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Investments:
 
 
Fixed maturities, available for sale, amortized cost
$ 20,092.5 
$ 19,803.1 
Equity securities cost
$ 688.7 
$ 580.7 
Shareholders' equity:
 
 
Common stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, shares authorized (in shares)
8,000,000,000 
8,000,000,000 
Common stock, shares issued (in shares)
167,762,323 
173,753,614 
Common stock, shares outstanding (in shares)
167,762,323 
173,753,614 
CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Revenues:
 
 
 
 
Insurance policy income
$ 659.3 
$ 649.0 
$ 1,987.2 
$ 1,947.0 
Net investment income:
 
 
 
 
General account assets
325.9 
301.7 
960.3 
888.5 
Policyholder and other special-purpose portfolios
52.7 
43.1 
171.8 
82.7 
Realized investment gains (losses):
 
 
 
 
Net realized investment gains (losses), excluding impairment losses
34.5 
12.8 
74.8 
55.4 
Other-than-temporary impairments:
 
 
 
 
Total other-than-temporary impairment losses
(4.7)
(1.2)
(17.3)
(24.8)
Portion of other-than-temporary impairment losses recognized in accumulated other comprehensive income
0 
0 
(0.9)
0 
Net impairment losses recognized
(4.7)
(1.2)
(18.2)
(24.8)
Loss on dissolution of variable interest entities
(0.6)
0 
(4.3)
(7.3)
Total realized gains
29.2 
11.6 
52.3 
23.3 
Fee revenue and other income
12.2 
10.5 
35.5 
38.7 
Total revenues
1,079.3 
1,015.9 
3,207.1 
2,980.2 
Benefits and expenses:
 
 
 
 
Insurance policy benefits
638.1 
609.8 
1,941.6 
1,861.2 
Loss on reinsurance transaction
0 
75.4 
0 
75.4 
Interest expense
30.1 
29.4 
92.3 
86.0 
Amortization
58.2 
64.7 
181.3 
181.6 
Loss on extinguishment of borrowings related to a variable interest entity
5.5 
0 
5.5 
0 
Other operating costs and expenses
217.5 
187.3 
631.3 
603.5 
Total benefits and expenses
949.4 
966.6 
2,852.0 
2,807.7 
Income before income taxes
129.9 
49.3 
355.1 
172.5 
Income tax expense (benefit):
 
 
 
 
Tax expense on period income
44.1 
16.9 
123.6 
61.7 
Valuation allowance for deferred tax assets and other tax items
(15.0)
13.8 
(15.0)
(13.2)
Net income
$ 100.8 
$ 18.6 
$ 246.5 
$ 124.0 
Basic:
 
 
 
 
Weighted average shares outstanding (in shares)
168,684 
174,247 
170,890 
177,640 
Net income (loss) (in dollars per share)
$ 0.60 
$ 0.11 
$ 1.44 
$ 0.70 
Diluted:
 
 
 
 
Weighted average shares outstanding (in shares)
170,982 
175,723 
172,800 
179,373 
Net income (loss) (in dollars per share)
$ 0.59 
$ 0.11 
$ 1.43 
$ 0.69 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net income
$ 100.8 
$ 18.6 
$ 246.5 
$ 124.0 
Other comprehensive income, before tax:
 
 
 
 
Unrealized gains for the period
120.9 
228.3 
794.5 
1,329.2 
Adjustment to present value of future profits and deferred acquisition costs
(1.8)
(11.3)
(25.3)
(119.6)
Amount related to premium deficiencies assuming the net unrealized gains (losses) had been realized
(31.0)
(82.8)
(243.0)
(493.4)
Reclassification adjustments:
 
 
 
 
For net realized investment (gains) losses included in net income
(27.7)
(14.6)
(44.0)
(24.2)
For amortization of the present value of future profits and deferred acquisition costs related to net realized investment gains (losses) included in net income
0.7 
0.2 
1.0 
0.9 
Unrealized gains on investments
61.1 
119.8 
483.2 
692.9 
Change related to deferred compensation plan
0 
0 
0 
8.6 
Other comprehensive income before tax
61.1 
119.8 
483.2 
701.5 
Income tax expense related to items of accumulated other comprehensive income
(22.0)
(42.1)
(172.0)
(248.8)
Other comprehensive income, net of tax
39.1 
77.7 
311.2 
452.7 
Comprehensive income
$ 139.9 
$ 96.3 
$ 557.7 
$ 576.7 
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (unaudited) (USD $)
In Millions, unless otherwise specified
Total
Common stock and additional paid-in capital
Accumulated other comprehensive income
Retained earnings
Balance, beginning of period at Dec. 31, 2015
$ 4,138.5 
$ 3,388.6 
$ 402.8 
$ 347.1 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
Net income
124.0 
 
 
124.0 
Change in unrealized appreciation (depreciation) of investments and other (net of applicable income tax expense)
451.5 
 
451.5 
 
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense)
1.2 
 
1.2 
 
Cost of common stock repurchased
(203.0)
(203.0)
 
 
Dividends on common stock
(40.8)
 
 
(40.8)
Stock options, restricted stock and performance units
22.4 
22.4 
 
 
Balance, end of period at Sep. 30, 2016
4,493.8 
3,208.0 
855.5 
430.3 
Balance, beginning of period at Dec. 31, 2016
4,486.9 
3,213.8 
622.4 
650.7 
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
Net income
246.5 
 
 
246.5 
Change in unrealized appreciation (depreciation) of investments and other (net of applicable income tax expense)
309.1 
 
309.1 
 
Change in noncredit component of impairment losses on fixed maturities, available for sale (net of applicable income tax expense)
2.1 
 
2.1 
 
Cost of common stock repurchased
(140.1)
(140.1)
 
 
Dividends on common stock
(44.7)
 
 
(44.7)
Stock options, restricted stock and performance units
21.6 
21.6 
 
 
Balance, end of period at Sep. 30, 2017
$ 4,881.7 
$ 3,096.2 
$ 933.6 
$ 851.9 
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (unaudited) (Parenthetical) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Statement of Stockholders' Equity [Abstract]
 
 
Change in unrealized appreciation (depreciation) of investments, applicable income tax expense (benefit)
$ 170.9 
$ 248.1 
Change in noncredit component of impairment losses on fixed maturities, available for sale, applicable income tax expense (benefit)
$ 1.1 
$ 0.7 
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Cash flows from operating activities:
 
 
Insurance policy income
$ 1,859.4 
$ 1,837.9 
Net investment income
898.9 
877.7 
Fee revenue and other income
35.5 
38.7 
Cash and cash equivalents received upon recapture of reinsurance
0 
73.6 
Insurance policy benefits
(1,491.7)
(1,439.6)
Interest expense
(81.0)
(66.5)
Deferrable policy acquisition costs
(183.4)
(179.4)
Other operating costs
(546.0)
(552.1)
Income taxes
(58.0)
(5.5)
Net cash from operating activities
433.7 
584.8 
Cash flows from investing activities:
 
 
Sales of investments
1,742.5 
2,225.7 
Maturities and redemptions of investments
2,543.0 
1,529.5 
Purchases of investments
(4,076.8)
(4,196.7)
Net sales (purchases) of trading securities
94.8 
(31.0)
Change in cash and cash equivalents held by variable interest entities
83.4 
216.7 
Other
(23.6)
(17.8)
Net cash provided (used) by investing activities
363.3 
(273.6)
Cash flows from financing activities:
 
 
Issuance of common stock
6.0 
6.9 
Payments to repurchase common stock
(142.3)
(210.0)
Common stock dividends paid
(44.5)
(40.9)
Amounts received for deposit products
1,067.2 
992.1 
Withdrawals from deposit products
(920.8)
(891.5)
Issuance of investment borrowings:
 
 
Federal Home Loan Bank
332.0 
432.7 
Related to variable interest entities
387.3 
477.1 
Payments on investment borrowings:
 
 
Federal Home Loan Bank
(332.6)
(333.3)
Related to variable interest entities
(862.3)
(470.6)
Net cash used by financing activities
(510.0)
(37.5)
Net increase in cash and cash equivalents
287.0 
273.7 
Cash and cash equivalents, beginning of period
478.9 
432.3 
Cash and cash equivalents, end of period
$ 765.9 
$ 706.0 
BUSINESS AND BASIS OF PRESENTATION
BUSINESS AND BASIS OF PRESENTATION
BUSINESS AND BASIS OF PRESENTATION

The following notes should be read together with the notes to the consolidated financial statements included in our 2016 Annual Report on Form 10-K.

CNO Financial Group, Inc., a Delaware corporation ("CNO"), is a holding company for a group of insurance companies operating throughout the United States that develop, market and administer health insurance, annuity, individual life insurance and other insurance products.  The terms "CNO Financial Group, Inc.", "CNO", the "Company", "we", "us", and "our" as used in these financial statements refer to CNO and its subsidiaries.  Such terms, when used to describe insurance business and products, refer to the insurance business and products of CNO's insurance subsidiaries.

We focus on serving middle-income pre-retiree and retired Americans, which we believe are attractive, underserved, high growth markets.  We sell our products through three distribution channels: career agents, independent producers (some of whom sell one or more of our product lines exclusively) and direct marketing.

Our unaudited consolidated financial statements reflect normal recurring adjustments that, in the opinion of management, are necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented.  As permitted by rules and regulations of the Securities and Exchange Commission (the "SEC") applicable to quarterly reports on Form 10-Q, we have condensed or omitted certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").  We have reclassified certain amounts from the prior periods to conform to the 2017 presentation.  These reclassifications have no effect on net income or shareholders' equity.  Results for interim periods are not necessarily indicative of the results that may be expected for a full year.

The balance sheet at December 31, 2016, presented herein, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

When we prepare financial statements in conformity with GAAP, we are required to make estimates and assumptions that significantly affect reported amounts of various assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting periods.  For example, we use significant estimates and assumptions to calculate values for deferred acquisition costs, the present value of future profits, fair value measurements of certain investments (including derivatives), other-than-temporary impairments of investments, assets and liabilities related to income taxes, liabilities for insurance products, liabilities related to litigation and guaranty fund assessment accruals.  If our future experience differs from these estimates and assumptions, our financial statements would be materially affected.

The accompanying financial statements include the accounts of the Company and its subsidiaries. Our consolidated financial statements exclude transactions between us and our consolidated affiliates, or among our consolidated affiliates.
INVESTMENTS
INVESTMENTS
INVESTMENTS

We classify our fixed maturity securities into one of two categories: (i) "available for sale" (which we carry at estimated fair value with any unrealized gain or loss, net of tax and related adjustments, recorded as a component of shareholders' equity); or (ii) "trading" (which we carry at estimated fair value with changes in such value recognized as net investment income (classified as investment income from policyholder and other special-purpose portfolios)).

Our trading securities include: (i) investments purchased with the intent of selling in the near term to generate income; (ii) investments supporting certain insurance liabilities (including investments backing the market strategies of our multibucket annuity products); and (iii) certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option.  The change in fair value of the income generating investments and investments supporting insurance liabilities is recognized in income from policyholder and other special-purpose portfolios (a component of net investment income). The change in fair value of securities with embedded derivatives is recognized in realized investment gains (losses). Investment income related to investments supporting certain insurance liabilities is substantially offset by the change in insurance policy benefits related to certain products.

Accumulated other comprehensive income is primarily comprised of the net effect of unrealized appreciation (depreciation) on our investments.  These amounts, included in shareholders' equity as of September 30, 2017 and December 31, 2016, were as follows (dollars in millions):

 
September 30,
2017
 
December 31,
2016
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized
$
2.4

 
$
(1.1
)
Net unrealized gains on all other investments
2,058.9

 
1,311.9

Adjustment to present value of future profits (a)
(98.1
)
 
(106.2
)
Adjustment to deferred acquisition costs
(287.9
)
 
(223.5
)
Adjustment to insurance liabilities
(224.5
)
 
(13.5
)
Deferred income tax liabilities
(517.2
)
 
(345.2
)
Accumulated other comprehensive income
$
933.6

 
$
622.4

________
(a)
The present value of future profits is the value assigned to the right to receive future cash flows from contracts existing at September 10, 2003, the date Conseco, Inc., an Indiana corporation, emerged from bankruptcy.

At September 30, 2017, adjustments to the present value of future profits, deferred acquisition costs, insurance liabilities and deferred tax assets included $(86.7) million, $(135.8) million, $(224.5) million and $159.1 million, respectively, for premium deficiencies that would exist on certain blocks of business (primarily long-term care products) if unrealized gains on the assets backing such products had been realized and the proceeds from the sales of such assets were invested at then current yields.

At September 30, 2017, the amortized cost, gross unrealized gains and losses, estimated fair value, other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, and equity securities were as follows (dollars in millions):
 
Amortized cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Estimated fair value
 
Other-than-temporary impairments included in accumulated other comprehensive income
Corporate securities
$
13,145.4

 
$
1,537.6

 
$
(33.0
)
 
$
14,650.0

 
$
(3.6
)
United States Treasury securities and obligations of United States government corporations and agencies
145.4

 
26.9

 
—

 
172.3

 
—

States and political subdivisions
1,857.2

 
220.7

 
(.9
)
 
2,077.0

 
—

Debt securities issued by foreign governments
58.1

 
3.1

 
(.1
)
 
61.1

 
—

Asset-backed securities
2,608.6

 
180.6

 
(3.1
)
 
2,786.1

 
—

Collateralized debt obligations
236.5

 
1.4

 
—

 
237.9

 
—

Commercial mortgage-backed securities
1,311.6

 
37.4

 
(10.1
)
 
1,338.9

 
—

Mortgage pass-through securities
2.0

 
.2

 
—

 
2.2

 
—

Collateralized mortgage obligations
727.7

 
77.3

 
(.6
)
 
804.4

 
(1.1
)
Total fixed maturities, available for sale
$
20,092.5

 
$
2,085.2

 
$
(47.8
)
 
$
22,129.9

 
$
(4.7
)
Equity securities
$
688.7

 
$
27.2

 
$
(2.6
)
 
$
713.3

 
 


At December 31, 2016, the amortized cost, gross unrealized gains and losses, estimated fair value, other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, and equity securities were as follows (dollars in millions):
 
Amortized cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Estimated fair value
 
Other-than-temporary impairments included in accumulated other comprehensive income
Corporate securities
$
12,549.9

 
$
1,100.0

 
$
(139.0
)
 
$
13,510.9

 
$
(3.6
)
United States Treasury securities and obligations of United States government corporations and agencies
143.8

 
20.5

 
—

 
164.3

 
—

States and political subdivisions
1,811.8

 
186.7

 
(9.6
)
 
1,988.9

 
(3.0
)
Debt securities issued by foreign governments
37.1

 
.2

 
(.4
)
 
36.9

 
—

Asset-backed securities
2,641.5

 
84.3

 
(15.5
)
 
2,710.3

 
—

Collateralized debt obligations
230.0

 
1.0

 
(.3
)
 
230.7

 
—

Commercial mortgage-backed securities
1,531.0

 
33.1

 
(27.9
)
 
1,536.2

 
—

Mortgage pass-through securities
2.3

 
.2

 
—

 
2.5

 
—

Collateralized mortgage obligations
855.7

 
61.4

 
(1.6
)
 
915.5

 
(1.4
)
Total fixed maturities, available for sale
$
19,803.1

 
$
1,487.4

 
$
(194.3
)
 
$
21,096.2

 
$
(8.0
)
Equity securities
$
580.7

 
$
11.5

 
$
(8.0
)
 
$
584.2

 
 


The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at September 30, 2017, by contractual maturity.  Actual maturities will differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties.  Structured securities (such as asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, mortgage pass-through securities and collateralized mortgage obligations, collectively referred to as "structured securities") frequently include provisions for periodic principal payments and permit periodic unscheduled payments.

 
Amortized
cost
 
Estimated
fair
value
 
(Dollars in millions)
Due in one year or less
$
398.1

 
$
406.1

Due after one year through five years
2,004.8

 
2,131.7

Due after five years through ten years
1,562.8

 
1,671.1

Due after ten years
11,240.4

 
12,751.5

Subtotal
15,206.1

 
16,960.4

Structured securities
4,886.4

 
5,169.5

Total fixed maturities, available for sale
$
20,092.5

 
$
22,129.9



The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at December 31, 2016, by contractual maturity.

 
Amortized
cost
 
Estimated
fair
value
 
(Dollars in millions)
Due in one year or less
$
354.7

 
$
359.8

Due after one year through five years
2,243.8

 
2,399.5

Due after five years through ten years
1,549.1

 
1,620.8

Due after ten years
10,395.0

 
11,320.9

Subtotal
14,542.6

 
15,701.0

Structured securities
5,260.5

 
5,395.2

Total fixed maturities, available for sale
$
19,803.1

 
$
21,096.2


 
Net Realized Investment Gains (Losses)

The following table sets forth the net realized investment gains (losses) for the periods indicated (dollars in millions):

 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
Fixed maturity securities, available for sale:
 
 
 
 
 
 
 
Gross realized gains on sale
$
32.3

 
$
7.3

 
$
60.4

 
$
127.1

Gross realized losses on sale
(8.5
)
 
(2.8
)
 
(16.4
)
 
(84.4
)
Impairments:
 
 
 
 
 
 
 
Total other-than-temporary impairment losses
(3.2
)
 
—

 
(10.0
)
 
(6.3
)
Other-than-temporary impairment losses recognized in accumulated other comprehensive income
—

 
—

 
(.9
)
 
—

Net impairment losses recognized
(3.2
)
 
—

 
(10.9
)
 
(6.3
)
Net realized investment gains from fixed maturities
20.6

 
4.5

 
33.1

 
36.4

Equity securities
7.7

 
17.2

 
9.6

 
21.3

Commercial mortgage loans
—

 
—

 
1.0

 
—

Impairments of other investments
(1.5
)
 
(1.2
)
 
(7.3
)
 
(18.5
)
Loss on dissolution of variable interest entities
(.6
)
 
—

 
(4.3
)
 
(7.3
)
Other (a)
3.0

 
(8.9
)
 
20.2

 
(8.6
)
Net realized investment gains
$
29.2

 
$
11.6

 
$
52.3

 
$
23.3


_________________
(a)
Changes in the estimated fair value of trading securities that we have elected the fair value option (and are still held as of the end of the respective periods) were $13.0 million and $.8 million for the nine months ended September 30, 2017 and 2016, respectively.

During the first nine months of 2017, we recognized net realized investment gains of $52.3 million, which were comprised of: (i) $60.1 million of net gains from the sales of investments; (ii) $4.3 million of losses on the dissolution of variable interest entities ("VIEs"); (iii) the increase in fair value of certain fixed maturity investments with embedded derivatives of $12.3 million; (iv) the increase in fair value of embedded derivatives related to a modified coinsurance agreement of $2.4 million; and (v) $18.2 million of writedowns of investments for other than temporary declines in fair value recognized through net income.

During the first nine months of 2016, we recognized net realized investment gains of $23.3 million, which were comprised of: (i) $48.1 million of net gains from the sales of investments; (ii) a $7.3 million loss on the dissolution of a VIE; (iii) the increase in fair value of certain fixed maturity investments with embedded derivatives of $.6 million; (iv) the increase in fair value of embedded derivatives related to a modified coinsurance agreement of $6.7 million; and (v) $24.8 million of writedowns of investments for other than temporary declines in fair value recognized through net income.

During the first nine months of 2017 and 2016, certain VIEs that were required to be consolidated were dissolved. We recognized a loss of $4.3 million and $7.3 million during the first nine months of 2017 and 2016, respectively, representing the difference between the carrying value of the investment borrowings of such VIEs and the contractual distributions required following the liquidation of the underlying assets.

Our fixed maturity investments are generally purchased in the context of various long-term strategies, including funding insurance liabilities, so we do not generally seek to generate short-term realized gains through the purchase and sale of such securities.  In certain circumstances, including those in which securities are selling at prices which exceed our view of their underlying economic value, or when it is possible to reinvest the proceeds to better meet our long-term asset-liability objectives, we may sell certain securities.

During the first nine months of 2017, the $16.4 million of gross realized losses on sales of $290.8 million of fixed maturity securities, available for sale included: (i) $9.7 million related to various corporate securities; (ii) $3.1 million related to commercial mortgage-backed securities; and (iii) $3.6 million related to various other investments. Securities are generally sold at a loss following unforeseen issue-specific events or conditions or shifts in perceived relative values.  These reasons include but are not limited to:  (i) changes in the investment environment; (ii) expectation that the market value could deteriorate; (iii) our desire to reduce our exposure to an asset class, an issuer or an industry; (iv) prospective or actual changes in credit quality; or (v) changes in expected portfolio cash flows.

During the first nine months of 2017, we recognized $18.2 million of impairment losses recorded in earnings which included: (i) $5.7 million of writedowns on fixed maturities in the energy sector; (ii) $5.2 million of writedowns related to a mortgage loan; and (iii) $7.3 million of writedowns on other investments. Factors considered in determining the writedowns of investments in the first nine months of 2017 included changes in the estimated recoverable value of the assets related to each investment and the timing of and complexities related to the recovery process.

During the first nine months of 2016, we recognized $24.8 million of impairment losses recorded in earnings which included: (i) $6.3 million of writedowns on fixed maturities of a single issuer in the energy sector; (ii) $3.7 million of writedowns on a direct loan due to borrower specific events; (iii) $12.7 million of writedowns on a privately placed preferred stock of an entity formed to construct and operate a chemical plant; (iv) $.9 million of writedowns related to a real estate investment; and (v) $1.2 million of writedowns of investments held by VIEs due to other-than-temporary declines in value.

We regularly evaluate all of our investments with unrealized losses for possible impairment.  Our assessment of whether unrealized losses are "other than temporary" requires significant judgment.  Factors considered include:  (i) the extent to which fair value is less than the cost basis; (ii) the length of time that the fair value has been less than cost; (iii) whether the unrealized loss is event driven, credit-driven or a result of changes in market interest rates or risk premium; (iv) the near-term prospects for specific events, developments or circumstances likely to affect the value of the investment; (v) the investment's rating and whether the investment is investment-grade and/or has been downgraded since its purchase; (vi) whether the issuer is current on all payments in accordance with the contractual terms of the investment and is expected to meet all of its obligations under the terms of the investment; (vii) whether we intend to sell the investment or it is more likely than not that circumstances will require us to sell the investment before recovery occurs; (viii) the underlying current and prospective asset and enterprise values of the issuer and the extent to which the recoverability of the carrying value of our investment may be affected by changes in such values; (ix) projections of, and unfavorable changes in, cash flows on structured securities including mortgage-backed and asset-backed securities; (x) our best estimate of the value of any collateral; and (xi) other objective and subjective factors.

Future events may occur, or additional information may become available, which may necessitate future realized losses in our portfolio.  Significant losses could have a material adverse effect on our consolidated financial statements in future periods.

Impairment losses on equity securities are recognized in net income.  The manner in which impairment losses on fixed maturity securities, available for sale, are recognized in the financial statements is dependent on the facts and circumstances related to the specific security.  If we intend to sell a security or it is more likely than not that we would be required to sell a security before the recovery of its amortized cost, the security is other-than-temporarily impaired and the full amount of the impairment is recognized as a loss through earnings.  If we do not expect to recover the amortized cost basis, we do not plan to sell the security, and if it is not more likely than not that we would be required to sell a security before the recovery of its amortized cost, less any current period credit loss, the recognition of the other-than-temporary impairment is bifurcated.  We recognize the credit loss portion in net income and the noncredit loss portion in accumulated other comprehensive income.

We estimate the amount of the credit loss component of a fixed maturity security impairment as the difference between amortized cost and the present value of the expected cash flows of the security.  The present value is determined using the best estimate of future cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating-rate security.  The methodology and assumptions for establishing the best estimate of future cash flows vary depending on the type of security.

For most structured securities, cash flow estimates are based on bond-specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity, prepayment speeds and structural support, including excess spread, subordination and guarantees.  For corporate bonds, cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or the disposition of assets using bond specific facts and circumstances. The previous amortized cost basis less the impairment recognized in net income becomes the security's new cost basis.  We accrete the new cost basis to the estimated future cash flows over the expected remaining life of the security, except when the security is in default or considered nonperforming.

The remaining noncredit impairment, which is recorded in accumulated other comprehensive income, is the difference between the security's estimated fair value and our best estimate of future cash flows discounted at the effective interest rate prior to impairment.  The remaining noncredit impairment typically represents changes in the market interest rates, current market liquidity and risk premiums.  As of September 30, 2017, other-than-temporary impairments included in accumulated other comprehensive income totaled $4.7 million (before taxes and related amortization).

The following table summarizes the amount of credit losses recognized in earnings on fixed maturity securities, available for sale, held at the beginning of the period, for which a portion of the other-than-temporary impairment was also recognized in accumulated other comprehensive income for the three and nine months ended September 30, 2017 and 2016 (dollars in millions):

 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
Credit losses on fixed maturity securities, available for sale, beginning of period
$
(4.9
)
 
$
(2.6
)
 
$
(5.5
)
 
$
(2.6
)
Add: credit losses on other-than-temporary impairments not previously recognized
—

 
—

 
—

 
—

Less: credit losses on securities sold
—

 
.1

 
1.6

 
.1

Less: credit losses on securities impaired due to intent to sell (a)
—

 
—

 
—

 
—

Add: credit losses on previously impaired securities
—

 
—

 
(1.0
)
 
—

Less: increases in cash flows expected on previously impaired securities
—

 
—

 
—

 
—

Credit losses on fixed maturity securities, available for sale, end of period
$
(4.9
)
 
$
(2.5
)
 
$
(4.9
)
 
$
(2.5
)
__________
(a)
Represents securities for which the amount previously recognized in accumulated other comprehensive income was recognized in earnings because we intend to sell the security or we more likely than not will be required to sell the security before recovery of its amortized cost basis.

Gross Unrealized Investment Losses

Our investment strategy is to maximize, over a sustained period and within acceptable parameters of quality and risk, investment income and total investment return through active investment management. Accordingly, we may sell securities at a gain or a loss to enhance the projected total return of the portfolio as market opportunities change, to reflect changing perceptions of risk, or to better match certain characteristics of our investment portfolio with the corresponding characteristics of our insurance liabilities.

The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at September 30, 2017 (dollars in millions):

 
 
Less than 12 months
 
12 months or greater
 
Total
Description of securities
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
United States Treasury securities and obligations of United States government corporations and agencies
 
$
20.3

 
$
—

 
$
.6

 
$
—

 
$
20.9

 
$
—

States and political subdivisions
 
35.1

 
(.6
)
 
19.3

 
(.3
)
 
54.4

 
(.9
)
Debt securities issued by foreign governments
 
10.5

 
(.1
)
 
—

 
—

 
10.5

 
(.1
)
Corporate securities
 
666.9

 
(7.8
)
 
400.4

 
(25.2
)
 
1,067.3

 
(33.0
)
Asset-backed securities
 
276.7

 
(1.3
)
 
79.6

 
(1.8
)
 
356.3

 
(3.1
)
Collateralized debt obligations
 
24.0

 
—

 
—

 
—

 
24.0

 
—

Commercial mortgage-backed securities
 
226.2

 
(1.3
)
 
221.9

 
(8.8
)
 
448.1

 
(10.1
)
Collateralized mortgage obligations
 
72.8

 
(.5
)
 
11.6

 
(.1
)
 
84.4

 
(.6
)
Total fixed maturities, available for sale
 
$
1,332.5

 
$
(11.6
)
 
$
733.4

 
$
(36.2
)
 
$
2,065.9

 
$
(47.8
)
Equity securities
 
$
37.4

 
$
(.8
)
 
$
89.7

 
$
(1.8
)
 
$
127.1

 
$
(2.6
)

The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at December 31, 2016 (dollars in millions):

 
 
Less than 12 months
 
12 months or greater
 
Total
Description of securities
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
United States Treasury securities and obligations of United States government corporations and agencies
 
$
8.0

 
$
—

 
$
—

 
$
—

 
$
8.0

 
$
—

States and political subdivisions
 
176.3

 
(7.8
)
 
18.3

 
(1.8
)
 
194.6

 
(9.6
)
Debt securities issued by foreign governments
 
18.9

 
(.4
)
 
—

 
—

 
18.9

 
(.4
)
Corporate securities
 
1,907.6

 
(75.5
)
 
559.6

 
(63.5
)
 
2,467.2

 
(139.0
)
Asset-backed securities
 
692.9

 
(8.5
)
 
262.5

 
(7.0
)
 
955.4

 
(15.5
)
Collateralized debt obligations
 
38.3

 
(.1
)
 
30.8

 
(.2
)
 
69.1

 
(.3
)
Commercial mortgage-backed securities
 
525.2

 
(16.6
)
 
154.0

 
(11.3
)
 
679.2

 
(27.9
)
Collateralized mortgage obligations
 
73.6

 
(.6
)
 
34.6

 
(1.0
)
 
108.2

 
(1.6
)
Total fixed maturities, available for sale
 
$
3,440.8

 
$
(109.5
)
 
$
1,059.8

 
$
(84.8
)
 
$
4,500.6

 
$
(194.3
)
Equity securities
 
$
239.4

 
$
(8.0
)
 
$
—

 
$
—

 
$
239.4

 
$
(8.0
)


Based on management's current assessment of investments with unrealized losses at September 30, 2017, the Company believes the issuers of the securities will continue to meet their obligations (or with respect to equity-type securities, the investment value will recover to its cost basis).  While we do not have the intent to sell securities with unrealized losses and it is not more likely than not that we will be required to sell securities with unrealized losses prior to their anticipated recovery, our intent on an individual security may change, based upon market or other unforeseen developments.  In such instances, if a loss is recognized from a sale subsequent to a balance sheet date due to these unexpected developments, the loss is recognized in the period in which we had the intent to sell the security before its anticipated recovery.
EARNINGS PER SHARE
EARNINGS PER SHARE
EARNINGS PER SHARE

A reconciliation of net income and shares used to calculate basic and diluted earnings per share is as follows (dollars in millions and shares in thousands):

 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
Net income for basic and diluted earnings per share
$
100.8

 
$
18.6

 
$
246.5

 
$
124.0

Shares:
 

 
 

 
 
 
 
Weighted average shares outstanding for basic earnings per share
168,684

 
174,247

 
170,890

 
177,640

Effect of dilutive securities on weighted average shares:
 

 
 

 
 
 
 
Stock options, restricted stock and performance units
2,298

 
1,476

 
1,910

 
1,733

Weighted average shares outstanding for diluted earnings per share
170,982

 
175,723

 
172,800

 
179,373



Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period.  Restricted shares (including our performance units) are not included in basic earnings per share until vested.  Diluted earnings per share reflect the potential dilution that could occur if outstanding stock options were exercised and restricted stock was vested.  The dilution from options and restricted shares is calculated using the treasury stock method.  Under this method, we assume the proceeds from the exercise of the options (or the unrecognized compensation expense with respect to restricted stock and performance units) will be used to purchase shares of our common stock at the average market price during the period, reducing the dilutive effect of the exercise of the options (or the vesting of the restricted stock and performance units).
BUSINESS SEGMENTS
BUSINESS SEGMENTS
BUSINESS SEGMENTS

The Company manages its business through the following operating segments: Bankers Life, Washington National and Colonial Penn, which are defined on the basis of product distribution; and corporate operations, comprised of holding company activities and certain noninsurance company businesses. In the fourth quarter of 2016, we began reporting the long-term care block recaptured from Beechwood Re Ltd ("BRe") effective September 30, 2016, as an additional business segment.

We measure segment performance by excluding net realized investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), fair value changes and an amendment to the agent deferred compensation plan, loss on reinsurance transaction, income taxes and other non-operating items consisting primarily of earnings attributable to VIEs ("pre-tax operating earnings") because we believe that this performance measure is a better indicator of the ongoing business and trends in our business.  Our primary investment focus is on investment income to support our liabilities for insurance products as opposed to the generation of net realized investment gains (losses), and a long-term focus is necessary to maintain profitability over the life of the business.

The net realized investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), fair value changes and an amendment to the agent deferred compensation plan, loss on reinsurance transaction and other non-operating items consisting primarily of earnings attributable to VIEs depend on market conditions or represent unusual items that do not necessarily relate to the underlying business of our segments.  Net realized investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) may affect future earnings levels since our underlying business is long-term in nature and changes in our investment portfolio may impact our ability to earn the assumed interest rates needed to maintain the profitability of our business.
Operating information by segment was as follows (dollars in millions):

 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
Revenues:
 
 
 
 
 
 
 
Bankers Life:
 
 
 
 
 
 
 
Insurance policy income:
 
 
 
 
 
 
 
Annuities
$
3.7

 
$
6.8

 
$
15.5

 
$
17.4

Health
307.2

 
310.3

 
926.9

 
933.3

Life
103.7

 
96.6

 
310.4

 
295.8

Net investment income (a)
270.6

 
244.7

 
800.4

 
686.8

Fee revenue and other income (a)
11.3

 
9.6

 
32.5

 
23.5

Total Bankers Life revenues
696.5

 
668.0

 
2,085.7

 
1,956.8

Washington National:
 

 
 

 
 
 
 
Insurance policy income:
 

 
 

 
 
 
 
Annuities
.5

 
1.2

 
1.6

 
2.3

Health
160.4

 
156.9

 
480.3

 
469.1

Life
6.5

 
6.3

 
20.1

 
18.6

Net investment income (a)
68.0

 
67.1

 
201.9

 
191.3

Fee revenue and other income (a)
.3

 
.4

 
.8

 
1.0

Total Washington National revenues
235.7

 
231.9

 
704.7

 
682.3

Colonial Penn:
 

 
 

 
 
 
 
Insurance policy income:
 

 
 

 
 
 
 
Health
.5

 
.6

 
1.6

 
2.0

Life
72.6

 
70.3

 
217.5

 
208.5

Net investment income (a)
11.0

 
11.1

 
33.1

 
33.0

Fee revenue and other income (a)
.3

 
.2

 
.9

 
.8

Total Colonial Penn revenues
84.4

 
82.2

 
253.1

 
244.3

Long-term care in run-off:
 
 
 
 
 
 
 
Insurance policy income - health
4.2

 
—

 
13.3

 
—

Net investment income (a)                                                                                           
6.8

 
—

 
26.5

 
—

Total Long-term care in run-off revenues
11.0

 
—

 
39.8

 
—

Corporate operations:
 

 
 

 
 
 
 
Net investment income
7.0

 
6.7

 
24.8

 
16.6

Fee and other income
1.8

 
2.5

 
6.5

 
7.6

Total corporate revenues
8.8

 
9.2

 
31.3

 
24.2

Total revenues
$
1,036.4

 
$
991.3

 
$
3,114.6

 
$
2,907.6



(continued on next page)

(continued from previous page)
 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
Expenses:
 
 
 
 
 
 
 
Bankers Life:
 
 
 
 
 
 
 
Insurance policy benefits
$
437.2

 
$
427.1

 
$
1,307.7

 
$
1,240.9

Amortization
38.7

 
43.8

 
126.3

 
135.3

Interest expense on investment borrowings
5.3

 
3.5

 
14.3

 
9.4

Other operating costs and expenses
108.4

 
105.5

 
328.2

 
312.2

Total Bankers Life expenses
589.6

 
579.9

 
1,776.5

 
1,697.8

Washington National:
 

 
 

 
 
 
 
Insurance policy benefits
144.7

 
144.5

 
436.7

 
422.0

Amortization
14.3

 
14.3

 
43.9

 
44.5

Interest expense on investment borrowings
1.7

 
.9

 
4.5

 
2.5

Other operating costs and expenses
47.5

 
47.0

 
145.0

 
140.3

Total Washington National expenses
208.2

 
206.7

 
630.1

 
609.3

Colonial Penn:
 

 
 

 
 
 
 
Insurance policy benefits
47.7

 
50.3

 
150.8

 
151.3

Amortization
3.9

 
3.7

 
11.9

 
11.3

Interest expense on investment borrowings
.3

 
.1

 
.7

 
.4

Other operating costs and expenses
23.5

 
27.2

 
73.0

 
84.2

Total Colonial Penn expenses
75.4

 
81.3

 
236.4

 
247.2

Long-term care in run-off:
 
 
 
 
 
 
 
Insurance policy benefits                                                                                 
11.4

 
—

 
36.6

 
—

Other operating costs and expenses                                                                                 
.6

 
—

 
2.1

 
—

Total Long-term care in run-off expenses
12.0

 
—

 
38.7

 
—

Corporate operations:
 

 
 

 
 
 
 
Interest expense on corporate debt
11.7

 
11.5

 
34.8

 
34.3

Other operating costs and expenses
23.7

 
13.6

 
68.3

 
43.7

Total corporate expenses
35.4

 
25.1

 
103.1

 
78.0

Total expenses
920.6

 
893.0

 
2,784.8

 
2,632.3

Pre-tax operating earnings by segment:
 

 
 

 
 
 
 
Bankers Life
106.9

 
88.1

 
309.2

 
259.0

Washington National
27.5

 
25.2

 
74.6

 
73.0

Colonial Penn
9.0

 
.9

 
16.7

 
(2.9
)
Long-term care in run-off
(1.0
)
 
—

 
1.1

 
—

Corporate operations
(26.6
)
 
(15.9
)
 
(71.8
)
 
(53.8
)
Pre-tax operating earnings
$
115.8

 
$
98.3

 
$
329.8

 
$
275.3

___________________
(a)
It is not practicable to provide additional components of revenue by product or services.

A reconciliation of segment revenues and expenses to consolidated revenues and expenses and net income (loss) is as follows (dollars in millions):

 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
Total segment revenues                                                                                            
$
1,036.4

 
$
991.3

 
$
3,114.6

 
$
2,907.6

Net realized investment gains                                       
29.2

 
11.6

 
52.3

 
23.3

Revenues related to VIEs
13.7

 
13.0

 
40.2

 
39.3

Fee revenue related to transition and support services agreements
—

 
—

 
—

 
10.0

Consolidated revenues                                                                                       
1,079.3

 
1,015.9

 
3,207.1

 
2,980.2

 
 
 
 
 
 
 
 
Total segment expenses                                                                                            
920.6

 
893.0

 
2,784.8

 
2,632.3

Insurance policy benefits - fair value changes in embedded derivative liabilities
(2.9
)
 
(12.1
)
 
9.8

 
47.0

Amortization related to fair value changes in embedded derivative liabilities
.6

 
2.7

 
(1.8
)
 
(10.4
)
Amortization related to net realized investment gains
.7

 
.2

 
1.0

 
.9

Expenses related to VIEs
17.0

 
13.7

 
44.8

 
40.5

Fair value changes and amendment related to agent deferred compensation plan
13.4


(6.3
)
 
13.4

 
12.0

Loss on reinsurance transaction
—

 
75.4

 
—

 
75.4

Expenses related to transition and support services agreements
—

 
—

 
—

 
10.0

Consolidated expenses                                                                                       
949.4

 
966.6

 
2,852.0

 
2,807.7

Income before tax
129.9

 
49.3

 
355.1

 
172.5

Income tax expense (benefit):
 
 
 
 
 
 
 
Tax expense on period income
44.1

 
16.9

 
123.6

 
61.7

Valuation allowance for deferred tax assets and other tax items
(15.0
)
 
13.8

 
(15.0
)
 
(13.2
)
Net income
$
100.8

 
$
18.6

 
$
246.5

 
$
124.0

ACCOUNTING FOR DERIVATIVES
ACCOUNTING FOR DERIVATIVES
ACCOUNTING FOR DERIVATIVES

Our freestanding and embedded derivatives, which are not designated as hedging instruments, are held at fair value and are summarized as follows (dollars in millions):

 
 
Fair value
 
 
September 30,
2017
 
December 31, 2016
Assets:
 
 
 
 
Other invested assets:
 
 
 
 
Fixed index call options
 
$
142.2

 
$
111.9

Reinsurance receivables
 
(1.8
)
 
(4.2
)
Total assets
 
$
140.4

 
$
107.7

Liabilities:
 
 
 
 
Future policy benefits:
 
 
 
 
Fixed index products
 
$
1,249.3

 
$
1,092.3

Total liabilities
 
$
1,249.3

 
$
1,092.3



Our fixed index annuity products provide a guaranteed minimum rate of return and a higher potential return that is based on a percentage (the "participation rate") of the amount of increase in the value of a particular index, such as the Standard & Poor's 500 Index, over a specified period.  Typically, on each policy anniversary date, a new index period begins.  We are generally able to change the participation rate at the beginning of each index period during a policy year, subject to contractual minimums.  The Company accounts for the options attributed to the policyholder for the estimated life of the contract as embedded derivatives. These accounting requirements often create volatility in the earnings from these products. We typically buy call options (including call spreads) referenced to the applicable indices in an effort to offset or hedge potential increases to policyholder benefits resulting from increases in the particular index to which the policy's return is linked.  The notional amount of these options was $2.9 billion and $2.5 billion at September 30, 2017 and December 31, 2016, respectively.

From time to time, we utilize United States Treasury interest rate futures primarily to hedge interest rate risk related to anticipated mortgage loan transactions.

We are required to establish an embedded derivative related to a modified coinsurance agreement pursuant to which we assume the risks of a block of health insurance business. The embedded derivative represents the mark-to-market adjustment for approximately $125 million in underlying investments held by the ceding reinsurer.

We purchase certain fixed maturity securities that contain embedded derivatives that are required to be held at fair value on the consolidated balance sheet. We have elected the fair value option to carry the entire security at fair value with changes in fair value recognized in net income.

The following table provides the pre-tax gains (losses) recognized in net income for derivative instruments, which are not designated as hedges for the periods indicated (dollars in millions):

 
 
Three months ended
 
Nine months ended
 
 
September 30,
 
September 30,
 
 
2017
 
2016
 
2017
 
2016
Net investment income from policyholder and other special-purpose portfolios:
 
 
 
 
 
 
 
 
Fixed index call options
 
$
30.6

 
$
17.0

 
$
95.4

 
$
10.9

Net realized gains (losses):
 
 
 
 
 
 
 
 
Interest rate futures
 
—

 
—

 
—

 
(1.1
)
Embedded derivative related to modified coinsurance agreement
 
.3

 
.1

 
2.4

 
6.7

Total
 
.3

 
.1

 
2.4

 
5.6

Insurance policy benefits:
 
 
 
 
 
 
 
 
Embedded derivative related to fixed index annuities
 
—

 
18.3

 
—

 
(33.3
)
Total
 
$
30.9

 
$
35.4

 
$
97.8

 
$
(16.8
)


Derivative Counterparty Risk

If the counterparties to the call options fail to meet their obligations, we may recognize a loss.  We limit our exposure to such a loss by diversifying among several counterparties believed to be strong and creditworthy.  At September 30, 2017, all of our counterparties were rated "A-" or higher by S&P Global Ratings ("S&P").

We also enter into exchange-traded interest rate future contracts. The contracts are marked to market and margined on a daily basis. The Company has minimal exposure to credit-related losses in the event of nonperformance.

The Company and its subsidiaries are parties to master netting arrangements with its counterparties related to entering into various derivative contracts. Exchange-traded derivatives require margin accounts which we offset.

The following table summarizes information related to derivatives with master netting arrangements or collateral as of September 30, 2017 and December 31, 2016 (dollars in millions):

 
 
 
 
 
 
 
 
 
Gross amounts not offset in the balance sheet
 
 
 
 
 
Gross amounts recognized
 
Gross amounts offset in the balance sheet
 
Net amounts of assets presented in the balance sheet
 
Financial instruments
 
Cash collateral received
 
Net amount
September 30, 2017:
 
 
 
Fixed index call options
 
$
142.2

 
$
—

 
$
142.2

 
$
—

 
$
—

 
$
142.2

December 31, 2016:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed index call options
 
111.9

 
—

 
111.9

 
—

 
—

 
111.9

REINSURANCE
REINSURANCE
REINSURANCE

The cost of reinsurance ceded totaled $27.1 million and $32.2 million in the third quarters of 2017 and 2016, respectively, and $79.9 million and $97.3 million in the first nine months of 2017 and 2016, respectively.  We deduct this cost from insurance policy income.  Reinsurance recoveries netted against insurance policy benefits totaled $22.6 million and $31.7 million in the third quarters of 2017 and 2016, respectively, and $69.1 million and $113.3 million in the first nine months of 2017 and 2016, respectively.

From time to time, we assume insurance from other companies.  Any costs associated with the assumption of insurance are amortized consistent with the method used to amortize deferred acquisition costs.  Reinsurance premiums assumed totaled $7.4 million and $8.3 million in the third quarters of 2017 and 2016, respectively, and $23.1 million and $25.8 million in the first nine months of 2017 and 2016, respectively.
INCOME TAXES
INCOME TAXES
INCOME TAXES

The Company's interim tax expense is based upon the estimated annual effective tax rate for the respective period. Under authoritative guidance, certain items are required to be excluded from the estimated annual effective tax rate calculation. Such items include changes in judgment about the realizability of deferred tax assets resulting from changes in projections of income expected to be available in future years, and items deemed to be unusual, infrequent, or that can not be reliably estimated. In these cases, the actual tax expense or benefit applicable to that item is treated discretely and is reported in the same period as the related item. The components of income tax expense are as follows (dollars in millions):

 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
Current tax expense
$
25.9

 
$
46.8

 
$
68.5

 
$
51.6

Deferred tax expense (benefit)
18.2

 
(29.9
)
 
55.1

 
10.1

Valuation allowance applicable to current year income
(2.2
)
 
(10.5
)
 
(2.2
)
 
(10.5
)
Income tax expense calculated based on estimated annual effective tax rate
41.9

 
6.4

 
121.4

 
51.2

Income tax expense on discrete items:
 
 
 
 
 
 
 
Change in valuation allowance
(12.8
)
 
16.0

 
(12.8
)
 
(11.0
)
Other items
—

 
8.3

 
—

 
8.3

Total income tax expense
$
29.1

 
$
30.7

 
$
108.6

 
$
48.5



A reconciliation of the U.S. statutory corporate tax rate to the estimated annual effective rate, before discrete items, reflected in the consolidated statement of operations is as follows:
 
 
Nine months ended
 
September 30,
 
2017
 
2016
U.S. statutory corporate rate
35.0
 %
 
35.0
 %
Valuation allowance
(.6
)
 
(6.1
)
Non-taxable income and nondeductible benefits, net
(1.5
)
 
(1.0
)
State taxes
1.3

 
1.8

Estimated annual effective tax rate
34.2
 %
 
29.7
 %


The effective tax rate for the nine months ended September 30, 2017 and 2016 included reductions in the deferred tax valuation allowance of $2.2 million and $10.5 million, respectively, reflecting higher current year expected taxable income than previously reflected in our deferred tax valuation allowance model in each year.

Our total tax expense for the nine months ended September 30, 2017, includes $12.8 million of reductions to the deferred tax valuation allowance primarily related to the recognition of capital gains. Our total tax expense for the nine months ended September 30, 2016, includes $11.0 million of reductions to the deferred tax valuation allowance related to adjustments to future expected taxable income reflected in our deferred tax valuation allowance model and $8.3 million of increased tax expense primarily related to IRS exam adjustments. The reduction to the deferred tax valuation allowance primarily relates to higher expected non-life income consistent with our current investment strategies, the impacts of the recapture of certain reinsurance agreements and IRS examination adjustments.

Effective January 1, 2017, the Company adopted new authoritative guidance related to several aspects of the accounting for share-based payment transactions, including the income tax consequences. Under the new guidance, any excess tax benefits are recognized as an income tax benefit in the income statement. The new guidance is applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings for all tax benefits that were not previously recognized because the related tax deduction had not reduced taxes payable. The Company had NOL carryforwards of $15.7 million related to deductions for stock options and restricted stock on the date of adoption. However, a corresponding valuation allowance of $15.7 million was recognized as a result of adopting this guidance. Therefore, there was no impact to our consolidated financial statements related to the initial adoption of this provision of the new guidance.

The components of the Company's income tax assets and liabilities are summarized below (dollars in millions):

 
September 30,
2017
 
December 31,
2016
Deferred tax assets:
 
 
 
Net federal operating loss carryforwards
$
841.8

 
$
882.9

Net state operating loss carryforwards
12.2

 
12.3

Investments
13.7

 
17.8

Insurance liabilities
678.9

 
668.4

Other
60.1

 
66.3

Gross deferred tax assets
1,606.7

 
1,647.7

Deferred tax liabilities:
 

 
 

Present value of future profits and deferred acquisition costs
(275.0
)
 
(277.8
)
Accumulated other comprehensive income
(516.9
)
 
(344.1
)
Gross deferred tax liabilities
(791.9
)
 
(621.9
)
Net deferred tax assets before valuation allowance
814.8

 
1,025.8

Valuation allowance
(240.9
)
 
(240.2
)
Net deferred tax assets
573.9

 
785.6

Current income taxes prepaid (accrued)
(6.5
)
 
4.1

Income tax assets, net
$
567.4

 
$
789.7



Our income tax expense includes deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities and net operating loss carryforwards ("NOLs"). Deferred tax assets and liabilities are measured using enacted tax rates expected to apply in the years in which temporary differences are expected to be recovered or paid.  The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period when the changes are enacted.

A reduction of the net carrying amount of deferred tax assets by establishing a valuation allowance is required if, based on the available evidence, it is more likely than not that such assets will not be realized. In assessing the need for a valuation allowance, all available evidence, both positive and negative, shall be considered to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. This assessment requires significant judgment and considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of carryforward periods, our experience with operating loss and tax credit carryforwards expiring unused, and tax planning strategies. We evaluate the need to establish a valuation allowance for our deferred income tax assets on an ongoing basis. The realization of our deferred tax assets depends upon generating sufficient future taxable income of the appropriate type during the periods in which our temporary differences become deductible and before our NOLs expire.

Based on our assessment, it appears more likely than not that $573.9 million of our net deferred tax assets of $814.8 million will be realized through future taxable earnings. Accordingly, we have established a deferred tax valuation allowance of $240.9 million at September 30, 2017 ($230.9 million of which relates to our net federal operating loss carryforwards and $10.0 million relates to state operating loss carryforwards). We will continue to assess the need for a valuation allowance in the future. If future results are less than projected, an increase to the valuation allowance may be required to reduce the deferred tax asset, which could have a material impact on our results of operations in the period in which it is recorded.
 
We use a deferred tax valuation model to assess the need for a valuation allowance. Our model is adjusted to reflect changes in our projections of future taxable income including changes resulting from investment strategies, the impact of the sale or reinsurance of business and the recapture of business previously ceded. Our estimates of future taxable income are based on evidence we consider to be objective and verifiable.

Our projection of future taxable income for purposes of determining the valuation allowance is based on our adjusted average annual taxable income which is assumed to increase by 3 percent for the next five years, and level taxable income is assumed thereafter. In the projections used for our analysis, our adjusted average taxable income of approximately $335 million consisted of $85 million of non-life taxable income and $250 million of life taxable income.

Recovery of our deferred tax asset is dependent on achieving the level of future taxable income projected in our deferred tax valuation model and failure to do so could result in an increase in the valuation allowance in a future period.  Any future increase in the valuation allowance may result in additional income tax expense and reduce shareholders' equity, and such an increase could have a significant impact upon our earnings in the future.

The Internal Revenue Code (the "Code") limits the extent to which losses realized by a non-life entity (or entities) may offset income from a life insurance company (or companies) to the lesser of:  (i) 35 percent of the income of the life insurance company; or (ii) 35 percent of the total loss of the non-life entities (including NOLs of the non-life entities).  There is no similar limitation on the extent to which losses realized by a life insurance entity (or entities) may offset income from a non-life entity (or entities). This limitation is the primary reason a valuation allowance for NOLs is required.

Section 382 of the Code imposes limitations on a corporation's ability to use its NOLs when the company undergoes an ownership change.  Future transactions and the timing of such transactions could cause an ownership change for Section 382 income tax purposes.  Such transactions may include, but are not limited to, additional repurchases under our securities repurchase program, issuances of common stock and acquisitions or sales of shares of CNO stock by certain holders of our shares, including persons who have held, currently hold or may accumulate in the future five percent or more of our outstanding common stock for their own account.  Many of these transactions are beyond our control.  If an additional ownership change were to occur for purposes of Section 382, we would be required to calculate an annual restriction on the use of our NOLs to offset future taxable income.  The annual restriction would be calculated based upon the value of CNO's equity at the time of such ownership change, multiplied by a federal long-term tax exempt rate (1.93 percent at September 30, 2017), and the annual restriction could limit our ability to use a substantial portion of our NOLs to offset future taxable income.  We regularly monitor ownership change (as calculated for purposes of Section 382) and, as of September 30, 2017, we were below the 50 percent ownership change level that would trigger further impairment of our ability to utilize our NOLs.

As of September 30, 2017, we had $2.4 billion of federal NOLs (all of which were non-life NOLs). The following table summarizes the expiration dates of our loss carryforwards (dollars in millions):

 
 
Net operating loss
Year of expiration
 
carryforwards
2023
 
$
1,818.5

2025
 
85.2

2026
 
149.9

2027
 
10.8

2028
 
80.3

2029
 
213.2

2030
 
.3

2031
 
.2

2032
 
44.4

2033
 
.6

2034
 
.9

2035
 
.8

Total federal NOLs
 
$
2,405.1



We also had deferred tax assets related to NOLs for state income taxes of $12.2 million and $12.3 million at September 30, 2017 and December 31, 2016, respectively.  The related state NOLs are available to offset future state taxable income in certain states through 2025.

All of the life NOLs were utilized by December 31, 2016. Accordingly, we began making estimated federal tax payments equal to the prescribed federal tax rate applied to 65 percent of our life insurance company taxable income due to the limitations on the extent to which we can use non-life NOLs to offset life insurance company taxable income. Under current law, we will continue to pay tax on 65 percent of our life insurance company taxable income until all non-life NOLs are utilized or expire.

The Internal Revenue Service ("IRS") is conducting an examination of 2013 through 2014. In connection with this exam, we have agreed to extend the statute of limitation for 2013 through September 30, 2018. The Company’s various state income tax returns are generally open for tax years beginning in 2014, based on individual state statutes of limitation. Generally, for tax years which generate NOLs, capital losses or tax credit carryforwards, the statute remains open until the expiration of the statute of limitations for the tax year in which such carryforwards are utilized. The outcome of the tax audit cannot be predicted with certainty. If the Company’s tax audit is not resolved in a manner consistent with management’s expectations, the Company may be required to adjust its provision for income taxes.
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS

The following notes payable were direct corporate obligations of the Company as of September 30, 2017 and December 31, 2016 (dollars in millions):

 
September 30,
2017
 
December 31,
2016
4.500% Senior Notes due May 2020
$
325.0

 
$
325.0

5.250% Senior Notes due May 2025
500.0

 
500.0

Revolving Credit Agreement (as defined below)
100.0

 
100.0

Unamortized debt issue costs
(10.6
)
 
(12.1
)
Direct corporate obligations
$
914.4

 
$
912.9



Revolving Credit Agreement

On May 19, 2015, the Company entered into a revolving credit agreement with KeyBank National Association, as administrative agent (the "Agent"), and the lenders from time to time party thereto (the "Revolving Credit Agreement"). On May 19, 2015, the Company made an initial drawing of $100.0 million under the Revolving Credit Agreement, resulting in $50.0 million available for additional borrowings.

The interest rates with respect to loans under the Revolving Credit Agreement are based on, at the Company's option, a floating base rate (defined as a per annum rate equal to the highest of: (i) the federal funds rate plus 0.50%; (ii) the "prime rate" of the Agent; and (iii) the eurodollar rate for a one-month interest period plus an applicable margin of initially 1.00% per annum), or a eurodollar rate plus an applicable margin of initially 2.00% per annum. At September 30, 2017, the interest rate on the amounts outstanding under the Revolving Credit Agreement was 3.24 percent. In addition, the daily average undrawn portion of the Revolving Credit Agreement accrues a commitment fee payable quarterly in arrears. The applicable margin for, and the commitment fee applicable to, the Revolving Credit Agreement, will be adjusted from time to time pursuant to a ratings based pricing grid.

The Revolving Credit Agreement requires the Company to maintain (each as calculated in accordance with the Revolving Credit Agreement): (i) a debt to total capitalization ratio of not more than 30.0 percent (such ratio was 19.2 percent at September 30, 2017); (ii) an aggregate ratio of total adjusted capital to company action level risk-based capital for the Company's insurance subsidiaries of not less than 250 percent (such ratio was estimated to be 450 percent at September 30, 2017); and (iii) a minimum consolidated net worth of not less than the sum of (x) $2,674 million plus (y) 50.0% of the net equity proceeds received by the Company from the issuance and sale of equity interests in the Company (the Company's consolidated net worth was $3,948.1 million at September 30, 2017 compared to the minimum requirement of $2,683.8 million).

As further described in the note to the consolidated financial statements entitled "Subsequent Event", the Revolving Credit Agreement was amended and restated in October 2017.

Scheduled Repayment of our Direct Corporate Obligations

The scheduled repayment of our direct corporate obligations was as follows at September 30, 2017 (dollars in millions):

Year ending September 30,
 
2018
$
—

2019
100.0

2020
325.0

2021
—

2022
—

Thereafter
500.0

 
$
925.0

INVESTMENT BORROWINGS
INVESTMENT BORROWINGS
INVESTMENT BORROWINGS

Three of the Company's insurance subsidiaries (Washington National Insurance Company ("Washington National"), Bankers Life and Casualty Company ("Bankers Life") and Colonial Penn Life Insurance Company ("Colonial Penn")) are members of the Federal Home Loan Bank ("FHLB").  As members of the FHLB, our insurance subsidiaries have the ability to borrow on a collateralized basis from the FHLB. We are required to hold certain minimum amounts of FHLB common stock as a condition of membership in the FHLB, and additional amounts based on the amount of the borrowings.  At September 30, 2017, the carrying value of the FHLB common stock was $71.2 million.  As of September 30, 2017, collateralized borrowings from the FHLB totaled $1.6 billion and the proceeds were used to purchase fixed maturity securities.  The borrowings are classified as investment borrowings in the accompanying consolidated balance sheet.  The borrowings are collateralized by investments with an estimated fair value of $2.0 billion at September 30, 2017, which are maintained in a custodial account for the benefit of the FHLB.  Substantially all of such investments are classified as fixed maturities, available for sale, in our consolidated balance sheet.  

The following summarizes the terms of the borrowings from the FHLB by our insurance subsidiaries (dollars in millions):

Amount
 
Maturity
 
Interest rate at
borrowed
 
date
 
September 30, 2017
$
50.0

 
February 2018
 
Variable rate – 1.404%
50.0

 
August 2018
 
Variable rate – 1.435%
50.0

 
January 2019
 
Variable rate – 1.724%
50.0

 
February 2019
 
Variable rate – 1.404%
100.0

 
March 2019
 
Variable rate – 1.714%
21.8

 
July 2019
 
Variable rate – 1.727%
15.0

 
October 2019
 
Variable rate – 1.830%
50.0

 
May 2020
 
Variable rate – 1.754%
21.8

 
June 2020
 
Fixed rate – 1.960%
25.0

 
September 2020
 
Variable rate – 1.953%
100.0

 
September 2020
 
Variable rate – 1.897%
50.0

 
September 2020
 
Variable rate – 1.894%
75.0

 
September 2020
 
Variable rate – 1.453%
100.0

 
October 2020
 
Variable rate – 1.409%
50.0

 
December 2020
 
Variable rate – 1.932%
100.0

 
July 2021
 
Variable rate – 1.854%
100.0

 
July 2021
 
Variable rate – 1.824%
28.2

 
August 2021
 
Fixed rate – 2.550%
57.7

 
August 2021
 
Variable rate - 1.842%
125.0

 
August 2021
 
Variable rate – 1.717%
50.0

 
September 2021
 
Variable rate – 1.857%
22.0

 
May 2022
 
Variable rate – 1.668%
100.0

 
May 2022
 
Variable rate – 1.666%
10.0

 
June 2022
 
Variable rate – 1.931%
50.0

 
July 2022
 
Variable rate – 1.675%
50.0

 
July 2022
 
Variable rate – 1.693%
50.0

 
July 2022
 
Variable rate – 1.694%
50.0

 
August 2022
 
Variable rate – 1.702%
24.9

 
March 2023
 
Fixed rate – 2.160%
20.5

 
June 2025
 
Fixed rate – 2.940%
$
1,646.9

 
 
 
 


The variable rate borrowings are pre-payable on each interest reset date without penalty.  The fixed rate borrowings are pre-payable subject to payment of a yield maintenance fee based on prevailing market interest rates.  At September 30, 2017, the aggregate yield maintenance fee to prepay all fixed rate borrowings was $3.2 million.

Interest expense of $19.5 million and $12.3 million in the first nine months of 2017 and 2016, respectively, was recognized related to total borrowings from the FHLB.
CHANGES IN COMMON STOCK
CHANGES IN COMMON STOCK
CHANGES IN COMMON STOCK

Changes in the number of shares of common stock outstanding were as follows (shares in thousands):

Balance, December 31, 2016
173,754

 
Treasury stock purchased and retired
(6,701
)
 
Stock options exercised
524

 
Restricted and performance stock vested
185

(a)
Balance, September 30, 2017
167,762

 
____________________
(a)
Such amount was reduced by 103 thousand shares which were tendered to the Company for the payment of required federal and state tax withholdings owed on the vesting of restricted and performance stock.

In the first nine months of 2017, we repurchased 6.7 million shares of common stock for $140.1 million under our securities repurchase program. In May 2017, the Company announced that its Board of Directors approved an additional $300.0 million to repurchase the Company's outstanding common stock. The Company had remaining repurchase authority of $412.6 million as of September 30, 2017.

In the first nine months of 2017, dividends declared on common stock totaled $44.7 million ($0.26 per common share). In May 2017, the Company increased its quarterly common stock dividend to $0.09 per share from $0.08 per share.
SALES INDUCEMENTS
SALES INDUCEMENTS
SALES INDUCEMENTS

Certain of our annuity products offer sales inducements to contract holders in the form of enhanced crediting rates or bonus payments in the initial period of the contract.  Certain of our life insurance products offer persistency bonuses credited to the contract holder's balance after the policy has been outstanding for a specified period of time.  These enhanced rates and persistency bonuses are considered sales inducements in accordance with GAAP.  Such amounts are deferred and amortized in the same manner as deferred acquisition costs.  Sales inducements deferred totaled $1.5 million and $2.8 million during the nine months ended September 30, 2017 and 2016, respectively.  Amounts amortized totaled $6.6 million and $7.1 million during the nine months ended September 30, 2017 and 2016, respectively.  The unamortized balance of deferred sales inducements was $44.3 million and $49.4 million at September 30, 2017 and December 31, 2016, respectively.  The balance of insurance liabilities for persistency bonus benefits was $.4 million and $.5 million at September 30, 2017 and December 31, 2016, respectively.
OUT-OF-PERIOD ADJUSTMENTS
OUT-OF-PERIOD ADJUSTMENTS
OUT-OF-PERIOD ADJUSTMENTS

In the third quarter of 2017, we recorded the net effect of an out-of-period adjustment related to the calculation of certain life insurance liabilities in our Colonial Penn segment which decreased insurance policy benefits by $2.5 million, increased tax expense by $.9 million and increased our net income by $1.6 million (or 1 cent per diluted share). In the second quarter of 2017, we recorded the net effect of an out-of-period adjustment related to the calculation of certain long-term care insurance liabilities in our Bankers Life segment which decreased insurance policy benefits by $1.7 million, increased tax expense by $.6 million and increased our net income by $1.1 million (or 1 cent per diluted share). We evaluated these adjustments taking into account both qualitative and quantitative factors and considered the impact of these adjustments in relation to each period, as well as the periods in which they originated. The impact of recognizing these adjustments in prior years was not significant to any individual period. Management believes these adjustments are immaterial to the consolidated financial statements and all previously issued financial statements.
RECENTLY ISSUED ACCOUNTING STANDARDS
RECENTLY ISSUED ACCOUNTING STANDARDS
RECENTLY ISSUED ACCOUNTING STANDARDS

Pending Accounting Standards

In May 2014, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance for recognizing revenue from contracts with customers. Certain contracts with customers are specifically excluded from this guidance, including insurance contracts. The core principle of the new guidance is that an entity should recognize revenue when it transfers promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance will be effective for the Company on January 1, 2018 and permits two methods of transition upon adoption; full retrospective and modified retrospective. Under the full retrospective method, prior periods would be restated under the new revenue standard, providing for comparability in all periods presented. Under the modified retrospective method, prior periods would not be restated. Instead, revenues and other disclosures for pre-2018 periods would be provided in the notes to the financial statements as previously reported under the current revenue standard. The new guidance will impact our accounting for various distribution and marketing agreements with other insurance companies pursuant to which Bankers Life's career agents distribute third party products including prescription drug and Medicare Advantage plans. The revenue associated with these distribution agreements has been less than 1 percent of our total revenue. Our annual fee income earned during a calendar year will not change, but the amount recognized during each quarterly period will vary based on the sales of such products in each period. Accordingly, the adoption of this guidance is not expected to have a material impact on our consolidated financial statements. The Company expects to adopt the new guidance using the modified retrospective method.

In January 2016, the FASB issued authoritative guidance related to the recognition and measurement of financial assets and financial liabilities which made targeted improvements to GAAP as follows:

(i)
Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
(ii)
Simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value.
(iii)
Eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet.
(iv)
Require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.
(v)
Require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments.
(vi)
Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements.
(vii)
Clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity's other deferred tax assets.

An entity should apply this guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption of the guidance. The guidance will be effective for the Company for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption of the guidance is not permitted; except that item (v) above is permitted to be adopted early as of the beginning of the fiscal year of adoption. The Company currently holds equity securities classified as available for sale securities that are measured at fair value with changes in fair value recognized through accumulated other comprehensive income. Upon adoption of this guidance, changes in fair value of such equity securities will be recognized through net income. Based upon the equity securities held at September 30, 2017, the estimated impact of the new guidance, assuming it was adopted on October 1, 2017, would be a cumulative effect adjustment that would increase retained earnings by approximately $15 million with a corresponding decrease to accumulated other comprehensive income of approximately $15 million. The Company may experience an increase in volatility in the income statement due to the requirement to measure equity investments at fair value with changes in fair value recognized in income. In addition, the Company will be required to modify certain disclosures upon adoption.

In February 2016, the FASB issued authoritative guidance related to accounting for leases, requiring lessees to report most leases on their balance sheets, regardless of whether the lease is classified as a finance lease or an operating lease. For lessees, the initial lease liability is equal to the present value of future lease payments, and a corresponding asset, adjusted for certain items, is also recorded. Expense recognition for lessees will remain similar to current accounting requirements for capital and operating leases. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The guidance will be effective for the Company for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company has not yet determined the expected impact of adoption of this guidance on its consolidated financial position, results of operations or cash flows.

In June 2016, the FASB issued authoritative guidance related to the measurement of credit losses on financial instruments. The new guidance replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to form credit loss estimates. The guidance will be effective for the Company for fiscal years beginning in 2020, including interim periods within the fiscal year. Early adoption is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company has not yet determined the expected impact of adoption of this guidance on its consolidated financial position, results of operations or cash flows.

In August 2016, the FASB issued authoritative guidance related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance addresses eight specific cash flow issues including debt prepayment or debt extinguishment costs, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, and others. The guidance will be effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this guidance will result in reclassifications to certain cash receipts and payments within our consolidated statement of cash flows, but will have no impact on our consolidated financial position, results of operations or cash flows.

In November 2016, the FASB issued authoritative guidance to address the diversity in practice that currently exists regarding the classification and presentation of changes in restricted cash on the statement of cash flows. The new guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Entities will also be required to disclose information about the nature of their restricted cash and restricted cash equivalents. Additionally, if cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item in the statement of financial position, entities will be required to present a reconciliation, either on the face of the statement of cash flows or disclosed in the notes, of the totals in the statement of cash flows to the related line item captions in the statement of financial position. The guidance will be effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The adoption of this guidance will impact the presentation of our consolidated statement of cash flows and related cash flow disclosures, but will have no impact on our consolidated financial position, results of operations or cash flows.

In January 2017, the FASB issued authoritative guidance that removes Step 2 of the goodwill impairment test under current guidance, which requires a hypothetical purchase price allocation. The new guidance requires an impairment charge to be recognized for the amount by which the carrying amount exceeds the reported unit's fair value. Upon adoption, the guidance is to be applied prospectively. The guidance will be effective for the Company on January 1, 2020, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows.

In March 2017, the FASB issued authoritative guidance related to the premium amortization on purchased callable debt securities. The guidance shortens the amortization period for certain callable debt securities held at a premium. Specifically, the new guidance requires the premium to be amortized to the earliest call date. The guidance does not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The guidance will be effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the guidance in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The guidance should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company has not yet determined the expected impact of adoption of this guidance on our consolidated financial position, results of operations or cash flows.

In May 2017, the FASB issued authoritative guidance related to which changes to the terms or conditions of a share-based award require an entity to apply modification accounting. The guidance will be effective for the Company in 2018. The guidance is to be applied prospectively to an award modified on or after the adoption date. The adoption of this guidance is not expected to have a material impact to the Company's consolidated financial position, results of operations or cash flows.

In August 2017, the FASB issued authoritative guidance related to derivatives and hedging. The new guidance expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instruments and the hedged item in the financial statements. The new guidance also includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The guidance will be effective for the Company for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company has not yet determined the expected impact of adoption of this guidance on its consolidated financial position, results of operations or cash flows.

Adopted Accounting Standards

In March 2016, the FASB issued authoritative guidance that clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under this guidance is required to assess the embedded call (put) options solely in accordance with a four-step decision sequence. The guidance is effective for the Company on January 1, 2017. The adoption of this guidance had no effect on our consolidated financial statements.
In March 2016, the FASB issued authoritative guidance related to several aspects of the accounting for share-based payment transactions, including the income tax consequences, accounting policy for forfeiture rate assumptions, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new guidance requires all income tax effects of stock-based compensation awards to be recognized in the income statement when the awards vest or are settled. The new guidance also allows an employer to withhold shares upon settlement of an award to satisfy the employer's tax withholding requirements up to the highest marginal tax rate applicable to employees, without resulting in liability classification of the award. Current guidance strictly limits the withholding to the employer's minimum statutory tax withholding requirement. The guidance was effective for the Company on January 1, 2017. The impact of adoption was as follows (dollars in millions):
 
January 1, 2017
 
 
 
Effect of Adoption of Authoritative Guidance
 
 
 
Amounts prior to effect of adoption of authoritative guidance
 
Election to account for forfeitures as they occur
 
Recognition of excess tax benefits
 
As adjusted
 
 
 
 
 
 
 
 
Income tax assets
$
1,029.9

 
$
.3

 
$
15.7

 
$
1,045.9

Valuation allowance for deferred income tax assets
(240.2
)
 
—

 
(15.7
)
 
(255.9
)
Income tax assets, net
789.7

 
.3

 
—

 
790.0

Total assets
31,975.2

 
.3

 
—

 
31,975.5

 
 
 
 
 
 
 
 
Additional paid-in capital
3,212.1

 
.9

 
—

 
3,213.0

Retained earnings
650.7

 
(.6
)
 
—

 
650.1

Total shareholders' equity
4,486.9

 
.3

 
—

 
4,487.2

 
 
 
 
 
 
 
 
Total liabilities and shareholders' equity
31,975.2

 
.3

 
—

 
31,975.5


 
Nine months ended
 
September 30, 2016
 
Amounts prior to effect of adoption of authoritative guidance
 
Effect of adoption of authoritative guidance
 
As adjusted
Cash flows from operating activities:
 
 
 
 
 
Other operating costs
$
(555.4
)
 
$
3.3

 
$
(552.1
)
Net cash flow from operating activities
581.5

 
3.3

 
584.8

 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
Payments to repurchase common stock
(206.7
)
 
(3.3
)
 
(210.0
)
Net cash used by financing activities
(34.2
)
 
(3.3
)
 
(37.5
)
 
 
 
 
 
 
Net increase in cash and cash equivalents
273.7

 
—

 
273.7



In October 2016, the FASB issued authoritative guidance to amend the consolidation guidance on how a reporting entity that is the single decision maker of a VIE should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE. The guidance is effective for the Company on January 1, 2017. The adoption of this guidance had no impact on our consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF CASH FLOWS

The following disclosures supplement our consolidated statement of cash flows.

The following reconciles net income to net cash from operating activities (dollars in millions):

 
Nine months ended
 
September 30,
 
2017
 
2016
Cash flows from operating activities:
 
 
 
Net income
$
246.5

 
$
124.0

Adjustments to reconcile net income to net cash from operating activities:
 
 
 

Amortization and depreciation
200.8

 
199.1

Income taxes
50.6

 
43.0

Insurance liabilities
321.5

 
310.2

Accrual and amortization of investment income
(233.2
)
 
(93.4
)
Deferral of policy acquisition costs
(183.4
)
 
(179.4
)
Net realized investment gains
(52.3
)
 
(23.3
)
Loss on reinsurance transaction
—

 
75.4

Cash and cash equivalents received upon recapture of reinsurance
—

 
73.6

Loss on extinguishment of borrowings related to a variable interest entity
5.5

 
—

Other
77.7

 
55.6

Net cash from operating activities
$
433.7

 
$
584.8



Other non-cash items not reflected in the investing and financing activities sections of the consolidated statement of cash flows (dollars in millions):

 
Nine months ended
 
September 30,
 
2017
 
2016
Stock options, restricted stock and performance units
$
17.8

 
$
18.9

Market value of investments recaptured in connection with the termination of reinsurance agreements with BRe
—

 
431.1

INVESTMENTS IN VARIABLE INTEREST ENTITIES
INVESTMENTS IN VARIABLE INTEREST ENTITIES
INVESTMENTS IN VARIABLE INTEREST ENTITIES

We have concluded that we are the primary beneficiary with respect to certain VIEs, which are consolidated in our financial statements.  In consolidating the VIEs, we consistently use the financial information most recently distributed to investors in the VIE.

All of the VIEs are collateralized loan trusts that were established to issue securities to finance the purchase of corporate loans and other permitted investments.  The assets held by the trusts are legally isolated and not available to the Company.  The liabilities of the VIEs are expected to be satisfied from the cash flows generated by the underlying loans held by the trusts, not from the assets of the Company.  The Company has no financial obligation to the VIEs beyond its investment in each VIE.

Certain of our insurance subsidiaries are noteholders of the VIEs.  Another subsidiary of the Company is the investment manager for the VIEs.  As such, it has the power to direct the most significant activities of the VIEs which materially impacts the economic performance of the VIEs.

The following tables provide supplemental information about the assets and liabilities of the VIEs which have been consolidated in accordance with authoritative guidance (dollars in millions):
 
September 30, 2017
 
VIEs
 
Eliminations
 
Net effect on
consolidated
balance sheet
Assets:
 
 
 
 
 
Investments held by variable interest entities
$
1,382.5

 
$
—

 
$
1,382.5

Notes receivable of VIEs held by insurance subsidiaries
—

 
(159.9
)
 
(159.9
)
Cash and cash equivalents held by variable interest entities
105.9

 
—

 
105.9

Accrued investment income
2.0

 
(.1
)
 
1.9

Income tax assets, net
(.6
)
 
—

 
(.6
)
Other assets
13.3

 
(1.4
)
 
11.9

Total assets
$
1,503.1

 
$
(161.4
)
 
$
1,341.7

Liabilities:
 

 
 

 
 

Other liabilities
$
145.9

 
$
(3.5
)
 
$
142.4

Borrowings related to variable interest entities
1,198.2

 
—

 
1,198.2

Notes payable of VIEs held by insurance subsidiaries
172.9

 
(172.9
)
 
—

Total liabilities
$
1,517.0

 
$
(176.4
)
 
$
1,340.6


 
December 31, 2016
 
VIEs
 
Eliminations
 
Net effect on
consolidated
balance sheet
Assets:
 
 
 
 
 
Investments held by variable interest entities
$
1,724.3

 
$
—

 
$
1,724.3

Notes receivable of VIEs held by insurance subsidiaries
—

 
(204.2
)
 
(204.2
)
Cash and cash equivalents held by variable interest entities
189.3

 
—

 
189.3

Accrued investment income
3.0

 
(.1
)
 
2.9

Income tax assets, net
6.4

 
(1.3
)
 
5.1

Other assets
13.1

 
(1.8
)
 
11.3

Total assets
$
1,936.1

 
$
(207.4
)
 
$
1,728.7

Liabilities:
 

 
 

 
 

Other liabilities
$
81.8

 
$
(6.4
)
 
$
75.4

Borrowings related to variable interest entities
1,662.8

 
—

 
1,662.8

Notes payable of VIEs held by insurance subsidiaries
203.3

 
(203.3
)
 
—

Total liabilities
$
1,947.9

 
$
(209.7
)
 
$
1,738.2



The investment portfolios held by the VIEs are primarily comprised of commercial bank loans to corporate obligors which are almost entirely rated below-investment grade.  At September 30, 2017, such loans had an amortized cost of $1,381.7 million; gross unrealized gains of $8.4 million; gross unrealized losses of $7.6 million; and an estimated fair value of $1,382.5 million.

The following table sets forth the amortized cost and estimated fair value of the investments held by the VIEs at September 30, 2017, by contractual maturity.  Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.
 
Amortized
cost
 
Estimated
fair
value
 
(Dollars in millions)
Due in one year or less
$
5.9

 
$
5.9

Due after one year through five years
499.4

 
500.1

Due after five years through ten years
876.4

 
876.5

Total
$
1,381.7

 
$
1,382.5



During the first nine months of 2017, the VIEs recognized net realized investment losses of $2.5 million, which were comprised of: (i) $2.2 million of net gains from the sales of investments; (ii) $4.3 million of losses on the dissolution of VIEs; and (iii) $.4 million of writedowns of investments for other than temporary declines in fair value recognized through net income. During the first nine months of 2016, the VIEs recognized net realized investment losses of $20.6 million, which were comprised of: (i) $12.1 million of net losses from the sales of fixed maturities; (ii) a $7.3 million loss on the dissolution of a VIE; and (iii) $1.2 million of writedowns of investments for other than temporary declines in fair value recognized through net income.

At September 30, 2017, there were no investments held by the VIEs that were in default or considered nonperforming.

During the first nine months of 2017, $2.2 million of net gains from the sale of investments included sales of $86.0 million which resulted in gross investment losses (before income taxes) of $2.0 million. During the first nine months of 2016, $186.6 million of investments held by the VIEs were sold which resulted in gross investment losses (before income taxes) of $20.3 million.

At September 30, 2017, the VIEs held:  (i) investments with a fair value of $382.5 million and gross unrealized losses of $7.1 million that had been in an unrealized loss position for less than twelve months; and (ii) investments with a fair value of $11.0 million and gross unrealized losses of $.5 million that had been in an unrealized loss position for greater than twelve months.

At December 31, 2016, the VIEs held: (i) investments with a fair value of $93.8 million and gross unrealized losses of $.9 million that had been in an unrealized loss position for less than twelve months; and (ii) investments with a fair value of $143.9 million and gross unrealized losses of $2.9 million that had been in an unrealized loss position for greater than twelve months.

The investments held by the VIEs are evaluated for other-than-temporary declines in fair value in a manner that is consistent with the Company's fixed maturities, available for sale.

In addition, the Company, in the normal course of business, makes passive investments in structured securities issued by VIEs for which the Company is not the investment manager.  These structured securities include asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, residential mortgage-backed securities and collateralized mortgage obligations.  Our maximum exposure to loss on these securities is limited to our cost basis in the investment.  We have determined that we are not the primary beneficiary of these structured securities due to the relative size of our investment in comparison to the total principal amount of the individual structured securities and the level of credit subordination which reduces our obligation to absorb gains or losses.

At September 30, 2017, we held investments in various limited partnerships, in which we are not the primary beneficiary, totaling $315.1 million (classified as other invested assets).  At September 30, 2017, we had unfunded commitments to these partnerships and other investments of $266.2 million.  Our maximum exposure to loss on these investments is limited to the amount of our investment.
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and, therefore, represents an exit price, not an entry price.  We carry certain assets and liabilities at fair value on a recurring basis, including fixed maturities, equity securities, trading securities, investments held by VIEs, derivatives, separate account assets and embedded derivatives.  We carry our company-owned life insurance policy, which is invested in a series of mutual funds, at its cash surrender value which approximates fair value. In addition, we disclose fair value for certain financial instruments, including mortgage loans, policy loans, cash and cash equivalents, insurance liabilities for interest-sensitive products, investment borrowings, notes payable and borrowings related to VIEs.

The degree of judgment utilized in measuring the fair value of financial instruments is largely dependent on the level to which pricing is based on observable inputs.  Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information.  Financial instruments with readily available active quoted prices would be considered to have fair values based on the highest level of observable inputs, and little judgment would be utilized in measuring fair value.  Financial instruments that rarely trade would often have fair value based on a lower level of observable inputs, and more judgment would be utilized in measuring fair value.

Valuation Hierarchy

There is a three-level hierarchy for valuing assets or liabilities at fair value based on whether inputs are observable or unobservable.

•
Level 1 – includes assets and liabilities valued using inputs that are unadjusted quoted prices in active markets for identical assets or liabilities.  Our Level 1 assets primarily include cash and cash equivalents and exchange traded securities.

•
Level 2 – includes assets and liabilities valued using inputs that are quoted prices for similar assets in an active market, quoted prices for identical or similar assets in a market that is not active, observable inputs, or observable inputs that can be corroborated by market data.  Level 2 assets and liabilities include those financial instruments that are valued by independent pricing services using models or other valuation methodologies.  These models consider various inputs such as credit rating, maturity, corporate credit spreads, reported trades and other inputs that are observable or derived from observable information in the marketplace or are supported by transactions executed in the marketplace. Financial assets in this category primarily include:  certain publicly registered and privately placed corporate fixed maturity securities; certain government or agency securities; certain mortgage and asset-backed securities; certain equity securities; most investments held by our consolidated VIEs; certain mutual fund investments; most short-term investments; and non-exchange-traded derivatives such as call options. Financial liabilities in this category include investment borrowings, notes payable and borrowings related to VIEs.

•
Level 3 – includes assets and liabilities valued using unobservable inputs that are used in model-based valuations that contain management assumptions.  Level 3 assets and liabilities include those financial instruments whose fair value is estimated based on broker/dealer quotes, pricing services or internally developed models or methodologies utilizing significant inputs not based on, or corroborated by, readily available market information.  Financial assets in this category include certain corporate securities (primarily certain below-investment grade privately placed securities), certain structured securities, mortgage loans, and other less liquid securities.  Financial liabilities in this category include our insurance liabilities for interest-sensitive products, which includes embedded derivatives (including embedded derivatives related to our fixed index annuity products and to a modified coinsurance arrangement) since their values include significant unobservable inputs including actuarial assumptions.

At each reporting date, we classify assets and liabilities into the three input levels based on the lowest level of input that is significant to the measurement of fair value for each asset and liability reported at fair value.  This classification is impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction and overall market conditions.  Our assessment of the significance of a particular input to the fair value measurement and the ultimate classification of each asset and liability requires judgment and is subject to change from period to period based on the observability of the valuation inputs. Any transfers between levels are reported as having occurred at the beginning of the period. There were no transfers between Level 1 and Level 2 in both the first nine months of 2017 and 2016.

The vast majority of our fixed maturity and equity securities, including those held in trading portfolios and those held by consolidated VIEs, short-term and separate account assets use Level 2 inputs for the determination of fair value.  These fair values are obtained primarily from independent pricing services, which use Level 2 inputs for the determination of fair value.  Our Level 2 assets are valued as follows:

•Fixed maturities available for sale, equity securities and trading securities

Corporate securities are generally priced using market and income approaches. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets, issuer rating, benchmark yields, maturity, and credit spreads.

U.S. Treasuries and obligations of U.S. Government corporations and agencies are generally priced using the market approach. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets and maturity.

States and political subdivisions are generally priced using the market approach. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets, new issuances and credit spreads.

Asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, mortgage pass-through securities and collateralized mortgage obligations are generally priced using market and income approaches. Inputs generally consist of quoted prices in inactive markets, spreads on actively traded securities, expected prepayments, expected default rates, expected recovery rates, and issue specific information including, but not limited to, collateral type, seniority and vintage.

Equity securities (primarily comprised of non-redeemable preferred stock) are generally priced using the market approach. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets, issuer rating, benchmark yields, maturity, and credit spreads.

•
Investments held by VIEs

Corporate securities are generally priced using market and income approaches using pricing vendors. Inputs generally consist of issuer rating, benchmark yields, maturity, and credit spreads.

•
Other invested assets - derivatives

The fair value measurements for derivative instruments, including embedded derivatives requiring bifurcation, are determined based on the consideration of several inputs including closing exchange or over-the-counter market price quotes; time value and volatility factors underlying options; market interest rates; and non-performance risk.

Third party pricing services normally derive security prices through recently reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information.  If there are no recently reported trades, the third party pricing services may use matrix or model processes to develop a security price where future cash flow expectations are discounted at an estimated risk-adjusted market rate.  The number of prices obtained for a given security is dependent on the Company's analysis of such prices as further described below.

As the Company is responsible for the determination of fair value, we have control processes designed to ensure that the fair values received from third-party pricing sources are reasonable and the valuation techniques and assumptions used appear reasonable and consistent with prevailing market conditions. Additionally, when inputs are provided by third-party pricing sources, we have controls in place to review those inputs for reasonableness. As part of these controls, we perform monthly quantitative and qualitative analysis on the prices received from third parties to determine whether the prices are reasonable estimates of fair value.  The Company's analysis includes:  (i) a review of the methodology used by third party pricing services; (ii) where available, a comparison of multiple pricing services' valuations for the same security; (iii) a review of month to month price fluctuations; (iv) a review to ensure valuations are not unreasonably dated; and (v) back testing to compare actual purchase and sale transactions with valuations received from third parties.  As a result of such procedures, the Company may conclude the prices received from third parties are not reflective of current market conditions.  In those instances, we may request additional pricing quotes or apply internally developed valuations.  However, the number of such instances is insignificant and the aggregate change in value of such investments is not materially different from the original prices received.

The categorization of the fair value measurements of our investments priced by independent pricing services was based upon the Company's judgment of the inputs or methodologies used by the independent pricing services to value different asset classes.  Such inputs typically include:  benchmark yields, reported trades, broker dealer quotes, issuer spreads, benchmark securities, bids, offers and other relevant data.  The Company categorizes such fair value measurements based upon asset classes and the underlying observable or unobservable inputs used to value such investments.

For securities that are not priced by pricing services and may not be reliably priced using pricing models, we obtain broker quotes.  These broker quotes are non-binding and represent an exit price, but assumptions used to establish the fair value may not be observable and therefore represent Level 3 inputs.  Approximately 45 percent of our Level 3 fixed maturity securities were valued using unadjusted broker quotes or broker-provided valuation inputs.  The remaining Level 3 fixed maturity investments do not have readily determinable market prices and/or observable inputs.  For these securities, we use internally developed valuations.  Key assumptions used to determine fair value for these securities may include risk premiums, projected performance of underlying collateral and other factors involving significant assumptions which may not be reflective of an active market.  For certain investments, we use a matrix or model process to develop a security price where future cash flow expectations are discounted at an estimated market rate.  The pricing matrix incorporates term interest rates as well as a spread level based on the issuer's credit rating, other factors relating to the issuer, and the security's maturity.  In some instances issuer-specific spread adjustments, which can be positive or negative, are made based upon internal analysis of security specifics such as liquidity, deal size, and time to maturity.

For certain embedded derivatives, we use actuarial assumptions in the determination of fair value which we consider to be Level 3 inputs.

The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at September 30, 2017 is as follows (dollars in millions):

 
Quoted prices in active markets
for identical assets or liabilities
(Level 1)
 
Significant other observable inputs
(Level 2)
 
Significant unobservable inputs
 (Level 3)
 
Total
Assets:
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
Corporate securities
$
—

 
$
14,394.3

 
$
255.7

 
$
14,650.0

United States Treasury securities and obligations of United States government corporations and agencies
—

 
172.3

 
—

 
172.3

States and political subdivisions
—

 
2,077.0

 
—

 
2,077.0

Debt securities issued by foreign governments
—

 
57.1

 
4.0

 
61.1

Asset-backed securities
—

 
2,726.2

 
59.9

 
2,786.1

Collateralized debt obligations
—

 
237.9

 
—

 
237.9

Commercial mortgage-backed securities
—

 
1,338.9

 
—

 
1,338.9

Mortgage pass-through securities
—

 
2.2

 
—

 
2.2

Collateralized mortgage obligations
—

 
804.4

 
—

 
804.4

Total fixed maturities, available for sale
—

 
21,810.3

 
319.6

 
22,129.9

Equity securities - corporate securities
477.8

 
213.9

 
21.6

 
713.3

Trading securities:
 

 
 

 
 

 
 

Corporate securities
—

 
21.1

 
—

 
21.1

United States Treasury securities and obligations of United States government corporations and agencies
—

 
.5

 
—

 
.5

Asset-backed securities
—

 
101.2

 
—

 
101.2

Collateralized debt obligations
—

 
2.7

 
—

 
2.7

Commercial mortgage-backed securities
—

 
93.3

 
—

 
93.3

Collateralized mortgage obligations
—

 
72.5

 
—

 
72.5

Equity securities
3.1

 
—

 
—

 
3.1

Total trading securities
3.1

 
291.3

 
—

 
294.4

Investments held by variable interest entities - corporate securities
—

 
1,377.5

 
5.0

 
1,382.5

Other invested assets - derivatives
—

 
142.2

 
—

 
142.2

Assets held in separate accounts
—

 
4.8

 
—

 
4.8

Total assets carried at fair value by category
$
480.9

 
$
23,840.0

 
$
346.2

 
$
24,667.1

 
 
 
 
 
 
 
 
Liabilities:
 

 
 

 
 

 
 

Future policy benefits - embedded derivatives associated with fixed index annuity products
$
—

 
$
—

 
$
1,249.3

 
$
1,249.3



The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2016 is as follows (dollars in millions):

 
Quoted prices in active markets
 for identical assets or liabilities
(Level 1)
 
Significant other observable inputs
 (Level 2)
 
Significant unobservable inputs 
(Level 3)
 
Total
Assets:
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
Corporate securities
$
—

 
$
13,252.4

 
$
258.5

 
$
13,510.9

United States Treasury securities and obligations of United States government corporations and agencies
—

 
164.3

 
—

 
164.3

States and political subdivisions
—

 
1,988.9

 
—

 
1,988.9

Debt securities issued by foreign governments
—

 
33.0

 
3.9

 
36.9

Asset-backed securities
—

 
2,649.9

 
60.4

 
2,710.3

Collateralized debt obligations
—

 
225.3

 
5.4

 
230.7

Commercial mortgage-backed securities
—

 
1,504.2

 
32.0

 
1,536.2

Mortgage pass-through securities
—

 
2.5

 
—

 
2.5

Collateralized mortgage obligations
—

 
915.5

 
—

 
915.5

Total fixed maturities, available for sale
—

 
20,736.0

 
360.2

 
21,096.2

Equity securities - corporate securities
359.9

 
199.1

 
25.2

 
584.2

Trading securities:
 

 
 

 
 

 
 

Corporate securities
—

 
19.0

 
—

 
19.0

United States Treasury securities and obligations of United States government corporations and agencies
—

 
.5

 
—

 
.5

Asset-backed securities
—

 
94.3

 
—

 
94.3

Collateralized debt obligations
—

 
2.4

 
—

 
2.4

Commercial mortgage-backed securities
—

 
163.9

 
—

 
163.9

Collateralized mortgage obligations
—

 
78.4

 
—

 
78.4

Equity securities
4.9

 
—

 
—

 
4.9

Total trading securities
4.9

 
358.5

 
—

 
363.4

Investments held by variable interest entities - corporate securities
—

 
1,724.3

 
—

 
1,724.3

Other invested assets - derivatives
—

 
111.9

 
—

 
111.9

Assets held in separate accounts
—

 
4.7

 
—

 
4.7

Total assets carried at fair value by category
$
364.8

 
$
23,134.5

 
$
385.4

 
$
23,884.7

 
 
 
 
 
 
 
 
Liabilities:
 

 
 

 
 

 
 

Future policy benefits - embedded derivatives associated with fixed index annuity products
$
—

 
$
—

 
$
1,092.3

 
$
1,092.3






For those financial instruments disclosed at fair value, we use the following methods and assumptions to determine the estimated fair values:

Mortgage loans and policy loans.  We discount future expected cash flows based on interest rates currently being offered for similar loans with similar risk characteristics.  We aggregate loans with similar characteristics in our calculations.  The fair value of policy loans approximates their carrying value.

Company-owned life insurance is backed by a series of mutual funds and is carried at cash surrender value which approximates estimated fair value.

Cash and cash equivalents include commercial paper, invested cash and other investments purchased with original maturities of less than three months. We carry them at amortized cost, which approximates estimated fair value.

Liabilities for policyholder account balances.  The estimated fair value of insurance liabilities for policyholder account balances was approximately equal to its carrying value as interest rates credited on the vast majority of account balances approximate current rates paid on similar products and because these rates are not generally guaranteed beyond one year.

Investment borrowings, notes payable and borrowings related to variable interest entities.  For publicly traded debt, we use current fair values.  For other notes, we use discounted cash flow analyses based on our current incremental borrowing rates for similar types of borrowing arrangements.

The fair value measurements for our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions):
 
September 30, 2017
 
Quoted prices in active markets for identical assets or liabilities
(Level 1)
 
Significant other observable inputs
 (Level 2)
 
Significant unobservable inputs 
(Level 3)
 
Total estimated fair value
 
Total carrying amount
Assets:
 
 
 
 
 
 
 
 
 
Mortgage loans
$
—

 
$
—

 
$
1,705.8

 
$
1,705.8

 
$
1,667.8

Policy loans
—

 
—

 
114.6

 
114.6

 
114.6

Other invested assets:
 
 
 
 
 
 
 
 
 
Company-owned life insurance
—

 
178.8

 
—

 
178.8

 
178.8

Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
Unrestricted
765.9

 
—

 
—

 
765.9

 
765.9

Held by variable interest entities
105.9

 
—

 
—

 
105.9

 
105.9

Liabilities:
 
 
 
 
 
 
 
 
 
Policyholder account balances
—

 
—

 
11,113.5

 
11,113.5

 
11,113.5

Investment borrowings
—

 
1,650.1

 
—

 
1,650.1

 
1,646.9

Borrowings related to variable interest entities
—

 
1,215.1

 
—

 
1,215.1

 
1,198.2

Notes payable – direct corporate obligations
—

 
970.5

 
—

 
970.5

 
914.4


 
December 31, 2016
 
Quoted prices in active markets for identical assets or liabilities
(Level 1)
 
Significant other observable inputs
 (Level 2)
 
Significant unobservable inputs 
(Level 3)
 
Total estimated fair value
 
Total carrying amount
Assets:
 
 
 
 
 
 
 
 
 
Mortgage loans
$
—

 
$
—

 
$
1,800.1

 
$
1,800.1

 
$
1,768.0

Policy loans
—

 
—

 
112.0

 
112.0

 
112.0

Other invested assets:
 
 
 
 
 
 
 
 
 
Company-owned life insurance
—

 
165.0

 
—

 
165.0

 
165.0

Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
Unrestricted
473.6

 
5.3

 
—

 
478.9

 
478.9

Held by variable interest entities
189.3

 
—

 
—

 
189.3

 
189.3

Liabilities:
 
 
 
 
 
 
 
 
 
Policyholder account balances
—

 
—

 
10,912.7

 
10,912.7

 
10,912.7

Investment borrowings
—

 
1,650.0

 
—

 
1,650.0

 
1,647.4

Borrowings related to variable interest entities
—

 
1,675.2

 
—

 
1,675.2

 
1,662.8

Notes payable – direct corporate obligations
—

 
931.9

 
—

 
931.9

 
912.9



The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended September 30, 2017 (dollars in millions):
 
 
September 30, 2017
 
 
 
 
Beginning balance as of June 30, 2017
 
Purchases, sales, issuances and settlements, net (b)
 
Total realized and unrealized gains (losses) included in net income
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
Transfers into Level 3 (a)
 
Transfers out of Level 3 (a)
 
Ending balance as of September 30, 2017
 
Amount of total gains (losses) for the three months ended September 30, 2017 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
 
$
263.3

 
$
(44.8
)
 
$
1.7

 
$
1.3

 
$
34.2

 
$
—

 
$
255.7

 
$
(3.2
)
Debt securities issued by foreign governments
 
3.9

 
—

 
—

 
.1

 
—

 
—

 
4.0

 
—

Asset-backed securities
 
59.6

 
(1.3
)
 
—

 
.7

 
7.1

 
(6.2
)
 
59.9

 
—

Collateralized debt obligations
 
2.5

 
(2.5
)
 
—

 
—

 
—

 
—

 
—

 
—

Collateralized mortgage obligations
 
.2

 
—

 
—

 
(.2
)
 
—

 
—

 
—

 
—

Total fixed maturities, available for sale
 
329.5

 
(48.6
)
 
1.7

 
1.9

 
41.3

 
(6.2
)
 
319.6

 
(3.2
)
Equity securities - corporate securities
 
24.6

 
(8.3
)
 
6.4

 
(1.1
)
 
—

 
—

 
21.6

 
(.5
)
Investments held by variable interest entities - corporate securities
 
—

 
—

 
—

 
—

 
5.0

 
—

 
5.0

 
—

Liabilities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Future policy benefits - embedded derivatives associated with fixed index annuity products
 
(1,205.4
)
 
(56.3
)
 
12.4

 
—

 
—

 
—

 
(1,249.3
)
 
12.4

_________
(a)
Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.
(b)
Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the three months ended September 30, 2017 (dollars in millions):

 
Purchases
 
Sales
 
Issuances
 
Settlements
 
Purchases, sales, issuances and settlements, net
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
Corporate securities
$
15.3

 
$
(60.1
)
 
$
—

 
$
—

 
$
(44.8
)
Asset-backed securities
9.9

 
(11.2
)
 
—

 
—

 
(1.3
)
Collateralized debt obligations
—

 
(2.5
)
 
—

 
—

 
(2.5
)
Total fixed maturities, available for sale
25.2

 
(73.8
)
 
—

 
—

 
(48.6
)
Equity securities - corporate securities
—

 
(8.3
)
 
—

 
—

 
(8.3
)
Liabilities:
 
 
 
 
 
 
 
 
 
Future policy benefits - embedded derivatives associated with fixed index annuity products
(41.0
)
 
1.8

 
(31.4
)
 
14.3

 
(56.3
)




The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the nine months ended September 30, 2017 (dollars in millions):
 
 
September 30, 2017
 
 
 
 
Beginning balance as of December 31, 2016
 
Purchases, sales, issuances and settlements, net (b)
 
Total realized and unrealized gains (losses) included in net income
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
Transfers into Level 3 (a)
 
Transfers out of Level 3 (a)
 
Ending balance as of September 30, 2017
 
Amount of total gains (losses) for the nine months ended September 30, 2017 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
 
$
258.5

 
$
(44.1
)
 
$
9.5

 
$
.6

 
$
31.2

 
$
—

 
$
255.7

 
$
(6.5
)
Debt securities issued by foreign governments
 
3.9

 
—

 
—

 
.1

 
—

 
—

 
4.0

 
—

Asset-backed securities
 
60.4

 
3.8

 
—

 
2.3

 
4.2

 
(10.8
)
 
59.9

 
—

Collateralized debt obligations
 
5.4

 
(2.5
)
 
—

 
—

 
—

 
(2.9
)
 
—

 
—

Commercial mortgage-backed securities
 
32.0

 
—

 
—

 
—

 
—

 
(32.0
)
 
—

 
—

Total fixed maturities, available for sale
 
360.2

 
(42.8
)
 
9.5

 
3.0

 
35.4

 
(45.7
)
 
319.6

 
(6.5
)
Equity securities - corporate securities
 
25.2

 
(8.5
)
 
6.3

 
(1.4
)
 
—

 
—

 
21.6

 
(.5
)
Investments held by variable interest entities - corporate securities
 
—

 
5.0

 
—

 
—

 
—

 
—

 
5.0

 
—

Liabilities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Future policy benefits - embedded derivatives associated with fixed index annuity products
 
(1,092.3
)
 
(174.2
)
 
17.2

 
—

 
—

 
—

 
(1,249.3
)
 
17.2

_________
(a)
Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.
(b)
Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the nine months ended September 30, 2017 (dollars in millions):

 
Purchases
 
Sales
 
Issuances
 
Settlements
 
Purchases, sales, issuances and settlements, net
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
Corporate securities
$
64.3

 
$
(108.4
)
 
$
—

 
$
—

 
$
(44.1
)
Asset-backed securities
21.9

 
(18.1
)
 
—

 
—

 
3.8

Collateralized debt obligations
—

 
(2.5
)
 
—

 
—

 
(2.5
)
Total fixed maturities, available for sale
86.2

 
(129.0
)
 
—

 
—

 
(42.8
)
Equity securities - corporate securities
—

 
(8.5
)
 
—

 
—

 
(8.5
)
Investments held by variable interest entities - corporate securities
5.0

 
—

 
—

 
—

 
5.0

Liabilities:
 
 
 
 
 
 
 
 
 
Future policy benefits - embedded derivatives associated with fixed index annuity products
(130.1
)
 
5.3

 
(95.7
)
 
46.3

 
(174.2
)




The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended September 30, 2016 (dollars in millions):

 
September 30, 2016
 
 
 
Beginning balance as of June 30, 2016
 
Purchases, sales, issuances and settlements, net (b)
 
Total realized and unrealized gains (losses) included in net income
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
Transfers into Level 3 (a)
 
Transfers out of Level 3 (a)
 
Ending balance as of September 30, 2016
 
Amount of total gains (losses) for the three months ended September 30, 2016 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
$
174.6

 
$
118.8

 
$
—

 
$
(4.9
)
 
$
—

 
$
—

 
$
288.5

 
$
—

Debt securities issued by foreign governments
4.1

 
—

 
—

 
—

 
—

 
—

 
4.1

 
—

Asset-backed securities
39.1

 
5.7

 
—

 
2.1

 
24.6

 
(15.0
)
 
56.5

 
—

Collateralized debt obligations
—

 
2.5

 
—

 
—

 
—

 
—

 
2.5

 
—

Commercial mortgage-backed securities
1.1

 
17.0

 
—

 
(.1
)
 
14.4

 
—

 
32.4

 
—

Collateralized mortgage obligations
—

 
12.0

 
—

 
—

 
—

 
—

 
12.0

 
—

Total fixed maturities, available for sale
218.9

 
156.0

 
—

 
(2.9
)
 
39.0

 
(15.0
)
 
396.0

 
—

Equity securities - corporate securities
21.4

 
3.3

 
—

 
(.8
)
 
—

 
—

 
23.9

 
—

Trading securities - commercial mortgage-backed securities
—

 
—

 
—

 
(1.7
)
 
10.0

 
—

 
8.3

 
(1.7
)
Liabilities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Future policy benefits - embedded derivatives associated with fixed index annuity products
(1,127.0
)
 
(37.0
)
 
18.3

 
—

 
—

 
—

 
(1,145.7
)
 
18.3

____________
(a)
Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.
(b)
Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  In addition, such activity includes the investments received upon the recapture of reinsurance agreements with BRe on September 29, 2016. The following summarizes such activity for the three months ended September 30, 2016 (dollars in millions):

 
Purchases
 
Received in reinsurance recapture
 
Sales
 
Issuances
 
Settlements
 
Purchases, sales, issuances and settlements, net
Assets:
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
$
1.1

 
$
118.6

 
$
(.9
)
 
$
—

 
$
—

 
$
118.8

Asset-backed securities
7.0

 
—

 
(1.3
)
 
—

 
—

 
5.7

Collateralized debt obligations
2.5

 
—

 
—

 
—

 
—

 
2.5

Commercial mortgage-backed securities
17.0

 
—

 
—

 
—

 
—

 
17.0

Collateralized mortgage obligations
—

 
12.0

 
—

 
—

 
—

 
12.0

Total fixed maturities, available for sale
27.6

 
130.6

 
(2.2
)
 
—

 
—

 
156.0

Equity securities - corporate securities
1.1

 
2.2

 
—

 
—

 
—

 
3.3

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Future policy benefits - embedded derivatives associated with fixed index annuity products
(38.5
)
 
—

 
3.1

 
(14.6
)
 
13.0

 
(37.0
)


The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the nine months ended September 30, 2016 (dollars in millions):

 
September 30, 2016
 
 
 
Beginning balance as of December 31, 2015
 
Purchases, sales, issuances and settlements, net (b)
 
Total realized and unrealized gains (losses) included in net income
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
Transfers into Level 3 (a)
 
Transfers out of Level 3 (a)
 
Ending balance as of September 30, 2016
 
Amount of total gains (losses) for the nine months ended September 30, 2016 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
$
170.4

 
$
104.4

 
$
(7.0
)
 
$
7.4

 
$
20.3

 
$
(7.0
)
 
$
288.5

 
$
(5.6
)
Debt securities issued by foreign governments
—

 
4.0

 
—

 
.1

 
—

 
—

 
4.1

 
—

Asset-backed securities
35.9

 
1.7

 
—

 
4.0

 
28.6

 
(13.7
)
 
56.5

 
—

Collateralized debt obligations
—

 
2.5

 
—

 
—

 
—

 
—

 
2.5

 
—

Commercial mortgage-backed securities
1.1

 
17.0

 
—

 
.4

 
13.9

 
—

 
32.4

 
—

Mortgage pass-through securities
.1

 
(.1
)
 
—

 
—

 
—

 
—

 
—

 
—

Collateralized mortgage obligations
—

 
12.0

 
—

 
—

 
—

 
—

 
12.0

 
—

Total fixed maturities, available for sale
207.5

 
141.5

 
(7.0
)
 
11.9

 
62.8

 
(20.7
)
 
396.0

 
(5.6
)
Equity securities - corporate securities
32.0

 
5.5

 
(12.8
)
 
(.8
)
 
—

 
—

 
23.9

 
(12.8
)
Trading securities - commercial mortgage-backed securities
39.9

 
—

 
—

 
(1.4
)
 
—

 
(30.2
)
 
8.3

 
(1.4
)
Liabilities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Future policy benefits - embedded derivatives associated with fixed index annuity products
(1,057.1
)
 
(55.3
)
 
(33.3
)
 
—

 
—

 
—

 
(1,145.7
)
 
(33.3
)
____________
(a)
Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.
(b)
Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  In addition, such activity includes the investments received upon the recapture of reinsurance agreements with BRe on September 29, 2016. The following summarizes such activity for the nine months ended September 30, 2016 (dollars in millions):

 
Purchases
 
Received in reinsurance recapture
 
Sales
 
Issuances
 
Settlements
 
Purchases, sales, issuances and settlements, net
Assets:
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
$
1.1

 
$
118.6

 
$
(15.3
)
 
$
—

 
$
—

 
$
104.4

Debt securities issued by foreign governments
4.0

 
—

 
—

 
—

 
—

 
4.0

Asset-backed securities
7.0

 
—

 
(5.3
)
 
—

 
—

 
1.7

Collateralized debt obligations
2.5

 
—

 
—

 
—

 
—

 
2.5

Commercial mortgage-backed securities
17.0

 
—

 
—

 
—

 
—

 
17.0

Mortgage pass-through securities
—

 
—

 
(.1
)
 
—

 
—

 
(.1
)
Collateralized mortgage obligations
—

 
12.0

 
—

 
—

 
—

 
12.0

Total fixed maturities, available for sale
31.6

 
130.6

 
(20.7
)
 
—

 
—

 
141.5

Equity securities - corporate securities
3.3

 
2.2

 
—

 
—

 
—

 
5.5

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Future policy benefits - embedded derivatives associated with fixed index annuity products
(101.9
)
 
—

 
19.2

 
(17.5
)
 
44.9

 
(55.3
)


At September 30, 2017, 55 percent of our Level 3 fixed maturities, available for sale, were investment grade and 80 percent of our Level 3 fixed maturities, available for sale, consisted of corporate securities.

Realized and unrealized investment gains and losses presented in the preceding tables represent gains and losses during the time the applicable financial instruments were classified as Level 3.

Realized and unrealized gains (losses) on Level 3 assets are primarily reported in either net investment income for policyholder and other special-purpose portfolios, net realized investment gains (losses) or insurance policy benefits within the consolidated statement of operations or accumulated other comprehensive income within shareholders' equity based on the appropriate accounting treatment for the instrument.

The amount presented for gains (losses) included in our net loss for assets and liabilities still held as of the reporting date primarily represents impairments for fixed maturities, available for sale, changes in fair value of trading securities and certain derivatives and changes in fair value of embedded derivative instruments included in liabilities for insurance products that exist as of the reporting date.

The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at September 30, 2017 (dollars in millions):

 
Fair value at September 30, 2017
 
Valuation techniques
 
Unobservable inputs
 
Range (weighted average)
Assets:
 
 
 
 
 
 
 
Corporate securities (a)
$
138.4

 
Discounted cash flow analysis
 
Discount margins
 
1.50% - 61.70% (9.10%)
Corporate securities (b)
3.1

 
Recovery method
 
Percent of recovery expected
 
5% - 38% (17.76%)
Asset-backed securities (c)
24.9

 
Discounted cash flow analysis
 
Discount margins
 
1.77% - 3.36% (2.54%)
Equity securities (d)
21.6

 
Market comparables
 
EBITDA multiples
 
0.5X - 6.2X (5.9X)
Other assets categorized as Level 3 (e)
158.2

 
Unadjusted third-party price source
 
Not applicable
 
Not applicable
Total
346.2

 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Future policy benefits (f)
1,249.3

 
Discounted projected embedded derivatives
 
Projected portfolio yields
 
5.15% - 5.61% (5.59%)
 
 
 
 
 
Discount rates
 
0.44% - 2.80% (1.94%)
 
 
 
 
 
Surrender rates
 
0.94% - 46.48% (13.52%)
________________________________
(a)
Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.
(b)
Corporate securities - The significant unobservable input used in the fair value measurement of these corporate securities is percentage of recovery expected.  Significant increases (decreases) in percentage of recovery expected in isolation would result in a significantly higher (lower) fair value measurement.
(c)
Asset-backed securities - The significant unobservable input used in the fair value measurement of these asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.
(d)
Equity securities - The significant unobservable input used in the fair value measurement of these equity securities is multiples of earnings before interest, taxes, depreciation and amortization ("EBITDA"). Generally, increases (decreases) in the EBITDA multiples would result in higher (lower) fair value measurements.
(e)
Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources.
(f)
Future policy benefits - The significant unobservable inputs used in the fair value measurement of our embedded derivatives associated with fixed index annuity products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative.

The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at December 31, 2016 (dollars in millions):

 
Fair value at December 31, 2016
 
Valuation techniques
 
Unobservable inputs
 
Range (weighted average)
Assets:
 
 
 
 
 
 
 
Corporate securities (a)
$
148.5

 
Discounted cash flow analysis
 
Discount margins
 
1.35% - 27.71% (13.52%)
Corporate securities (b)
14.8

 
Recovery method
 
Percent of recovery expected
 
5% - 69% (55%)
Asset-backed securities (c)
24.0

 
Discounted cash flow analysis
 
Discount margins
 
2.06% - 3.64% (2.76%)
Equity securities (d)
25.2

 
Market comparables
 
EBITDA multiples
 
0.4X - 6.2X (5.9X)
Other assets categorized as Level 3 (e)
172.9

 
Unadjusted third-party price source
 
Not applicable
 
Not applicable
Total
385.4

 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Future policy benefits (f)
1,092.3

 
Discounted projected embedded derivatives
 
Projected portfolio yields
 
5.15% - 5.61% (5.59%)
 
 
 
 
 
Discount rates
 
0.18% - 3.06% (2.07%)
 
 
 
 
 
Surrender rates
 
0.94% - 46.48% (13.52%)

________________________________
(a)
Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.
(b)
Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is percentage of recovery expected.  Significant increases (decreases) in percentage of recovery expected in isolation would result in a significantly higher (lower) fair value measurement.
(c)
Asset-backed securities - The significant unobservable input used in the fair value measurement of these asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.
(d)
Equity securities - The significant unobservable input used in the fair value measurement of these equity securities is EBITDA multiples. Generally, increases (decreases) in the EBITDA multiples would result in higher (lower) fair value measurements.
(e)
Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources.
(f)
Future policy benefits - The significant unobservable inputs used in the fair value measurement of our embedded derivatives associated with fixed index annuity products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative.
SUBSEQUENT EVENT
Subsequent Event
SUBSEQUENT EVENT

On October 13, 2017, the Company entered into an amendment and restatement agreement (the "Amendment Agreement") with respect to its Revolving Credit Agreement (as amended by the Amendment Agreement, the "Amended Credit Agreement"). The Amendment Agreement, among other things, increases the total commitments available under the revolving credit facility from $150.0 million to $250.0 million, increases the aggregate amount of additional incremental loans the Company may incur from $50.0 million to $100.0 million and extends the maturity date of the revolving credit facility from May 19, 2019 to the earlier of October 13, 2022 and the date that is six months prior to the maturity date of the Company’s 4.50% senior notes due 2020, which is November 30, 2019. The amount drawn under the Amended Credit Agreement continues to be $100.0 million.
The interest rate applicable to loans under the Amended Credit Agreement continues to be calculated as the eurodollar rate or the base rate, at the Company’s option, plus a margin based on the Company’s unsecured debt rating. The margins under the Amended Credit Agreement range from 1.375% to 2.125%, in the case of loans at the eurodollar rate, and 0.375% to 1.125%, in the case of loans at the base rate. The commitment fee under the Amended Credit Agreement continues to be based on the Company’s unsecured debt rating.
Additionally, the Amended Credit Agreement revises the debt to total capitalization ratio that the Company is required to maintain from not more than 30.0 percent to not more than 35.0 percent. The Amended Credit Agreement continues to contain certain other restrictive covenants with which the Company must comply.
RECENTLY ISSUED ACCOUNTING STANDARDS (Policies)
Investments 
We regularly evaluate all of our investments with unrealized losses for possible impairment.  Our assessment of whether unrealized losses are "other than temporary" requires significant judgment.  Factors considered include:  (i) the extent to which fair value is less than the cost basis; (ii) the length of time that the fair value has been less than cost; (iii) whether the unrealized loss is event driven, credit-driven or a result of changes in market interest rates or risk premium; (iv) the near-term prospects for specific events, developments or circumstances likely to affect the value of the investment; (v) the investment's rating and whether the investment is investment-grade and/or has been downgraded since its purchase; (vi) whether the issuer is current on all payments in accordance with the contractual terms of the investment and is expected to meet all of its obligations under the terms of the investment; (vii) whether we intend to sell the investment or it is more likely than not that circumstances will require us to sell the investment before recovery occurs; (viii) the underlying current and prospective asset and enterprise values of the issuer and the extent to which the recoverability of the carrying value of our investment may be affected by changes in such values; (ix) projections of, and unfavorable changes in, cash flows on structured securities including mortgage-backed and asset-backed securities; (x) our best estimate of the value of any collateral; and (xi) other objective and subjective factors.

Future events may occur, or additional information may become available, which may necessitate future realized losses in our portfolio.  Significant losses could have a material adverse effect on our consolidated financial statements in future periods.

Impairment losses on equity securities are recognized in net income.  The manner in which impairment losses on fixed maturity securities, available for sale, are recognized in the financial statements is dependent on the facts and circumstances related to the specific security.  If we intend to sell a security or it is more likely than not that we would be required to sell a security before the recovery of its amortized cost, the security is other-than-temporarily impaired and the full amount of the impairment is recognized as a loss through earnings.  If we do not expect to recover the amortized cost basis, we do not plan to sell the security, and if it is not more likely than not that we would be required to sell a security before the recovery of its amortized cost, less any current period credit loss, the recognition of the other-than-temporary impairment is bifurcated.  We recognize the credit loss portion in net income and the noncredit loss portion in accumulated other comprehensive income.

We estimate the amount of the credit loss component of a fixed maturity security impairment as the difference between amortized cost and the present value of the expected cash flows of the security.  The present value is determined using the best estimate of future cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating-rate security.  The methodology and assumptions for establishing the best estimate of future cash flows vary depending on the type of security.

For most structured securities, cash flow estimates are based on bond-specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity, prepayment speeds and structural support, including excess spread, subordination and guarantees.  For corporate bonds, cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or the disposition of assets using bond specific facts and circumstances. The previous amortized cost basis less the impairment recognized in net income becomes the security's new cost basis.  We accrete the new cost basis to the estimated future cash flows over the expected remaining life of the security, except when the security is in default or considered nonperforming.

The remaining noncredit impairment, which is recorded in accumulated other comprehensive income, is the difference between the security's estimated fair value and our best estimate of future cash flows discounted at the effective interest rate prior to impairment.  The remaining noncredit impairment typically represents changes in the market interest rates, current market liquidity and risk premiums.
We classify our fixed maturity securities into one of two categories: (i) "available for sale" (which we carry at estimated fair value with any unrealized gain or loss, net of tax and related adjustments, recorded as a component of shareholders' equity); or (ii) "trading" (which we carry at estimated fair value with changes in such value recognized as net investment income (classified as investment income from policyholder and other special-purpose portfolios)).

Our trading securities include: (i) investments purchased with the intent of selling in the near term to generate income; (ii) investments supporting certain insurance liabilities (including investments backing the market strategies of our multibucket annuity products); and (iii) certain fixed maturity securities containing embedded derivatives for which we have elected the fair value option.  The change in fair value of the income generating investments and investments supporting insurance liabilities is recognized in income from policyholder and other special-purpose portfolios (a component of net investment income). The change in fair value of securities with embedded derivatives is recognized in realized investment gains (losses). Investment income related to investments supporting certain insurance liabilities is substantially offset by the change in insurance policy benefits related to certain products.
Earnings Per Share 
Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period.  Restricted shares (including our performance units) are not included in basic earnings per share until vested.  Diluted earnings per share reflect the potential dilution that could occur if outstanding stock options were exercised and restricted stock was vested.  The dilution from options and restricted shares is calculated using the treasury stock method.  Under this method, we assume the proceeds from the exercise of the options (or the unrecognized compensation expense with respect to restricted stock and performance units) will be used to purchase shares of our common stock at the average market price during the period, reducing the dilutive effect of the exercise of the options (or the vesting of the restricted stock and performance units).
Segment Reporting 
The Company manages its business through the following operating segments: Bankers Life, Washington National and Colonial Penn, which are defined on the basis of product distribution; and corporate operations, comprised of holding company activities and certain noninsurance company businesses. In the fourth quarter of 2016, we began reporting the long-term care block recaptured from Beechwood Re Ltd ("BRe") effective September 30, 2016, as an additional business segment.

We measure segment performance by excluding net realized investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), fair value changes and an amendment to the agent deferred compensation plan, loss on reinsurance transaction, income taxes and other non-operating items consisting primarily of earnings attributable to VIEs ("pre-tax operating earnings") because we believe that this performance measure is a better indicator of the ongoing business and trends in our business.  Our primary investment focus is on investment income to support our liabilities for insurance products as opposed to the generation of net realized investment gains (losses), and a long-term focus is necessary to maintain profitability over the life of the business.

The net realized investment gains (losses), fair value changes in embedded derivative liabilities (net of related amortization), fair value changes and an amendment to the agent deferred compensation plan, loss on reinsurance transaction and other non-operating items consisting primarily of earnings attributable to VIEs depend on market conditions or represent unusual items that do not necessarily relate to the underlying business of our segments.  Net realized investment gains (losses) and fair value changes in embedded derivative liabilities (net of related amortization) may affect future earnings levels since our underlying business is long-term in nature and changes in our investment portfolio may impact our ability to earn the assumed interest rates needed to maintain the profitability of our business.
Recently Issued Accounting Standards 
RECENTLY ISSUED ACCOUNTING STANDARDS

Pending Accounting Standards

In May 2014, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance for recognizing revenue from contracts with customers. Certain contracts with customers are specifically excluded from this guidance, including insurance contracts. The core principle of the new guidance is that an entity should recognize revenue when it transfers promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance will be effective for the Company on January 1, 2018 and permits two methods of transition upon adoption; full retrospective and modified retrospective. Under the full retrospective method, prior periods would be restated under the new revenue standard, providing for comparability in all periods presented. Under the modified retrospective method, prior periods would not be restated. Instead, revenues and other disclosures for pre-2018 periods would be provided in the notes to the financial statements as previously reported under the current revenue standard. The new guidance will impact our accounting for various distribution and marketing agreements with other insurance companies pursuant to which Bankers Life's career agents distribute third party products including prescription drug and Medicare Advantage plans. The revenue associated with these distribution agreements has been less than 1 percent of our total revenue. Our annual fee income earned during a calendar year will not change, but the amount recognized during each quarterly period will vary based on the sales of such products in each period. Accordingly, the adoption of this guidance is not expected to have a material impact on our consolidated financial statements. The Company expects to adopt the new guidance using the modified retrospective method.

In January 2016, the FASB issued authoritative guidance related to the recognition and measurement of financial assets and financial liabilities which made targeted improvements to GAAP as follows:

(i)
Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
(ii)
Simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value.
(iii)
Eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet.
(iv)
Require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.
(v)
Require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments.
(vi)
Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements.
(vii)
Clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity's other deferred tax assets.

An entity should apply this guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption of the guidance. The guidance will be effective for the Company for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption of the guidance is not permitted; except that item (v) above is permitted to be adopted early as of the beginning of the fiscal year of adoption. The Company currently holds equity securities classified as available for sale securities that are measured at fair value with changes in fair value recognized through accumulated other comprehensive income. Upon adoption of this guidance, changes in fair value of such equity securities will be recognized through net income. Based upon the equity securities held at September 30, 2017, the estimated impact of the new guidance, assuming it was adopted on October 1, 2017, would be a cumulative effect adjustment that would increase retained earnings by approximately $15 million with a corresponding decrease to accumulated other comprehensive income of approximately $15 million. The Company may experience an increase in volatility in the income statement due to the requirement to measure equity investments at fair value with changes in fair value recognized in income. In addition, the Company will be required to modify certain disclosures upon adoption.

In February 2016, the FASB issued authoritative guidance related to accounting for leases, requiring lessees to report most leases on their balance sheets, regardless of whether the lease is classified as a finance lease or an operating lease. For lessees, the initial lease liability is equal to the present value of future lease payments, and a corresponding asset, adjusted for certain items, is also recorded. Expense recognition for lessees will remain similar to current accounting requirements for capital and operating leases. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The guidance will be effective for the Company for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company has not yet determined the expected impact of adoption of this guidance on its consolidated financial position, results of operations or cash flows.

In June 2016, the FASB issued authoritative guidance related to the measurement of credit losses on financial instruments. The new guidance replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to form credit loss estimates. The guidance will be effective for the Company for fiscal years beginning in 2020, including interim periods within the fiscal year. Early adoption is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company has not yet determined the expected impact of adoption of this guidance on its consolidated financial position, results of operations or cash flows.

In August 2016, the FASB issued authoritative guidance related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance addresses eight specific cash flow issues including debt prepayment or debt extinguishment costs, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees, and others. The guidance will be effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this guidance will result in reclassifications to certain cash receipts and payments within our consolidated statement of cash flows, but will have no impact on our consolidated financial position, results of operations or cash flows.

In November 2016, the FASB issued authoritative guidance to address the diversity in practice that currently exists regarding the classification and presentation of changes in restricted cash on the statement of cash flows. The new guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Entities will also be required to disclose information about the nature of their restricted cash and restricted cash equivalents. Additionally, if cash, cash equivalents, restricted cash and restricted cash equivalents are presented in more than one line item in the statement of financial position, entities will be required to present a reconciliation, either on the face of the statement of cash flows or disclosed in the notes, of the totals in the statement of cash flows to the related line item captions in the statement of financial position. The guidance will be effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The adoption of this guidance will impact the presentation of our consolidated statement of cash flows and related cash flow disclosures, but will have no impact on our consolidated financial position, results of operations or cash flows.

In January 2017, the FASB issued authoritative guidance that removes Step 2 of the goodwill impairment test under current guidance, which requires a hypothetical purchase price allocation. The new guidance requires an impairment charge to be recognized for the amount by which the carrying amount exceeds the reported unit's fair value. Upon adoption, the guidance is to be applied prospectively. The guidance will be effective for the Company on January 1, 2020, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows.

In March 2017, the FASB issued authoritative guidance related to the premium amortization on purchased callable debt securities. The guidance shortens the amortization period for certain callable debt securities held at a premium. Specifically, the new guidance requires the premium to be amortized to the earliest call date. The guidance does not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The guidance will be effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the guidance in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The guidance should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company has not yet determined the expected impact of adoption of this guidance on our consolidated financial position, results of operations or cash flows.

In May 2017, the FASB issued authoritative guidance related to which changes to the terms or conditions of a share-based award require an entity to apply modification accounting. The guidance will be effective for the Company in 2018. The guidance is to be applied prospectively to an award modified on or after the adoption date. The adoption of this guidance is not expected to have a material impact to the Company's consolidated financial position, results of operations or cash flows.

In August 2017, the FASB issued authoritative guidance related to derivatives and hedging. The new guidance expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instruments and the hedged item in the financial statements. The new guidance also includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The guidance will be effective for the Company for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company has not yet determined the expected impact of adoption of this guidance on its consolidated financial position, results of operations or cash flows.

Adopted Accounting Standards

In March 2016, the FASB issued authoritative guidance that clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under this guidance is required to assess the embedded call (put) options solely in accordance with a four-step decision sequence. The guidance is effective for the Company on January 1, 2017. The adoption of this guidance had no effect on our consolidated financial statements.
In March 2016, the FASB issued authoritative guidance related to several aspects of the accounting for share-based payment transactions, including the income tax consequences, accounting policy for forfeiture rate assumptions, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new guidance requires all income tax effects of stock-based compensation awards to be recognized in the income statement when the awards vest or are settled. The new guidance also allows an employer to withhold shares upon settlement of an award to satisfy the employer's tax withholding requirements up to the highest marginal tax rate applicable to employees, without resulting in liability classification of the award. Current guidance strictly limits the withholding to the employer's minimum statutory tax withholding requirement. The guidance was effective for the Company on January 1, 2017. The impact of adoption was as follows (dollars in millions):
 
January 1, 2017
 
 
 
Effect of Adoption of Authoritative Guidance
 
 
 
Amounts prior to effect of adoption of authoritative guidance
 
Election to account for forfeitures as they occur
 
Recognition of excess tax benefits
 
As adjusted
 
 
 
 
 
 
 
 
Income tax assets
$
1,029.9

 
$
.3

 
$
15.7

 
$
1,045.9

Valuation allowance for deferred income tax assets
(240.2
)
 
—

 
(15.7
)
 
(255.9
)
Income tax assets, net
789.7

 
.3

 
—

 
790.0

Total assets
31,975.2

 
.3

 
—

 
31,975.5

 
 
 
 
 
 
 
 
Additional paid-in capital
3,212.1

 
.9

 
—

 
3,213.0

Retained earnings
650.7

 
(.6
)
 
—

 
650.1

Total shareholders' equity
4,486.9

 
.3

 
—

 
4,487.2

 
 
 
 
 
 
 
 
Total liabilities and shareholders' equity
31,975.2

 
.3

 
—

 
31,975.5


 
Nine months ended
 
September 30, 2016
 
Amounts prior to effect of adoption of authoritative guidance
 
Effect of adoption of authoritative guidance
 
As adjusted
Cash flows from operating activities:
 
 
 
 
 
Other operating costs
$
(555.4
)
 
$
3.3

 
$
(552.1
)
Net cash flow from operating activities
581.5

 
3.3

 
584.8

 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
Payments to repurchase common stock
(206.7
)
 
(3.3
)
 
(210.0
)
Net cash used by financing activities
(34.2
)
 
(3.3
)
 
(37.5
)
 
 
 
 
 
 
Net increase in cash and cash equivalents
273.7

 
—

 
273.7



In October 2016, the FASB issued authoritative guidance to amend the consolidation guidance on how a reporting entity that is the single decision maker of a VIE should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE. The guidance is effective for the Company on January 1, 2017. The adoption of this guidance had no impact on our consolidated financial statements.
Fair Value Measurements 
For those financial instruments disclosed at fair value, we use the following methods and assumptions to determine the estimated fair values:

Mortgage loans and policy loans.  We discount future expected cash flows based on interest rates currently being offered for similar loans with similar risk characteristics.  We aggregate loans with similar characteristics in our calculations.  The fair value of policy loans approximates their carrying value.

Company-owned life insurance is backed by a series of mutual funds and is carried at cash surrender value which approximates estimated fair value.

Cash and cash equivalents include commercial paper, invested cash and other investments purchased with original maturities of less than three months. We carry them at amortized cost, which approximates estimated fair value.

Liabilities for policyholder account balances.  The estimated fair value of insurance liabilities for policyholder account balances was approximately equal to its carrying value as interest rates credited on the vast majority of account balances approximate current rates paid on similar products and because these rates are not generally guaranteed beyond one year.

Investment borrowings, notes payable and borrowings related to variable interest entities.  For publicly traded debt, we use current fair values.  For other notes, we use discounted cash flow analyses based on our current incremental borrowing rates for similar types of borrowing arrangements.
Realized and unrealized investment gains and losses presented in the preceding tables represent gains and losses during the time the applicable financial instruments were classified as Level 3.

Realized and unrealized gains (losses) on Level 3 assets are primarily reported in either net investment income for policyholder and other special-purpose portfolios, net realized investment gains (losses) or insurance policy benefits within the consolidated statement of operations or accumulated other comprehensive income within shareholders' equity based on the appropriate accounting treatment for the instrument.

The amount presented for gains (losses) included in our net loss for assets and liabilities still held as of the reporting date primarily represents impairments for fixed maturities, available for sale, changes in fair value of trading securities and certain derivatives and changes in fair value of embedded derivative instruments included in liabilities for insurance products that exist as of the reporting date.
FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and, therefore, represents an exit price, not an entry price.  We carry certain assets and liabilities at fair value on a recurring basis, including fixed maturities, equity securities, trading securities, investments held by VIEs, derivatives, separate account assets and embedded derivatives.  We carry our company-owned life insurance policy, which is invested in a series of mutual funds, at its cash surrender value which approximates fair value. In addition, we disclose fair value for certain financial instruments, including mortgage loans, policy loans, cash and cash equivalents, insurance liabilities for interest-sensitive products, investment borrowings, notes payable and borrowings related to VIEs.

The degree of judgment utilized in measuring the fair value of financial instruments is largely dependent on the level to which pricing is based on observable inputs.  Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information.  Financial instruments with readily available active quoted prices would be considered to have fair values based on the highest level of observable inputs, and little judgment would be utilized in measuring fair value.  Financial instruments that rarely trade would often have fair value based on a lower level of observable inputs, and more judgment would be utilized in measuring fair value.

Valuation Hierarchy

There is a three-level hierarchy for valuing assets or liabilities at fair value based on whether inputs are observable or unobservable.

•
Level 1 – includes assets and liabilities valued using inputs that are unadjusted quoted prices in active markets for identical assets or liabilities.  Our Level 1 assets primarily include cash and cash equivalents and exchange traded securities.

•
Level 2 – includes assets and liabilities valued using inputs that are quoted prices for similar assets in an active market, quoted prices for identical or similar assets in a market that is not active, observable inputs, or observable inputs that can be corroborated by market data.  Level 2 assets and liabilities include those financial instruments that are valued by independent pricing services using models or other valuation methodologies.  These models consider various inputs such as credit rating, maturity, corporate credit spreads, reported trades and other inputs that are observable or derived from observable information in the marketplace or are supported by transactions executed in the marketplace. Financial assets in this category primarily include:  certain publicly registered and privately placed corporate fixed maturity securities; certain government or agency securities; certain mortgage and asset-backed securities; certain equity securities; most investments held by our consolidated VIEs; certain mutual fund investments; most short-term investments; and non-exchange-traded derivatives such as call options. Financial liabilities in this category include investment borrowings, notes payable and borrowings related to VIEs.

•
Level 3 – includes assets and liabilities valued using unobservable inputs that are used in model-based valuations that contain management assumptions.  Level 3 assets and liabilities include those financial instruments whose fair value is estimated based on broker/dealer quotes, pricing services or internally developed models or methodologies utilizing significant inputs not based on, or corroborated by, readily available market information.  Financial assets in this category include certain corporate securities (primarily certain below-investment grade privately placed securities), certain structured securities, mortgage loans, and other less liquid securities.  Financial liabilities in this category include our insurance liabilities for interest-sensitive products, which includes embedded derivatives (including embedded derivatives related to our fixed index annuity products and to a modified coinsurance arrangement) since their values include significant unobservable inputs including actuarial assumptions.

At each reporting date, we classify assets and liabilities into the three input levels based on the lowest level of input that is significant to the measurement of fair value for each asset and liability reported at fair value.  This classification is impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction and overall market conditions.  Our assessment of the significance of a particular input to the fair value measurement and the ultimate classification of each asset and liability requires judgment and is subject to change from period to period based on the observability of the valuation inputs. Any transfers between levels are reported as having occurred at the beginning of the period. There were no transfers between Level 1 and Level 2 in both the first nine months of 2017 and 2016.

The vast majority of our fixed maturity and equity securities, including those held in trading portfolios and those held by consolidated VIEs, short-term and separate account assets use Level 2 inputs for the determination of fair value.  These fair values are obtained primarily from independent pricing services, which use Level 2 inputs for the determination of fair value.  Our Level 2 assets are valued as follows:

•Fixed maturities available for sale, equity securities and trading securities

Corporate securities are generally priced using market and income approaches. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets, issuer rating, benchmark yields, maturity, and credit spreads.

U.S. Treasuries and obligations of U.S. Government corporations and agencies are generally priced using the market approach. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets and maturity.

States and political subdivisions are generally priced using the market approach. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets, new issuances and credit spreads.

Asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, mortgage pass-through securities and collateralized mortgage obligations are generally priced using market and income approaches. Inputs generally consist of quoted prices in inactive markets, spreads on actively traded securities, expected prepayments, expected default rates, expected recovery rates, and issue specific information including, but not limited to, collateral type, seniority and vintage.

Equity securities (primarily comprised of non-redeemable preferred stock) are generally priced using the market approach. Inputs generally consist of trades of identical or similar securities, quoted prices in inactive markets, issuer rating, benchmark yields, maturity, and credit spreads.

•
Investments held by VIEs

Corporate securities are generally priced using market and income approaches using pricing vendors. Inputs generally consist of issuer rating, benchmark yields, maturity, and credit spreads.

•
Other invested assets - derivatives

The fair value measurements for derivative instruments, including embedded derivatives requiring bifurcation, are determined based on the consideration of several inputs including closing exchange or over-the-counter market price quotes; time value and volatility factors underlying options; market interest rates; and non-performance risk.

Third party pricing services normally derive security prices through recently reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information.  If there are no recently reported trades, the third party pricing services may use matrix or model processes to develop a security price where future cash flow expectations are discounted at an estimated risk-adjusted market rate.  The number of prices obtained for a given security is dependent on the Company's analysis of such prices as further described below.

As the Company is responsible for the determination of fair value, we have control processes designed to ensure that the fair values received from third-party pricing sources are reasonable and the valuation techniques and assumptions used appear reasonable and consistent with prevailing market conditions. Additionally, when inputs are provided by third-party pricing sources, we have controls in place to review those inputs for reasonableness. As part of these controls, we perform monthly quantitative and qualitative analysis on the prices received from third parties to determine whether the prices are reasonable estimates of fair value.  The Company's analysis includes:  (i) a review of the methodology used by third party pricing services; (ii) where available, a comparison of multiple pricing services' valuations for the same security; (iii) a review of month to month price fluctuations; (iv) a review to ensure valuations are not unreasonably dated; and (v) back testing to compare actual purchase and sale transactions with valuations received from third parties.  As a result of such procedures, the Company may conclude the prices received from third parties are not reflective of current market conditions.  In those instances, we may request additional pricing quotes or apply internally developed valuations.  However, the number of such instances is insignificant and the aggregate change in value of such investments is not materially different from the original prices received.

The categorization of the fair value measurements of our investments priced by independent pricing services was based upon the Company's judgment of the inputs or methodologies used by the independent pricing services to value different asset classes.  Such inputs typically include:  benchmark yields, reported trades, broker dealer quotes, issuer spreads, benchmark securities, bids, offers and other relevant data.  The Company categorizes such fair value measurements based upon asset classes and the underlying observable or unobservable inputs used to value such investments.

For securities that are not priced by pricing services and may not be reliably priced using pricing models, we obtain broker quotes.  These broker quotes are non-binding and represent an exit price, but assumptions used to establish the fair value may not be observable and therefore represent Level 3 inputs.  Approximately 45 percent of our Level 3 fixed maturity securities were valued using unadjusted broker quotes or broker-provided valuation inputs.  The remaining Level 3 fixed maturity investments do not have readily determinable market prices and/or observable inputs.  For these securities, we use internally developed valuations.  Key assumptions used to determine fair value for these securities may include risk premiums, projected performance of underlying collateral and other factors involving significant assumptions which may not be reflective of an active market.  For certain investments, we use a matrix or model process to develop a security price where future cash flow expectations are discounted at an estimated market rate.  The pricing matrix incorporates term interest rates as well as a spread level based on the issuer's credit rating, other factors relating to the issuer, and the security's maturity.  In some instances issuer-specific spread adjustments, which can be positive or negative, are made based upon internal analysis of security specifics such as liquidity, deal size, and time to maturity.

For certain embedded derivatives, we use actuarial assumptions in the determination of fair value which we consider to be Level 3 inputs.
INVESTMENTS (Tables)
Schedule of accumulated other comprehensive income (loss) 
Accumulated other comprehensive income is primarily comprised of the net effect of unrealized appreciation (depreciation) on our investments.  These amounts, included in shareholders' equity as of September 30, 2017 and December 31, 2016, were as follows (dollars in millions):

 
September 30,
2017
 
December 31,
2016
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized
$
2.4

 
$
(1.1
)
Net unrealized gains on all other investments
2,058.9

 
1,311.9

Adjustment to present value of future profits (a)
(98.1
)
 
(106.2
)
Adjustment to deferred acquisition costs
(287.9
)
 
(223.5
)
Adjustment to insurance liabilities
(224.5
)
 
(13.5
)
Deferred income tax liabilities
(517.2
)
 
(345.2
)
Accumulated other comprehensive income
$
933.6

 
$
622.4

________
(a)
The present value of future profits is the value assigned to the right to receive future cash flows from contracts existing at September 10, 2003, the date Conseco, Inc., an Indiana corporation, emerged from bankruptcy.

Schedule of fixed maturities for available for sale and equity securities 
At September 30, 2017, the amortized cost, gross unrealized gains and losses, estimated fair value, other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, and equity securities were as follows (dollars in millions):
 
Amortized cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Estimated fair value
 
Other-than-temporary impairments included in accumulated other comprehensive income
Corporate securities
$
13,145.4

 
$
1,537.6

 
$
(33.0
)
 
$
14,650.0

 
$
(3.6
)
United States Treasury securities and obligations of United States government corporations and agencies
145.4

 
26.9

 
—

 
172.3

 
—

States and political subdivisions
1,857.2

 
220.7

 
(.9
)
 
2,077.0

 
—

Debt securities issued by foreign governments
58.1

 
3.1

 
(.1
)
 
61.1

 
—

Asset-backed securities
2,608.6

 
180.6

 
(3.1
)
 
2,786.1

 
—

Collateralized debt obligations
236.5

 
1.4

 
—

 
237.9

 
—

Commercial mortgage-backed securities
1,311.6

 
37.4

 
(10.1
)
 
1,338.9

 
—

Mortgage pass-through securities
2.0

 
.2

 
—

 
2.2

 
—

Collateralized mortgage obligations
727.7

 
77.3

 
(.6
)
 
804.4

 
(1.1
)
Total fixed maturities, available for sale
$
20,092.5

 
$
2,085.2

 
$
(47.8
)
 
$
22,129.9

 
$
(4.7
)
Equity securities
$
688.7

 
$
27.2

 
$
(2.6
)
 
$
713.3

 
 


At December 31, 2016, the amortized cost, gross unrealized gains and losses, estimated fair value, other-than-temporary impairments in accumulated other comprehensive income of fixed maturities, available for sale, and equity securities were as follows (dollars in millions):
 
Amortized cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Estimated fair value
 
Other-than-temporary impairments included in accumulated other comprehensive income
Corporate securities
$
12,549.9

 
$
1,100.0

 
$
(139.0
)
 
$
13,510.9

 
$
(3.6
)
United States Treasury securities and obligations of United States government corporations and agencies
143.8

 
20.5

 
—

 
164.3

 
—

States and political subdivisions
1,811.8

 
186.7

 
(9.6
)
 
1,988.9

 
(3.0
)
Debt securities issued by foreign governments
37.1

 
.2

 
(.4
)
 
36.9

 
—

Asset-backed securities
2,641.5

 
84.3

 
(15.5
)
 
2,710.3

 
—

Collateralized debt obligations
230.0

 
1.0

 
(.3
)
 
230.7

 
—

Commercial mortgage-backed securities
1,531.0

 
33.1

 
(27.9
)
 
1,536.2

 
—

Mortgage pass-through securities
2.3

 
.2

 
—

 
2.5

 
—

Collateralized mortgage obligations
855.7

 
61.4

 
(1.6
)
 
915.5

 
(1.4
)
Total fixed maturities, available for sale
$
19,803.1

 
$
1,487.4

 
$
(194.3
)
 
$
21,096.2

 
$
(8.0
)
Equity securities
$
580.7

 
$
11.5

 
$
(8.0
)
 
$
584.2

 
 
Schedule of investments classified by contractual maturity date 
The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at September 30, 2017, by contractual maturity.  Actual maturities will differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without penalties.  Structured securities (such as asset-backed securities, collateralized debt obligations, commercial mortgage-backed securities, mortgage pass-through securities and collateralized mortgage obligations, collectively referred to as "structured securities") frequently include provisions for periodic principal payments and permit periodic unscheduled payments.

 
Amortized
cost
 
Estimated
fair
value
 
(Dollars in millions)
Due in one year or less
$
398.1

 
$
406.1

Due after one year through five years
2,004.8

 
2,131.7

Due after five years through ten years
1,562.8

 
1,671.1

Due after ten years
11,240.4

 
12,751.5

Subtotal
15,206.1

 
16,960.4

Structured securities
4,886.4

 
5,169.5

Total fixed maturities, available for sale
$
20,092.5

 
$
22,129.9



The following table sets forth the amortized cost and estimated fair value of fixed maturities, available for sale, at December 31, 2016, by contractual maturity.

 
Amortized
cost
 
Estimated
fair
value
 
(Dollars in millions)
Due in one year or less
$
354.7

 
$
359.8

Due after one year through five years
2,243.8

 
2,399.5

Due after five years through ten years
1,549.1

 
1,620.8

Due after ten years
10,395.0

 
11,320.9

Subtotal
14,542.6

 
15,701.0

Structured securities
5,260.5

 
5,395.2

Total fixed maturities, available for sale
$
19,803.1

 
$
21,096.2

Schedule of realized gain (loss) on investments 
The following table sets forth the net realized investment gains (losses) for the periods indicated (dollars in millions):

 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
Fixed maturity securities, available for sale:
 
 
 
 
 
 
 
Gross realized gains on sale
$
32.3

 
$
7.3

 
$
60.4

 
$
127.1

Gross realized losses on sale
(8.5
)
 
(2.8
)
 
(16.4
)
 
(84.4
)
Impairments:
 
 
 
 
 
 
 
Total other-than-temporary impairment losses
(3.2
)
 
—

 
(10.0
)
 
(6.3
)
Other-than-temporary impairment losses recognized in accumulated other comprehensive income
—

 
—

 
(.9
)
 
—

Net impairment losses recognized
(3.2
)
 
—

 
(10.9
)
 
(6.3
)
Net realized investment gains from fixed maturities
20.6

 
4.5

 
33.1

 
36.4

Equity securities
7.7

 
17.2

 
9.6

 
21.3

Commercial mortgage loans
—

 
—

 
1.0

 
—

Impairments of other investments
(1.5
)
 
(1.2
)
 
(7.3
)
 
(18.5
)
Loss on dissolution of variable interest entities
(.6
)
 
—

 
(4.3
)
 
(7.3
)
Other (a)
3.0

 
(8.9
)
 
20.2

 
(8.6
)
Net realized investment gains
$
29.2

 
$
11.6

 
$
52.3

 
$
23.3


_________________
(a)
Changes in the estimated fair value of trading securities that we have elected the fair value option (and are still held as of the end of the respective periods) were $13.0 million and $.8 million for the nine months ended September 30, 2017 and 2016, respectively.

Schedule of credit losses recognized in earnings 
The following table summarizes the amount of credit losses recognized in earnings on fixed maturity securities, available for sale, held at the beginning of the period, for which a portion of the other-than-temporary impairment was also recognized in accumulated other comprehensive income for the three and nine months ended September 30, 2017 and 2016 (dollars in millions):

 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
Credit losses on fixed maturity securities, available for sale, beginning of period
$
(4.9
)
 
$
(2.6
)
 
$
(5.5
)
 
$
(2.6
)
Add: credit losses on other-than-temporary impairments not previously recognized
—

 
—

 
—

 
—

Less: credit losses on securities sold
—

 
.1

 
1.6

 
.1

Less: credit losses on securities impaired due to intent to sell (a)
—

 
—

 
—

 
—

Add: credit losses on previously impaired securities
—

 
—

 
(1.0
)
 
—

Less: increases in cash flows expected on previously impaired securities
—

 
—

 
—

 
—

Credit losses on fixed maturity securities, available for sale, end of period
$
(4.9
)
 
$
(2.5
)
 
$
(4.9
)
 
$
(2.5
)
__________
(a)
Represents securities for which the amount previously recognized in accumulated other comprehensive income was recognized in earnings because we intend to sell the security or we more likely than not will be required to sell the security before recovery of its amortized cost basis.
Schedule of unrealized loss on investments 
The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at September 30, 2017 (dollars in millions):

 
 
Less than 12 months
 
12 months or greater
 
Total
Description of securities
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
United States Treasury securities and obligations of United States government corporations and agencies
 
$
20.3

 
$
—

 
$
.6

 
$
—

 
$
20.9

 
$
—

States and political subdivisions
 
35.1

 
(.6
)
 
19.3

 
(.3
)
 
54.4

 
(.9
)
Debt securities issued by foreign governments
 
10.5

 
(.1
)
 
—

 
—

 
10.5

 
(.1
)
Corporate securities
 
666.9

 
(7.8
)
 
400.4

 
(25.2
)
 
1,067.3

 
(33.0
)
Asset-backed securities
 
276.7

 
(1.3
)
 
79.6

 
(1.8
)
 
356.3

 
(3.1
)
Collateralized debt obligations
 
24.0

 
—

 
—

 
—

 
24.0

 
—

Commercial mortgage-backed securities
 
226.2

 
(1.3
)
 
221.9

 
(8.8
)
 
448.1

 
(10.1
)
Collateralized mortgage obligations
 
72.8

 
(.5
)
 
11.6

 
(.1
)
 
84.4

 
(.6
)
Total fixed maturities, available for sale
 
$
1,332.5

 
$
(11.6
)
 
$
733.4

 
$
(36.2
)
 
$
2,065.9

 
$
(47.8
)
Equity securities
 
$
37.4

 
$
(.8
)
 
$
89.7

 
$
(1.8
)
 
$
127.1

 
$
(2.6
)

The following table summarizes the gross unrealized losses and fair values of our investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that such securities have been in a continuous unrealized loss position, at December 31, 2016 (dollars in millions):

 
 
Less than 12 months
 
12 months or greater
 
Total
Description of securities
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
United States Treasury securities and obligations of United States government corporations and agencies
 
$
8.0

 
$
—

 
$
—

 
$
—

 
$
8.0

 
$
—

States and political subdivisions
 
176.3

 
(7.8
)
 
18.3

 
(1.8
)
 
194.6

 
(9.6
)
Debt securities issued by foreign governments
 
18.9

 
(.4
)
 
—

 
—

 
18.9

 
(.4
)
Corporate securities
 
1,907.6

 
(75.5
)
 
559.6

 
(63.5
)
 
2,467.2

 
(139.0
)
Asset-backed securities
 
692.9

 
(8.5
)
 
262.5

 
(7.0
)
 
955.4

 
(15.5
)
Collateralized debt obligations
 
38.3

 
(.1
)
 
30.8

 
(.2
)
 
69.1

 
(.3
)
Commercial mortgage-backed securities
 
525.2

 
(16.6
)
 
154.0

 
(11.3
)
 
679.2

 
(27.9
)
Collateralized mortgage obligations
 
73.6

 
(.6
)
 
34.6

 
(1.0
)
 
108.2

 
(1.6
)
Total fixed maturities, available for sale
 
$
3,440.8

 
$
(109.5
)
 
$
1,059.8

 
$
(84.8
)
 
$
4,500.6

 
$
(194.3
)
Equity securities
 
$
239.4

 
$
(8.0
)
 
$
—

 
$
—

 
$
239.4

 
$
(8.0
)
EARNINGS PER SHARE (Tables)
Schedule of earnings per share reconciliation
A reconciliation of net income and shares used to calculate basic and diluted earnings per share is as follows (dollars in millions and shares in thousands):

 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
Net income for basic and diluted earnings per share
$
100.8

 
$
18.6

 
$
246.5

 
$
124.0

Shares:
 

 
 

 
 
 
 
Weighted average shares outstanding for basic earnings per share
168,684

 
174,247

 
170,890

 
177,640

Effect of dilutive securities on weighted average shares:
 

 
 

 
 
 
 
Stock options, restricted stock and performance units
2,298

 
1,476

 
1,910

 
1,733

Weighted average shares outstanding for diluted earnings per share
170,982

 
175,723

 
172,800

 
179,373



BUSINESS SEGMENTS (Tables)
Schedule of segment reporting information by segment 
Operating information by segment was as follows (dollars in millions):

 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
Revenues:
 
 
 
 
 
 
 
Bankers Life:
 
 
 
 
 
 
 
Insurance policy income:
 
 
 
 
 
 
 
Annuities
$
3.7

 
$
6.8

 
$
15.5

 
$
17.4

Health
307.2

 
310.3

 
926.9

 
933.3

Life
103.7

 
96.6

 
310.4

 
295.8

Net investment income (a)
270.6

 
244.7

 
800.4

 
686.8

Fee revenue and other income (a)
11.3

 
9.6

 
32.5

 
23.5

Total Bankers Life revenues
696.5

 
668.0

 
2,085.7

 
1,956.8

Washington National:
 

 
 

 
 
 
 
Insurance policy income:
 

 
 

 
 
 
 
Annuities
.5

 
1.2

 
1.6

 
2.3

Health
160.4

 
156.9

 
480.3

 
469.1

Life
6.5

 
6.3

 
20.1

 
18.6

Net investment income (a)
68.0

 
67.1

 
201.9

 
191.3

Fee revenue and other income (a)
.3

 
.4

 
.8

 
1.0

Total Washington National revenues
235.7

 
231.9

 
704.7

 
682.3

Colonial Penn:
 

 
 

 
 
 
 
Insurance policy income:
 

 
 

 
 
 
 
Health
.5

 
.6

 
1.6

 
2.0

Life
72.6

 
70.3

 
217.5

 
208.5

Net investment income (a)
11.0

 
11.1

 
33.1

 
33.0

Fee revenue and other income (a)
.3

 
.2

 
.9

 
.8

Total Colonial Penn revenues
84.4

 
82.2

 
253.1

 
244.3

Long-term care in run-off:
 
 
 
 
 
 
 
Insurance policy income - health
4.2

 
—

 
13.3

 
—

Net investment income (a)                                                                                           
6.8

 
—

 
26.5

 
—

Total Long-term care in run-off revenues
11.0

 
—

 
39.8

 
—

Corporate operations:
 

 
 

 
 
 
 
Net investment income
7.0

 
6.7

 
24.8

 
16.6

Fee and other income
1.8

 
2.5

 
6.5

 
7.6

Total corporate revenues
8.8

 
9.2

 
31.3

 
24.2

Total revenues
$
1,036.4

 
$
991.3

 
$
3,114.6

 
$
2,907.6



(continued on next page)

(continued from previous page)
 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
Expenses:
 
 
 
 
 
 
 
Bankers Life:
 
 
 
 
 
 
 
Insurance policy benefits
$
437.2

 
$
427.1

 
$
1,307.7

 
$
1,240.9

Amortization
38.7

 
43.8

 
126.3

 
135.3

Interest expense on investment borrowings
5.3

 
3.5

 
14.3

 
9.4

Other operating costs and expenses
108.4

 
105.5

 
328.2

 
312.2

Total Bankers Life expenses
589.6

 
579.9

 
1,776.5

 
1,697.8

Washington National:
 

 
 

 
 
 
 
Insurance policy benefits
144.7

 
144.5

 
436.7

 
422.0

Amortization
14.3

 
14.3

 
43.9

 
44.5

Interest expense on investment borrowings
1.7

 
.9

 
4.5

 
2.5

Other operating costs and expenses
47.5

 
47.0

 
145.0

 
140.3

Total Washington National expenses
208.2

 
206.7

 
630.1

 
609.3

Colonial Penn:
 

 
 

 
 
 
 
Insurance policy benefits
47.7

 
50.3

 
150.8

 
151.3

Amortization
3.9

 
3.7

 
11.9

 
11.3

Interest expense on investment borrowings
.3

 
.1

 
.7

 
.4

Other operating costs and expenses
23.5

 
27.2

 
73.0

 
84.2

Total Colonial Penn expenses
75.4

 
81.3

 
236.4

 
247.2

Long-term care in run-off:
 
 
 
 
 
 
 
Insurance policy benefits                                                                                 
11.4

 
—

 
36.6

 
—

Other operating costs and expenses                                                                                 
.6

 
—

 
2.1

 
—

Total Long-term care in run-off expenses
12.0

 
—

 
38.7

 
—

Corporate operations:
 

 
 

 
 
 
 
Interest expense on corporate debt
11.7

 
11.5

 
34.8

 
34.3

Other operating costs and expenses
23.7

 
13.6

 
68.3

 
43.7

Total corporate expenses
35.4

 
25.1

 
103.1

 
78.0

Total expenses
920.6

 
893.0

 
2,784.8

 
2,632.3

Pre-tax operating earnings by segment:
 

 
 

 
 
 
 
Bankers Life
106.9

 
88.1

 
309.2

 
259.0

Washington National
27.5

 
25.2

 
74.6

 
73.0

Colonial Penn
9.0

 
.9

 
16.7

 
(2.9
)
Long-term care in run-off
(1.0
)
 
—

 
1.1

 
—

Corporate operations
(26.6
)
 
(15.9
)
 
(71.8
)
 
(53.8
)
Pre-tax operating earnings
$
115.8

 
$
98.3

 
$
329.8

 
$
275.3

___________________
(a)
It is not practicable to provide additional components of revenue by product or services.

Reconciliation of operating profit (loss) from segments to consolidated 
A reconciliation of segment revenues and expenses to consolidated revenues and expenses and net income (loss) is as follows (dollars in millions):

 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
Total segment revenues                                                                                            
$
1,036.4

 
$
991.3

 
$
3,114.6

 
$
2,907.6

Net realized investment gains                                       
29.2

 
11.6

 
52.3

 
23.3

Revenues related to VIEs
13.7

 
13.0

 
40.2

 
39.3

Fee revenue related to transition and support services agreements
—

 
—

 
—

 
10.0

Consolidated revenues                                                                                       
1,079.3

 
1,015.9

 
3,207.1

 
2,980.2

 
 
 
 
 
 
 
 
Total segment expenses                                                                                            
920.6

 
893.0

 
2,784.8

 
2,632.3

Insurance policy benefits - fair value changes in embedded derivative liabilities
(2.9
)
 
(12.1
)
 
9.8

 
47.0

Amortization related to fair value changes in embedded derivative liabilities
.6

 
2.7

 
(1.8
)
 
(10.4
)
Amortization related to net realized investment gains
.7

 
.2

 
1.0

 
.9

Expenses related to VIEs
17.0

 
13.7

 
44.8

 
40.5

Fair value changes and amendment related to agent deferred compensation plan
13.4


(6.3
)
 
13.4

 
12.0

Loss on reinsurance transaction
—

 
75.4

 
—

 
75.4

Expenses related to transition and support services agreements
—

 
—

 
—

 
10.0

Consolidated expenses                                                                                       
949.4

 
966.6

 
2,852.0

 
2,807.7

Income before tax
129.9

 
49.3

 
355.1

 
172.5

Income tax expense (benefit):
 
 
 
 
 
 
 
Tax expense on period income
44.1

 
16.9

 
123.6

 
61.7

Valuation allowance for deferred tax assets and other tax items
(15.0
)
 
13.8

 
(15.0
)
 
(13.2
)
Net income
$
100.8

 
$
18.6

 
$
246.5

 
$
124.0



ACCOUNTING FOR DERIVATIVES (Tables)
Fair value by balance sheet location 
Our freestanding and embedded derivatives, which are not designated as hedging instruments, are held at fair value and are summarized as follows (dollars in millions):

 
 
Fair value
 
 
September 30,
2017
 
December 31, 2016
Assets:
 
 
 
 
Other invested assets:
 
 
 
 
Fixed index call options
 
$
142.2

 
$
111.9

Reinsurance receivables
 
(1.8
)
 
(4.2
)
Total assets
 
$
140.4

 
$
107.7

Liabilities:
 
 
 
 
Future policy benefits:
 
 
 
 
Fixed index products
 
$
1,249.3

 
$
1,092.3

Total liabilities
 
$
1,249.3

 
$
1,092.3

Schedule pre-tax gains (losses) recognized in net income for derivative instruments 
The following table provides the pre-tax gains (losses) recognized in net income for derivative instruments, which are not designated as hedges for the periods indicated (dollars in millions):

 
 
Three months ended
 
Nine months ended
 
 
September 30,
 
September 30,
 
 
2017
 
2016
 
2017
 
2016
Net investment income from policyholder and other special-purpose portfolios:
 
 
 
 
 
 
 
 
Fixed index call options
 
$
30.6

 
$
17.0

 
$
95.4

 
$
10.9

Net realized gains (losses):
 
 
 
 
 
 
 
 
Interest rate futures
 
—

 
—

 
—

 
(1.1
)
Embedded derivative related to modified coinsurance agreement
 
.3

 
.1

 
2.4

 
6.7

Total
 
.3

 
.1

 
2.4

 
5.6

Insurance policy benefits:
 
 
 
 
 
 
 
 
Embedded derivative related to fixed index annuities
 
—

 
18.3

 
—

 
(33.3
)
Total
 
$
30.9

 
$
35.4

 
$
97.8

 
$
(16.8
)
Derivatives with master netting arrangements 
The following table summarizes information related to derivatives with master netting arrangements or collateral as of September 30, 2017 and December 31, 2016 (dollars in millions):

 
 
 
 
 
 
 
 
 
Gross amounts not offset in the balance sheet
 
 
 
 
 
Gross amounts recognized
 
Gross amounts offset in the balance sheet
 
Net amounts of assets presented in the balance sheet
 
Financial instruments
 
Cash collateral received
 
Net amount
September 30, 2017:
 
 
 
Fixed index call options
 
$
142.2

 
$
—

 
$
142.2

 
$
—

 
$
—

 
$
142.2

December 31, 2016:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed index call options
 
111.9

 
—

 
111.9

 
—

 
—

 
111.9

INCOME TAXES (Tables)
Schedule of components of income tax expense 
The components of income tax expense are as follows (dollars in millions):

 
Three months ended
 
Nine months ended
 
September 30,
 
September 30,
 
2017
 
2016
 
2017
 
2016
Current tax expense
$
25.9

 
$
46.8

 
$
68.5

 
$
51.6

Deferred tax expense (benefit)
18.2

 
(29.9
)
 
55.1

 
10.1

Valuation allowance applicable to current year income
(2.2
)
 
(10.5
)
 
(2.2
)
 
(10.5
)
Income tax expense calculated based on estimated annual effective tax rate
41.9

 
6.4

 
121.4

 
51.2

Income tax expense on discrete items:
 
 
 
 
 
 
 
Change in valuation allowance
(12.8
)
 
16.0

 
(12.8
)
 
(11.0
)
Other items
—

 
8.3

 
—

 
8.3

Total income tax expense
$
29.1

 
$
30.7

 
$
108.6

 
$
48.5



Schedule of effective income tax rate reconciliation 
A reconciliation of the U.S. statutory corporate tax rate to the estimated annual effective rate, before discrete items, reflected in the consolidated statement of operations is as follows:
 
 
Nine months ended
 
September 30,
 
2017
 
2016
U.S. statutory corporate rate
35.0
 %
 
35.0
 %
Valuation allowance
(.6
)
 
(6.1
)
Non-taxable income and nondeductible benefits, net
(1.5
)
 
(1.0
)
State taxes
1.3

 
1.8

Estimated annual effective tax rate
34.2
 %
 
29.7
 %
Schedule of deferred tax assets and liabilities 
The components of the Company's income tax assets and liabilities are summarized below (dollars in millions):

 
September 30,
2017
 
December 31,
2016
Deferred tax assets:
 
 
 
Net federal operating loss carryforwards
$
841.8

 
$
882.9

Net state operating loss carryforwards
12.2

 
12.3

Investments
13.7

 
17.8

Insurance liabilities
678.9

 
668.4

Other
60.1

 
66.3

Gross deferred tax assets
1,606.7

 
1,647.7

Deferred tax liabilities:
 

 
 

Present value of future profits and deferred acquisition costs
(275.0
)
 
(277.8
)
Accumulated other comprehensive income
(516.9
)
 
(344.1
)
Gross deferred tax liabilities
(791.9
)
 
(621.9
)
Net deferred tax assets before valuation allowance
814.8

 
1,025.8

Valuation allowance
(240.9
)
 
(240.2
)
Net deferred tax assets
573.9

 
785.6

Current income taxes prepaid (accrued)
(6.5
)
 
4.1

Income tax assets, net
$
567.4

 
$
789.7

Summary of operating loss carryforwards 
The following table summarizes the expiration dates of our loss carryforwards (dollars in millions):

 
 
Net operating loss
Year of expiration
 
carryforwards
2023
 
$
1,818.5

2025
 
85.2

2026
 
149.9

2027
 
10.8

2028
 
80.3

2029
 
213.2

2030
 
.3

2031
 
.2

2032
 
44.4

2033
 
.6

2034
 
.9

2035
 
.8

Total federal NOLs
 
$
2,405.1



NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS (Tables)
Schedule of long-term debt instruments 
The following notes payable were direct corporate obligations of the Company as of September 30, 2017 and December 31, 2016 (dollars in millions):

 
September 30,
2017
 
December 31,
2016
4.500% Senior Notes due May 2020
$
325.0

 
$
325.0

5.250% Senior Notes due May 2025
500.0

 
500.0

Revolving Credit Agreement (as defined below)
100.0

 
100.0

Unamortized debt issue costs
(10.6
)
 
(12.1
)
Direct corporate obligations
$
914.4

 
$
912.9

Schedule of maturities of long-term debt 
The scheduled repayment of our direct corporate obligations was as follows at September 30, 2017 (dollars in millions):

Year ending September 30,
 
2018
$
—

2019
100.0

2020
325.0

2021
—

2022
—

Thereafter
500.0

 
$
925.0

INVESTMENT BORROWINGS (Tables)
Schedule of terms of federal home loan bank borrowing
The following summarizes the terms of the borrowings from the FHLB by our insurance subsidiaries (dollars in millions):

Amount
 
Maturity
 
Interest rate at
borrowed
 
date
 
September 30, 2017
$
50.0

 
February 2018
 
Variable rate – 1.404%
50.0

 
August 2018
 
Variable rate – 1.435%
50.0

 
January 2019
 
Variable rate – 1.724%
50.0

 
February 2019
 
Variable rate – 1.404%
100.0

 
March 2019
 
Variable rate – 1.714%
21.8

 
July 2019
 
Variable rate – 1.727%
15.0

 
October 2019
 
Variable rate – 1.830%
50.0

 
May 2020
 
Variable rate – 1.754%
21.8

 
June 2020
 
Fixed rate – 1.960%
25.0

 
September 2020
 
Variable rate – 1.953%
100.0

 
September 2020
 
Variable rate – 1.897%
50.0

 
September 2020
 
Variable rate – 1.894%
75.0

 
September 2020
 
Variable rate – 1.453%
100.0

 
October 2020
 
Variable rate – 1.409%
50.0

 
December 2020
 
Variable rate – 1.932%
100.0

 
July 2021
 
Variable rate – 1.854%
100.0

 
July 2021
 
Variable rate – 1.824%
28.2

 
August 2021
 
Fixed rate – 2.550%
57.7

 
August 2021
 
Variable rate - 1.842%
125.0

 
August 2021
 
Variable rate – 1.717%
50.0

 
September 2021
 
Variable rate – 1.857%
22.0

 
May 2022
 
Variable rate – 1.668%
100.0

 
May 2022
 
Variable rate – 1.666%
10.0

 
June 2022
 
Variable rate – 1.931%
50.0

 
July 2022
 
Variable rate – 1.675%
50.0

 
July 2022
 
Variable rate – 1.693%
50.0

 
July 2022
 
Variable rate – 1.694%
50.0

 
August 2022
 
Variable rate – 1.702%
24.9

 
March 2023
 
Fixed rate – 2.160%
20.5

 
June 2025
 
Fixed rate – 2.940%
$
1,646.9

 
 
 
 
CHANGES IN COMMON STOCK (Tables)
Schedule of options activity
Changes in the number of shares of common stock outstanding were as follows (shares in thousands):

Balance, December 31, 2016
173,754

 
Treasury stock purchased and retired
(6,701
)
 
Stock options exercised
524

 
Restricted and performance stock vested
185

(a)
Balance, September 30, 2017
167,762

 
____________________
(a)
Such amount was reduced by 103 thousand shares which were tendered to the Company for the payment of required federal and state tax withholdings owed on the vesting of restricted and performance stock.
RECENTLY ISSUED ACCOUNTING STANDARDS (Tables)
Schedule of New Accounting Pronouncements and Changes in Accounting Principles
The impact of adoption was as follows (dollars in millions):
 
January 1, 2017
 
 
 
Effect of Adoption of Authoritative Guidance
 
 
 
Amounts prior to effect of adoption of authoritative guidance
 
Election to account for forfeitures as they occur
 
Recognition of excess tax benefits
 
As adjusted
 
 
 
 
 
 
 
 
Income tax assets
$
1,029.9

 
$
.3

 
$
15.7

 
$
1,045.9

Valuation allowance for deferred income tax assets
(240.2
)
 
—

 
(15.7
)
 
(255.9
)
Income tax assets, net
789.7

 
.3

 
—

 
790.0

Total assets
31,975.2

 
.3

 
—

 
31,975.5

 
 
 
 
 
 
 
 
Additional paid-in capital
3,212.1

 
.9

 
—

 
3,213.0

Retained earnings
650.7

 
(.6
)
 
—

 
650.1

Total shareholders' equity
4,486.9

 
.3

 
—

 
4,487.2

 
 
 
 
 
 
 
 
Total liabilities and shareholders' equity
31,975.2

 
.3

 
—

 
31,975.5


 
Nine months ended
 
September 30, 2016
 
Amounts prior to effect of adoption of authoritative guidance
 
Effect of adoption of authoritative guidance
 
As adjusted
Cash flows from operating activities:
 
 
 
 
 
Other operating costs
$
(555.4
)
 
$
3.3

 
$
(552.1
)
Net cash flow from operating activities
581.5

 
3.3

 
584.8

 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
Payments to repurchase common stock
(206.7
)
 
(3.3
)
 
(210.0
)
Net cash used by financing activities
(34.2
)
 
(3.3
)
 
(37.5
)
 
 
 
 
 
 
Net increase in cash and cash equivalents
273.7

 
—

 
273.7

CONSOLIDATED STATEMENT OF CASH FLOWS (Tables)
Schedule of the reconciliation for net income provided by operating activities 
The following reconciles net income to net cash from operating activities (dollars in millions):

 
Nine months ended
 
September 30,
 
2017
 
2016
Cash flows from operating activities:
 
 
 
Net income
$
246.5

 
$
124.0

Adjustments to reconcile net income to net cash from operating activities:
 
 
 

Amortization and depreciation
200.8

 
199.1

Income taxes
50.6

 
43.0

Insurance liabilities
321.5

 
310.2

Accrual and amortization of investment income
(233.2
)
 
(93.4
)
Deferral of policy acquisition costs
(183.4
)
 
(179.4
)
Net realized investment gains
(52.3
)
 
(23.3
)
Loss on reinsurance transaction
—

 
75.4

Cash and cash equivalents received upon recapture of reinsurance
—

 
73.6

Loss on extinguishment of borrowings related to a variable interest entity
5.5

 
—

Other
77.7

 
55.6

Net cash from operating activities
$
433.7

 
$
584.8



Schedule of other significant noncash transactions 
Other non-cash items not reflected in the investing and financing activities sections of the consolidated statement of cash flows (dollars in millions):

 
Nine months ended
 
September 30,
 
2017
 
2016
Stock options, restricted stock and performance units
$
17.8

 
$
18.9

Market value of investments recaptured in connection with the termination of reinsurance agreements with BRe
—

 
431.1

INVESTMENTS IN VARIABLE INTEREST ENTITIES (Tables)
Schedule of impact on balance sheet of consolidating variable interest entities 
The following tables provide supplemental information about the assets and liabilities of the VIEs which have been consolidated in accordance with authoritative guidance (dollars in millions):
 
September 30, 2017
 
VIEs
 
Eliminations
 
Net effect on
consolidated
balance sheet
Assets:
 
 
 
 
 
Investments held by variable interest entities
$
1,382.5

 
$
—

 
$
1,382.5

Notes receivable of VIEs held by insurance subsidiaries
—

 
(159.9
)
 
(159.9
)
Cash and cash equivalents held by variable interest entities
105.9

 
—

 
105.9

Accrued investment income
2.0

 
(.1
)
 
1.9

Income tax assets, net
(.6
)
 
—

 
(.6
)
Other assets
13.3

 
(1.4
)
 
11.9

Total assets
$
1,503.1

 
$
(161.4
)
 
$
1,341.7

Liabilities:
 

 
 

 
 

Other liabilities
$
145.9

 
$
(3.5
)
 
$
142.4

Borrowings related to variable interest entities
1,198.2

 
—

 
1,198.2

Notes payable of VIEs held by insurance subsidiaries
172.9

 
(172.9
)
 
—

Total liabilities
$
1,517.0

 
$
(176.4
)
 
$
1,340.6


 
December 31, 2016
 
VIEs
 
Eliminations
 
Net effect on
consolidated
balance sheet
Assets:
 
 
 
 
 
Investments held by variable interest entities
$
1,724.3

 
$
—

 
$
1,724.3

Notes receivable of VIEs held by insurance subsidiaries
—

 
(204.2
)
 
(204.2
)
Cash and cash equivalents held by variable interest entities
189.3

 
—

 
189.3

Accrued investment income
3.0

 
(.1
)
 
2.9

Income tax assets, net
6.4

 
(1.3
)
 
5.1

Other assets
13.1

 
(1.8
)
 
11.3

Total assets
$
1,936.1

 
$
(207.4
)
 
$
1,728.7

Liabilities:
 

 
 

 
 

Other liabilities
$
81.8

 
$
(6.4
)
 
$
75.4

Borrowings related to variable interest entities
1,662.8

 
—

 
1,662.8

Notes payable of VIEs held by insurance subsidiaries
203.3

 
(203.3
)
 
—

Total liabilities
$
1,947.9

 
$
(209.7
)
 
$
1,738.2

Summary of variable interest entities by contractual maturity 
The following table sets forth the amortized cost and estimated fair value of the investments held by the VIEs at September 30, 2017, by contractual maturity.  Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.
 
Amortized
cost
 
Estimated
fair
value
 
(Dollars in millions)
Due in one year or less
$
5.9

 
$
5.9

Due after one year through five years
499.4

 
500.1

Due after five years through ten years
876.4

 
876.5

Total
$
1,381.7

 
$
1,382.5

FAIR VALUE MEASUREMENTS (Tables)
Schedule of financial instruments carried at fair value categorized by input level 
The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at September 30, 2017 is as follows (dollars in millions):

 
Quoted prices in active markets
for identical assets or liabilities
(Level 1)
 
Significant other observable inputs
(Level 2)
 
Significant unobservable inputs
 (Level 3)
 
Total
Assets:
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
Corporate securities
$
—

 
$
14,394.3

 
$
255.7

 
$
14,650.0

United States Treasury securities and obligations of United States government corporations and agencies
—

 
172.3

 
—

 
172.3

States and political subdivisions
—

 
2,077.0

 
—

 
2,077.0

Debt securities issued by foreign governments
—

 
57.1

 
4.0

 
61.1

Asset-backed securities
—

 
2,726.2

 
59.9

 
2,786.1

Collateralized debt obligations
—

 
237.9

 
—

 
237.9

Commercial mortgage-backed securities
—

 
1,338.9

 
—

 
1,338.9

Mortgage pass-through securities
—

 
2.2

 
—

 
2.2

Collateralized mortgage obligations
—

 
804.4

 
—

 
804.4

Total fixed maturities, available for sale
—

 
21,810.3

 
319.6

 
22,129.9

Equity securities - corporate securities
477.8

 
213.9

 
21.6

 
713.3

Trading securities:
 

 
 

 
 

 
 

Corporate securities
—

 
21.1

 
—

 
21.1

United States Treasury securities and obligations of United States government corporations and agencies
—

 
.5

 
—

 
.5

Asset-backed securities
—

 
101.2

 
—

 
101.2

Collateralized debt obligations
—

 
2.7

 
—

 
2.7

Commercial mortgage-backed securities
—

 
93.3

 
—

 
93.3

Collateralized mortgage obligations
—

 
72.5

 
—

 
72.5

Equity securities
3.1

 
—

 
—

 
3.1

Total trading securities
3.1

 
291.3

 
—

 
294.4

Investments held by variable interest entities - corporate securities
—

 
1,377.5

 
5.0

 
1,382.5

Other invested assets - derivatives
—

 
142.2

 
—

 
142.2

Assets held in separate accounts
—

 
4.8

 
—

 
4.8

Total assets carried at fair value by category
$
480.9

 
$
23,840.0

 
$
346.2

 
$
24,667.1

 
 
 
 
 
 
 
 
Liabilities:
 

 
 

 
 

 
 

Future policy benefits - embedded derivatives associated with fixed index annuity products
$
—

 
$
—

 
$
1,249.3

 
$
1,249.3



The categorization of fair value measurements, by input level, for our financial instruments carried at fair value on a recurring basis at December 31, 2016 is as follows (dollars in millions):

 
Quoted prices in active markets
 for identical assets or liabilities
(Level 1)
 
Significant other observable inputs
 (Level 2)
 
Significant unobservable inputs 
(Level 3)
 
Total
Assets:
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
Corporate securities
$
—

 
$
13,252.4

 
$
258.5

 
$
13,510.9

United States Treasury securities and obligations of United States government corporations and agencies
—

 
164.3

 
—

 
164.3

States and political subdivisions
—

 
1,988.9

 
—

 
1,988.9

Debt securities issued by foreign governments
—

 
33.0

 
3.9

 
36.9

Asset-backed securities
—

 
2,649.9

 
60.4

 
2,710.3

Collateralized debt obligations
—

 
225.3

 
5.4

 
230.7

Commercial mortgage-backed securities
—

 
1,504.2

 
32.0

 
1,536.2

Mortgage pass-through securities
—

 
2.5

 
—

 
2.5

Collateralized mortgage obligations
—

 
915.5

 
—

 
915.5

Total fixed maturities, available for sale
—

 
20,736.0

 
360.2

 
21,096.2

Equity securities - corporate securities
359.9

 
199.1

 
25.2

 
584.2

Trading securities:
 

 
 

 
 

 
 

Corporate securities
—

 
19.0

 
—

 
19.0

United States Treasury securities and obligations of United States government corporations and agencies
—

 
.5

 
—

 
.5

Asset-backed securities
—

 
94.3

 
—

 
94.3

Collateralized debt obligations
—

 
2.4

 
—

 
2.4

Commercial mortgage-backed securities
—

 
163.9

 
—

 
163.9

Collateralized mortgage obligations
—

 
78.4

 
—

 
78.4

Equity securities
4.9

 
—

 
—

 
4.9

Total trading securities
4.9

 
358.5

 
—

 
363.4

Investments held by variable interest entities - corporate securities
—

 
1,724.3

 
—

 
1,724.3

Other invested assets - derivatives
—

 
111.9

 
—

 
111.9

Assets held in separate accounts
—

 
4.7

 
—

 
4.7

Total assets carried at fair value by category
$
364.8

 
$
23,134.5

 
$
385.4

 
$
23,884.7

 
 
 
 
 
 
 
 
Liabilities:
 

 
 

 
 

 
 

Future policy benefits - embedded derivatives associated with fixed index annuity products
$
—

 
$
—

 
$
1,092.3

 
$
1,092.3

Schedule of assets and liabilities measured on a recurring fair value basis 
The fair value measurements for our financial instruments disclosed at fair value on a recurring basis are as follows (dollars in millions):
 
September 30, 2017
 
Quoted prices in active markets for identical assets or liabilities
(Level 1)
 
Significant other observable inputs
 (Level 2)
 
Significant unobservable inputs 
(Level 3)
 
Total estimated fair value
 
Total carrying amount
Assets:
 
 
 
 
 
 
 
 
 
Mortgage loans
$
—

 
$
—

 
$
1,705.8

 
$
1,705.8

 
$
1,667.8

Policy loans
—

 
—

 
114.6

 
114.6

 
114.6

Other invested assets:
 
 
 
 
 
 
 
 
 
Company-owned life insurance
—

 
178.8

 
—

 
178.8

 
178.8

Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
Unrestricted
765.9

 
—

 
—

 
765.9

 
765.9

Held by variable interest entities
105.9

 
—

 
—

 
105.9

 
105.9

Liabilities:
 
 
 
 
 
 
 
 
 
Policyholder account balances
—

 
—

 
11,113.5

 
11,113.5

 
11,113.5

Investment borrowings
—

 
1,650.1

 
—

 
1,650.1

 
1,646.9

Borrowings related to variable interest entities
—

 
1,215.1

 
—

 
1,215.1

 
1,198.2

Notes payable – direct corporate obligations
—

 
970.5

 
—

 
970.5

 
914.4


 
December 31, 2016
 
Quoted prices in active markets for identical assets or liabilities
(Level 1)
 
Significant other observable inputs
 (Level 2)
 
Significant unobservable inputs 
(Level 3)
 
Total estimated fair value
 
Total carrying amount
Assets:
 
 
 
 
 
 
 
 
 
Mortgage loans
$
—

 
$
—

 
$
1,800.1

 
$
1,800.1

 
$
1,768.0

Policy loans
—

 
—

 
112.0

 
112.0

 
112.0

Other invested assets:
 
 
 
 
 
 
 
 
 
Company-owned life insurance
—

 
165.0

 
—

 
165.0

 
165.0

Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
Unrestricted
473.6

 
5.3

 
—

 
478.9

 
478.9

Held by variable interest entities
189.3

 
—

 
—

 
189.3

 
189.3

Liabilities:
 
 
 
 
 
 
 
 
 
Policyholder account balances
—

 
—

 
10,912.7

 
10,912.7

 
10,912.7

Investment borrowings
—

 
1,650.0

 
—

 
1,650.0

 
1,647.4

Borrowings related to variable interest entities
—

 
1,675.2

 
—

 
1,675.2

 
1,662.8

Notes payable – direct corporate obligations
—

 
931.9

 
—

 
931.9

 
912.9



The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended September 30, 2017 (dollars in millions):
 
 
September 30, 2017
 
 
 
 
Beginning balance as of June 30, 2017
 
Purchases, sales, issuances and settlements, net (b)
 
Total realized and unrealized gains (losses) included in net income
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
Transfers into Level 3 (a)
 
Transfers out of Level 3 (a)
 
Ending balance as of September 30, 2017
 
Amount of total gains (losses) for the three months ended September 30, 2017 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
 
$
263.3

 
$
(44.8
)
 
$
1.7

 
$
1.3

 
$
34.2

 
$
—

 
$
255.7

 
$
(3.2
)
Debt securities issued by foreign governments
 
3.9

 
—

 
—

 
.1

 
—

 
—

 
4.0

 
—

Asset-backed securities
 
59.6

 
(1.3
)
 
—

 
.7

 
7.1

 
(6.2
)
 
59.9

 
—

Collateralized debt obligations
 
2.5

 
(2.5
)
 
—

 
—

 
—

 
—

 
—

 
—

Collateralized mortgage obligations
 
.2

 
—

 
—

 
(.2
)
 
—

 
—

 
—

 
—

Total fixed maturities, available for sale
 
329.5

 
(48.6
)
 
1.7

 
1.9

 
41.3

 
(6.2
)
 
319.6

 
(3.2
)
Equity securities - corporate securities
 
24.6

 
(8.3
)
 
6.4

 
(1.1
)
 
—

 
—

 
21.6

 
(.5
)
Investments held by variable interest entities - corporate securities
 
—

 
—

 
—

 
—

 
5.0

 
—

 
5.0

 
—

Liabilities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Future policy benefits - embedded derivatives associated with fixed index annuity products
 
(1,205.4
)
 
(56.3
)
 
12.4

 
—

 
—

 
—

 
(1,249.3
)
 
12.4

_________
(a)
Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.
(b)
Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the three months ended September 30, 2017 (dollars in millions):

 
Purchases
 
Sales
 
Issuances
 
Settlements
 
Purchases, sales, issuances and settlements, net
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
Corporate securities
$
15.3

 
$
(60.1
)
 
$
—

 
$
—

 
$
(44.8
)
Asset-backed securities
9.9

 
(11.2
)
 
—

 
—

 
(1.3
)
Collateralized debt obligations
—

 
(2.5
)
 
—

 
—

 
(2.5
)
Total fixed maturities, available for sale
25.2

 
(73.8
)
 
—

 
—

 
(48.6
)
Equity securities - corporate securities
—

 
(8.3
)
 
—

 
—

 
(8.3
)
Liabilities:
 
 
 
 
 
 
 
 
 
Future policy benefits - embedded derivatives associated with fixed index annuity products
(41.0
)
 
1.8

 
(31.4
)
 
14.3

 
(56.3
)




The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the nine months ended September 30, 2017 (dollars in millions):
 
 
September 30, 2017
 
 
 
 
Beginning balance as of December 31, 2016
 
Purchases, sales, issuances and settlements, net (b)
 
Total realized and unrealized gains (losses) included in net income
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
Transfers into Level 3 (a)
 
Transfers out of Level 3 (a)
 
Ending balance as of September 30, 2017
 
Amount of total gains (losses) for the nine months ended September 30, 2017 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
 
$
258.5

 
$
(44.1
)
 
$
9.5

 
$
.6

 
$
31.2

 
$
—

 
$
255.7

 
$
(6.5
)
Debt securities issued by foreign governments
 
3.9

 
—

 
—

 
.1

 
—

 
—

 
4.0

 
—

Asset-backed securities
 
60.4

 
3.8

 
—

 
2.3

 
4.2

 
(10.8
)
 
59.9

 
—

Collateralized debt obligations
 
5.4

 
(2.5
)
 
—

 
—

 
—

 
(2.9
)
 
—

 
—

Commercial mortgage-backed securities
 
32.0

 
—

 
—

 
—

 
—

 
(32.0
)
 
—

 
—

Total fixed maturities, available for sale
 
360.2

 
(42.8
)
 
9.5

 
3.0

 
35.4

 
(45.7
)
 
319.6

 
(6.5
)
Equity securities - corporate securities
 
25.2

 
(8.5
)
 
6.3

 
(1.4
)
 
—

 
—

 
21.6

 
(.5
)
Investments held by variable interest entities - corporate securities
 
—

 
5.0

 
—

 
—

 
—

 
—

 
5.0

 
—

Liabilities:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Future policy benefits - embedded derivatives associated with fixed index annuity products
 
(1,092.3
)
 
(174.2
)
 
17.2

 
—

 
—

 
—

 
(1,249.3
)
 
17.2

_________
(a)
Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.
(b)
Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  The following summarizes such activity for the nine months ended September 30, 2017 (dollars in millions):

 
Purchases
 
Sales
 
Issuances
 
Settlements
 
Purchases, sales, issuances and settlements, net
Assets:
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
Corporate securities
$
64.3

 
$
(108.4
)
 
$
—

 
$
—

 
$
(44.1
)
Asset-backed securities
21.9

 
(18.1
)
 
—

 
—

 
3.8

Collateralized debt obligations
—

 
(2.5
)
 
—

 
—

 
(2.5
)
Total fixed maturities, available for sale
86.2

 
(129.0
)
 
—

 
—

 
(42.8
)
Equity securities - corporate securities
—

 
(8.5
)
 
—

 
—

 
(8.5
)
Investments held by variable interest entities - corporate securities
5.0

 
—

 
—

 
—

 
5.0

Liabilities:
 
 
 
 
 
 
 
 
 
Future policy benefits - embedded derivatives associated with fixed index annuity products
(130.1
)
 
5.3

 
(95.7
)
 
46.3

 
(174.2
)




The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the three months ended September 30, 2016 (dollars in millions):

 
September 30, 2016
 
 
 
Beginning balance as of June 30, 2016
 
Purchases, sales, issuances and settlements, net (b)
 
Total realized and unrealized gains (losses) included in net income
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
Transfers into Level 3 (a)
 
Transfers out of Level 3 (a)
 
Ending balance as of September 30, 2016
 
Amount of total gains (losses) for the three months ended September 30, 2016 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
$
174.6

 
$
118.8

 
$
—

 
$
(4.9
)
 
$
—

 
$
—

 
$
288.5

 
$
—

Debt securities issued by foreign governments
4.1

 
—

 
—

 
—

 
—

 
—

 
4.1

 
—

Asset-backed securities
39.1

 
5.7

 
—

 
2.1

 
24.6

 
(15.0
)
 
56.5

 
—

Collateralized debt obligations
—

 
2.5

 
—

 
—

 
—

 
—

 
2.5

 
—

Commercial mortgage-backed securities
1.1

 
17.0

 
—

 
(.1
)
 
14.4

 
—

 
32.4

 
—

Collateralized mortgage obligations
—

 
12.0

 
—

 
—

 
—

 
—

 
12.0

 
—

Total fixed maturities, available for sale
218.9

 
156.0

 
—

 
(2.9
)
 
39.0

 
(15.0
)
 
396.0

 
—

Equity securities - corporate securities
21.4

 
3.3

 
—

 
(.8
)
 
—

 
—

 
23.9

 
—

Trading securities - commercial mortgage-backed securities
—

 
—

 
—

 
(1.7
)
 
10.0

 
—

 
8.3

 
(1.7
)
Liabilities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Future policy benefits - embedded derivatives associated with fixed index annuity products
(1,127.0
)
 
(37.0
)
 
18.3

 
—

 
—

 
—

 
(1,145.7
)
 
18.3

____________
(a)
Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.
(b)
Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  In addition, such activity includes the investments received upon the recapture of reinsurance agreements with BRe on September 29, 2016. The following summarizes such activity for the three months ended September 30, 2016 (dollars in millions):

 
Purchases
 
Received in reinsurance recapture
 
Sales
 
Issuances
 
Settlements
 
Purchases, sales, issuances and settlements, net
Assets:
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
$
1.1

 
$
118.6

 
$
(.9
)
 
$
—

 
$
—

 
$
118.8

Asset-backed securities
7.0

 
—

 
(1.3
)
 
—

 
—

 
5.7

Collateralized debt obligations
2.5

 
—

 
—

 
—

 
—

 
2.5

Commercial mortgage-backed securities
17.0

 
—

 
—

 
—

 
—

 
17.0

Collateralized mortgage obligations
—

 
12.0

 
—

 
—

 
—

 
12.0

Total fixed maturities, available for sale
27.6

 
130.6

 
(2.2
)
 
—

 
—

 
156.0

Equity securities - corporate securities
1.1

 
2.2

 
—

 
—

 
—

 
3.3

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Future policy benefits - embedded derivatives associated with fixed index annuity products
(38.5
)
 
—

 
3.1

 
(14.6
)
 
13.0

 
(37.0
)


The following table presents additional information about assets and liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value for the nine months ended September 30, 2016 (dollars in millions):

 
September 30, 2016
 
 
 
Beginning balance as of December 31, 2015
 
Purchases, sales, issuances and settlements, net (b)
 
Total realized and unrealized gains (losses) included in net income
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
Transfers into Level 3 (a)
 
Transfers out of Level 3 (a)
 
Ending balance as of September 30, 2016
 
Amount of total gains (losses) for the nine months ended September 30, 2016 included in our net income relating to assets and liabilities still held as of the reporting date
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
$
170.4

 
$
104.4

 
$
(7.0
)
 
$
7.4

 
$
20.3

 
$
(7.0
)
 
$
288.5

 
$
(5.6
)
Debt securities issued by foreign governments
—

 
4.0

 
—

 
.1

 
—

 
—

 
4.1

 
—

Asset-backed securities
35.9

 
1.7

 
—

 
4.0

 
28.6

 
(13.7
)
 
56.5

 
—

Collateralized debt obligations
—

 
2.5

 
—

 
—

 
—

 
—

 
2.5

 
—

Commercial mortgage-backed securities
1.1

 
17.0

 
—

 
.4

 
13.9

 
—

 
32.4

 
—

Mortgage pass-through securities
.1

 
(.1
)
 
—

 
—

 
—

 
—

 
—

 
—

Collateralized mortgage obligations
—

 
12.0

 
—

 
—

 
—

 
—

 
12.0

 
—

Total fixed maturities, available for sale
207.5

 
141.5

 
(7.0
)
 
11.9

 
62.8

 
(20.7
)
 
396.0

 
(5.6
)
Equity securities - corporate securities
32.0

 
5.5

 
(12.8
)
 
(.8
)
 
—

 
—

 
23.9

 
(12.8
)
Trading securities - commercial mortgage-backed securities
39.9

 
—

 
—

 
(1.4
)
 
—

 
(30.2
)
 
8.3

 
(1.4
)
Liabilities:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Future policy benefits - embedded derivatives associated with fixed index annuity products
(1,057.1
)
 
(55.3
)
 
(33.3
)
 
—

 
—

 
—

 
(1,145.7
)
 
(33.3
)
____________
(a)
Transfers into Level 3 are the result of unobservable inputs utilized within valuation methodologies for assets that were previously valued using observable inputs. Transfers out of Level 3 are due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate.
(b)
Purchases, sales, issuances and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period.  Such activity primarily consists of purchases and sales of fixed maturity and equity securities and changes to embedded derivative instruments related to insurance products resulting from the issuance of new contracts, or changes to existing contracts.  In addition, such activity includes the investments received upon the recapture of reinsurance agreements with BRe on September 29, 2016. The following summarizes such activity for the nine months ended September 30, 2016 (dollars in millions):

 
Purchases
 
Received in reinsurance recapture
 
Sales
 
Issuances
 
Settlements
 
Purchases, sales, issuances and settlements, net
Assets:
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
Corporate securities
$
1.1

 
$
118.6

 
$
(15.3
)
 
$
—

 
$
—

 
$
104.4

Debt securities issued by foreign governments
4.0

 
—

 
—

 
—

 
—

 
4.0

Asset-backed securities
7.0

 
—

 
(5.3
)
 
—

 
—

 
1.7

Collateralized debt obligations
2.5

 
—

 
—

 
—

 
—

 
2.5

Commercial mortgage-backed securities
17.0

 
—

 
—

 
—

 
—

 
17.0

Mortgage pass-through securities
—

 
—

 
(.1
)
 
—

 
—

 
(.1
)
Collateralized mortgage obligations
—

 
12.0

 
—

 
—

 
—

 
12.0

Total fixed maturities, available for sale
31.6

 
130.6

 
(20.7
)
 
—

 
—

 
141.5

Equity securities - corporate securities
3.3

 
2.2

 
—

 
—

 
—

 
5.5

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Future policy benefits - embedded derivatives associated with fixed index annuity products
(101.9
)
 
—

 
19.2

 
(17.5
)
 
44.9

 
(55.3
)
Schedule of fair value measurement inputs 
The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at September 30, 2017 (dollars in millions):

 
Fair value at September 30, 2017
 
Valuation techniques
 
Unobservable inputs
 
Range (weighted average)
Assets:
 
 
 
 
 
 
 
Corporate securities (a)
$
138.4

 
Discounted cash flow analysis
 
Discount margins
 
1.50% - 61.70% (9.10%)
Corporate securities (b)
3.1

 
Recovery method
 
Percent of recovery expected
 
5% - 38% (17.76%)
Asset-backed securities (c)
24.9

 
Discounted cash flow analysis
 
Discount margins
 
1.77% - 3.36% (2.54%)
Equity securities (d)
21.6

 
Market comparables
 
EBITDA multiples
 
0.5X - 6.2X (5.9X)
Other assets categorized as Level 3 (e)
158.2

 
Unadjusted third-party price source
 
Not applicable
 
Not applicable
Total
346.2

 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Future policy benefits (f)
1,249.3

 
Discounted projected embedded derivatives
 
Projected portfolio yields
 
5.15% - 5.61% (5.59%)
 
 
 
 
 
Discount rates
 
0.44% - 2.80% (1.94%)
 
 
 
 
 
Surrender rates
 
0.94% - 46.48% (13.52%)
________________________________
(a)
Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.
(b)
Corporate securities - The significant unobservable input used in the fair value measurement of these corporate securities is percentage of recovery expected.  Significant increases (decreases) in percentage of recovery expected in isolation would result in a significantly higher (lower) fair value measurement.
(c)
Asset-backed securities - The significant unobservable input used in the fair value measurement of these asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.
(d)
Equity securities - The significant unobservable input used in the fair value measurement of these equity securities is multiples of earnings before interest, taxes, depreciation and amortization ("EBITDA"). Generally, increases (decreases) in the EBITDA multiples would result in higher (lower) fair value measurements.
(e)
Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources.
(f)
Future policy benefits - The significant unobservable inputs used in the fair value measurement of our embedded derivatives associated with fixed index annuity products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative.

The following table provides additional information about the significant unobservable (Level 3) inputs developed internally by the Company to determine fair value for certain assets and liabilities carried at fair value at December 31, 2016 (dollars in millions):

 
Fair value at December 31, 2016
 
Valuation techniques
 
Unobservable inputs
 
Range (weighted average)
Assets:
 
 
 
 
 
 
 
Corporate securities (a)
$
148.5

 
Discounted cash flow analysis
 
Discount margins
 
1.35% - 27.71% (13.52%)
Corporate securities (b)
14.8

 
Recovery method
 
Percent of recovery expected
 
5% - 69% (55%)
Asset-backed securities (c)
24.0

 
Discounted cash flow analysis
 
Discount margins
 
2.06% - 3.64% (2.76%)
Equity securities (d)
25.2

 
Market comparables
 
EBITDA multiples
 
0.4X - 6.2X (5.9X)
Other assets categorized as Level 3 (e)
172.9

 
Unadjusted third-party price source
 
Not applicable
 
Not applicable
Total
385.4

 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Future policy benefits (f)
1,092.3

 
Discounted projected embedded derivatives
 
Projected portfolio yields
 
5.15% - 5.61% (5.59%)
 
 
 
 
 
Discount rates
 
0.18% - 3.06% (2.07%)
 
 
 
 
 
Surrender rates
 
0.94% - 46.48% (13.52%)

________________________________
(a)
Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.
(b)
Corporate securities - The significant unobservable input used in the fair value measurement of our corporate securities is percentage of recovery expected.  Significant increases (decreases) in percentage of recovery expected in isolation would result in a significantly higher (lower) fair value measurement.
(c)
Asset-backed securities - The significant unobservable input used in the fair value measurement of these asset-backed securities is discount margin added to a riskless market yield. Significant increases (decreases) in discount margin in isolation would result in a significantly lower (higher) fair value measurement.
(d)
Equity securities - The significant unobservable input used in the fair value measurement of these equity securities is EBITDA multiples. Generally, increases (decreases) in the EBITDA multiples would result in higher (lower) fair value measurements.
(e)
Other assets categorized as Level 3 - For these assets, there were no adjustments to quoted market prices obtained from third-party pricing sources.
(f)
Future policy benefits - The significant unobservable inputs used in the fair value measurement of our embedded derivatives associated with fixed index annuity products are projected portfolio yields, discount rates and surrender rates. Increases (decreases) in projected portfolio yields in isolation would lead to a higher (lower) fair value measurement. The discount rate is based on the Treasury rate adjusted by a margin. Increases (decreases) in the discount rates would lead to a lower (higher) fair value measurement. Assumed surrender rates are used to project how long the contracts remain in force. Generally, the longer the contracts are assumed to be in force the higher the fair value of the embedded derivative.
BUSINESS AND BASIS OF PRESENTATION (Details)
9 Months Ended
Sep. 30, 2017
distribution_channel
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
Number of distribution channels
3 
INVESTMENTS - SCHEDULE OF UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS INCLUDED IN ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract]
 
 
Net unrealized appreciation (depreciation) on fixed maturity securities, available for sale, on which an other-than-temporary impairment loss has been recognized
$ 2.4 
$ (1.1)
Net unrealized gains on all other investments
2,058.9 
1,311.9 
Adjustment to present value of future profits
(98.1)
(106.2)
Adjustment to deferred acquisition costs
(287.9)
(223.5)
Adjustment to insurance liabilities
(224.5)
(13.5)
Deferred income tax liabilities
(517.2)
(345.2)
Accumulated other comprehensive income
$ 933.6 
$ 622.4 
INVESTMENTS - NARRATIVE (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
 
Premium deficiencies adjustments to present value of future profits
$ (86.7)
 
$ (86.7)
 
 
Reduction to deferred acquisition costs due to unrealized gains that would result in premium deficiency if unrealized gains were realized
(135.8)
 
(135.8)
 
 
Adjustment to insurance liabilities
224.5 
 
224.5 
 
13.5 
Increase to deferred tax assets due to unrealized gains that would result in premium deficiency if unrealized gains were realized
159.1 
 
159.1 
 
 
Net realized investment gains (losses)
29.2 
11.6 
52.3 
23.3 
 
Net realized investment gains (losses), excluding impairment losses
34.5 
12.8 
74.8 
55.4 
 
Loss on dissolution of variable interest entities
0.6 
0 
4.3 
7.3 
 
Net impairment losses recognized
(4.7)
(1.2)
(18.2)
(24.8)
 
Value of available for sale securities sold
 
 
290.8 
 
 
Other than temporary impairment losses, losses on other investments following unforeseen events
 
 
7.3 
0.9 
 
Other-than-temporary impairments included in accumulated other comprehensive income
 
 
4.7 
 
 
Embedded Derivative Related to Reinsurance Contract
 
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
 
Increase in fair value of embedded derivative
 
 
12.3 
0.6 
 
Coinsurance |
Embedded Derivative Related to Reinsurance Contract
 
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
 
Increase in fair value of embedded derivative
 
 
2.4 
6.7 
 
Marketable securities
 
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
 
Net realized investment gains (losses), excluding impairment losses
 
 
60.1 
48.1 
 
Total fixed maturities, available for sale
 
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
 
Net realized investment gains (losses)
20.6 
4.5 
33.1 
36.4 
 
Gross realized losses on sale
8.5 
2.8 
16.4 
84.4 
 
Corporate securities
 
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
 
Gross realized losses on sale
 
 
9.7 
 
 
Commercial mortgage-backed securities
 
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
 
Gross realized losses on sale
 
 
3.1 
 
 
Various other investments
 
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
 
Gross realized losses on sale
 
 
3.6 
 
 
Fixed income investments |
Energy Sector
 
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
 
Net impairment losses recognized
 
 
(5.7)
(6.3)
 
Real estate investment
 
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
 
Net impairment losses recognized
 
 
(5.2)
 
 
Direct loan
 
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
 
Net impairment losses recognized
 
 
 
(3.7)
 
Preferred Stock
 
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
 
Net impairment losses recognized
 
 
 
(12.7)
 
Variable Interest Entity, Primary Beneficiary
 
 
 
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
 
 
 
Net impairment losses recognized
 
 
 
$ (1.2)
 
INVESTMENTS - SCHEDULE OF AMORTIZED COST, GROSS UNREALIZED GAINS AND LOSSES, ESTIMATED FAIR VALUE, AND OTHER-THAN-TEMPORARY IMPAIRMENTS (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended 12 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
$ 20,092.5 
$ 19,803.1 
Other-than-temporary impairments included in accumulated other comprehensive income
(4.7)
 
Corporate securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
13,145.4 
12,549.9 
Gross unrealized gains
1,537.6 
1,100.0 
Gross unrealized losses
(33.0)
(139.0)
Estimated fair value
14,650.0 
13,510.9 
Other-than-temporary impairments included in accumulated other comprehensive income
(3.6)
(3.6)
United States Treasury securities and obligations of United States government corporations and agencies
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
145.4 
143.8 
Gross unrealized gains
26.9 
20.5 
Gross unrealized losses
0 
0 
Estimated fair value
172.3 
164.3 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
States and political subdivisions
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
1,857.2 
1,811.8 
Gross unrealized gains
220.7 
186.7 
Gross unrealized losses
(0.9)
(9.6)
Estimated fair value
2,077.0 
1,988.9 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
(3.0)
Debt securities issued by foreign governments
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
58.1 
37.1 
Gross unrealized gains
3.1 
0.2 
Gross unrealized losses
(0.1)
(0.4)
Estimated fair value
61.1 
36.9 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
Asset-backed securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
2,608.6 
2,641.5 
Gross unrealized gains
180.6 
84.3 
Gross unrealized losses
(3.1)
(15.5)
Estimated fair value
2,786.1 
2,710.3 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
Collateralized debt obligations
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
236.5 
230.0 
Gross unrealized gains
1.4 
1.0 
Gross unrealized losses
0 
(0.3)
Estimated fair value
237.9 
230.7 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
Commercial mortgage-backed securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
1,311.6 
1,531.0 
Gross unrealized gains
37.4 
33.1 
Gross unrealized losses
(10.1)
(27.9)
Estimated fair value
1,338.9 
1,536.2 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
Mortgage pass-through securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
2.0 
2.3 
Gross unrealized gains
0.2 
0.2 
Gross unrealized losses
0 
0 
Estimated fair value
2.2 
2.5 
Other-than-temporary impairments included in accumulated other comprehensive income
0 
0 
Collateralized mortgage obligations
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
727.7 
855.7 
Gross unrealized gains
77.3 
61.4 
Gross unrealized losses
(0.6)
(1.6)
Estimated fair value
804.4 
915.5 
Other-than-temporary impairments included in accumulated other comprehensive income
(1.1)
(1.4)
Total fixed maturities, available for sale
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
20,092.5 
19,803.1 
Gross unrealized gains
2,085.2 
1,487.4 
Gross unrealized losses
(47.8)
(194.3)
Estimated fair value
22,129.9 
21,096.2 
Other-than-temporary impairments included in accumulated other comprehensive income
(4.7)
(8.0)
Equity securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Amortized cost
688.7 
580.7 
Gross unrealized gains
27.2 
11.5 
Gross unrealized losses
(2.6)
(8.0)
Estimated fair value
$ 713.3 
$ 584.2 
INVESTMENTS - SUMMARY OF INVESTMENTS BY CONTRACTUAL MATURITY (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Amortized cost
 
 
Due in one year or less
$ 398.1 
$ 354.7 
Due after one year through five years
2,004.8 
2,243.8 
Due after five years through ten years
1,562.8 
1,549.1 
Due after ten years
11,240.4 
10,395.0 
Subtotal
15,206.1 
14,542.6 
Structured securities
4,886.4 
5,260.5 
Amortized cost
20,092.5 
19,803.1 
Estimated fair value
 
 
Due in one year or less
406.1 
359.8 
Due after one year through five years
2,131.7 
2,399.5 
Due after five years through ten years
1,671.1 
1,620.8 
Due after ten years
12,751.5 
11,320.9 
Subtotal
16,960.4 
15,701.0 
Structured securities
5,169.5 
5,395.2 
Total fixed maturities, available for sale
$ 22,129.9 
$ 21,096.2 
INVESTMENTS - NET REALIZED INVESTMENT GAINS (LOSSES) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Gain (Loss) on Investments [Line Items]
 
 
 
 
Total other-than-temporary impairment losses
$ (4.7)
$ (1.2)
$ (17.3)
$ (24.8)
Other-than-temporary impairment losses recognized in accumulated other comprehensive income
0 
0 
(0.9)
0 
Total realized gains
29.2 
11.6 
52.3 
23.3 
Loss on dissolution of variable interest entities
(0.6)
0 
(4.3)
(7.3)
Investments
 
 
 
 
Gain (Loss) on Investments [Line Items]
 
 
 
 
Change in estimated fair value of trading securities
 
 
13.0 
0.8 
Total fixed maturities, available for sale
 
 
 
 
Gain (Loss) on Investments [Line Items]
 
 
 
 
Gross realized gains on sale
32.3 
7.3 
60.4 
127.1 
Gross realized losses on sale
(8.5)
(2.8)
(16.4)
(84.4)
Total other-than-temporary impairment losses
(3.2)
0 
(10.0)
(6.3)
Other-than-temporary impairment losses recognized in accumulated other comprehensive income
0 
0 
(0.9)
0 
Net impairment losses recognized
(3.2)
0 
(10.9)
(6.3)
Total realized gains
20.6 
4.5 
33.1 
36.4 
Equity securities
 
 
 
 
Gain (Loss) on Investments [Line Items]
 
 
 
 
Total realized gains
7.7 
17.2 
9.6 
21.3 
Commercial mortgage loans
 
 
 
 
Gain (Loss) on Investments [Line Items]
 
 
 
 
Total realized gains
0 
0 
1.0 
0 
Impairments of other investments
 
 
 
 
Gain (Loss) on Investments [Line Items]
 
 
 
 
Total realized gains
(1.5)
(1.2)
(7.3)
(18.5)
Other
 
 
 
 
Gain (Loss) on Investments [Line Items]
 
 
 
 
Total realized gains
3.0 
(8.9)
20.2 
(8.6)
VIEs
 
 
 
 
Gain (Loss) on Investments [Line Items]
 
 
 
 
Loss on dissolution of variable interest entities
$ (0.6)
$ 0 
$ (4.3)
$ (7.3)
INVESTMENTS - SCHEDULE OF OTHER THAN TEMPORARY IMPAIRMENT (Details) (Available-for-sale Securities, USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Available-for-sale Securities
 
 
 
 
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
 
 
 
 
Credit losses on fixed maturity securities, available for sale, beginning of period
$ (4.9)
$ (2.6)
$ (5.5)
$ (2.6)
Add: credit losses on other-than-temporary impairments not previously recognized
0 
0 
0 
0 
Less: credit losses on securities sold
0 
0.1 
1.6 
0.1 
Less: credit losses on securities impaired due to intent to sell
0 
0 
0 
0 
Add: credit losses on previously impaired securities
0 
0 
(1.0)
0 
Less: increases in cash flows expected on previously impaired securities
0 
0 
0 
0 
Credit losses on fixed maturity securities, available for sale, end of period
$ (4.9)
$ (2.5)
$ (4.9)
$ (2.5)
INVESTMENTS - SUMMARY OF INVESTMENTS WITH UNREALIZED LOSSES BY INVESTMENT CATEGORY (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair value, less than 12 months
$ 1,332.5 
$ 3,440.8 
Unrealized losses, less than 12 months
(11.6)
(109.5)
Fair value, 12 months or greater
733.4 
1,059.8 
Unrealized losses, 12 months or greater
(36.2)
(84.8)
Fair value, total
2,065.9 
4,500.6 
Unrealized losses, total
(47.8)
(194.3)
United States Treasury securities and obligations of United States government corporations and agencies
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair value, less than 12 months
20.3 
8.0 
Unrealized losses, less than 12 months
0 
0 
Fair value, 12 months or greater
0.6 
0 
Unrealized losses, 12 months or greater
0 
0 
Fair value, total
20.9 
8.0 
Unrealized losses, total
0 
0 
States and political subdivisions
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair value, less than 12 months
35.1 
176.3 
Unrealized losses, less than 12 months
(0.6)
(7.8)
Fair value, 12 months or greater
19.3 
18.3 
Unrealized losses, 12 months or greater
(0.3)
(1.8)
Fair value, total
54.4 
194.6 
Unrealized losses, total
(0.9)
(9.6)
Debt securities issued by foreign governments
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair value, less than 12 months
10.5 
18.9 
Unrealized losses, less than 12 months
(0.1)
(0.4)
Fair value, 12 months or greater
0 
0 
Unrealized losses, 12 months or greater
0 
0 
Fair value, total
10.5 
18.9 
Unrealized losses, total
(0.1)
(0.4)
Corporate securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair value, less than 12 months
666.9 
1,907.6 
Unrealized losses, less than 12 months
(7.8)
(75.5)
Fair value, 12 months or greater
400.4 
559.6 
Unrealized losses, 12 months or greater
(25.2)
(63.5)
Fair value, total
1,067.3 
2,467.2 
Unrealized losses, total
(33.0)
(139.0)
Asset-backed securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair value, less than 12 months
276.7 
692.9 
Unrealized losses, less than 12 months
(1.3)
(8.5)
Fair value, 12 months or greater
79.6 
262.5 
Unrealized losses, 12 months or greater
(1.8)
(7.0)
Fair value, total
356.3 
955.4 
Unrealized losses, total
(3.1)
(15.5)
Collateralized debt obligations
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair value, less than 12 months
24.0 
38.3 
Unrealized losses, less than 12 months
0 
(0.1)
Fair value, 12 months or greater
0 
30.8 
Unrealized losses, 12 months or greater
0 
(0.2)
Fair value, total
24.0 
69.1 
Unrealized losses, total
0 
(0.3)
Commercial mortgage-backed securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair value, less than 12 months
226.2 
525.2 
Unrealized losses, less than 12 months
(1.3)
(16.6)
Fair value, 12 months or greater
221.9 
154.0 
Unrealized losses, 12 months or greater
(8.8)
(11.3)
Fair value, total
448.1 
679.2 
Unrealized losses, total
(10.1)
(27.9)
Collateralized mortgage obligations
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair value, less than 12 months
72.8 
73.6 
Unrealized losses, less than 12 months
(0.5)
(0.6)
Fair value, 12 months or greater
11.6 
34.6 
Unrealized losses, 12 months or greater
(0.1)
(1.0)
Fair value, total
84.4 
108.2 
Unrealized losses, total
(0.6)
(1.6)
Equity securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Fair value, less than 12 months
37.4 
239.4 
Unrealized losses, less than 12 months
(0.8)
(8.0)
Fair value, 12 months or greater
89.7 
0 
Unrealized losses, 12 months or greater
(1.8)
0 
Fair value, total
127.1 
239.4 
Unrealized losses, total
$ (2.6)
$ (8.0)
EARNINGS PER SHARE (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Dilutive Securities, Effect on Basic Earnings Per Share [Abstract]
 
 
 
 
Net income
$ 100.8 
$ 18.6 
$ 246.5 
$ 124.0 
Shares:
 
 
 
 
Weighted average shares outstanding for basic earnings per share (in shares)
168,684 
174,247 
170,890 
177,640 
Effect of dilutive securities on weighted average shares:
 
 
 
 
Stock options, restricted stock and performance units (in shares)
2,298 
1,476 
1,910 
1,733 
Weighted average shares outstanding for diluted earnings per share (in shares)
170,982 
175,723 
172,800 
179,373 
BUSINESS SEGMENTS (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Revenues:
 
 
 
 
Fee revenue and other income
$ 12.2 
$ 10.5 
$ 35.5 
$ 38.7 
Total revenues
1,036.4 
991.3 
3,114.6 
2,907.6 
Expenses:
 
 
 
 
Insurance policy benefits
638.1 
609.8 
1,941.6 
1,861.2 
Other operating costs and expenses
217.5 
187.3 
631.3 
603.5 
Total expenses
920.6 
893.0 
2,784.8 
2,632.3 
Pre-tax operating earnings
115.8 
98.3 
329.8 
275.3 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
Total segment revenues
1,036.4 
991.3 
3,114.6 
2,907.6 
Net realized investment gains
29.2 
11.6 
52.3 
23.3 
Revenues related to VIEs
13.7 
13.0 
40.2 
39.3 
Fee revenue related to transition and support services agreements
0 
0 
0 
10.0 
Total revenues
1,079.3 
1,015.9 
3,207.1 
2,980.2 
Total segment expenses
920.6 
893.0 
2,784.8 
2,632.3 
Insurance policy benefits - fair value changes in embedded derivative liabilities
(2.9)
(12.1)
9.8 
47.0 
Amortization related to fair value changes in embedded derivative liabilities
0.6 
2.7 
(1.8)
(10.4)
Amortization related to net realized investment gains
0.7 
0.2 
1.0 
0.9 
Expenses related to VIEs
17.0 
13.7 
44.8 
40.5 
Fair value changes and amendment related to agent deferred compensation plan
13.4 
(6.3)
13.4 
12.0 
Loss on reinsurance transaction
0 
75.4 
0 
75.4 
Expenses related to transition and support services agreements
0 
0 
0 
10.0 
Total benefits and expenses
949.4 
966.6 
2,852.0 
2,807.7 
Income before income taxes
129.9 
49.3 
355.1 
172.5 
Tax expense on period income
44.1 
16.9 
123.6 
61.7 
Valuation allowance for deferred tax assets and other tax items
(15.0)
13.8 
(15.0)
(13.2)
Net income
100.8 
18.6 
246.5 
124.0 
Operating segments |
Bankers Life:
 
 
 
 
Revenues:
 
 
 
 
Annuities
3.7 
6.8 
15.5 
17.4 
Health
307.2 
310.3 
926.9 
933.3 
Life
103.7 
96.6 
310.4 
295.8 
Net investment income
270.6 
244.7 
800.4 
686.8 
Fee revenue and other income
11.3 
9.6 
32.5 
23.5 
Total revenues
696.5 
668.0 
2,085.7 
1,956.8 
Expenses:
 
 
 
 
Insurance policy benefits
437.2 
427.1 
1,307.7 
1,240.9 
Amortization
38.7 
43.8 
126.3 
135.3 
Interest expense on investment borrowings
5.3 
3.5 
14.3 
9.4 
Other operating costs and expenses
108.4 
105.5 
328.2 
312.2 
Total expenses
589.6 
579.9 
1,776.5 
1,697.8 
Pre-tax operating earnings
106.9 
88.1 
309.2 
259.0 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
Total segment revenues
696.5 
668.0 
2,085.7 
1,956.8 
Total segment expenses
589.6 
579.9 
1,776.5 
1,697.8 
Operating segments |
Washington National:
 
 
 
 
Revenues:
 
 
 
 
Annuities
0.5 
1.2 
1.6 
2.3 
Health
160.4 
156.9 
480.3 
469.1 
Life
6.5 
6.3 
20.1 
18.6 
Net investment income
68.0 
67.1 
201.9 
191.3 
Fee revenue and other income
0.3 
0.4 
0.8 
1.0 
Total revenues
235.7 
231.9 
704.7 
682.3 
Expenses:
 
 
 
 
Insurance policy benefits
144.7 
144.5 
436.7 
422.0 
Amortization
14.3 
14.3 
43.9 
44.5 
Interest expense on investment borrowings
1.7 
0.9 
4.5 
2.5 
Other operating costs and expenses
47.5 
47.0 
145.0 
140.3 
Total expenses
208.2 
206.7 
630.1 
609.3 
Pre-tax operating earnings
27.5 
25.2 
74.6 
73.0 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
Total segment revenues
235.7 
231.9 
704.7 
682.3 
Total segment expenses
208.2 
206.7 
630.1 
609.3 
Operating segments |
Colonial Penn:
 
 
 
 
Revenues:
 
 
 
 
Health
0.5 
0.6 
1.6 
2.0 
Life
72.6 
70.3 
217.5 
208.5 
Net investment income
11.0 
11.1 
33.1 
33.0 
Fee revenue and other income
0.3 
0.2 
0.9 
0.8 
Total revenues
84.4 
82.2 
253.1 
244.3 
Expenses:
 
 
 
 
Insurance policy benefits
47.7 
50.3 
150.8 
151.3 
Amortization
3.9 
3.7 
11.9 
11.3 
Interest expense on investment borrowings
0.3 
0.1 
0.7 
0.4 
Other operating costs and expenses
23.5 
27.2 
73.0 
84.2 
Total expenses
75.4 
81.3 
236.4 
247.2 
Pre-tax operating earnings
9.0 
0.9 
16.7 
(2.9)
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
Total segment revenues
84.4 
82.2 
253.1 
244.3 
Total segment expenses
75.4 
81.3 
236.4 
247.2 
Operating segments |
Long-term care in run-off:
 
 
 
 
Revenues:
 
 
 
 
Health
4.2 
0 
13.3 
0 
Net investment income
6.8 
0 
26.5 
0 
Total revenues
11.0 
0 
39.8 
0 
Expenses:
 
 
 
 
Insurance policy benefits
11.4 
0 
36.6 
0 
Other operating costs and expenses
0.6 
0 
2.1 
0 
Total expenses
12.0 
0 
38.7 
0 
Pre-tax operating earnings
(1.0)
0 
1.1 
0 
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
Total segment revenues
11.0 
0 
39.8 
0 
Total segment expenses
12.0 
0 
38.7 
0 
Corporate
 
 
 
 
Revenues:
 
 
 
 
Net investment income
7.0 
6.7 
24.8 
16.6 
Fee revenue and other income
1.8 
2.5 
6.5 
7.6 
Total revenues
8.8 
9.2 
31.3 
24.2 
Expenses:
 
 
 
 
Interest expense on corporate debt
11.7 
11.5 
34.8 
34.3 
Other operating costs and expenses
23.7 
13.6 
68.3 
43.7 
Total expenses
35.4 
25.1 
103.1 
78.0 
Pre-tax operating earnings
(26.6)
(15.9)
(71.8)
(53.8)
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
 
 
 
 
Total segment revenues
8.8 
9.2 
31.3 
24.2 
Total segment expenses
$ 35.4 
$ 25.1 
$ 103.1 
$ 78.0 
ACCOUNTING FOR DERIVATIVES - FAIR VALUE BY BALANCE SHEET LOCATION (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Fixed index call options
 
 
Derivatives, Fair Value [Line Items]
 
 
Assets
$ 142.2 
$ 111.9 
Not Designated as Hedging Instrument
 
 
Derivatives, Fair Value [Line Items]
 
 
Assets
140.4 
107.7 
Liabilities
1,249.3 
1,092.3 
Not Designated as Hedging Instrument |
Fixed index call options |
Other invested assets:
 
 
Derivatives, Fair Value [Line Items]
 
 
Assets
142.2 
111.9 
Not Designated as Hedging Instrument |
Reinsurance receivables |
Other invested assets:
 
 
Derivatives, Fair Value [Line Items]
 
 
Assets
(1.8)
(4.2)
Not Designated as Hedging Instrument |
Fixed index products |
Future policy benefits:
 
 
Derivatives, Fair Value [Line Items]
 
 
Liabilities
$ 1,249.3 
$ 1,092.3 
ACCOUNTING FOR DERIVATIVES (Details) (USD $)
Sep. 30, 2017
Dec. 31, 2016
Embedded Derivative Associated With Modified Coinsurance Agreement
 
 
Derivative [Line Items]
 
 
Embedded derivative
$ 125,000,000 
 
Fixed index call options
 
 
Derivative [Line Items]
 
 
Notional amount
$ 2,900,000,000 
$ 2,500,000,000 
ACCOUNTING FOR DERIVATIVES - SCHEDULE PRE-TAX GAINS (LOSSES) RECOGNIZED IN NET INCOME FOR DERIVATIVE INSTRUMENTS (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Derivative [Line Items]
 
 
 
 
Gains (losses) on derivatives not designated as hedging instruments
$ 30.9 
$ 35.4 
$ 97.8 
$ (16.8)
Investment Income |
Fixed index call options
 
 
 
 
Derivative [Line Items]
 
 
 
 
Gains (losses) on derivatives not designated as hedging instruments
30.6 
17.0 
95.4 
10.9 
Gain (Loss) on Investments
 
 
 
 
Derivative [Line Items]
 
 
 
 
Gains (losses) on derivatives not designated as hedging instruments
0.3 
0.1 
2.4 
5.6 
Gain (Loss) on Investments |
Interest rate futures
 
 
 
 
Derivative [Line Items]
 
 
 
 
Gains (losses) on derivatives not designated as hedging instruments
0 
0 
0 
(1.1)
Gain (Loss) on Investments |
Embedded Derivative |
Coinsurance
 
 
 
 
Derivative [Line Items]
 
 
 
 
Gains (losses) on derivatives not designated as hedging instruments
0.3 
0.1 
2.4 
6.7 
Insurance Policy Benefits |
Embedded Derivative |
Fixed Index Annuity
 
 
 
 
Derivative [Line Items]
 
 
 
 
Gains (losses) on derivatives not designated as hedging instruments
$ 0 
$ 18.3 
$ 0 
$ (33.3)
ACCOUNTING FOR DERIVATIVES - DERIVATIVES WITH MASTER NETTING ARRANGEMENTS (Details) (Fixed index call options, USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Fixed index call options
 
 
Derivative [Line Items]
 
 
Gross amounts recognized
$ 142.2 
$ 111.9 
Gross amounts offset in the balance sheet
0 
0 
Net amounts of assets presented in the balance sheet
142.2 
111.9 
Financial instruments
0 
0 
Cash collateral received
0 
0 
Net amount
$ 142.2 
$ 111.9 
REINSURANCE (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Reinsurance Disclosures [Abstract]
 
 
 
 
Ceded premiums written
$ 27.1 
$ 32.2 
$ 79.9 
$ 97.3 
Ceded insurance policy benefits
22.6 
31.7 
69.1 
113.3 
Assumed premiums written
$ 7.4 
$ 8.3 
$ 23.1 
$ 25.8 
INCOME TAXES - COMPONENTS OF TAX EXPENSE (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Income Tax Disclosure [Abstract]
 
 
 
 
Current tax expense
$ 25.9 
$ 46.8 
$ 68.5 
$ 51.6 
Deferred tax expense (benefit)
18.2 
(29.9)
55.1 
10.1 
Valuation allowance applicable to current year income
(2.2)
(10.5)
(2.2)
(10.5)
Income tax expense calculated based on estimated annual effective tax rate
41.9 
6.4 
121.4 
51.2 
Change in valuation allowance
(12.8)
16.0 
(12.8)
(11.0)
Other items
0 
8.3 
0 
8.3 
Total income tax expense
$ 29.1 
$ 30.7 
$ 108.6 
$ 48.5 
INCOME TAXES - RECONCILIATION OF CORPORATE TAX RATE (Details)
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Income Tax Disclosure [Abstract]
 
 
U.S. statutory corporate rate
35.00% 
35.00% 
Valuation allowance
(0.60%)
(6.10%)
Non-taxable income and nondeductible benefits, net
(1.50%)
(1.00%)
State taxes
1.30% 
1.80% 
Estimated annual effective tax rate
34.20% 
29.70% 
INCOME TAXES - NARRATIVE (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Jan. 1, 2017
Dec. 31, 2016
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Valuation allowance applicable to current year income
$ 2.2 
$ 10.5 
$ 2.2 
$ 10.5 
 
 
Change in valuation allowance
12.8 
(16.0)
12.8 
11.0 
 
 
Other items
0 
8.3 
0 
8.3 
 
 
Income tax assets
1,606.7 
 
1,606.7 
 
1,045.9 
1,647.7 
Valuation allowance
(240.9)
 
(240.9)
 
(255.9)
(240.2)
Deferred tax assets more likely than not to be realized through future taxable earnings
573.9 
 
573.9 
 
 
785.6 
Net deferred tax assets
814.8 
 
814.8 
 
 
1,025.8 
Deferred tax valuation analysis, growth rate for the next five years
3.00% 
 
3.00% 
 
 
 
Valuation allowance model, forecast period of Model
 
 
5 years 
 
 
 
Estimated normalized annual taxable income for the current year
 
 
335 
 
 
 
Adjusted average non-life taxable income
 
 
85 
 
 
 
Adjusted average life taxable income
 
 
250 
 
 
 
Loss limitation based on income of life insurance company, percent
35.00% 
 
35.00% 
 
 
 
Loss limitation based on loss of non-life entities, percent
35.00% 
 
35.00% 
 
 
 
Federal long-term tax exempt rate
1.93% 
 
1.93% 
 
 
 
Ownership change threshold restricting NOL usage
50.00% 
 
50.00% 
 
 
 
Net operating loss carryforwards
2,405.1 
 
2,405.1 
 
 
 
Net state operating loss carryforwards
12.2 
 
12.2 
 
 
12.3 
Future cash tax payments based on income of life insurance company, percent
 
 
65.00% 
 
 
 
Federal
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Valuation allowance
(230.9)
 
(230.9)
 
 
 
Net operating loss carryforwards
2,405.1 
 
2,405.1 
 
 
 
State
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Valuation allowance
(10.0)
 
(10.0)
 
 
 
Recognition of excess tax benefits
 
 
 
 
 
 
Operating Loss Carryforwards [Line Items]
 
 
 
 
 
 
Income tax assets
 
 
 
 
15.7 
 
Valuation allowance
 
 
 
 
$ (15.7)
 
INCOME TAXES - DEFERRED ASSETS AND LIABILITIES (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Jan. 1, 2017
Dec. 31, 2016
Deferred tax assets:
 
 
 
Net federal operating loss carryforwards
$ 841.8 
 
$ 882.9 
Net state operating loss carryforwards
12.2 
 
12.3 
Investments
13.7 
 
17.8 
Insurance liabilities
678.9 
 
668.4 
Other
60.1 
 
66.3 
Gross deferred tax assets
1,606.7 
1,045.9 
1,647.7 
Deferred tax liabilities:
 
 
 
Present value of future profits and deferred acquisition costs
(275.0)
 
(277.8)
Accumulated other comprehensive income
(516.9)
 
(344.1)
Gross deferred tax liabilities
(791.9)
 
(621.9)
Net deferred tax assets before valuation allowance
814.8 
 
1,025.8 
Valuation allowance
(240.9)
(255.9)
(240.2)
Net deferred tax assets
573.9 
 
785.6 
Current income taxes prepaid (accrued)
(6.5)
 
4.1 
Income tax assets, net
$ 567.4 
 
$ 789.7 
INCOME TAXES - NET OPERATING LOSSES (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Operating Loss Carryforwards [Line Items]
 
Net operating loss carryforwards
$ 2,405.1 
Carryforward Expiration 2023
 
Operating Loss Carryforwards [Line Items]
 
Year of expiration
Dec. 31, 2023 
Net operating loss carryforwards
1,818.5 
Carryforward Expiration 2025
 
Operating Loss Carryforwards [Line Items]
 
Year of expiration
Dec. 31, 2025 
Net operating loss carryforwards
85.2 
Carryforward Expiration 2026
 
Operating Loss Carryforwards [Line Items]
 
Year of expiration
Dec. 31, 2026 
Net operating loss carryforwards
149.9 
Carryforward Expiration 2027
 
Operating Loss Carryforwards [Line Items]
 
Year of expiration
Dec. 31, 2027 
Net operating loss carryforwards
10.8 
Carryforward Expiration 2028
 
Operating Loss Carryforwards [Line Items]
 
Year of expiration
Dec. 31, 2028 
Net operating loss carryforwards
80.3 
Carryforward Expiration 2029
 
Operating Loss Carryforwards [Line Items]
 
Year of expiration
Dec. 31, 2029 
Net operating loss carryforwards
213.2 
Carryforward Expiration 2030
 
Operating Loss Carryforwards [Line Items]
 
Year of expiration
Dec. 31, 2030 
Net operating loss carryforwards
0.3 
Carryforward Expiration 2031
 
Operating Loss Carryforwards [Line Items]
 
Year of expiration
Dec. 31, 2031 
Net operating loss carryforwards
0.2 
Carryforward Expiration 2032
 
Operating Loss Carryforwards [Line Items]
 
Year of expiration
Dec. 31, 2032 
Net operating loss carryforwards
44.4 
Carryforward Expiration 2033
 
Operating Loss Carryforwards [Line Items]
 
Year of expiration
Dec. 31, 2033 
Net operating loss carryforwards
0.6 
Carryforward Expiration 2034
 
Operating Loss Carryforwards [Line Items]
 
Year of expiration
Dec. 31, 2034 
Net operating loss carryforwards
0.9 
Carryforward Expiration 2035
 
Operating Loss Carryforwards [Line Items]
 
Year of expiration
Dec. 31, 2035 
Net operating loss carryforwards
$ 0.8 
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS - SCHEDULE OF LONG-TERM DEBT INSTRUMENTS (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
May 19, 2015
Debt Instruments [Abstract]
 
 
 
Direct corporate obligations
$ 914.4 
$ 912.9 
 
Unamortized debt issue costs
(10.6)
(12.1)
 
Senior notes |
4.500% Senior Notes due May 2020
 
 
 
Debt Instruments [Abstract]
 
 
 
Direct corporate obligations
325.0 
325.0 
 
Interest rate
4.50% 
 
 
Senior notes |
5.250% Senior Notes due May 2025
 
 
 
Debt Instruments [Abstract]
 
 
 
Direct corporate obligations
500.0 
500.0 
 
Interest rate
5.25% 
 
 
Line of credit |
Revolving credit agreement
 
 
 
Debt Instruments [Abstract]
 
 
 
Direct corporate obligations
$ 100.0 
$ 100.0 
$ 100.0 
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS - REVOLVING CREDIT AGREEMENT (Details) (USD $)
In Millions, unless otherwise specified
0 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Sep. 30, 2017
Revolving credit agreement
Line of credit
Rate
Dec. 31, 2016
Revolving credit agreement
Line of credit
May 19, 2015
Revolving credit agreement
Line of credit
Rate
May 19, 2015
Revolving credit agreement
Line of credit
Federal Funds Rate
May 19, 2015
Revolving credit agreement
Line of credit
One-Month Eurodollar
May 19, 2015
Revolving credit agreement
Line of credit
Eurodollar
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
Initial drawing amount
$ 914.4 
$ 912.9 
$ 100.0 
$ 100.0 
$ 100.0 
 
 
 
Remaining borrowing capacity
 
 
 
 
50.0 
 
 
 
Basis spread on variable rate
 
 
 
 
 
0.50% 
1.00% 
2.00% 
Interest rate on amounts outstanding at period end
 
 
3.24% 
 
 
 
 
 
Debt covenant, required minimum debt to total capitalization ratio
 
 
 
 
0.30 
 
 
 
Debt covenant, actual debt to total capitalization ratio at period end
 
 
0.192 
 
 
 
 
 
Debt covenant, minimum required aggregate total adjusted capital to company action level risk-based capital ratio
 
 
 
 
2.50 
 
 
 
Debt covenant, actual aggregate total adjusted capital to company action level risk-based capital ratio at period end
 
 
4.50 
 
 
 
 
 
Debt covenant, minimum required consolidated net worth, component one, amount
 
 
 
 
2,674 
 
 
 
Debt covenant, minimum required consolidated net worth, component two, as a percent of net equity proceeds received from issuance and sale of equity interests
 
 
 
 
0.50 
 
 
 
Debt covenant, actual consolidated net worth at period end
 
 
3,948.1 
 
 
 
 
 
Debt covenant, required minimum consolidated net worth, amount
 
 
$ 2,683.8 
 
 
 
 
 
NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS NOTES PAYABLE - DIRECT CORPORATE OBLIGATIONS - SCHEDULED REPAYMENT (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Debt Disclosure [Abstract]
 
2018
$ 0 
2019
100.0 
2020
325.0 
2021
0 
2022
0 
Thereafter
500.0 
Long-term Debt
$ 925.0 
INVESTMENT BORROWINGS (Details) (USD $)
9 Months Ended 9 Months Ended
Sep. 30, 2017
subsidiary
Dec. 31, 2016
Sep. 30, 2017
Federal Home Loan Bank advances
Sep. 30, 2016
Federal Home Loan Bank advances
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due February 2018
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due August 2018
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due January 2019
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due February 2019
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due March 2019
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due July 2019
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due October 2019
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowing due May 2020
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due June 2020
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due September 2020
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due September 2020 rate two
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due September 2020 rate three
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due September 2020 rate four
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due October 2020
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due December 2020
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due July 2021
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due July 2021 rate two
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due August 2021
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due August 2021 rate two
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due August 2021 Rate Three
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due September 2021
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due May 2022, Rate One
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due May 2022, Rate Two
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due June 2022
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due July 2022 rate one
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due July 2022 rate two
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due July 2022 rate three
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due August 2022
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due March 2023
Sep. 30, 2017
Federal Home Loan Bank advances
Borrowings due June 2025
Schedule of Trading Securities and Other Trading Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of insurance subsidiaries that are members of the FHLB
3 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal Home Loan Bank stock
 
 
$ 71,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment borrowings
1,646,900,000 
1,647,400,000 
1,600,000,000 
 
50,000,000 
50,000,000 
50,000,000 
50,000,000 
100,000,000 
21,800,000 
15,000,000 
50,000,000 
21,800,000 
25,000,000 
100,000,000 
50,000,000 
75,000,000 
100,000,000 
50,000,000 
100,000,000 
100,000,000 
28,200,000 
57,700,000 
125,000,000 
50,000,000 
22,000,000 
100,000,000 
10,000,000 
50,000,000 
50,000,000 
50,000,000 
50,000,000 
24,900,000 
20,500,000 
Federal Home Loan Bank, advances, collateral pledged
 
 
2,000,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maturity date
 
 
 
 
Feb. 28, 2018 
Aug. 31, 2018 
Jan. 31, 2019 
Feb. 28, 2019 
Mar. 31, 2019 
Jul. 31, 2019 
Oct. 31, 2019 
May 31, 2020 
Jun. 30, 2020 
Sep. 30, 2020 
Sep. 30, 2020 
Sep. 30, 2020 
Sep. 30, 2020 
Oct. 31, 2020 
Dec. 31, 2020 
Jul. 31, 2021 
Jul. 31, 2021 
Aug. 31, 2021 
Aug. 31, 2021 
Aug. 31, 2021 
Sep. 30, 2021 
May 31, 2022 
May 31, 2022 
Jun. 30, 2022 
Jul. 31, 2022 
Jul. 31, 2022 
Jul. 31, 2022 
Aug. 31, 2022 
Mar. 31, 2023 
Jun. 30, 2025 
Interest rate
 
 
 
 
1.404% 
1.435% 
1.724% 
1.404% 
1.714% 
1.727% 
1.83% 
1.754% 
1.96% 
1.953% 
1.897% 
1.894% 
1.453% 
1.409% 
1.932% 
1.854% 
1.824% 
2.55% 
1.842% 
1.717% 
1.857% 
1.668% 
1.666% 
1.931% 
1.675% 
1.693% 
1.694% 
1.702% 
2.16% 
2.94% 
Aggregate fee to prepay all fixed rate FHLB borrowings
 
 
3,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense on FHLB borrowings
 
 
$ 19,500,000 
$ 12,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CHANGES IN COMMON STOCK (Details) (USD $)
In Millions, except Share data, unless otherwise specified
1 Months Ended 4 Months Ended 5 Months Ended 9 Months Ended
May 31, 2017
Apr. 30, 2017
Sep. 30, 2017
Sep. 30, 2017
Sep. 30, 2016
Number of common shares outstanding
 
 
 
 
 
Balance, beginning of year (in shares)
 
173,753,614 
 
173,753,614 
 
Balance, end of year (in shares)
 
 
167,762,323 
167,762,323 
 
Number of stock tendered for payment of federal and state taxes owed (in shares)
 
 
 
103,000 
 
Payments to repurchase common stock
 
 
 
$ 142.3 
$ 210.0 
Stock repurchase program, increase in authorized amount
300.0 
 
 
 
 
Stock repurchase program, remaining repurchase authorized amount
 
 
412.6 
412.6 
 
Common stock dividends declared
 
 
 
44.7 
40.8 
Dividends (in dollars per share)
 
$ 0.08 
$ 0.09 
$ 0.26 
 
Common stock
 
 
 
 
 
Number of common shares outstanding
 
 
 
 
 
Balance, beginning of year (in shares)
 
173,754,000 
 
173,754,000 
 
Treasury stock purchased and retired (in shares)
 
 
 
(6,701,000)
 
Balance, end of year (in shares)
 
 
167,762,000 
167,762,000 
 
Common stock |
Stock options
 
 
 
 
 
Number of common shares outstanding
 
 
 
 
 
Shares issued under employee benefit compensation plans (in shares)
 
 
 
524,000 
 
Common stock |
Restricted and Performance Stock
 
 
 
 
 
Number of common shares outstanding
 
 
 
 
 
Shares issued under employee benefit compensation plans (in shares)
 
 
 
185,000 
 
Common stock
 
 
 
 
 
Number of common shares outstanding
 
 
 
 
 
Payments to repurchase common stock
 
 
 
$ 140.1 
 
SALES INDUCEMENTS (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Deferred Sales Inducements [Abstract]
 
 
 
Deferred sales inducements
$ 1.5 
$ 2.8 
 
Deferred sales inducements, amortization expense
6.6 
7.1 
 
Unamortized deferred sales inducements
44.3 
 
49.4 
Insurance liabilities for persistency bonus benefits
$ 0.4 
 
$ 0.5 
OUT-OF-PERIOD ADJUSTMENTS (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended 3 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Restatement Adjustment
Bankers Life
Long-term Care Insurance Benefits
Jun. 30, 2017
Restatement Adjustment
Bankers Life
Long-term Care Insurance Benefits
Decrease of insurance policy benefits
$ (638.1)
$ (609.8)
$ (1,941.6)
$ (1,861.2)
$ 2.5 
$ 1.7 
Increase on tax expense
29.1 
30.7 
108.6 
48.5 
0.9 
0.6 
Increase on net income
$ 100.8 
$ 18.6 
$ 246.5 
$ 124.0 
$ 1.6 
$ 1.1 
Adjustment to net income per diluted share (in dollars per share)
 
 
 
 
$ 0.01 
$ 0.01 
RECENTLY ISSUED ACCOUNTING STANDARDS (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Jan. 1, 2017
Dec. 31, 2016
Dec. 31, 2015
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
Cumulative effect of accounting change
 
 
 
$ 0.3 
 
Income tax assets
1,606.7 
 
1,045.9 
1,647.7 
 
Valuation allowance for deferred income tax assets
(240.9)
 
(255.9)
(240.2)
 
Income tax assets, net
 
 
790.0 
 
 
Total assets
32,704.6 
 
31,975.5 
31,975.2 
 
Additional paid-in capital
3,094.5 
 
3,213.0 
3,212.1 
 
Retained earnings
851.9 
 
650.1 
650.7 
 
Total shareholders' equity
4,881.7 
4,493.8 
4,487.2 
4,486.9 
4,138.5 
Total liabilities and shareholders' equity
32,704.6 
 
31,975.5 
31,975.2 
 
Other operating costs
(546.0)
(552.1)
 
 
 
Net cash flow from operating activities
433.7 
584.8 
 
 
 
Payments to repurchase common stock
(142.3)
(210.0)
 
 
 
Net cash used by financing activities
(510.0)
(37.5)
 
 
 
Net increase in cash and cash equivalents
287.0 
273.7 
 
 
 
Election to account for forfeitures as they occur
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
Income tax assets
 
 
0.3 
 
 
Valuation allowance for deferred income tax assets
 
 
0 
 
 
Income tax assets, net
 
 
0.3 
 
 
Total assets
 
 
0.3 
 
 
Additional paid-in capital
 
 
0.9 
 
 
Retained earnings
 
 
(0.6)
 
 
Total shareholders' equity
 
 
0.3 
 
 
Total liabilities and shareholders' equity
 
 
0.3 
 
 
Recognition of excess tax benefits
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
Income tax assets
 
 
15.7 
 
 
Valuation allowance for deferred income tax assets
 
 
(15.7)
 
 
Income tax assets, net
 
 
0 
 
 
Total assets
 
 
0 
 
 
Additional paid-in capital
 
 
0 
 
 
Retained earnings
 
 
0 
 
 
Total shareholders' equity
 
 
0 
 
 
Total liabilities and shareholders' equity
 
 
0 
 
 
Effect of adoption of authoritative guidance
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
Other operating costs
 
3.3 
 
 
 
Net cash flow from operating activities
 
3.3 
 
 
 
Payments to repurchase common stock
 
(3.3)
 
 
 
Net cash used by financing activities
 
(3.3)
 
 
 
Net increase in cash and cash equivalents
 
0 
 
 
 
Amounts prior to effect of adoption of authoritative guidance
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
Income tax assets
 
 
1,029.9 
 
 
Valuation allowance for deferred income tax assets
 
 
(240.2)
 
 
Income tax assets, net
 
 
789.7 
 
 
Total assets
 
 
31,975.2 
 
 
Additional paid-in capital
 
 
3,212.1 
 
 
Retained earnings
 
 
650.7 
 
 
Total shareholders' equity
 
 
4,486.9 
 
 
Total liabilities and shareholders' equity
 
 
31,975.2 
 
 
Other operating costs
 
(555.4)
 
 
 
Net cash flow from operating activities
 
581.5 
 
 
 
Payments to repurchase common stock
 
(206.7)
 
 
 
Net cash used by financing activities
 
(34.2)
 
 
 
Net increase in cash and cash equivalents
 
273.7 
 
 
 
Retained earnings
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
Cumulative effect of accounting change
 
 
 
(0.6)
 
Total shareholders' equity
851.9 
430.3 
 
650.7 
347.1 
Retained earnings |
Pro Forma |
Accounting Standards Update 2016-01
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
Cumulative effect of accounting change
15.0 
 
 
 
 
Accumulated other comprehensive income
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
Total shareholders' equity
933.6 
855.5 
 
622.4 
402.8 
Accumulated other comprehensive income |
Pro Forma |
Accounting Standards Update 2016-01
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
Cumulative effect of accounting change
$ 15.0 
 
 
 
 
Revenue |
Accounting Standards Update 2014-09
 
 
 
 
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
 
 
 
 
Concentration risk, percentage
1.00% 
 
 
 
 
CONSOLIDATED STATEMENT OF CASH FLOWS (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Cash flows from operating activities:
 
 
 
 
Net income
$ 100.8 
$ 18.6 
$ 246.5 
$ 124.0 
Adjustments to reconcile net income to net cash from operating activities:
 
 
 
 
Amortization and depreciation
 
 
200.8 
199.1 
Income taxes
 
 
50.6 
43.0 
Insurance liabilities
 
 
321.5 
310.2 
Accrual and amortization of investment income
 
 
(233.2)
(93.4)
Deferral of policy acquisition costs
 
 
(183.4)
(179.4)
Net realized investment gains
 
 
(52.3)
(23.3)
Loss on reinsurance transaction
0 
75.4 
0 
75.4 
Cash and cash equivalents received upon recapture of reinsurance
 
 
0 
73.6 
Loss on extinguishment of borrowings related to a variable interest entity
5.5 
0 
5.5 
0 
Other
 
 
77.7 
55.6 
Net cash from operating activities
 
 
433.7 
584.8 
Stock options, restricted stock and performance units
 
 
17.8 
18.9 
Market value of investments recaptured in connection with the termination of reinsurance agreements with BRe
 
 
$ 0 
$ 431.1 
INVESTMENTS IN VARIABLE INTEREST ENTITIES - BALANCE SHEET ITEMS (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Assets:
 
 
Investments held by variable interest entities
$ 1,382.5 
$ 1,724.3 
Cash and cash equivalents held by variable interest entities
105.9 
189.3 
Liabilities:
 
 
Borrowings related to variable interest entities
1,198.2 
1,662.8 
VIEs
 
 
Assets:
 
 
Investments held by variable interest entities
1,382.5 
1,724.3 
Notes receivable of VIEs held by insurance subsidiaries
0 
0 
Cash and cash equivalents held by variable interest entities
105.9 
189.3 
Accrued investment income
2.0 
3.0 
Income tax assets, net
(0.6)
6.4 
Other assets
13.3 
13.1 
Total assets
1,503.1 
1,936.1 
Liabilities:
 
 
Other liabilities
145.9 
81.8 
Borrowings related to variable interest entities
1,198.2 
1,662.8 
Notes payable of VIEs held by insurance subsidiaries
172.9 
203.3 
Total liabilities
1,517.0 
1,947.9 
Eliminations
 
 
Assets:
 
 
Investments held by variable interest entities
0 
0 
Notes receivable of VIEs held by insurance subsidiaries
(159.9)
(204.2)
Cash and cash equivalents held by variable interest entities
0 
0 
Accrued investment income
(0.1)
(0.1)
Income tax assets, net
0 
(1.3)
Other assets
(1.4)
(1.8)
Total assets
(161.4)
(207.4)
Liabilities:
 
 
Other liabilities
(3.5)
(6.4)
Borrowings related to variable interest entities
0 
0 
Notes payable of VIEs held by insurance subsidiaries
(172.9)
(203.3)
Total liabilities
(176.4)
(209.7)
Net effect on consolidated balance sheet
 
 
Assets:
 
 
Investments held by variable interest entities
1,382.5 
1,724.3 
Notes receivable of VIEs held by insurance subsidiaries
(159.9)
(204.2)
Cash and cash equivalents held by variable interest entities
105.9 
189.3 
Accrued investment income
1.9 
2.9 
Income tax assets, net
(0.6)
5.1 
Other assets
11.9 
11.3 
Total assets
1,341.7 
1,728.7 
Liabilities:
 
 
Other liabilities
142.4 
75.4 
Borrowings related to variable interest entities
1,198.2 
1,662.8 
Notes payable of VIEs held by insurance subsidiaries
0 
0 
Total liabilities
$ 1,340.6 
$ 1,738.2 
INVESTMENTS IN VARIABLE INTEREST ENTITIES - NARRATIVE (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended 12 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2017
investment
Sep. 30, 2016
Sep. 30, 2017
investment
Sep. 30, 2016
Sep. 30, 2017
Less than twelve months
Dec. 31, 2016
Less than twelve months
Sep. 30, 2017
Greater than twelve months
Dec. 31, 2016
Greater than twelve months
Variable Interest Entity [Line Items]
 
 
 
 
 
 
 
 
Variable interest entity amortized cost securities held
$ 1,381.7 
 
$ 1,381.7 
 
 
 
 
 
Variable interest entity, gross unrealized gains fixed maturity securities
8.4 
 
8.4 
 
 
 
 
 
Variable interest entity gross unrealized losses fixed maturity securities
7.6 
 
7.6 
 
 
 
 
 
Estimated fair value of fixed maturity securities
1,382.5 
 
1,382.5 
 
 
 
 
 
Variable interest entities net realized gain (loss) on investments
 
 
(2.5)
(20.6)
 
 
 
 
Net gain (loss) from sale of fixed maturities
 
 
2.2 
(12.1)
 
 
 
 
Loss on dissolution of variable interest entities
(0.6)
0 
(4.3)
(7.3)
 
 
 
 
Writedowns of investments for other than temporary declines in fair value recognized through net income
 
 
0.4 
1.2 
 
 
 
 
Number of investments held by VIE, in default
0 
 
0 
 
 
 
 
 
Variable interest entities, investments sold
 
 
86.0 
186.6 
 
 
 
 
Variable interest entity, gross investment losses from sale
 
 
2.0 
20.3 
 
 
 
 
Fair value investments held by variable interest entity that had been in an unrealized loss position
 
 
 
 
382.5 
93.8 
11.0 
143.9 
Gross unrealized losses for a period
 
 
 
 
7.1 
0.9 
0.5 
2.9 
Investments held in limited partnerships
315.1 
 
315.1 
 
 
 
 
 
Unfunded commitments to limited partnerships
$ 266.2 
 
$ 266.2 
 
 
 
 
 
INVESTMENTS IN VARIABLE INTEREST ENTITIES - SCHEDULE OF VIEs (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Investment Holdings [Line Items]
 
Total amortized cost
$ 1,381.7 
Total fair value
1,382.5 
Amortized cost
 
Investment Holdings [Line Items]
 
Due in one year or less
5.9 
Due after one year through five years
499.4 
Due after five years through ten years
876.4 
Total amortized cost
1,381.7 
Estimated fair value
 
Investment Holdings [Line Items]
 
Due in one year or less
5.9 
Due after one year through five years
500.1 
Due after five years through ten years
876.5 
Total fair value
$ 1,382.5 
FAIR VALUE MEASUREMENTS - NARRATIVE (Details)
9 Months Ended
Sep. 30, 2017
Fair Value Disclosures [Abstract]
 
Fair value of level 3 fixed maturity securities valued using broker quotes, percentage
45.00% 
Available for sale fixed maturities classified as level 3, investment grade, percent
55.00% 
Available for sale fixed maturities classified as Level 3 and corporate securities
80.00% 
FAIR VALUE MEASUREMENTS - MEASUREMENTS BY INPUT LEVEL (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
$ 22,129.9 
$ 21,096.2 
Trading securities
294.4 
363.4 
Investments held by variable interest entities
1,382.5 
1,724.3 
Assets held in separate accounts
4.8 
4.7 
Fair Value, Measurements, Recurring
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Trading securities
294.4 
363.4 
Investments held by variable interest entities
1,382.5 
1,724.3 
Assets held in separate accounts
4.8 
4.7 
Total assets carried at fair value by category
24,667.1 
23,884.7 
Fair Value, Measurements, Recurring |
Embedded derivatives associated with fixed index annuity products
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Future policy benefits - embedded derivatives associated with fixed index annuity products
1,249.3 
1,092.3 
Fair Value, Measurements, Recurring |
Derivatives
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Other invested assets - derivatives
142.2 
111.9 
Fair Value, Measurements, Recurring |
Corporate securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
14,650.0 
13,510.9 
Equity securities - corporate securities
713.3 
584.2 
Trading securities
21.1 
19.0 
Fair Value, Measurements, Recurring |
United States Treasury securities and obligations of United States government corporations and agencies
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
172.3 
164.3 
Trading securities
0.5 
0.5 
Fair Value, Measurements, Recurring |
States and political subdivisions
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
2,077.0 
1,988.9 
Fair Value, Measurements, Recurring |
Debt securities issued by foreign governments
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
61.1 
36.9 
Fair Value, Measurements, Recurring |
Asset-backed securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
2,786.1 
2,710.3 
Trading securities
101.2 
94.3 
Fair Value, Measurements, Recurring |
Collateralized debt obligations
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
237.9 
230.7 
Trading securities
2.7 
2.4 
Fair Value, Measurements, Recurring |
Commercial mortgage-backed securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
1,338.9 
1,536.2 
Trading securities
93.3 
163.9 
Fair Value, Measurements, Recurring |
Mortgage pass-through securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
2.2 
2.5 
Fair Value, Measurements, Recurring |
Collateralized mortgage obligations
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
804.4 
915.5 
Trading securities
72.5 
78.4 
Fair Value, Measurements, Recurring |
Total fixed maturities, available for sale
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
22,129.9 
21,096.2 
Fair Value, Measurements, Recurring |
Equity securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Trading securities
3.1 
4.9 
Fair Value, Measurements, Recurring |
Quoted prices in active markets for identical assets or liabilities (Level 1)
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Trading securities
3.1 
4.9 
Investments held by variable interest entities
0 
0 
Assets held in separate accounts
0 
0 
Total assets carried at fair value by category
480.9 
364.8 
Fair Value, Measurements, Recurring |
Quoted prices in active markets for identical assets or liabilities (Level 1) |
Embedded derivatives associated with fixed index annuity products
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Future policy benefits - embedded derivatives associated with fixed index annuity products
0 
0 
Fair Value, Measurements, Recurring |
Quoted prices in active markets for identical assets or liabilities (Level 1) |
Derivatives
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Other invested assets - derivatives
0 
0 
Fair Value, Measurements, Recurring |
Quoted prices in active markets for identical assets or liabilities (Level 1) |
Corporate securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
0 
0 
Equity securities - corporate securities
477.8 
359.9 
Trading securities
0 
0 
Fair Value, Measurements, Recurring |
Quoted prices in active markets for identical assets or liabilities (Level 1) |
United States Treasury securities and obligations of United States government corporations and agencies
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
0 
0 
Trading securities
0 
0 
Fair Value, Measurements, Recurring |
Quoted prices in active markets for identical assets or liabilities (Level 1) |
States and political subdivisions
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
0 
0 
Fair Value, Measurements, Recurring |
Quoted prices in active markets for identical assets or liabilities (Level 1) |
Debt securities issued by foreign governments
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
0 
0 
Fair Value, Measurements, Recurring |
Quoted prices in active markets for identical assets or liabilities (Level 1) |
Asset-backed securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
0 
0 
Trading securities
0 
0 
Fair Value, Measurements, Recurring |
Quoted prices in active markets for identical assets or liabilities (Level 1) |
Collateralized debt obligations
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
0 
0 
Trading securities
0 
0 
Fair Value, Measurements, Recurring |
Quoted prices in active markets for identical assets or liabilities (Level 1) |
Commercial mortgage-backed securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
0 
0 
Trading securities
0 
0 
Fair Value, Measurements, Recurring |
Quoted prices in active markets for identical assets or liabilities (Level 1) |
Mortgage pass-through securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
0 
0 
Fair Value, Measurements, Recurring |
Quoted prices in active markets for identical assets or liabilities (Level 1) |
Collateralized mortgage obligations
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
0 
0 
Trading securities
0 
0 
Fair Value, Measurements, Recurring |
Quoted prices in active markets for identical assets or liabilities (Level 1) |
Total fixed maturities, available for sale
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
0 
0 
Fair Value, Measurements, Recurring |
Quoted prices in active markets for identical assets or liabilities (Level 1) |
Equity securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Trading securities
3.1 
4.9 
Fair Value, Measurements, Recurring |
Significant other observable inputs (Level 2)
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Trading securities
291.3 
358.5 
Investments held by variable interest entities
1,377.5 
1,724.3 
Assets held in separate accounts
4.8 
4.7 
Total assets carried at fair value by category
23,840.0 
23,134.5 
Fair Value, Measurements, Recurring |
Significant other observable inputs (Level 2) |
Embedded derivatives associated with fixed index annuity products
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Future policy benefits - embedded derivatives associated with fixed index annuity products
0 
0 
Fair Value, Measurements, Recurring |
Significant other observable inputs (Level 2) |
Derivatives
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Other invested assets - derivatives
142.2 
111.9 
Fair Value, Measurements, Recurring |
Significant other observable inputs (Level 2) |
Corporate securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
14,394.3 
13,252.4 
Equity securities - corporate securities
213.9 
199.1 
Trading securities
21.1 
19.0 
Fair Value, Measurements, Recurring |
Significant other observable inputs (Level 2) |
United States Treasury securities and obligations of United States government corporations and agencies
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
172.3 
164.3 
Trading securities
0.5 
0.5 
Fair Value, Measurements, Recurring |
Significant other observable inputs (Level 2) |
States and political subdivisions
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
2,077.0 
1,988.9 
Fair Value, Measurements, Recurring |
Significant other observable inputs (Level 2) |
Debt securities issued by foreign governments
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
57.1 
33.0 
Fair Value, Measurements, Recurring |
Significant other observable inputs (Level 2) |
Asset-backed securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
2,726.2 
2,649.9 
Trading securities
101.2 
94.3 
Fair Value, Measurements, Recurring |
Significant other observable inputs (Level 2) |
Collateralized debt obligations
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
237.9 
225.3 
Trading securities
2.7 
2.4 
Fair Value, Measurements, Recurring |
Significant other observable inputs (Level 2) |
Commercial mortgage-backed securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
1,338.9 
1,504.2 
Trading securities
93.3 
163.9 
Fair Value, Measurements, Recurring |
Significant other observable inputs (Level 2) |
Mortgage pass-through securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
2.2 
2.5 
Fair Value, Measurements, Recurring |
Significant other observable inputs (Level 2) |
Collateralized mortgage obligations
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
804.4 
915.5 
Trading securities
72.5 
78.4 
Fair Value, Measurements, Recurring |
Significant other observable inputs (Level 2) |
Total fixed maturities, available for sale
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
21,810.3 
20,736.0 
Fair Value, Measurements, Recurring |
Significant other observable inputs (Level 2) |
Equity securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Trading securities
0 
0 
Fair Value, Measurements, Recurring |
Significant unobservable inputs (Level 3)
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Trading securities
0 
0 
Investments held by variable interest entities
5.0 
0 
Assets held in separate accounts
0 
0 
Total assets carried at fair value by category
346.2 
385.4 
Fair Value, Measurements, Recurring |
Significant unobservable inputs (Level 3) |
Embedded derivatives associated with fixed index annuity products
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Future policy benefits - embedded derivatives associated with fixed index annuity products
1,249.3 
1,092.3 
Fair Value, Measurements, Recurring |
Significant unobservable inputs (Level 3) |
Derivatives
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Other invested assets - derivatives
0 
0 
Fair Value, Measurements, Recurring |
Significant unobservable inputs (Level 3) |
Corporate securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
255.7 
258.5 
Equity securities - corporate securities
21.6 
25.2 
Trading securities
0 
0 
Fair Value, Measurements, Recurring |
Significant unobservable inputs (Level 3) |
United States Treasury securities and obligations of United States government corporations and agencies
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
0 
0 
Trading securities
0 
0 
Fair Value, Measurements, Recurring |
Significant unobservable inputs (Level 3) |
States and political subdivisions
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
0 
0 
Fair Value, Measurements, Recurring |
Significant unobservable inputs (Level 3) |
Debt securities issued by foreign governments
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
4.0 
3.9 
Fair Value, Measurements, Recurring |
Significant unobservable inputs (Level 3) |
Asset-backed securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
59.9 
60.4 
Trading securities
0 
0 
Fair Value, Measurements, Recurring |
Significant unobservable inputs (Level 3) |
Collateralized debt obligations
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
0 
5.4 
Trading securities
0 
0 
Fair Value, Measurements, Recurring |
Significant unobservable inputs (Level 3) |
Commercial mortgage-backed securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
0 
32.0 
Trading securities
0 
0 
Fair Value, Measurements, Recurring |
Significant unobservable inputs (Level 3) |
Mortgage pass-through securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
0 
0 
Fair Value, Measurements, Recurring |
Significant unobservable inputs (Level 3) |
Collateralized mortgage obligations
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
0 
0 
Trading securities
0 
0 
Fair Value, Measurements, Recurring |
Significant unobservable inputs (Level 3) |
Total fixed maturities, available for sale
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Total fixed maturities, available for sale
319.6 
360.2 
Fair Value, Measurements, Recurring |
Significant unobservable inputs (Level 3) |
Equity securities
 
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
 
Trading securities
$ 0 
$ 0 
FAIR VALUE MEASUREMENTS - RECURRING BASIS (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Sep. 30, 2016
Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Cash and cash equivalents - unrestricted
$ 765.9 
$ 478.9 
$ 706.0 
$ 432.3 
Cash and cash equivalents held by variable interest entities
105.9 
189.3 
 
 
Fair Value, Measurements, Recurring
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Mortgage loans
1,667.8 
1,768.0 
 
 
Policy loans
114.6 
112.0 
 
 
Company-owned life insurance
178.8 
165.0 
 
 
Cash and cash equivalents - unrestricted
765.9 
478.9 
 
 
Cash and cash equivalents held by variable interest entities
105.9 
189.3 
 
 
Policyholder account balances
11,113.5 
10,912.7 
 
 
Investment borrowings
1,646.9 
1,647.4 
 
 
Borrowings related to variable interest entities
1,198.2 
1,662.8 
 
 
Notes payable – direct corporate obligations
914.4 
912.9 
 
 
Fair Value, Measurements, Recurring |
Estimate of fair value measurement
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Mortgage loans
1,705.8 
1,800.1 
 
 
Policy loans
114.6 
112.0 
 
 
Company-owned life insurance
178.8 
165.0 
 
 
Cash and cash equivalents - unrestricted
765.9 
478.9 
 
 
Cash and cash equivalents held by variable interest entities
105.9 
189.3 
 
 
Policyholder account balances
11,113.5 
10,912.7 
 
 
Investment borrowings
1,650.1 
1,650.0 
 
 
Borrowings related to variable interest entities
1,215.1 
1,675.2 
 
 
Notes payable – direct corporate obligations
970.5 
931.9 
 
 
Fair Value, Measurements, Recurring |
Quoted prices in active markets for identical assets or liabilities (Level 1)
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Mortgage loans
0 
0 
 
 
Policy loans
0 
0 
 
 
Company-owned life insurance
0 
0 
 
 
Cash and cash equivalents - unrestricted
765.9 
473.6 
 
 
Cash and cash equivalents held by variable interest entities
105.9 
189.3 
 
 
Policyholder account balances
0 
0 
 
 
Investment borrowings
0 
0 
 
 
Borrowings related to variable interest entities
0 
0 
 
 
Notes payable – direct corporate obligations
0 
0 
 
 
Fair Value, Measurements, Recurring |
Significant other observable inputs (Level 2)
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Mortgage loans
0 
0 
 
 
Policy loans
0 
0 
 
 
Company-owned life insurance
178.8 
165.0 
 
 
Cash and cash equivalents - unrestricted
0 
5.3 
 
 
Cash and cash equivalents held by variable interest entities
0 
0 
 
 
Policyholder account balances
0 
0 
 
 
Investment borrowings
1,650.1 
1,650.0 
 
 
Borrowings related to variable interest entities
1,215.1 
1,675.2 
 
 
Notes payable – direct corporate obligations
970.5 
931.9 
 
 
Fair Value, Measurements, Recurring |
Significant unobservable inputs (Level 3)
 
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
Mortgage loans
1,705.8 
1,800.1 
 
 
Policy loans
114.6 
112.0 
 
 
Company-owned life insurance
0 
0 
 
 
Cash and cash equivalents - unrestricted
0 
0 
 
 
Cash and cash equivalents held by variable interest entities
0 
0 
 
 
Policyholder account balances
11,113.5 
10,912.7 
 
 
Investment borrowings
0 
0 
 
 
Borrowings related to variable interest entities
0 
0 
 
 
Notes payable – direct corporate obligations
$ 0 
$ 0 
 
 
FAIR VALUE MEASUREMENTS - BALANCE SHEET RECURRING (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Interest sensitive products
 
 
 
 
Liabilities:
 
 
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
$ (1,205.4)
$ (1,127.0)
$ (1,092.3)
$ (1,057.1)
Purchases, sales, issuances and settlements, net
(56.3)
(37.0)
(174.2)
(55.3)
Total realized and unrealized gains (losses) included in net income
12.4 
18.3 
17.2 
(33.3)
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0 
0 
0 
0 
Transfers into level 3
0 
0 
0 
0 
Transfers out of level 3
0 
0 
0 
0 
Fair value, measurement with unobservable inputs reconciliation, ending balance
(1,249.3)
(1,145.7)
(1,249.3)
(1,145.7)
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date
12.4 
18.3 
17.2 
(33.3)
Corporate securities
 
 
 
 
Assets:
 
 
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
263.3 
174.6 
258.5 
170.4 
Purchases, sales, issuances and settlements, net
(44.8)
118.8 
(44.1)
104.4 
Total realized and unrealized gains (losses) included in net income
1.7 
0 
9.5 
(7.0)
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
1.3 
(4.9)
0.6 
7.4 
Transfers into level 3
34.2 
0 
31.2 
20.3 
Transfers out of level 3
0 
0 
0 
(7.0)
Fair value, measurement with unobservable inputs reconciliation, ending balance
255.7 
288.5 
255.7 
288.5 
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date
(3.2)
0 
(6.5)
(5.6)
Debt securities issued by foreign governments
 
 
 
 
Assets:
 
 
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
3.9 
4.1 
3.9 
0 
Purchases, sales, issuances and settlements, net
0 
0 
0 
4.0 
Total realized and unrealized gains (losses) included in net income
0 
0 
0 
0 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0.1 
0 
0.1 
0.1 
Transfers into level 3
0 
0 
0 
0 
Transfers out of level 3
0 
0 
0 
0 
Fair value, measurement with unobservable inputs reconciliation, ending balance
4.0 
4.1 
4.0 
4.1 
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date
0 
0 
0 
0 
Asset-backed securities
 
 
 
 
Assets:
 
 
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
59.6 
39.1 
60.4 
35.9 
Purchases, sales, issuances and settlements, net
(1.3)
5.7 
3.8 
1.7 
Total realized and unrealized gains (losses) included in net income
0 
0 
0 
0 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0.7 
2.1 
2.3 
4.0 
Transfers into level 3
7.1 
24.6 
4.2 
28.6 
Transfers out of level 3
(6.2)
(15.0)
(10.8)
(13.7)
Fair value, measurement with unobservable inputs reconciliation, ending balance
59.9 
56.5 
59.9 
56.5 
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date
0 
0 
0 
0 
Collateralized debt obligations
 
 
 
 
Assets:
 
 
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
2.5 
0 
5.4 
0 
Purchases, sales, issuances and settlements, net
(2.5)
2.5 
(2.5)
2.5 
Total realized and unrealized gains (losses) included in net income
0 
0 
0 
0 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0 
0 
0 
0 
Transfers into level 3
0 
0 
0 
0 
Transfers out of level 3
0 
0 
(2.9)
0 
Fair value, measurement with unobservable inputs reconciliation, ending balance
0 
2.5 
0 
2.5 
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date
0 
0 
0 
0 
Collateralized mortgage obligations
 
 
 
 
Assets:
 
 
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
0.2 
0 
 
0 
Purchases, sales, issuances and settlements, net
0 
12.0 
 
12.0 
Total realized and unrealized gains (losses) included in net income
0 
0 
 
0 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
(0.2)
0 
 
0 
Transfers into level 3
0 
0 
 
0 
Transfers out of level 3
0 
0 
 
0 
Fair value, measurement with unobservable inputs reconciliation, ending balance
0 
12.0 
0 
12.0 
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date
0 
0 
 
0 
Commercial mortgage-backed securities
 
 
 
 
Assets:
 
 
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
 
1.1 
32.0 
1.1 
Purchases, sales, issuances and settlements, net
 
17.0 
0 
17.0 
Total realized and unrealized gains (losses) included in net income
 
0 
0 
0 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
(0.1)
0 
0.4 
Transfers into level 3
 
14.4 
0 
13.9 
Transfers out of level 3
 
0 
(32.0)
0 
Fair value, measurement with unobservable inputs reconciliation, ending balance
0 
32.4 
0 
32.4 
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date
 
0 
0 
0 
Total fixed maturities, available for sale
 
 
 
 
Assets:
 
 
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
329.5 
218.9 
360.2 
207.5 
Purchases, sales, issuances and settlements, net
(48.6)
156.0 
(42.8)
141.5 
Total realized and unrealized gains (losses) included in net income
1.7 
0 
9.5 
(7.0)
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
1.9 
(2.9)
3.0 
11.9 
Transfers into level 3
41.3 
39.0 
35.4 
62.8 
Transfers out of level 3
(6.2)
(15.0)
(45.7)
(20.7)
Fair value, measurement with unobservable inputs reconciliation, ending balance
319.6 
396.0 
319.6 
396.0 
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date
(3.2)
0 
(6.5)
(5.6)
Investments held by variable interest entities - corporate securities
 
 
 
 
Assets:
 
 
 
 
Purchases, sales, issuances and settlements, net
 
 
5.0 
 
Equity securities
 
 
 
 
Assets:
 
 
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
24.6 
21.4 
25.2 
32.0 
Purchases, sales, issuances and settlements, net
(8.3)
3.3 
(8.5)
5.5 
Total realized and unrealized gains (losses) included in net income
6.4 
0 
6.3 
(12.8)
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
(1.1)
(0.8)
(1.4)
(0.8)
Transfers into level 3
0 
0 
0 
0 
Transfers out of level 3
0 
0 
0 
0 
Fair value, measurement with unobservable inputs reconciliation, ending balance
21.6 
23.9 
21.6 
23.9 
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date
(0.5)
0 
(0.5)
(12.8)
Mortgage pass-through securities
 
 
 
 
Assets:
 
 
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
 
 
 
0.1 
Purchases, sales, issuances and settlements, net
 
 
 
(0.1)
Total realized and unrealized gains (losses) included in net income
 
 
 
0 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
 
 
0 
Transfers into level 3
 
 
 
0 
Transfers out of level 3
 
 
 
0 
Fair value, measurement with unobservable inputs reconciliation, ending balance
 
0 
 
0 
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date
 
 
 
0 
Trading securities - commercial mortgage-backed securities
 
 
 
 
Assets:
 
 
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
 
0 
 
39.9 
Purchases, sales, issuances and settlements, net
 
0 
 
0 
Total realized and unrealized gains (losses) included in net income
 
0 
 
0 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
 
(1.7)
 
(1.4)
Transfers into level 3
 
10.0 
 
0 
Transfers out of level 3
 
0 
 
(30.2)
Fair value, measurement with unobservable inputs reconciliation, ending balance
 
8.3 
 
8.3 
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date
 
(1.7)
 
(1.4)
Investments Held By Variable Interest Entities\ |
Fair Value, Measurements, Recurring |
Significant unobservable inputs (Level 3) |
Investments held by variable interest entities - corporate securities
 
 
 
 
Assets:
 
 
 
 
Fair value, measurement with unobservable inputs reconciliation, beginning balance
0 
 
0 
 
Purchases, sales, issuances and settlements, net
0 
 
5.0 
 
Total realized and unrealized gains (losses) included in net income
0 
 
0 
 
Total realized and unrealized gains (losses) included in accumulated other comprehensive income (loss)
0 
 
0 
 
Transfers into level 3
5.0 
 
0 
 
Transfers out of level 3
0 
 
0 
 
Fair value, measurement with unobservable inputs reconciliation, ending balance
5.0 
 
5.0 
 
Amount of total gains (losses) for the period included in our net income relating to assets and liabilities still held as of the reporting date
$ 0 
 
$ 0 
 
FAIR VALUE MEASUREMENTS - FAIR VALUE ACTIVITY (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Interest sensitive products
 
 
 
 
Liabilities:
 
 
 
 
Purchases
$ (41.0)
$ (38.5)
$ (130.1)
$ (101.9)
Received in reinsurance recapture
 
0 
 
0 
Sales
1.8 
3.1 
5.3 
19.2 
Issuances
(31.4)
(14.6)
(95.7)
(17.5)
Settlements
14.3 
13.0 
46.3 
44.9 
Purchases, sales, issuances and settlements, net
(56.3)
(37.0)
(174.2)
(55.3)
Debt securities issued by foreign governments
 
 
 
 
Assets:
 
 
 
 
Purchases
 
 
 
4.0 
Received in reinsurance recapture
 
 
 
0 
Sales
 
 
 
0 
Issuances
 
 
 
0 
Settlements
 
 
 
0 
Purchases, sales, issuances and settlements, net
0 
0 
0 
4.0 
Corporate securities
 
 
 
 
Assets:
 
 
 
 
Purchases
15.3 
1.1 
64.3 
1.1 
Received in reinsurance recapture
 
118.6 
 
118.6 
Sales
(60.1)
(0.9)
(108.4)
(15.3)
Issuances
0 
0 
0 
0 
Settlements
0 
0 
0 
0 
Purchases, sales, issuances and settlements, net
(44.8)
118.8 
(44.1)
104.4 
Asset-backed securities
 
 
 
 
Assets:
 
 
 
 
Purchases
9.9 
7.0 
21.9 
7.0 
Received in reinsurance recapture
 
0 
 
0 
Sales
(11.2)
(1.3)
(18.1)
(5.3)
Issuances
0 
0 
0 
0 
Settlements
0 
0 
0 
0 
Purchases, sales, issuances and settlements, net
(1.3)
5.7 
3.8 
1.7 
Collateralized debt obligations
 
 
 
 
Assets:
 
 
 
 
Purchases
0 
2.5 
0 
2.5 
Received in reinsurance recapture
 
0 
 
0 
Sales
(2.5)
0 
(2.5)
0 
Issuances
0 
0 
0 
0 
Settlements
0 
0 
0 
0 
Purchases, sales, issuances and settlements, net
(2.5)
2.5 
(2.5)
2.5 
Total fixed maturities, available for sale
 
 
 
 
Assets:
 
 
 
 
Purchases
25.2 
27.6 
86.2 
31.6 
Received in reinsurance recapture
 
130.6 
 
130.6 
Sales
(73.8)
(2.2)
(129.0)
(20.7)
Issuances
0 
0 
0 
0 
Settlements
0 
0 
0 
0 
Purchases, sales, issuances and settlements, net
(48.6)
156.0 
(42.8)
141.5 
Equity securities
 
 
 
 
Assets:
 
 
 
 
Purchases
0 
1.1 
0 
3.3 
Received in reinsurance recapture
 
2.2 
 
2.2 
Sales
(8.3)
0 
(8.5)
0 
Issuances
0 
0 
0 
0 
Settlements
0 
0 
0 
0 
Purchases, sales, issuances and settlements, net
(8.3)
3.3 
(8.5)
5.5 
Investments held by variable interest entities - corporate securities
 
 
 
 
Assets:
 
 
 
 
Purchases
 
 
5.0 
 
Sales
 
 
0 
 
Issuances
 
 
0 
 
Settlements
 
 
0 
 
Purchases, sales, issuances and settlements, net
 
 
5.0 
 
Commercial mortgage-backed securities
 
 
 
 
Assets:
 
 
 
 
Purchases
 
17.0 
 
17.0 
Received in reinsurance recapture
 
0 
 
0 
Sales
 
0 
 
0 
Issuances
 
0 
 
0 
Settlements
 
0 
 
0 
Purchases, sales, issuances and settlements, net
 
17.0 
0 
17.0 
Mortgage pass-through securities
 
 
 
 
Assets:
 
 
 
 
Purchases
 
 
 
0 
Received in reinsurance recapture
 
 
 
0 
Sales
 
 
 
(0.1)
Issuances
 
 
 
0 
Settlements
 
 
 
0 
Purchases, sales, issuances and settlements, net
 
 
 
(0.1)
Collateralized mortgage obligations
 
 
 
 
Assets:
 
 
 
 
Purchases
 
0 
 
0 
Received in reinsurance recapture
 
12.0 
 
12.0 
Sales
 
0 
 
0 
Issuances
 
0 
 
0 
Settlements
 
0 
 
0 
Purchases, sales, issuances and settlements, net
$ 0 
$ 12.0 
 
$ 12.0 
FAIR VALUE MEASUREMENTS - FAIR VALUE INPUTS (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended 12 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Investments
$ 27,054.6 
$ 26,237.6 
Other invested assets
752.1 
589.5 
Significant unobservable inputs (Level 3)
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Investments
346.2 
385.4 
Other invested assets
158.2 
172.9 
Policyholder account balances
1,249.3 
1,092.3 
Significant unobservable inputs (Level 3) |
Minimum |
Interest sensitive products
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Projected portfolio yields
5.15% 
5.15% 
Discount rates
0.44% 
0.18% 
Surrender rates
0.94% 
0.94% 
Significant unobservable inputs (Level 3) |
Maximum |
Interest sensitive products
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Projected portfolio yields
5.61% 
5.61% 
Discount rates
2.80% 
3.06% 
Surrender rates
46.48% 
46.48% 
Significant unobservable inputs (Level 3) |
Weighted Average |
Interest sensitive products
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Projected portfolio yields
5.59% 
5.59% 
Discount rates
1.94% 
2.07% 
Surrender rates
13.52% 
13.52% 
Significant unobservable inputs (Level 3) |
Corporate securities
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Investments
138.4 
148.5 
Significant unobservable inputs (Level 3) |
Corporate securities |
Minimum
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Discount rate
1.50% 
1.35% 
Significant unobservable inputs (Level 3) |
Corporate securities |
Maximum
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Discount rate
61.70% 
27.71% 
Significant unobservable inputs (Level 3) |
Corporate securities |
Weighted Average
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Discount rate
9.10% 
13.52% 
Significant unobservable inputs (Level 3) |
Asset-backed securities
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Investments
24.9 
24.0 
Significant unobservable inputs (Level 3) |
Asset-backed securities |
Minimum
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Discount rate
1.77% 
2.06% 
Significant unobservable inputs (Level 3) |
Asset-backed securities |
Maximum
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Discount rate
3.36% 
3.64% 
Significant unobservable inputs (Level 3) |
Asset-backed securities |
Weighted Average
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Discount rate
2.54% 
2.76% 
Significant unobservable inputs (Level 3) |
Equity securities
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Investments
21.6 
25.2 
Significant unobservable inputs (Level 3) |
Equity securities |
Minimum
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
EBITDA Multiple
50.00% 
40.00% 
Significant unobservable inputs (Level 3) |
Equity securities |
Maximum
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
EBITDA Multiple
620.00% 
620.00% 
Significant unobservable inputs (Level 3) |
Equity securities |
Weighted Average
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
EBITDA Multiple
590.00% 
590.00% 
Recovery method |
Significant unobservable inputs (Level 3) |
Corporate securities
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Investments
$ 3.1 
$ 14.8 
Recovery method |
Significant unobservable inputs (Level 3) |
Corporate securities |
Minimum
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Discount rate
5.00% 
5.00% 
Recovery method |
Significant unobservable inputs (Level 3) |
Corporate securities |
Maximum
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Discount rate
38.00% 
69.00% 
Recovery method |
Significant unobservable inputs (Level 3) |
Corporate securities |
Weighted Average
 
 
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
 
 
Discount rate
17.76% 
55.00% 
SUBSEQUENT EVENT (Details) (USD $)
0 Months Ended
May 19, 2015
Line of credit
Revolving credit facility
Rate
Oct. 13, 2017
Line of credit
Revolving credit facility
Subsequent Event
Rate
May 19, 2015
Minimum
Line of credit
Revolving credit facility
Oct. 13, 2017
Maximum
Line of credit
Revolving credit facility
Subsequent Event
May 19, 2015
Eurodollar
Line of credit
Revolving credit facility
Oct. 13, 2017
Eurodollar
Minimum
Subsequent Event
Rate
Oct. 13, 2017
Eurodollar
Maximum
Subsequent Event
Rate
Oct. 13, 2017
Base Rate
Minimum
Subsequent Event
Rate
Oct. 13, 2017
Base Rate
Maximum
Subsequent Event
Rate
Subsequent Event [Line Items]
 
 
 
 
 
 
 
 
 
Line of credit maximum borrowing capacity
$ 150,000,000 
$ 250,000,000 
 
 
 
 
 
 
 
Long-term line of credit
 
100,000,000 
 
 
 
 
 
 
 
Remaining borrowing capacity
$ 50,000,000 
 
$ 50,000,000 
$ 100,000,000 
 
 
 
 
 
Basis spread on variable rate
 
 
 
 
2.00% 
1.375% 
2.125% 
0.375% 
1.125% 
Debt covenant, required minimum debt to total capitalization ratio
0.30 
0.35