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Long Term Subordinated Notes
 9 Months Ended
Sep. 30, 2022
Long Term Subordinated Notes [Abstract]  
Long Term Subordinated Notes
12.
 
LONG TERM SUBORDINATED
 
NOTES
 
The table below
 
displays Holdings’
 
outstanding fixed
 
to floating rate
 
long term subordinated
 
notes.
 
Fair value
 
is
based
 
on
 
quoted
 
market
 
prices,
 
but
 
due
 
to
 
limited
 
trading
 
activity,
 
these
 
subordinated
 
notes
 
are
 
considered
Level 2 in the fair value hierarchy.
Maturity Date
September 30, 2022
December 31, 2021
Original
Consolidated Balance
Fair
Consolidated Balance
Fair
(Dollars in millions)
Date Issued
Principal Amount
Scheduled
Final
Sheet Amount
Value
Sheet Amount
Value
Long term subordinated notes
4/26/2007
$
400
5/15/2037
5/1/2067
$
218
$
179
$
224
$
216
During the fixed
 
rate interest
 
period from
May 3, 2007
 
through
May 14, 2017
, interest
 
was at the
 
annual rate
 
of
6.6
%, payable semi-annually in arrears
 
on November 15 and May 15 of each year,
 
commencing on
November 15,
2007
.
 
During the floating rate
 
interest period from
 
May 15, 2017 through
 
maturity,
 
interest will be based
 
on the
3
 
month
 
LIBOR
 
plus
238.5
 
basis
 
points,
 
reset
 
quarterly,
 
payable
 
quarterly
 
in
 
arrears
 
on
 
February
 
15,
 
May
 
15,
August 15
 
and November
 
15 of
 
each year,
 
subject to
 
Holdings’ right
 
to defer
 
interest
 
on
one
 
or more
 
occasions
for up
 
to
ten
 
consecutive
 
years.
 
Deferred
 
interest
 
will accumulate
 
interest
 
at the
 
applicable rate
 
compounded
quarterly for
 
periods from
 
and including
 
May 15,
 
2017.
 
The reset
 
quarterly interest
 
rate for
 
August 15,
 
2022 to
November 14, 2022 is
5.29
%.
 
Holdings may redeem
 
the long term subordinated
 
notes on or after
 
May 15, 2017, in
 
whole or in part at
100
% of
the principal amount
 
plus accrued and unpaid
 
interest; however,
 
redemption on or
 
after the scheduled
 
maturity
date and
 
prior to
May 1, 2047
 
is subject
 
to a
 
replacement
 
capital covenant.
 
This covenant
 
is for
 
the benefit
 
of
certain
 
senior
 
note
 
holders
 
and
 
it
 
mandates
 
that
 
Holdings
 
receive
 
proceeds
 
from
 
the
 
sale
 
of
 
another
subordinated
 
debt issue,
 
of at
 
least similar
 
size, before
 
it may
 
redeem the
 
subordinated
 
notes.
 
The Company’s
4.868
% senior notes,
 
due on
June 1, 2044
,
3.5
% senior noted
 
due on
October 15, 2050
 
and
3.125
% senior notes
due
 
on
October 15, 2052
 
are
 
the
 
Company’s
 
long
 
term
 
indebtedness
 
that
 
rank
 
senior
 
to
 
the
 
long
 
term
subordinated notes.
 
In
 
2009,
 
the
 
Company
 
had
 
reduced
 
its
 
outstanding
 
amount
 
of
 
long
 
term
 
subordinated
 
notes
 
by
 
$
161
 
million
through the initiation
 
of a cash tender offer
 
for any and
 
all of the long term
 
subordinated notes.
 
In addition, the
Company
 
repurchased
 
and
 
retired
 
$
13
 
million
 
of
 
the
 
long
 
term
 
subordinated
 
notes
 
in
 
2020.
 
During
 
the
 
third
quarter
 
of
 
2022,
 
the
 
Company
 
repurchased
 
and
 
retired
 
$
6
 
million
 
of
 
the
 
outstanding
 
long
 
term
 
subordinated
notes. The Company realized
 
a gain of $
1
 
million on the transaction.
Interest
 
expense
 
incurred
 
in
 
connection
 
with
 
these
 
long
 
term
 
subordinated
 
notes
 
is
 
as follows
 
for
 
the
 
periods
indicated:
Three Months Ended
Nine Months Ended
September 30,
September 30,
(Dollars in millions)
2022
2021
2022
2021
Interest expense incurred
$
3
$
1
$
6
$
4