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DERIVATIVES | 12 Months Ended
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Dec. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVES | 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
|  | 2024 |  | 2023
Assets: |  |  |  |
Other invested assets: |  |  |  |
Fixed indexed call options |  | $ | 279.0 |  |  | $ | 239.2 |
Reinsurance receivables |  | (17.1) |  |  | (17.5) |
Total assets |  | $ | 261.9 |  |  | $ | 221.7 |
Liabilities: |  |  |  |
Embedded derivatives related to fixed indexed annuities at fair value: |  |  |  |
Policyholder account balances |  | $ | 1,493.2 |  |  | $ | 1,376.7 |
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 $74.7 million in underlying investments held by the ceding reinsurer at December 31, 2024. The activity associated with freestanding derivative instruments is measured as either the notional or the number of contracts. The activity associated with the fixed indexed annuity embedded derivatives are shown by the number of policies. The following table represents activity associated with derivative instruments as of the dates indicated:
|  | Measurement |  | December 31, 2023 |  | Additions |  | Maturities/terminations |  | December 31, 2024
Fixed indexed annuities - embedded derivative |  | Policies |  | 125,298 |  |  | 12,407 |  |  | (12,241) |  |  | 125,464 |
Fixed indexed call options |  | Notional (a) |  | $ | 3,267.9 |  |  | $ | 4,202.6 |  |  | $ | (3,311.8) |  |  | $ | 4,158.7 |
_________________ (a) Dollars in millions. The following table provides the pre-tax impact recognized in net income for derivative instruments, which are not designated as hedges for the periods indicated (dollars in millions):
|  | 2024 |  | 2023 |  | 2022
Net investment income (loss) from policyholder and other special-purpose portfolios: |  |  |  |  |  |
Fixed indexed call options |  | $ | 255.8 |  |  | $ | 129.0 |  |  | $ | (206.6) |
Total investment gains (losses): |  |  |  |  |  |
Embedded derivative related to modified coinsurance agreement |  | 0.4 |  |  | 0.3 |  |  | (16.1) |
Total revenues from derivative instruments, not designated as hedges |  | 256.2 |  |  | 129.3 |  |  | (222.7) |
Insurance policy benefits: |  |  |  |  |  |
Embedded derivatives related to fixed indexed annuities |  | 179.1 |  |  | 137.1 |  |  | (488.5) |
Net pre-tax impact |  | $ | 77.1 |  |  | $ | (7.8) |  |  | $ | 265.8 |
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 December 31, 2024, all of our counterparties were rated "A" or higher by S&P. The Company and its subsidiaries are parties to master netting arrangements with its counterparties related to entering into various derivative contracts. The following table summarizes information related to derivatives with master netting arrangements or collateral as of December 31, 2024 and 2023 (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 |  | Non-cash collateral |  | Cash collateral received |  | Net amount
December 31, 2024: |  |
| Fixed indexed call options |  | $ | 279.0 |  |  | $ | — |  |  | $ | 279.0 |  |  | $ | 78.0 |  |  | $ | — |  |  | $ | 201.0 |
December 31, 2023: |  |  |  |  |  |  |  |  |  |  |  |
| Fixed indexed call options |  | 239.2 |  |  | — |  |  | 239.2 |  |  | 37.0 |  |  | — |  |  | 202.2 |

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