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v3.23.1

Accounting Pronouncements | 3 Months Ended
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Mar. 31, 2023
Accounting Changes and Error Corrections [Abstract] |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | ACCOUNTING PRONOUNCEMENTS ACCOUNTING STANDARDS RECENTLY ADOPTED Impacts at Transition Date In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2018-12, Financial Services-Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. The Company adopted ASU 2018-12 for the liability for future policy benefits, DAC and COIA on a modified retrospective basis such that those balances were adjusted to conform to ASU 2018-12 effective January 1, 2021. The following table summarizes the balance of and changes in the liability for future policy benefits, annuity reserves, DAC and COIA due to the adoption of ASU 2018-12.
(In thousands) | Life Insurance Segment | Home Services Insurance Segment |  |  | Consolidated
Liability for Future Policy Benefits |  |  |  |  |
Pre-adoption liability as of 12/31/2020 | $ | 987,373 |  | 255,513 |  |  |  | 1,242,886 |
Change in discount rate assumptions | 261,823 |  | 108,468 |  |  |  | 370,291 |
Effect of reserve changes | 6 |  | 96 |  |  |  | 102 |
Post-adoption liability as of 1/1/2021 | $ | 1,249,202 |  | 364,077 |  |  |  | 1,613,279 |
Fixed Annuity Liability |  |  |  |  |
Pre-adoption liability as of 12/31/2020 | $ | 60,027 |  | 18,277 |  |  |  | 78,304 |
Adjustments for the removal of shadow adjustments | — |  | 3,426 |  |  |  | 3,426 |
Post-adoption liability as of 1/1/2021 | $ | 60,027 |  | 21,703 |  |  |  | 81,730 |
Deferred Acquisition Costs |  |  |  |  |
Pre-adoption balance as of 12/31/2020 | $ | 94,771 |  | 10,142 |  |  |  | 104,913 |
Adjustments for the removal of shadow adjustments | 8,270 |  | 29,905 |  |  |  | 38,175 |
Impact of flooring cohorts at zero | 23 |  | 12 |  |  |  | 35 |
Post adoption balance as of 1/1/2021 | $ | 103,064 |  | 40,059 |  |  |  | 143,123 |
Cost of Insurance Acquired |  |  |  |  |
Pre-adoption balance as of 12/31/2020 | $ | 1,734 |  | 9,807 |  |  |  | 11,541 |
Adjustments for the removal of shadow adjustments | — |  | 484 |  |  |  | 484 |
Post adoption balance as of 1/1/2021 | $ | 1,734 |  | 10,291 |  |  |  | 12,025 |
At transition, the Company recorded a charge of $0.1 million to retained earnings, net of tax, primarily from capping net premium ratios for certain policyholder benefit cohorts at 100%, increasing reserves for certain non-premium paying cohorts and flooring certain DAC cohorts at zero. Other comprehensive income ("OCI") was reduced by $316.8 million primarily due to the difference in the discount rate used prior to transition and the discount rate at January 1, 2021. The Company also removed shadow adjustments previously recorded in OCI for the impact of unrealized gains and losses on annuity products that previously amortized unearned revenue, DAC and COIA over expected future gross profits. Impacts to Previously Reported Results Adoption of the standard impacted our previously reported consolidated financial results are as follows:
(in thousands, except per share amounts) | As Previously Reported | Adoption of New Standard | Post Adoption
As of December 31, 2022 |  |  |
Consolidated Balance Sheet |  |  |
Deferred policy acquisition costs | $ | 140,167 |  | 22,760 |  | 162,927 |
Cost of insurance acquired | 10,260 |  | 387 |  | 10,647 |
Deferred tax asset, net | 2,414 |  | (2,414) |  | — |
Future policy benefit reserves: |  |  |
Life insurance | 1,305,506 |  | (106,859) |  | 1,198,647 |
Annuities | 91,234 |  | (91,234) |  | — |
Policyholders' funds: |  |  |
Annuities | — |  | 121,422 |  | 121,422 |
Other policyholders' funds | 40,497 |  | (32,996) |  | 7,501 |
Deferred federal income tax liability | — |  | 3,653 |  | 3,653 |
Retained earnings (accumulated deficit) | (52,203) |  | 68,512 |  | 16,309 |
Accumulated other comprehensive income (loss) | (195,279) |  | 58,235 |  | (137,044) |
For the Three Months Ended March 31, 2022 |  |  |
Consolidated Statement of Operations |  |  |
Increase (decrease) in future policy benefit reserves | $ | 6,569 |  | (6,455) |  | 114 |
Policyholder liability remeasurement (gain) loss | — |  | 668 |  | 668 |
Amortization of deferred policy acquisition costs | 5,817 |  | (2,258) |  | 3,559 |
Amortization of cost of insurance acquired | 236 |  | (107) |  | 129 |
Federal income tax expense (benefit) | 359 |  | 370 |  | 729 |
Basic and diluted earnings (losses) per share of Class A common stock | (0.03) |  | 0.16 |  | 0.13 |
Consolidated Statement of Comprehensive Income (Loss) |  |
Unrealized holding gains (losses) arising during period | $ | (133,342) |  | 577 |  | (132,765) |
Change in current discount rate for liability for future policy benefits | — |  | 151,607 |  | 151,607 |
Income tax expense (benefit) on other comprehensive income items | (9,066) |  | 10,778 |  | 1,712 |
ACCOUNTING STANDARDS NOT YET ADOPTED On June 30, 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820: Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. This standard clarifies that contractual restrictions on equity security sales are not considered part of the security unit of account and, therefore, are not considered in measuring fair value. In addition, the amendments clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. Disclosures on such restrictions are also required. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and are required to be applied prospectively, with any adjustments from the adoption recognized in earnings and disclosed. Early adoption is available. Adoption of this standard will have no impact on our consolidated financial statements. No other new accounting pronouncements issued or effective during the year had, or is expected to have, a material impact on our consolidated financial statements.

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