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Commitments and Contingencies | 12 Months Ended
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Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies We lease our home office space and certain equipment under various operating leases. Rent expense for the years ended December 31, 2016, 2015 and 2014 totaled $2.8 million, $2.7 million and $2.7 million, respectively. At December 31, 2016, the aggregate future minimum lease payments are $16.9 million. The following represents payments due by period for operating lease obligations as of December 31, 2016 (dollars in thousands):
Year Ending December 31: |
2017 | $ | 1,890 |
2018 | 1,915 |
2019 | 1,898 |
2020 | 1,950 |
2021 | 1,754 |
2022 and thereafter | 7,464 |
We are occasionally involved in litigation, both as a defendant and as a plaintiff. In addition, state regulatory bodies, such as state insurance departments, the SEC, FINRA, the Department of Labor, and other regulatory bodies regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, the Employee Retirement Income Security Act of 1974, as amended, and laws governing the activities of broker/dealers. In accordance with applicable accounting guidelines, we establish an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. As a litigation or regulatory matter is developing we, in conjunction with outside counsel, evaluate on an ongoing basis whether the matter presents a loss contingency that meets conditions indicating the need for accrual and/or disclosure, and if not the matter will continue to be monitored for further developments. If and when the loss contingency related to litigation or regulatory matters is deemed to be both probable and estimable, we will establish an accrued liability with respect to that matter and will continue to monitor the matter for further developments that may affect the amount of the accrued liability. Companies in the life insurance and annuity business have faced litigation, including class action lawsuits, alleging improper product design, improper sales practices and similar claims. We were a defendant in a purported class action, McCormack, et al. v. American Equity Investment Life Insurance Company, et al., in the United States District Court for the Central District of California, Western Division and Anagnostis v. American Equity, et al., coordinated in the Central District, entitled, In Re: American Equity Annuity Practices and Sales Litigation (complaint filed September 7, 2005) (the "Los Angeles Case"), involving allegations of improper sales practices and similar claims. The Los Angeles Case was a consolidated action involving several lawsuits filed by putative class members seeking class action status for a national class of purchasers of annuities issued by us. On July 30, 2013, the parties entered into a settlement agreement and stipulated to certification of the case as a class action for settlement purposes only. A class member filed an appeal with the United States Court of Appeals for the Ninth Circuit on February 28, 2014. On February 17, 2016, the United States Court of Appeals for the Ninth Circuit affirmed the terms of the settlement agreement and on April 6, 2016, the class member’s subsequent request for a rehearing en banc was denied. All remaining opportunities for appeal have passed. During the third quarter of 2016, we reduced the litigation liability related to the Los Angeles Case by $6.4 million as we paid out $1.8 million in partial settlement, reclassified $1.8 million from the litigation liability to policy benefit reserves and other policy funds and contract claims and released $2.8 million of the litigation liability as additional information became available concerning the nature and magnitude of claims based on the terms of the settlement. During the fourth quarter of 2016, we paid out an additional $4.1 million and reduced the litigation liability by $4.1 million. After this activity, we estimate our litigation liability in this matter to be $0.6 million based on our best estimate of probable loss. There can be no assurance that any other pending or future litigation will not have a material adverse effect on our business, financial condition, or results of operations. In addition to our commitments to fund mortgage loans, we have unfunded commitments at December 31, 2016 to limited partnerships of $48.4 million and to secured bank loans of $34.3 million.

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