Revision of Immaterial Misstatement in Prior Year Financial Statements

3 Months Ended

Mar. 31, 2021

Accounting Changes and Error Corrections [Abstract]

Revision of Immaterial Misstatement in Prior Year Financial Statements

Management identified an error in the Company's historical financial statements as further described below. In accordance with the guidance set forth in SEC Staff Accounting Bulletin No. 99, Materiality, and SEC Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, management concluded that the error was not material to the consolidated financial statements as presented in the Company's quarterly and annual financial statements that had been previously filed in the Company's Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K. As a result, amendment of such reports is not required. The Company revised the previously issued annual consolidated financial statements for 2020 in this Form 10-Q to correct this error.

The corrected immaterial error was in the calculation of the impact of unrealized gains and losses on lifetime income benefit reserves as of December 31, 2020 determined in the first quarter of 2021. This immaterial error resulted in an increase in the lifetime income benefit reserves which are included in policy benefit reserves in the consolidated balance sheet, an increase in the deferred policy acquisition costs and deferred sales inducements and a decrease in deferred income taxes with an offsetting change in accumulated other comprehensive income which is a component of total stockholders' equity. The immaterial error had no impact on the consolidated statement of operations or consolidated statement of cash flows.

The effect of the revisions on the Company's previously issued financial statements are provided in the tables below. Amounts throughout the consolidated financial statements and notes thereto have been adjusted to incorporate the revised amounts, where applicable. The following tables reconcile selected lines from the Company's year-end December 31, 2020 consolidated balance sheet and the three months ended March 31, 2020 consolidated statement of comprehensive loss from the previously reported amounts to the revised amounts.


Revised Consolidated Balance Sheet
	Year Ended December 31, 2020
	As Reported		Adjustment		As Revised
	(Dollars in thousands)
Assets
Deferred policy acquisition costs	$	2,045,812	$	179,387	$	2,225,199
Deferred sales inducements	1,328,857		119,518		1,448,375
Total assets	71,389,674		298,905		71,688,579

Liabilities and Stockholders' Equity
Liabilities:
Policy benefit reserves	61,768,246		584,636		62,352,882
Deferred income taxes	564,003		(60,003)		504,000
Total liabilities	64,814,958		524,633		65,339,591
Stockholders' equity:
Accumulated other comprehensive income	2,429,285		(225,728)		2,203,557
Total stockholders' equity	6,574,716		(225,728)		6,348,988
Total liabilities and stockholders' equity	71,389,674		298,905		71,688,579


Revised Consolidated Statement of Comprehensive Loss
	Three Months Ended March 31, 2020
	As Reported		Adjustment		As Revised
	(Dollars in thousands)
Other comprehensive loss:
Change in net unrealized investment gains/losses (1)	$	(1,625,075)	$	152,445	$	(1,472,630)
Other comprehensive loss before income tax	(1,617,655)		152,445		(1,465,210)
Income tax effect related to other comprehensive loss	339,708		(32,013)		307,695
Other comprehensive loss	(1,277,947)		120,432		(1,157,515)
Comprehensive loss	(1,035,000)		120,432		(914,568)

(1)Net of related adjustments to amortization of deferred sales inducements, deferred policy acquisition costs and policy benefit reserves