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Significant Accounting Policies (Tables) | 9 Months Ended
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Sep. 30, 2023
Accounting Policies [Abstract] |
Liability for Future Policy Benefit, Activity |
| Liability for Future Policy Benefits for Payout Annuity With Life Contingency
| (Dollars in thousands)
Pre-adoption 1/1/2021 balance | $ | 337,467 |
Adjustment to opening retained earnings for expected future policy benefits | 2,566 |
Adjustment for the effect of remeasurement of liability at current single A rate | 68,717 |
Post adoption 1/1/2021 balance | $ | 408,750 |
The balances of and changes in the liability for future policy benefits for the nine months ended September 30, 2023 and year ended December 31, 2022 is as follows:
|  |  | Present Value of Expected Future Policy Benefits
|  |  | Nine Months Ended September 30, 2023 |  | Year Ended December 31, 2022
|  |  | (Dollars in thousands)
Balance, beginning of period |  |  | $ | 318,677 |  |  | $ | 402,305 |
Beginning balance at original discount rate |  |  | 342,453 |  |  | 352,708 |
Effect of changes in cash flow assumptions |  |  | (4,607) |  |  | 1,277 |
Effect of actual variances from expected experience |  |  | (1,692) |  |  | (1,941) |
Adjusted beginning of year balance |  |  | 336,154 |  |  | 352,044 |
Issuances |  |  | 6,391 |  |  | 16,072 |
Interest accrual |  |  | 10,357 |  |  | 14,664 |
Derecognition (lapses and benefit payments) |  |  | (29,252) |  |  | (40,327) |
Ending balance at original discount rate |  |  | 323,650 |  |  | 342,453 |
Effect of changes in discount rate assumptions |  |  | (31,316) |  |  | (23,776) |
Balance, end of period |  |  | $ | 292,334 |  |  | $ | 318,677 |
The reconciliation of the net liability for future policy benefits to the liability for future policy benefits included in policy benefit reserves in the consolidated balance sheets is as follows:
| September 30, 2023 |  | December 31, 2022
| (Dollars in thousands)
Liability for future policy benefits | $ | 292,334 |  |  | $ | 318,677 |
Deferred profit liability | 22,975 |  |  | 19,223 |
| 315,309 |  |  | 337,900 |
Less: Reinsurance recoverable | (1,997) |  |  | (1,259) |
Net liability for future policy benefits, after reinsurance recoverable | $ | 313,312 |  |  | $ | 336,641 |
The weighted-average liability duration of the liability for future policy benefits is as follows:
| September 30, 2023 |  | December 31, 2022
SPIA With Life Contingency: |  |  |
Weighted-average liability duration of the liability for future policy benefits (years) | 6.82 |  | 6.78
The amount of revenue and interest associated with the liability for future policy benefits recognized in the statement of operations for the nine months ended September 30, 2023 and year ended December 31, 2022 is as follows:
|  |  | Nine Months Ended September 30, 2023 |  | Year Ended December 31, 2022
|  |  |  |  | Gross Premiums or Assessments |  | Interest Expense |  | Gross Premiums or Assessments |  | Interest Expense
|  |  |  |  | (Dollars in thousands)
SPIA With Life Contingency |  |  |  |  | $ | 6,994 |  |  | $ | 10,297 |  |  | $ | 16,994 |  |  | $ | 14,613 |
Total |  |  |  |  | $ | 6,994 |  |  | $ | 10,297 |  |  | $ | 16,994 |  |  | $ | 14,613 |
The weighted-average interest rate is as follows:
| September 30, 2023 |  | December 31, 2022
Interest accretion rate | 4.25 | % |  | 4.25 | %
Current discount rate | 5.92 | % |  | 5.37 | %
Market Risk Benefit, Activity |
| Market Risk Benefit Liability
| (Dollars in thousands)
Pre-adoption 1/1/2021 carrying amount for features now classified as MRBs | $ | 2,547,231 |
Adjustment for the removal of shadow adjustments | (584,636) |
Adjustment for the cumulative effect of the changes in the instrument-specific credit risk between the original contract issuance date and the transition date | 229,108 |
Adjustment for the remaining difference between previous carrying amount and fair value measurement for the MRB, exclusive of the instrument specific credit risk | 33,781 |
Post adoption 1/1/2021 MRB balance | $ | 2,225,484 |
| Ceded Market Risk Benefit (a)
| (Dollars in thousands)
Pre-adoption 1/1/2021 carrying amount for features now classified as MRBs | $ | 62,108 |
Adjustment for the difference between previous carrying amount and fair value measurement for the MRB, exclusive of the instrument specific credit risk | 27,230 |
Post adoption 1/1/2021 ceded MRB balance | $ | 89,338 |
(a)The ceded market risk benefit is recognized in coinsurance deposits on the Consolidated Balance Sheets. The balances of and changes in the liability for market risk benefits (MRB) for the nine months ended September 30, 2023 and year ended December 31, 2022 is as follows:
|  |  | Nine Months Ended September 30, 2023 |  | Year Ended December 31, 2022
|  |  |  |  | Fixed Rate Annuities |  | Fixed Index Annuities |  | Fixed Rate Annuities |  | Fixed Index Annuities
|  |  |  |  | (Dollars in thousands)
MRB Liability |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of period |  |  |  |  | $ | 37,863 |  |  | $ | 2,187,758 |  |  | $ | 78,411 |  |  | $ | 2,557,378 |
Balance, beginning of period, before effect of changes in the instrument-specific credit risk |  |  |  |  | 44,355 |  |  | 2,453,169 |  |  | 77,731 |  |  | 2,310,437 |
Issuances |  |  |  |  | 32 |  |  | 218,643 |  |  | 376 |  |  | 59,452 |
Interest accrual |  |  |  |  | 2,294 |  |  | 118,391 |  |  | 1,349 |  |  | 72,551 |
Attributed fees collected |  |  |  |  | 920 |  |  | 93,757 |  |  | 1,270 |  |  | 125,168 |
Benefits payments |  |  |  |  | — |  |  | — |  |  | — |  |  | — |
Effect of changes in interest rates |  |  |  |  | (8,338) |  |  | (401,074) |  |  | (19,421) |  |  | (952,265) |
Effect of changes in equity markets |  |  |  |  | — |  |  | (9,167) |  |  | — |  |  | 186,618 |
Effect of changes in equity index volatility |  |  |  |  | — |  |  | (36,721) |  |  | — |  |  | 241,563 |
Actual policyholder behavior different from expected behavior |  |  |  |  | — |  |  | — |  |  | — |  |  | — |
Effect of changes in future expected policyholder behavior |  |  |  |  | (250) |  |  | (948) |  |  | 602 |  |  | 46,567 |
Effect of changes in other future expected assumptions |  |  |  |  | 16,720 |  |  | (219,094) |  |  | (17,552) |  |  | 363,078 |
Balance, end of period, before effect of changes in the instrument-specific credit |  |  |  |  | 55,733 |  |  | 2,216,956 |  |  | 44,355 |  |  | 2,453,169 |
Effect of changes in the instrument-specific credit risk |  |  |  |  | (5,134) |  |  | (61,163) |  |  | (6,492) |  |  | (265,411) |
Balance, end of period |  |  |  |  | 50,599 |  |  | 2,155,793 |  |  | 37,863 |  |  | 2,187,758 |
Reinsured MRB, end of period |  |  |  |  | 15,776 |  |  | 562,516 |  |  | 10,656 |  |  | 593,959 |
Balance, end of period, net of reinsurance |  |  |  |  | $ | 34,823 |  |  | $ | 1,593,277 |  |  | $ | 27,207 |  |  | $ | 1,593,799 |
Net amount at risk (a) |  |  |  |  | $ | 265,429 |  |  | $ | 11,673,620 |  |  | $ | 258,826 |  |  | $ | 10,987,198 |
Weighted average attained age of contract holders (years) |  |  |  |  | 70 |  | 71 |  | 69 |  | 71
(a)Net amount at risk is defined as the current guarantee amount in excess of the current account balance. The following is a reconciliation of market risk benefits by amounts in an asset position and in a liability position to market risk benefit amounts included in other assets and market risk benefit reserves, respectively, in the Consolidated Balance Sheets:
| September 30, 2023
| Asset |  | Liability |  | Net Liability
| (Dollars in thousands)
Fixed Index Annuities | $ | 343,923 |  |  | $ | 2,499,716 |  |  | $ | 2,155,793 |
Fixed Rate Annuities | 2,592 |  |  | 53,191 |  |  | 50,599 |
Total | $ | 346,515 |  |  | $ | 2,552,907 |  |  | $ | 2,206,392 |
| December 31, 2022
| Asset |  | Liability |  | Net Liability
| (Dollars in thousands)
Fixed Index Annuities | $ | 226,294 |  |  | $ | 2,414,052 |  |  | $ | 2,187,758 |
Fixed Rate Annuities | 3,577 |  |  | 41,440 |  |  | 37,863 |
Total | $ | 229,871 |  |  | $ | 2,455,492 |  |  | $ | 2,225,621 |
The following table presents the balances and changes in reinsured market risk benefits associated with fixed index annuities for the nine months ended September 30, 2023 and year ended December 31, 2022:
|  |  | Nine Months Ended September 30, 2023 |  | Year Ended December 31, 2022
|  |  |  |  | Fixed Rate Annuities |  | Fixed Index Annuities |  | Fixed Rate Annuities |  | Fixed Index Annuities
|  |  |  |  | (Dollars in thousands)
Ceded MRB |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of period |  |  |  |  | $ | 10,656 |  |  | $ | 593,959 |  |  | $ | — |  |  | $ | 156,931 |
Write-off related to in-force ceded reinsurance |  |  |  |  | — |  |  | — |  |  | 10,091 |  |  | 334,835 |
Issuances |  |  |  |  | — |  |  | 146,498 |  |  | — |  |  | 36,036 |
Interest accrual |  |  |  |  | 536 |  |  | 24,861 |  |  | 104 |  |  | 7,598 |
Attributed fees collected |  |  |  |  | 41 |  |  | 22,440 |  |  | 28 |  |  | 23,745 |
Benefits payments |  |  |  |  | — |  |  | — |  |  | — |  |  | — |
Effect of changes in interest rates |  |  |  |  | (1,129) |  |  | (74,994) |  |  | 135 |  |  | (171,948) |
Effect of changes in equity markets |  |  |  |  | — |  |  | (2,167) |  |  | 118 |  |  | 43,799 |
Effect of changes in equity index volatility |  |  |  |  | — |  |  | (8,485) |  |  | — |  |  | 34,278 |
Actual policyholder behavior different from expected behavior |  |  |  |  | — |  |  | — |  |  | — |  |  | — |
Effect of changes in future expected policyholder behavior |  |  |  |  | 58 |  |  | 5,098 |  |  | 180 |  |  | 12,598 |
Effect of changes in other future expected assumptions |  |  |  |  | 5,614 |  |  | (144,694) |  |  | — |  |  | 116,087 |
Balance, end of period |  |  |  |  | $ | 15,776 |  |  | $ | 562,516 |  |  | $ | 10,656 |  |  | $ | 593,959 |
Net amount at risk (a) |  |  |  |  | $ | 74,611 |  |  | $ | 2,828,270 |  |  | $ | 72,350 |  |  | $ | 2,402,964 |
Weighted average attained age of contract holders (years) |  |  |  |  | 70 |  | 70 |  | 70 |  | 71
(a)Net amount at risk is defined as the current guarantee amount in excess of the current account balance. The following is a reconciliation of reinsurance market risk benefits by amounts in an asset position and in liability position to market risk benefit amounts included in coinsurance deposits and other liabilities, respectively, in the consolidated balance sheets:
| September 30, 2023
| Asset |  | Liability |  | Net Asset
| (Dollars in thousands)
Fixed Index Annuities | $ | 695,387 |  |  | $ | 132,871 |  |  | $ | 562,516 |
Fixed Rate Annuities | 16,026 |  |  | 250 |  |  | 15,776 |
Total | $ | 711,413 |  |  | $ | 133,121 |  |  | $ | 578,292 |
| December 31, 2022
| Asset |  | Liability |  | Net Asset
| (Dollars in thousands)
Fixed Index Annuities | $ | 629,611 |  |  | $ | 35,652 |  |  | $ | 593,959 |
Fixed Rate Annuities | 11,070 |  |  | 414 |  |  | 10,656 |
Total | $ | 640,681 |  |  | $ | 36,066 |  |  | $ | 604,615 |
Deferred Policy Acquisition Costs |
| Deferred Policy Acquisition Costs
| Fixed Index Annuities and Fixed Rate Annuities
| (Dollars in thousands)
Pre-adoption 1/1/2021 balance | $ | 2,225,199 |
Adjustments for the removal of shadow adjustments | 1,183,306 |
Post adoption 1/1/2021 balance | $ | 3,408,505 |
The following tables present the balances and changes in deferred policy acquisition costs:
| Nine Months Ended September 30, 2023
| Fixed Index Annuities |  | Fixed Rate Annuities |  | Single Premium Immediate Annuities |  | Total
| (Dollars in thousands)
Balance, beginning of period | $ | 2,649,322 |  |  | $ | 120,105 |  |  | $ | 4,216 |  |  | $ | 2,773,643 |
Capitalizations | 350,302 |  |  | 16,586 |  |  | 45 |  |  | 366,933 |
Amortization expense | (184,710) |  |  | (22,069) |  |  | (493) |  |  | (207,272) |
Balance, end of period | $ | 2,814,914 |  |  | $ | 114,622 |  |  | $ | 3,768 |  |  | $ | 2,933,304 |
| Year Ended December 31, 2022
| Fixed Index Annuities |  | Fixed Rate Annuities |  | Single Premium Immediate Annuities |  | Total
| (Dollars in thousands)
Balance, beginning of period | $ | 2,906,684 |  |  | $ | 151,322 |  |  | $ | 4,198 |  |  | $ | 3,062,204 |
Write-off related to in-force ceded reinsurance | (196,417) |  |  | (7,209) |  |  | — |  |  | (203,626) |
Capitalizations | 193,989 |  |  | 4,424 |  |  | 663 |  |  | 199,076 |
Amortization expense | (254,934) |  |  | (28,432) |  |  | (645) |  |  | (284,011) |
Balance, end of period | $ | 2,649,322 |  |  | $ | 120,105 |  |  | $ | 4,216 |  |  | $ | 2,773,643 |
Deferred Sales Inducements |
| Deferred Sales Inducements
| Fixed Index Annuities and Fixed Rate Annuities
| (Dollars in thousands)
Pre-adoption 1/1/2021 balance | $ | 1,448,375 |
Adjustments for the removal of shadow adjustments | 768,310 |
Post adoption 1/1/2021 balance | $ | 2,216,685 |
The following tables present the balances and changes in deferred sales inducements:
| Nine Months Ended September 30, 2023
| Fixed Index Annuities |  | Fixed Rate Annuities |  | Total
| (Dollars in thousands)
Balance, beginning of period | $ | 2,017,960 |  |  | $ | 27,723 |  |  | $ | 2,045,683 |
Capitalizations | 353,220 |  |  | 67 |  |  | 353,287 |
Amortization expense | (139,568) |  |  | (2,338) |  |  | (141,906) |
Balance, end of period | $ | 2,231,612 |  |  | $ | 25,452 |  |  | $ | 2,257,064 |
| Year Ended December 31, 2022
| Fixed Index Annuities |  | Fixed Rate Annuities |  | Total
| (Dollars in thousands)
Balance, beginning of period | $ | 2,088,591 |  |  | $ | 31,370 |  |  | $ | 2,119,961 |
Capitalizations | 107,684 |  |  | 8 |  |  | 107,692 |
Amortization expense | (178,315) |  |  | (3,655) |  |  | (181,970) |
Balance, end of period | $ | 2,017,960 |  |  | $ | 27,723 |  |  | $ | 2,045,683 |

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