| Fair Value of Financial Instruments |
Fair Value of Financial Instruments The Company is required to disclose estimated fair values for certain financial and nonfinancial assets and liabilities. Fair values for the Company’s insurance contracts other than annuity contracts (which are investment contracts) and equity method limited partnership interests are not required to be disclosed in fair value hierarchy. The estimated fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk through the matching of investment maturities with amounts due under insurance contracts. Information regarding the three-level fair value hierarchy presented below and the valuation methodologies utilized by the Company to estimate fair values at each reporting date is included in Part II - Item 8, Note 3 of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Financial Instruments Measured and Carried at Fair Value on a Recurring Basis The following table presents the Company's fair value hierarchy for financial assets and financial liabilities measured and carried at fair value on a recurring basis. During the six months ended June 30, 2025 and 2024, there were no transfers between Level 1 and Level 2. As of June 30, 2025, Level 3 invested assets comprised 9.1% of the Company’s total investment portfolio at fair value. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ($ in millions) | | Carrying
Amount | | Fair
Value | | Fair Value Measurements at
Reporting Date Using | | | | | | Level 1 | | Level 2 | | Level 3 | | June 30, 2025 | | | | | | | | | | | | Financial Assets | | | | | | | | | | | | Investments | | | | | | | | | | | | Fixed maturity securities | | | | | | | | | | | U.S. Government and federally
sponsored agency obligations: | | | | | | | | | | | | Mortgage-backed securities | | $ | 605.5 | | | $ | 605.5 | | | $ | — | | | $ | 605.5 | | | $ | — | | | Other, including U.S. Treasury securities | | 363.6 | | | 363.6 | | | 24.9 | | | 338.7 | | | — | | | Municipal bonds | | 1,151.9 | | | 1,151.9 | | | — | | | 1,076.0 | | | 75.9 | | | Foreign government bonds | | 13.3 | | | 13.3 | | | — | | | 13.3 | | | — | | | Corporate bonds | | 1,770.8 | | | 1,770.8 | | | 4.9 | | | 1,423.9 | | | 342.0 | | | Other asset-backed securities | | 1,548.2 | | | 1,548.2 | | | — | | | 1,485.0 | | | 63.2 | | | Total fixed maturity securities | | 5,453.3 | | | 5,453.3 | | | 29.8 | | | 4,942.4 | | | 481.1 | | | Equity securities | | 58.3 | | | 58.3 | | | 1.3 | | | 52.7 | | | 4.3 | | Limited partnership interests | | 33.7 | | | 33.7 | | | — | | | — | | | 33.7 | | | Short-term investments | | 155.6 | | | 155.6 | | | 155.6 | | | — | | | — | | | Other investments | | 15.9 | | | 15.9 | | | — | | | 15.9 | | | — | | | Totals | | $ | 5,716.8 | | | $ | 5,716.8 | | | $ | 186.7 | | | $ | 5,011.0 | | | $ | 519.1 | | Separate Account variable annuity assets(1) | | $ | 3,863.3 | | | $ | 3,863.3 | | | $ | 3,863.3 | | | $ | — | | | $ | — | | | | | | | | | | | | | Financial Liabilities(2) | | $ | 78.1 | | | $ | 78.1 | | | $ | — | | | $ | 4.1 | | | $ | 74.0 | | | | | | | | | | | | | | December 31, 2024 | | | | | | | | | | | | Financial Assets | | | | | | | | | | | | Investments | | | | | | | | | | | | Fixed maturity securities | | | | | | | | | | | U.S. Government and federally
sponsored agency obligations: | | | | | | | | | | | | Mortgage-backed securities | | $ | 755.8 | | | $ | 755.8 | | | $ | — | | | $ | 755.8 | | | $ | — | | | Other, including U.S. Treasury securities | | 357.6 | | | 357.6 | | | 24.7 | | | 332.9 | | | — | | Municipal bonds | | 1,150.8 | | | 1,150.8 | | | — | | | 1,075.9 | | | 74.9 | | Foreign government bonds | | 13.1 | | | 13.1 | | | — | | | 13.1 | | | — | | Corporate bonds | | 1,782.4 | | | 1,782.4 | | | 7.7 | | | 1,423.4 | | | 351.3 | | Other asset-backed securities | | 1,328.2 | | | 1,328.2 | | | — | | | 1,254.5 | | | 73.7 | | | Total fixed maturity securities | | 5,387.9 | | | 5,387.9 | | | 32.4 | | | 4,855.6 | | | 499.9 | | | Equity securities | | 66.5 | | | 66.5 | | | 1.4 | | | 60.9 | | | 4.2 | | Limited partnership interests | | 28.9 | | | 28.9 | | | — | | | — | | | 28.9 | | | Short-term investments | | 101.1 | | | 101.1 | | | 101.1 | | | — | | | — | | | Other investments | | 18.5 | | | 18.5 | | | — | | | 18.5 | | | — | | | Totals | | $ | 5,602.9 | | | $ | 5,602.9 | | | $ | 134.9 | | | $ | 4,935.0 | | | $ | 533.0 | | Separate Account (variable annuity) assets(1) | | $ | 3,708.8 | | | $ | 3,708.8 | | | $ | 3,708.8 | | | $ | — | | | $ | — | | | | | | | | | | | | | Financial Liabilities(2) | | $ | 79.6 | | | $ | 79.6 | | | $ | — | | | $ | 4.1 | | | $ | 75.5 | |
(1) Separate Account variable annuity assets represent contractholder funds invested in various actively traded mutual funds that have daily quoted net asset values that are readily determinable for identical assets that the Company can access. Separate Account variable annuity liabilities are equal to the estimated fair value of the Separate Account variable annuity assets. (2) Represents embedded derivatives related to fixed indexed annuity and indexed universal life products reported in Future policy benefit reserves and Other policyholder funds as well as net MRBs reported in Policyholders' account balances in the Company's Consolidated Balance Sheets. Changes in Level 3 Fair Value Measurements The reconciliation for all financial assets and financial liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ($ in millions) | | Financial Assets | | Financial Liabilities(1) | | | Municipal
Bonds | | Corporate
Bonds | |
Mortgage-Backed and Other Asset- Backed Securities(2) | | Total
Fixed
Maturity
Securities | | Equity Securities & Limited Partnership Interests | | Total | | | | Beginning balance, April 1, 2025 | | $ | 76.1 | | | $ | 340.9 | | | $ | 67.1 | | | $ | 484.1 | | | $ | 38.9 | | | $ | 523.0 | | | $ | 74.3 | | Transfers into Level 3(3) | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Transfers out of Level 3(3) | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Total gains or losses | | | | | | | | | | | | | | | Net investment gains (losses) included in net income | | — | | | — | | | — | | | — | | | (0.9) | | | (0.9) | | | — | | Net investment (gains) losses included in net income related to financial liabilities | | — | | | — | | | — | | | — | | | — | | | — | | | 3.7 | | Net unrealized gains (losses) included in OCI | | 0.1 | | | 2.4 | | | 0.3 | | | 2.8 | | | — | | | 2.8 | | | (0.4) | | | Purchases | | — | | | 8.9 | | | — | | | 8.9 | | | — | | | 8.9 | | | — | | | Issuances | | — | | | — | | | — | | | — | | | — | | | — | | | 0.7 | | | Sales | | — | | | (3.0) | | | (1.7) | | | (4.7) | | | — | | | (4.7) | | | — | | | Settlements | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Paydowns, maturities and distributions | | (0.3) | | | (7.3) | | | (2.5) | | | (10.1) | | | — | | | (10.1) | | | (4.3) | | | Ending balance, June 30, 2025 | | $ | 75.9 | | | $ | 342.0 | | | $ | 63.2 | | | $ | 481.0 | | | $ | 38.0 | | | $ | 519.0 | | | $ | 74.0 | | | | | | | | | | | | | | | | | Beginning balance, January 1, 2025 | | $ | 74.9 | | | $ | 351.3 | | | $ | 73.7 | | | $ | 499.9 | | | $ | 33.1 | | | $ | 533.0 | | | $ | 75.5 | | Transfers into Level 3(3) | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Transfers out of Level 3(3) | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Total gains or losses | | | | | | | | | | | | | | | Net investment gains (losses) included in net income | | — | | | — | | | — | | | — | | | 4.9 | | | 4.9 | | | — | | Net investment (gains) losses included in net income related to financial liabilities | | — | | | — | | | — | | | — | | | — | | | — | | | 5.6 | | Net unrealized gains (losses) included in OCI | | 1.5 | | | 1.8 | | | (0.2) | | | 3.0 | | | — | | | 3.0 | | | (0.2) | | | Purchases | | — | | | 22.3 | | | — | | | 22.3 | | | — | | | 22.3 | | | — | | | Issuances | | — | | | — | | | — | | | — | | | — | | | — | | | 2.1 | | | Sales | | — | | | (25.3) | | | (1.8) | | | (27.1) | | | — | | | (27.1) | | | — | | | Settlements | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Paydowns, maturities and distributions | | (0.5) | | | (8.1) | | | (8.5) | | | (17.1) | | | — | | | (17.1) | | | (9.0) | | | Ending balance, June 30, 2025 | | $ | 75.9 | | | $ | 342.0 | | | $ | 63.2 | | | $ | 481.0 | | | $ | 38.0 | | | $ | 519.0 | | | $ | 74.0 | |
(1)Represents embedded derivatives related to fixed indexed annuity and indexed universal life products reported in Future policy benefit reserves and Other policyholder funds as well as net MRBs reported in Policyholders' account balances in the Company's Consolidated Balance Sheets. (2)Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other asset-backed securities. (3)Transfers into and out of Level 3 during the three and six months ended June 30, 2025 and 2024 were related to changes in the primary pricing source or changes in observability of external information used in determining fair value. The Company's policy is to recognize transfers into and out of the levels as having occurred at the end of the reporting period in which the transfers were determined. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ($ in millions) | | Financial Assets | | Financial
Liabilities(1) | | | Municipal
Bonds | | Corporate
Bonds | |
Mortgage-Backed and Other Asset- Backed Securities(2) | | Total
Fixed
Maturity
Securities | | Equity
Securities | | Total | | | Beginning balance, April 1, 2024 | | $ | 73.2 | | | $ | 345.5 | | | $ | 88.7 | | | $ | 507.4 | | | $ | 2.5 | | | $ | 509.9 | | | $ | 80.8 | | Transfers into Level 3(3) | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Transfers out of Level 3(3) | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Total gains or losses | | | | | | | | | | | | | | | Net investment gains (losses) included in net income | | — | | | (0.8) | | | 0.8 | | | — | | | 0.2 | | | 0.2 | | | — | | Net investment (gains) losses included in net income related to financial liabilities | | — | | | — | | | — | | | — | | | — | | | — | | | (0.3) | | Net unrealized gains (losses) included in OCI | | (0.7) | | | 0.4 | | | (0.9) | | | (1.2) | | | — | | | (1.2) | | | 0.1 | | | Purchases | | — | | | 27.6 | | | 1.8 | | | 29.4 | | | — | | | 29.4 | | | — | | | Issuances | | — | | | — | | | — | | | — | | | — | | | — | | | 1.4 | | | Sales | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Settlements | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Paydowns, maturities and distributions | | (0.4) | | | (6.3) | | | (5.0) | | | (11.7) | | | — | | | (11.7) | | | (4.1) | | Ending balance, June 30, 2024 | | $ | 72.1 | | | $ | 366.4 | | | $ | 85.4 | | | $ | 523.9 | | | $ | 2.7 | | | $ | 526.6 | | | $ | 77.9 | | | | | | | | | | | | | | | | | Beginning balance, January 1, 2024 | | $ | 74.0 | | | $ | 342.5 | | | $ | 97.5 | | | $ | 514.0 | | | $ | 4.5 | | | $ | 518.5 | | | $ | 82.4 | | Transfers into Level 3(3) | | — | | | — | | | — | | | — | | | — | | | — | | | — | | Transfers out of Level 3(3) | | — | | | (4.4) | | | — | | | (4.4) | | | — | | | (4.4) | | | — | | | Total gains or losses | | | | | | | | | | | | | | | Net investment gains (losses) included in net income | | — | | | (0.8) | | | 0.8 | | | — | | | 0.3 | | | 0.3 | | | — | | Net investment (gains) losses included in net income related to financial liabilities | | — | | | — | | | — | | | — | | | — | | | — | | | 1.0 | | Net unrealized gains/losses included in OCI | | (1.4) | | | (0.2) | | | 1.5 | | | (0.1) | | | — | | | (0.1) | | | — | | | Purchases | | — | | | 41.7 | | | 1.8 | | | 43.5 | | | — | | | 43.5 | | | — | | | Issuances | | — | | | — | | | — | | | — | | | — | | | — | | | 2.8 | | | Sales | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Settlements | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | Paydowns, maturities and distributions | | (0.5) | | | (12.4) | | | (16.2) | | | (29.1) | | | (2.1) | | | (31.2) | | | (8.3) | | Ending balance, June 30, 2024 | | $ | 72.1 | | | $ | 366.4 | | | $ | 85.4 | | | $ | 523.9 | | | $ | 2.7 | | | $ | 526.6 | | | $ | 77.9 | |
For the three and six months ended June 30, 2025, the Company had net losses of $0.9 million and net gains $4.9 million with respect to Level 3 financial assets. For the three and six months ended June 30, 2024, the Company had net gains of $0.2 million and $0.3 million with respect to Level 3 financial assets. For the three and six months ended June 30, 2025, the Company had net losses of $3.7 million and $5.6 million, respectively, that were included in net income and attributable to changes in the fair value of Level 3 financial liabilities. For the three and six months ended June 30, 2024, the Company had net gains of $0.3 million and net losses of $1.0 million, respectively, that were included in net income that were attributable to changes in the fair value of Level 3 financial liabilities. Level 3 Assets and Liabilities by Price Source The table below presents the balances of Level 3 assets and liabilities measured at fair value with their corresponding pricing sources: | | | | | | | | | | | | | | | | | | | | | | ($ in millions) | | | Total | | Internal | | External | | June 30, 2025 | | | | | | | | Financial Assets | | | | | | | | Fixed maturity securities | | | | | | | U.S. Government and federally sponsored agency obligations: | | | | | | | | Mortgage-backed securities | | $ | — | | | $ | — | | | $ | — | | | Municipal bonds | | 75.9 | | | — | | | 75.9 | | | Corporate bonds | | 342.0 | | | 203.7 | | | 138.3 | | | Other asset-backed securities | | 63.2 | | | — | | | 63.2 | | | Total fixed maturity securities | | 481.1 | | | 203.7 | | | 277.4 | | | Equity securities | | 4.3 | | | — | | | 4.3 | | Limited partnership interests | | 33.7 | | | — | | | $ | 33.7 | | | Totals | | 519.1 | | | 203.7 | | | 315.4 | | | | | | | | | Financial Liabilities(1) | | 74.0 | | | 74.0 | | | — | | | | | | | | | | December 31, 2024 | | | | | | | | Financial Assets | | | | | | | | Fixed maturity securities | | | | | | | | U.S. Government and federally sponsored agency obligations: | | | | | | | | Mortgage-backed securities | | — | | | — | | | — | | | Municipal bonds | | 74.9 | | | — | | | 74.9 | | | Corporate bonds | | 351.3 | | | 199.3 | | | 152.0 | | | Other asset-backed securities | | 73.7 | | | — | | | 73.7 | | | Total fixed maturity securities | | 499.9 | | | 199.3 | | | 300.6 | | | Equity securities | | 4.2 | | | — | | | 4.2 | | Limited partnership interests | | 28.9 | | | — | | | 28.9 | | | Totals | | 533.0 | | | 199.3 | | | 333.7 | | | | | | | | | Financial Liabilities(1) | | $ | 75.5 | | | $ | 75.5 | | | $ | — | |
(1) Represents embedded derivatives related to fixed indexed annuity and indexed universal life products reported in Future policy benefit reserves and Other policyholder funds as well as net MRBs reported in Policyholders' account balances in the Company's Consolidated Balance Sheets.
External pricing sources for securities represent prices from prior transactions or unadjusted third-party pricing information where pricing inputs are not readily available. Quantitative Information about Level 3 Fair Value Measurements The following table provides quantitative information about the significant unobservable inputs for recurring fair value measurements categorized with Level 3. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ($ in millions) | | |
| | Fair Value as of June 30, 2025 | | Valuation Technique(s) | | Unobservable Inputs | | Range (Weighted Average) and Single Point Best Estimate(1) | | Impact of Increase in Input on Fair Value | Financial Assets | | | | | | | | | | | Corporate bonds | | $ | 203.7 | | | discounted cash flow | | yield | | 3.4% - 9.2% | | decrease | | | | | discounted cash flow | | option adjusted spread | | 282 bps - 808 bps | | decrease | Financial Liabilities | | | | | | | | | | | Derivatives embedded in fixed indexed annuity products | | $ | 80.7 | | | discounted cash flow | | lapse rate | | 6.4% | | decrease | | | | | | | mortality multiplier(2) | | 67.0% | | decrease | | | | | | | | option budget | | 0.9% - 3.8% | | increase | | | | | | | non-performance adjustment(3) | | 5.0% | | decrease | | Net MRBs | | $ | (6.7) | | | discounted cash flow | | lapse rate | | 6.4% | | decrease | | | | | | | mortality multiplier(2) | | 67.0% | | increase |
(1) When a range of unobservable inputs is not readily available, the Company uses a single point best estimate. (2) Mortality multiplier is applied to the Annuity 2000 table. (3) Determined as a percentage of the risk-free rate.
The valuation techniques and significant unobservable inputs used in the fair value measurement for financial assets and financial liabilities classified as Level 3 are subject to the processes as described in Part II - Item 8, Note 3 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Generally, valuation techniques for corporate bonds include using discounted cash flow techniques where the unobservable input is the yield. Financial Instruments Not Carried at Fair Value The Company has various other financial assets and financial liabilities used in the normal course of business that are not carried at fair value, but for which fair value disclosure is required. These financial assets and financial liabilities are further described in Part II - Item 8, Note 3 in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. The following table presents the carrying amount and fair value of the Company’s financial assets and financial liabilities not carried at fair value and the level within the fair value hierarchy at which such financial assets and liabilities are categorized. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ($ in millions) | | Carrying
Amount | | Fair
Value | | Fair Value Measurements at
Reporting Date Using | | | | | Level 1 | | Level 2 | | Level 3 | | June 30, 2025 | | | | | | | | | | | | Financial Assets | | | | | | | | | | | | Other investments | | $ | 219.7 | | | $ | 222.9 | | | $ | — | | | $ | 37.5 | | | $ | 185.4 | | | Deposit asset on reinsurance | | 2,412.6 | | | 2,145.2 | | | — | | | — | | | 2,145.2 | | | Financial Liabilities | | | | | | | | | | | Policyholders' account balances | | 5,090.9 | | | 4,726.0 | | | — | | | — | | | 4,726.0 | | | Other policyholder funds | | 1,005.8 | | | 1,005.8 | | | — | | | 1,002.9 | | | 2.9 | | | Long-term debt | | 547.5 | | | 577.1 | | | — | | | 577.1 | | | — | | | | | | | | | | | | | | December 31, 2024 | | | | | | | | | | | | Financial Assets | | | | | | | | | | | | Other investments | | $ | 221.0 | | | $ | 224.3 | | | $ | — | | | $ | 37.0 | | | $ | 187.3 | | | Deposit asset on reinsurance | | 2,434.3 | | | 2,121.9 | | | — | | | — | | | 2,121.9 | | | Financial Liabilities | | | | | | | | | | | Policyholders' account balances | | 5,020.2 | | | 4,710.1 | | | — | | | — | | | 4,710.1 | | Reverse repurchase agreement | | 12.0 | | | 12.4 | | | — | | | 12.4 | | | — | | | Other policyholder funds | | 995.7 | | | 995.7 | | | — | | | 992.9 | | | 2.8 | | | Long-term debt | | 547.0 | | | 575.1 | | | — | | | 575.1 | | | — | |
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