v3.26.3
Future Policy Benefits
 12 Months Ended
Dec. 31, 2025
Future Policy Benefits [Abstract]  
Future Policy Benefits
Note 7. Future Policy Benefits

The LFPB represents the present value of expected future policy benefits and claim‑related expenses, less the present value of expected future net premiums. Net premiums represent the portion of gross premiums required to fund expected benefits based on current assumptions.

The following table sets forth the liability for future policy benefits as of December 31, 2025 and 2024:

   
2025
    
2024
  
(Dollar amounts in thousands)
         (Restated)  
Individual life
  
$
42,411
    
$
43,477
  
Group life
    
11,254
      
5,483
  
Medicare Supplement
    
9,617
      
8,478
  
Other individual health
    
21,437
      
19,443
  
Net liability for future policy benefits
    
84,719
      
76,881
  
Less: reinsurance recoverable
    
(5,309
)
    
(5,217
)
Net liability for future policy benefits, net of reinsurance recoverable
  
$
79,410
    
$
71,664
  
 
Changes in Future Liability Policy Benefits

One component of the change in the LFPB is the change attributable to changes in cash flow assumptions.  The LFPB is calculated based on assumptions that are evaluated at least annually. These assumptions include mortality and voluntary policyholder lapses for individual life and group life, and total policy terminations and claim costs for Medicare Supplement products and other individual health products.

The Company performed experience studies based on cutoff dates of December 31, 2024 and December 31, 2025 to determine the assumptions for the calculation of the LFPB as of the respective valuation dates.  Based on these studies, the Company updated mortality and voluntary lapse assumptions for individual and group life products and claim cost assumptions for Medicare Supplement products. The updated assumptions did not significantly affect LFPB for the life products. Changes in Medicare Supplement claim cost assumptions reduced LFPB by approximately $1,467 and $2,480 as of December 31, 2024 and December 31, 2025, respectively, primarily due to lower projected claim costs during the first three policy years. The remainder of the remeasurement gain of $225 and $1,232 in 2024 and 2025, respectively, were attributable to the differences between actual and expected cash flows. No portion of the LFPB remeasurement gain for 2024 or 2025 resulted from the application of the 100% net premium ratio cap.

The following table presents the balances of and changes in the liability for future policy benefits as of and for the year ended December 31, 2025:

   
2025
        
 
 
(Dollar amounts in thousands)
  
Individual
Life
    
Group
Life
    
Medicare
Supplement
    
Other
Individual
Health
    
Total
  
Present value of expected net premiums:
                              
Beginning balance as of January 1
  
$
18,698
    
$
60,665
    
$
749,267
    
$
28,888
    
$
857,518
  
Beginning balance, at original discount rate
    
19,313
      
67,017
      
835,891
      
31,290
      
953,511
  
Effect of changes in cash flow assumptions
    
15
      
(2,046
)
    
(17,467
)
    
-
      
(19,498
)
Effect of actual variances from expected experience
    
(35
)
    
(9,613
)
    
18,362
      
(1,692
)
    
7,022
  
Adjusted beginning balance
    
19,293
      
55,358
      
836,786
      
29,598
      
941,035
  
Issuances
    
785
      
15,092
      
313,351
      
8,407
      
337,635
  
Interest accretion
    
919
      
2,926
      
34,958
      
1,259
      
40,062
  
Net premiums collected(1)
    
(2,697
)
    
(6,641
)
    
(97,008
)
    
(5,067
)
    
(111,413
)
Other
    
(1
)
    
-
      
-
      
(10
)
    
(11
)
Ending balance, at original discount rate
    
18,299
      
66,735
      
1,088,087
      
34,187
      
1,207,308
  
Effect of changes in discount rate assumptions
    
(229
)
    
(3,977
)
    
(60,414
)
    
(1,364
)
    
(65,984
)
Ending balance as of December 31,
  
$
18,070
    
$
62,758
    
$
1,027,673
    
$
32,823
    
$
1,141,324
  
                                         
Present value of expected future policy benefits:
                                        
Beginning balance as of January 1
  
$
62,175
    
$
66,148
    
$
757,649
    
$
48,331
      
934,303
  
Beginning balance, at original discount rate
    
63,964
      
84,798
      
842,118
      
55,055
      
1,045,935
  
Effect of changes in cash flow assumptions
    
21
      
(2,138
)
    
(19,947
)
    
(2
)
    
(22,066
)
Effect of actual variances from expected experience
    
171
      
(9,834
)
    
17,130
      
(2,743
)
    
4,724
  
Adjusted beginning balance
    
64,156
      
72,826
      
839,301
      
52,310
      
1,028,593
  
Issuances
    
784
      
15,101
      
313,018
      
8,300
      
337,203
  
Interest accretion
    
3,167
      
3,843
      
36,102
      
2,175
      
45,287
  
Benefit payments
    
(6,558
)
    
(2,003
)
    
(88,477
)
    
(2,520
)
    
(99,558
)
Other
    
(436
)
    
(195
)
    
(2,875
)
    
(1,028
)
    
(4,534
)
Ending balance, at original discount rate
    
61,113
      
89,572
      
1,097,069
      
59,237
      
1,306,991
  
Effect of changes in discount rate assumptions
    
(632
)
    
(15,560
)
    
(60,367
)
    
(4,977
)
    
(81,536
)
Ending balance as of December 31,
  
$
60,481
    
$
74,012
    
$
1,036,702
    
$
54,260
    
$
1,225,455
  
Net liability for future policy benefits, before flooring adjustments
    
42,411
      
11,254
      
9,029
      
21,437
      
84,131
  
Flooring adjustments(2)
    
-
      
-
      
588
      
-
      
588
  
Net liability for future policy benefits
    
42,411
      
11,254
      
9,617
      
21,437
      
84,719
  
Less: reinsurance recoverable
    
(47
)
    
-
      
(5,262
)
    
-
      
(5,309
)
Net liability for future policy benefits, net of reinsurance recoverable
   $
42,364
     $
11,254
     $
4,355
     $
21,437
     $
79,410
  
Weighted average liability duration (years)
    
8.7
      
16.2
      
6.5
      
7.9
          

(1)
Net premiums represent the portion of gross premiums collected from policyholders that is necessary to fund expected benefit payments.
(2)
Flooring adjustments are necessary when the present value of future net premiums exceeds the present value of future benefits for a given cohort. The flooring adjustment is the total of the flooring adjustments for each cohort, if any.  These adjustments ensure that the liability for future policy benefits is at least zero for all cohorts.
The following table presents the balances of and changes in the liability for future policy benefits as of and for the year ended December 31, 2024.

   
2024
  
   
(Restated)
  
 
(Dollar amounts in thousands)
  
Individual
Life
    
Group
Life
    
Medicare
Supplement
    
Other
Individual
Health
    
Total
  
Present value of expected net premiums:
                              
Beginning balance as of January 1
  
$
19,626
    
$
52,337
    
$
769,715
    
$
26,734
    
$
868,412
  
Beginning balance, at original discount rate
    
19,429
      
56,900
      
838,249
      
29,115
      
943,693
  
Effect of changes in cash flow assumptions
    
(2
)
    
(1,729
)
    
(17,867
)
    
-
      
(19,598
)
Effect of actual variances from expected experience
    
744
      
(5,838
)
    
21,955
      
(3,094
)
    
13,767
  
Adjusted beginning balance
    
20,171
      
49,333
      
842,337
      
26,021
      
937,862
  
Issuances
    
883
      
21,609
      
50,374
      
8,589
      
81,455
  
Interest accretion
    
947
      
2,762
      
28,816
      
1,096
      
33,621
  
Net premiums collected(1)
    
(2,688
)
    
(6,688
)
    
(85,637
)
    
(4,420
)
    
(99,433
)
Other
    
-
      
1
      
1
      
4
      
6
  
Ending balance, at original discount rate
    
19,313
      
67,017
      
835,891
      
31,290
      
953,511
  
Effect of changes in discount rate assumptions
    
(615
)
    
(6,352
)
    
(86,624
)
    
(2,402
)
    
(95,993
)
Ending balance as of December 31,
  
$
18,698
    
$
60,665
    
$
749,267
    
$
28,888
    
$
857,518
  
                                         
Present value of expected future policy benefits:
                                        
Beginning balance as of January 1
  
$
67,902
    
$
56,767
    
$
784,912
    
$
45,549
      
955,130
  
Beginning balance, at original discount rate
    
66,232
      
69,013
      
851,128
      
50,884
      
1,037,257
  
Effect of changes in cash flow assumptions
    
(3
)
    
(1,749
)
    
(19,334
)
    
-
      
(21,086
)
Effect of actual variances from expected experience
    
941
      
(5,886
)
    
21,730
      
(4,024
)
    
12,761
  
Adjusted beginning balance
    
67,170
      
61,378
      
853,524
      
46,860
      
1,028,932
  
Issuances
    
885
      
21,609
      
50,327
      
8,662
      
81,483
  
Interest accretion
    
3,304
      
3,388
      
29,975
      
1,913
      
38,580
  
Benefit payments
    
(6,592
)
    
(1,322
)
    
(90,961
)
    
(2,200
)
    
(101,075
)
Other
    
(803
)
    
(255
)
    
(747
)
    
(180
)
    
(1,985
)
Ending balance, at original discount rate
    
63,964
      
84,798
      
842,118
      
55,055
      
1,045,935
  
Effect of changes in discount rate assumptions
    
(1,789
)
    
(18,650
)
    
(84,469
)
    
(6,724
)
    
(111,632
)
Ending balance as of December 31,
  
$
62,175
    
$
66,148
    
$
757,649
    
$
48,331
    
$
934,303
  
Net liability for future policy benefits, before flooring adjustments
    
43,477
      
5,483
      
8,382
      
19,443
      
76,785
  
Flooring adjustments(2)
     -      
-
      
96
      
-
      
96
  
Net liability for future policy benefits
    
43,477
      
5,483
      
8,478
      
19,443
      
76,881
  
Less: reinsurance recoverable
    
(56
)
    
-
      
(5,161
)
    
-
      
(5,217
)
Net liability for future policy benefits, net of reinsurance recoverable
   $
43,421
     $
5,483
     $
3,317
     $
19,443
     $
71,664
  
Weighted average liability duration (years)
    
8.4
      
17.2
      
6.2
      
8.2
          

(1)
Net premiums represent the portion of gross premiums collected from policyholders that is necessary to fund expected benefit payments
(2)
Flooring adjustments are necessary when the present value of future net premiums exceeds the present value of future benefits for a given cohort. The flooring adjustment is the total of the flooring adjustments for each cohort, if any.  These adjustments ensure that the liability for future policy benefits is at least zero for all cohorts.

 
Weighted Average Interest Rates

The following table presents the balances of and changes in the liability for future policy benefits as of and for the years ended December 31, 2025 and 2024.

   
Year Ended December 31,
2025
    
Year Ended December 31,
2024
  
Individual Life
            
Interest accretion (locked-in) rate
  
4.9
%
  
4.5
%
Current discount rate
  
5.3
%
  
5.5
%
Group Life
            
Interest accretion (locked-in) rate
  
5.0
%
  
4.6
%
Current discount rate
  
5.9
%
  
5.9
%
Medicare Supplement
            
Interest accretion (locked-in) rate
  
4.8
%
  
3.6
%
Current discount rate
  
6.4
%
  
6.0
%
Other Individual Health
            
Interest accretion (locked-in) rate
  
4.0
%
  
3.8
%
Current discount rate
  
5.5
%
  
5.7
%

Discounted Future Gross Premium

The following table sets forth the amount of undiscounted and discounted expected future gross premiums and expected future benefit payments as December 31, 2025 and 2024.

   
2025
    
2024
  
(Dollar amounts in thousands)
  
Undiscounted
    
Discounted
    
Undiscounted
    
Discounted
  
                         
Individual life
                        
Expected future gross premiums
  
$
61,771
    
$
37,820
    
$
67,906
    
$
40,068
  
Expected future benefits payments
    
115,435
      
60,481
      
121,624
      
62,175
  
Group Life
                                
Expected future gross premiums
    
214,892
      
127,261
      
202,437
      
116,517
  
Expected future benefits payments
    
237,776
      
74,012
      
222,729
      
66,148
  
Medicare Supplement
                                
Expected future gross premiums
    
2,264,574
      
1,515,989
      
1,642,269
      
1,104,499
  
Expected future benefits payments
    
1,528,633
      
1,036,702
      
1,112,219
      
757,649
  
Other Individual Health
                                
Expected future gross premiums
    
76,730
      
55,173
      
66,512
      
45,630
  
Expected future benefits payments
    
84,052
      
54,260
      
77,814
      
48,331
  

Revenue Interest Accretion

The following table sets forth the amount of revenue and interest accretion (expense) recognized in net income related to our liability for future policy benefits for the years ended December 31, 2025 and 2024.

   
2025
    
2024
  
 
(Dollar amounts in thousands)
  
Gross
Premiums
    
Interest
Accretion(1)
    
Gross
Premiums
    
Interest
Accretion(1)
  
                         
Individual life
  
$
5,782
    
$
2,248
    
$
5,947
    
$
2,357
  
Group Life
    
13,468
      
918
      
12,834
      
626
  
Medicare Supplement
    
144,644
      
1,144
      
126,726
      
1,159
  
Other Individual Health
    
9,199
      
916
      
8,042
      
816
  
   
$
173,093
    
$
5,226
    
$
153,549
    
$
4,958
  

(1) 
Amounts for interest accretion are included in benefits and other changes in policy reserves in the consolidated statement of operations.