Indiana                

35-1140070

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

150 N. Radnor Chester Road, Suite A305, Radnor, Pennsylvania

19087

(Address of principal executive offices)

(Zip Code)

Item

Page

PART I

1.

Financial Statements

2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements – Cautionary Language

Introduction

    Executive Summary

    Critical Accounting Policies and Estimates

    Acquisitions and Dispositions

Results of Consolidated Operations

Results of Annuities

Results of Retirement Plan Services

Results of Life Insurance

Results of Group Protection

Results of Other Operations

Realized Gain (Loss) and Benefit Ratio Unlocking

Consolidated Investments

Reinsurance

Review of Consolidated Financial Condition

   Liquidity and Capital Resources

Other Matters

   Other Factors Affecting Our Business

   Recent Accounting Pronouncements

3.

Quantitative and Qualitative Disclosures About Market Risk

4.

Controls and Procedures

PART II

1.

Legal Proceedings

2.

Unregistered Sales of Equity Securities and Use of Proceeds

6.

Exhibits

Signatures

Exhibit Index for the Report on Form 10-Q

E-1

As of

As of

September 30,

December 31,

2015

2014

(Unaudited)

ASSETS

Investments:

Available-for-sale securities, at fair value:

Fixed maturity securities (amortized cost:  2015 – $80,899; 2014 – $78,609)

$

$

Variable interest entities’ fixed maturity securities (amortized cost:  2015 – $595; 2014 – $587)

Equity securities (cost:  2015 – $232; 2014 – $216)

Trading securities

Mortgage loans on real estate

Real estate

Policy loans

Derivative investments

Other investments

Total investments

Cash and invested cash

Deferred acquisition costs and value of business acquired

Premiums and fees receivable

Accrued investment income

Reinsurance recoverables

Funds withheld reinsurance assets

Goodwill

Other assets

Separate account assets

Total assets

$

$

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities

Future contract benefits

$

$

Other contract holder funds

Short-term debt

 -

Long-term debt

Reinsurance related embedded derivatives

Funds withheld reinsurance liabilities

Deferred gain on business sold through reinsurance

Payables for collateral on investments

Variable interest entities’ liabilities

Other liabilities

Separate account liabilities

Total liabilities

Contingencies and Commitments (See Note 8)

Stockholders’ Equity

Preferred stock – 10,000,000 shares authorized

 -

 -

Common stock – 800,000,000 shares authorized; 247,464,931 and 256,551,440 shares

issued and outstanding as of September 30, 2015, and December 31, 2014, respectively

Retained earnings

Accumulated other comprehensive income (loss)

Total stockholders’ equity

 Total liabilities and stockholders’ equity

$

$

For the Three

For the Nine

Months Ended

Months Ended

September 30,

September 30,

2015

2014

2015

2014

Revenues

Insurance premiums

$

$

$

$

Fee income

Net investment income

Realized gain (loss):

Total other-than-temporary impairment losses on securities

)

)

)

)

Portion of loss recognized in other comprehensive income

Net other-than-temporary impairment losses on securities

recognized in earnings

)

)

)

)

Realized gain (loss), excluding other-than-temporary

impairment losses on securities

Total realized gain (loss)

)

Amortization of deferred gain on business sold through reinsurance

Other revenues

 Total revenues

Expenses

Interest credited

Benefits

Commissions and other expenses

Interest and debt expense

Total expenses

Income (loss) before taxes

Federal income tax expense (benefit)

Net income (loss)

Other comprehensive income (loss), net of tax

)

)

)

Comprehensive income (loss)

$

)

$

$

)

$

Net Income (Loss) Per Common Share

Basic

$

$

$

$

Diluted

For the Nine

Months Ended

September 30,

2015

2014

Common Stock

Balance as of beginning-of-year

$

$

Stock compensation/issued for benefit plans

Retirement of common stock/cancellation of shares

)

)

Balance as of end-of-period

Retained Earnings

Balance as of beginning-of-year

Net income (loss)

Retirement of common stock

)

)

Common stock dividends declared (2015 – $0.60; 2014 – $0.48)

)

)

Balance as of end-of-period

Accumulated Other Comprehensive Income (Loss)

Balance as of beginning-of-year

Other comprehensive income (loss), net of tax

)

Balance as of end-of-period

Total stockholders’ equity as of end-of-period

$

$

For the Nine

Months Ended

September 30,

2015

2014

Cash Flows from Operating Activities

Net income (loss)

$

$

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Deferred acquisition costs, value of business acquired, deferred sales inducements

and deferred front-end loads deferrals and interest, net of amortization

)

)

Trading securities purchases, sales and maturities, net

Change in premiums and fees receivable

)

Change in accrued investment income

)

)

Change in future contract benefits and other contract holder funds

Change in reinsurance related assets and liabilities

)

Change in federal income tax accruals

)

Realized (gain) loss

)

Amortization of deferred gain on business sold through reinsurance

)

)

Other

)

Net cash provided by (used in) operating activities

Cash Flows from Investing Activities

Purchases of available-for-sale securities

)

)

Sales of available-for-sale securities

Maturities of available-for-sale securities

Purchases of other investments

)

)

Sales or maturities of other investments

Increase (decrease) in payables for collateral on investments

Proceeds from sale of subsidiary/business

 -

Other

)

)

Net cash provided by (used in) investing activities

)

)

Cash Flows from Financing Activities

Payment of long-term debt, including current maturities

)

)

Issuance of long-term debt, net of issuance costs

 -

Deposits of fixed account values, including the fixed portion of variable

Withdrawals of fixed account values, including the fixed portion of variable

)

)

Transfers to and from separate accounts, net

)

)

Common stock issued for benefit plans and excess tax benefits

Repurchase of common stock

)

)

Dividends paid to common stockholders

)

)

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and invested cash

)

)

Cash and invested cash as of beginning-of-year

Cash and invested cash as of end-of-period

$

$

Standard

Description

Date of Adoption

Effect on Financial Statements or Other Significant Matters

ASU 2014-01, Accounting for Investments in Qualified Affordable Housing Projects

This standard permits an entity to make an accounting policy to use the proportional amortization method of accounting to recognize investments in qualified affordable housing projects, if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). Entities that previously applied the effective yield method to investments in qualified affordable housing prior to the adoption of this standard may continue to apply the effective yield method to those pre-existing investments.

January 1, 2015

The adoption of this ASU did not have an effect on our consolidated financial condition and results of operations.

ASU 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings and Disclosures

This standard eliminates a distinction in current GAAP related to certain repurchase agreements, and amends current GAAP to require repurchase-to-maturity transactions and linked repurchase financings to be accounted for as secured borrowings; consistent with the accounting for other repurchase agreements.  The standard also includes new disclosure requirements related to transfers accounted for as sales that are economically similar to repurchase agreements and information about the types of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings.  The new disclosures are not required for comparative periods before the effective date.

January 1, 2015, except for disclosures related to collateral pledged that were adopted for the interim period ended June 30, 2015

The adoption of this ASU did not have an effect on our consolidated financial condition and results of operations. 

Standard

Description

Projected Date of Adoption

Effect on Financial Statements or Other Significant Matters

ASU 2014-09, Revenue from Contracts with Customers & ASU 2015- 14, Revenue from Contracts with Customers; Deferral of the Effective Date

This standard establishes the core principle of recognizing revenue to depict the transfer of promised goods and services.  The amendments define a five-step process that systematically identifies the various components of the revenue recognition process, culminating with the recognition of revenue upon satisfaction of an entity’s performance obligation.  Retrospective application is required.  After performing extensive outreach, the FASB decided to delay the effective date of ASU 2014-09 for one year.  Early application is permitted but only for annual reporting periods beginning after December 15, 2016.    

January 1, 2018

We will adopt the accounting guidance in this standard for non-insurance related products and services, and are currently evaluating the impact of adoption on our consolidated financial condition and results of operations.

ASU 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity

This standard clarifies that when considering the nature of the host contract in a hybrid financial instrument issued in the form of a share; an entity must consider all of the stated and implied substantive terms of the hybrid instrument, including the embedded derivative feature that is being considered for separate accounting from the host contract.  Early adoption of this standard is permitted, and application is under a modified retrospective basis to existing hybrid financial instruments that are within the scope of the standard.

January 1, 2016

We are currently evaluating the impact of adopting this standard on our consolidated financial condition and results of operations.

ASU 2015-02, Amendments to the Consolidation Analysis

This standard is intended to improve consolidation accounting guidance related to limited partnerships, limited liability corporations and securitization structures.  The new standard includes changes to existing consolidation models that will eliminate the presumption that a general partner should consolidate a limited partnership, clarify when fees paid to a decision maker should be a factor in the variable interest entities (“VIEs”) consolidation evaluation and reduce the VIEs consolidation models from two to one by eliminating the indefinite deferral for certain investment funds.  Early adoption is permitted, including adoption in an interim period.

January 1, 2016

We are currently evaluating the impact of adopting this standard on our consolidated financial condition and results of operations.

ASU 2015-03,

Simplifying the Presentation of Debt Issuance Costs

Under current accounting guidance, debt issuance costs are recognized as a deferred charge in the balance sheet.  This amendment requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of that debt.  This standard does not change the recognition and measurement requirements related to debt issuance costs.  Early adoption of this standard is permitted, and retrospective application is required for all periods presented in the financial statements.

January 1, 2016

We will appropriately classify all of our debt issuance costs in accordance with this ASU as of the required effective date.

ASU 2015-05,

Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement

This standard clarifies the accounting requirements for recognizing cloud computing arrangements.  If an entity purchases a software license through a cloud computing arrangement, the software license should be accounted for in a manner consistent with the acquisition of other software licenses.  If a cloud computing arrangement does not include a software license, the arrangement should be accounted for as a service contract.  Early adoption of this standard is permitted, and the amendments can be adopted either prospectively or retrospectively. 

January 1, 2016

We are currently evaluating the impact of adopting this standard on our consolidated financial condition and results of operations.

Standard

Description

Projected Date of Adoption

Effect on Financial Statements or Other Significant Matters

ASU 2015-07, Disclosures for Certain Investments That Calculate Net Asset Value per Share (or its Equivalent)

This standard removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient.  In addition, the standard also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient, and limits those disclosures only to those investments for which the practical expedient has been elected.  Early adoption is permitted, and the disclosures must be provided retrospectively for all periods presented in the financial statements.

January 1, 2016

We are currently evaluating these disclosure changes and will appropriately amend our financial statement disclosures in accordance with this standard as of the adoption date.

ASU 2015-09, Disclosures about Short-Duration Contracts

This standard enhances the disclosure requirements related to short-duration insurance contracts.  The new disclosure requirements focus on providing users of financial statements with more transparent information about an insurance entity’s (1) initial claims estimates and subsequent adjustments to those estimates, (2) methodologies and judgments in estimating claims, and (3) timing, frequency and severity of claims.  Early application of this standard is permitted, and retrospective application is required for each comparative period presented, except for those requirements that apply only to the current period.

Annual periods beginning January 1, 2016; interim and annual periods beginning January 1, 2017

We are currently evaluating these disclosure changes and will provide the additional disclosures upon adoption.

ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements

Given the absence of authoritative accounting guidance in ASU 2015-03 related to debt issuance costs for line-of-credit arrangements, this standard clarifies that the SEC Staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement.

January 1, 2016

We are currently evaluating this SEC Staff Announcement in connection with our adoption of ASU 2015-03 and will make the necessary disclosures as of the effective date.

Amount and Date of Issuance

$400

$200

December

April

2006

2007

Original attachment point (subordination)

Current attachment point (subordination)

Maturity

12/20/2016

3/20/2017

Current rating of tranche 

BBB+

BB

Current rating of underlying reference obligations 

AA - B

AAA - CCC

Number of defaults in underlying reference obligations

Number of entities

Number of countries

AAA

AA

A

BBB

BB

B

CCC

Total

Industry

Financial intermediaries

Telecommunications

Oil and gas

Utilities

Chemicals and plastics

Drugs

Retailers (except food

and drug)

Industrial equipment

Sovereign

Conglomerates

Forest products

Other

Total

As of September 30, 2015

As of December 31, 2014

Number

Number

of

Notional

Carrying

of

Notional

Carrying

Instruments

Amounts

Value

Instruments

Amounts

Value

Assets

Fixed maturity securities:

Asset-backed credit card loans

N/A

$

 -

$

N/A

$

 -

$

Total return swap

 -

 -

Total assets (1)

$

$

$

$

Liabilities

Non-qualifying hedges:

Credit default swaps

$

$

$

$

Contingent forwards

 -

 -

 -

 -

Total liabilities (2)

$

$

$

$

For the Three

For the Nine

Months Ended

Months Ended

September 30,

September 30,

2015

2014

2015

2014

Non-Qualifying Hedges

Credit default swaps

$

$

)

$

$

Contingent forwards

 -

 -

 -

 -

Total non-qualifying hedges (1)

$

$

)

$

$

As of September 30, 2015

Amortized

Gross Unrealized

Fair

Cost

Gains

Losses

OTTI (1)

Value

Fixed maturity securities:

Corporate bonds

$

$

$

$

$

Asset-backed securities ("ABS")

)

U.S. government bonds

 -

Foreign government bonds

 -

Residential mortgage-backed securities ("RMBS")

)

Commercial mortgage-backed securities ("CMBS")

)

Collateralized loan obligations ("CLOs")

)

State and municipal bonds

 -

Hybrid and redeemable preferred securities

 -

VIEs’ fixed maturity securities

 -

 -

Total fixed maturity securities

)

Equity securities

 -

Total AFS securities

$

$

$

$

)

$

As of December 31, 2014