very-10q_20210331.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021 

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM                      TO                     

Commission File Number 001-38945

 

VERICITY, INC.

(Exact name of Registrant as specified in its Charter)

 

 

Delaware

 

46-2348863

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

8700 W. Bryn Mawr Avenue, Suite 900S, Chicago Illinois

 

60631

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (312) 288-0073

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol

 

Name on each exchange on which registered

Common Stock, Par Value $0.001 per share

 

VERY

 

NASDAQ Capital Market

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES  NO  

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES  NO  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES  NO 

The number of shares of Registrant’s Common Stock outstanding as of May 14, 2021 was 14,875,000.

 

 


 

Table of Contents

 

 

 

 

 

Page

 

 

 

 

 

PART I –

 

Financial Information

 

 

 

Item 1.

 

Financial Statements (Unaudited) (at March 31, 2021 and December 31, 2020 and for the Three Months Ended March 31, 2021 and 2020)

 

 

 

 

 

 

 

 

 

Interim Condensed Consolidated Balance Sheets

 

1

 

 

Interim Condensed Consolidated Statements of Operations

 

2

 

 

Interim Condensed Consolidated Statements of Comprehensive Income (Loss)

 

3

 

 

Interim Condensed Consolidated Statements of Changes in Equity

 

4

 

 

Interim Condensed Consolidated Statements of Cash Flows

 

5

 

 

Notes to the Interim Condensed Consolidated Financial Statements

 

6

 

 

 

Note 1 – Summary of Significant Accounting Policies

 

6

 

 

 

Note 2 – Investments

 

6

 

 

 

Note 3 – Policy Liabilities

 

11

 

 

 

Note 4 – Reinsurance

 

12

 

 

 

Note 5 – Closed Block

 

12

 

 

 

Note 6 – Commitments and Contingencies

 

14

 

 

 

Note 7 – Assets and Liabilities Measured at Fair Value

 

15

 

 

 

Note 8 – Long and Short-term Debt

 

19

 

 

 

Note 9– Accumulated Other Comprehensive Income (Loss)

 

19

 

 

 

Note 10 – Business Segments

 

19

 

 

 

Note 11 – Subsequent Events

 

20

 

 

 

 

 

 

Item 2.

 

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

 

21

Item 4.

 

Controls and Procedures

 

32

 

 

 

 

 

PART II –

 

Other Information

 

33

Item 1.

 

Legal Proceedings

 

33

Item 1A.

 

Risk Factors

 

33

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

33

Item 3.

 

Default upon Senior Securities

 

33

Item 4.

 

Mine Safety Disclosures

 

33

Item 5.

 

Other Information

 

33

Item 6.

 

Exhibits

 

34

Signature

 

 

 

35

 

 


 

Part 1. Financial Information

Item I. Financial Statements

Vericity, Inc.

Interim Condensed Consolidated Balance Sheets

(dollars in thousands)

 

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(Unaudited)

 

 

(Audited)

 

Assets

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

Fixed maturities – available-for-sale – at fair value (amortized cost; $333,194

   and $328,263)

 

$

354,717

 

 

$

363,851

 

Equity securities – at fair value (cost; $6,672 and $6,530)

 

 

4,646

 

 

 

3,848

 

Mortgage loans (net of valuation allowances of $136 and $141)

 

 

50,018

 

 

 

50,427

 

Policyholder loans

 

 

6,288

 

 

 

6,414

 

Other invested assets

 

 

880

 

 

 

273

 

Total investments

 

 

416,549

 

 

 

424,813

 

Cash, cash equivalents and restricted cash

 

 

12,878

 

 

 

36,242

 

Accrued investment income

 

 

2,505

 

 

 

2,633

 

Reinsurance recoverables (net of allowances of $131 and $131)

 

 

168,845

 

 

 

158,015

 

Deferred policy acquisition costs

 

 

87,656

 

 

 

87,212

 

Commissions and agent balances (net of allowances of $978 and $749)

 

 

25,741

 

 

 

19,526

 

Intangible assets

 

 

1,635

 

 

 

1,635

 

Deferred income tax assets, net

 

 

14,122

 

 

 

10,926

 

Other assets

 

 

29,408

 

 

 

27,762

 

Total assets

 

 

759,339

 

 

 

768,764

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Future policy benefits and claims

 

 

388,151

 

 

 

381,563

 

Policyholder account balances

 

 

82,643

 

 

 

83,869

 

Other policyholder liabilities

 

 

41,251

 

 

 

37,789

 

Policy dividend obligations

 

 

12,355

 

 

 

13,282

 

Reinsurance liabilities and payables

 

 

6,495

 

 

 

6,696

 

Long-term debt

 

 

24,149

 

 

 

24,933

 

Short-term debt

 

 

4,575

 

 

 

5,545

 

Other liabilities

 

 

19,039

 

 

 

19,854

 

Total liabilities

 

 

578,658

 

 

 

573,531

 

Commitments and Contingencies (Note 6)

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

 

 

Common stock, $.001 par value, 30,000,000 shares authorized, 14,875,000 shares, issued and outstanding

 

 

15

 

 

 

15

 

Additional paid-in capital

 

 

39,840

 

 

 

39,840

 

Retained earnings

 

 

132,711

 

 

 

138,777

 

Accumulated other comprehensive income (loss)

 

 

8,115

 

 

 

16,601

 

Total shareholders' equity

 

 

180,681

 

 

 

195,233

 

Total liabilities and shareholders' equity

 

$

759,339

 

 

$

768,764

 

 

See notes to interim condensed consolidated financial statements

1


Vericity, Inc.

Interim Condensed Consolidated Statements of Operations

(dollars in thousands, except earnings per share)

 

 

 

Three Months Ended March 31,

 

 

 

 

2021

 

 

2020

 

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

Revenues

 

 

 

 

 

 

 

 

 

Net insurance premiums

 

$

25,297

 

 

$

30,056

 

 

Net investment income

 

 

3,254

 

 

 

3,572

 

 

Net realized investment gains (losses)

 

 

1,517

 

 

 

(3,057

)

 

Other-than-temporary-impairments (OTTI)

 

 

(2

)

 

 

(54

)

 

Earned commissions

 

 

10,622

 

 

 

4,125

 

 

Insurance lead sales

 

 

1,474

 

 

 

1,588

 

 

Other income

 

 

75

 

 

 

83

 

 

Total revenues

 

 

42,237

 

 

 

36,313

 

 

Benefits and expenses

 

 

 

 

 

 

 

 

 

Life, annuity, and health claim benefits

 

 

21,952

 

 

 

20,761

 

 

Interest credited to policyholder account balances

 

 

722

 

 

 

783

 

 

Operating costs and expenses

 

 

23,330

 

 

 

23,529

 

 

Amortization of deferred policy acquisition costs

 

 

3,240

 

 

 

976

 

 

Total benefits and expenses

 

 

49,244

 

 

 

46,049

 

 

(Loss) income before income tax

 

 

(7,007

)

 

 

(9,736

)

 

Income tax (benefit) expense

 

 

(941

)

 

 

(1,158

)

 

Net (loss) income

 

$

(6,066

)

 

$

(8,578

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share for the periods

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

 

2021

 

 

2020

 

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

Weighted average shares outstanding, basic and diluted

 

 

14,875,000

 

 

 

14,875,000

 

 

Basic earnings per share

 

$

(0.41

)

 

$

(0.58

)

 

Diluted earnings per share

 

$

(0.41

)

 

$

(0.58

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to interim condensed consolidated financial statements

2


Vericity, Inc.

Interim Condensed Consolidated Statements of Comprehensive Income (Loss)

(dollars in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

 

2021

 

 

2020

 

 

 

 

(Unaudited)

 

 

Net (loss) income

 

$

(6,066

)

 

$

(8,578

)

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

Net unrealized (losses) gains on investments

 

 

(8,486

)

 

 

(7,253

)

 

Total other comprehensive (loss) income

 

 

(8,486

)

 

 

(7,253

)

 

Total comprehensive (loss) income

 

$

(14,552

)

 

$

(15,831

)

 

 

See notes to interim condensed consolidated financial statements

3


Vericity, Inc.

Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity

(dollars in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

 

(Unaudited)

 

Common stock

 

 

 

 

 

 

 

 

Balance – beginning of period

 

$

15

 

 

$

15

 

Balance – end of period

 

$

15

 

 

$

15

 

 

 

 

 

 

 

 

 

 

Additional paid-in capital

 

 

 

 

 

 

 

 

Balance – beginning of period

 

$

39,840

 

 

$

39,840

 

Balance – end of period

 

$

39,840

 

 

$

39,840

 

 

 

 

 

 

 

 

 

 

Retained earnings

 

 

 

 

 

 

 

 

Balance – beginning of period

 

$

138,777

 

 

$

163,805

 

Net (loss) income

 

 

(6,066

)

 

 

(8,578

)

Balance – end of period

 

$

132,711

 

 

$

155,227

 

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive income (loss)

 

 

 

 

 

 

 

 

Balance – beginning of period

 

$

16,601

 

 

$

8,757

 

Other comprehensive (loss) income

 

 

(8,486

)

 

 

(7,253

)

Balance – end of period

 

$

8,115

 

 

$

1,504

 

Total shareholders' equity

 

$

180,681

 

 

$

196,586

 

 

See notes to interim condensed consolidated financial statements

4


Vericity, Inc.

Interim Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

 

(Unaudited)

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(6,066

)

 

$

(8,578

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization and other non-cash items

 

 

805

 

 

 

594

 

Interest credited to policyholder account balances

 

 

722

 

 

 

783

 

Deferred income tax

 

 

(941

)

 

 

(1,158

)

Net realized investment losses (gains)

 

 

(1,517

)

 

 

3,057

 

Other-than-temporary-impairments

 

 

2

 

 

 

54

 

Interest expense

 

 

406

 

 

 

303

 

Change in:

 

 

 

 

 

 

 

 

Equity securities

 

 

(142

)

 

 

(171

)

Accrued investment income

 

 

128

 

 

 

319

 

Reinsurance recoverables

 

 

(10,830

)

 

 

(7,401

)

Deferred policy acquisition costs

 

 

(444

)

 

 

(3,459

)

Commissions and agent balances

 

 

(6,192

)

 

 

(1,530

)

Other assets

 

 

(843

)

 

 

8,736

 

Insurance liabilities

 

 

12,418

 

 

 

15,972

 

Other liabilities

 

 

(1,058

)

 

 

(7,607

)

Net cash (used) by operating activities

 

 

(13,552

)

 

 

(86

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

Sales, maturities and repayments of:

 

 

 

 

 

 

 

 

Fixed maturities

 

 

19,566

 

 

 

10,717

 

Short-term investments

 

 

 

 

 

29,800

 

Mortgage loans

 

 

689

 

 

 

520

 

Purchases of:

 

 

 

 

 

 

 

 

Fixed maturities

 

 

(24,210

)

 

 

(22,188

)

Short-term investments

 

 

 

 

 

(250

)

Mortgage loans

 

 

(274

)

 

 

(363

)

Change in policyholder loans, net

 

 

126

 

 

 

19

 

Other, net

 

 

(1,644

)

 

 

(1,878

)

Net cash (used) provided by investing activities

 

 

(5,747

)

 

 

16,377

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Debt issued

 

 

1,189

 

 

 

3,167

 

Debt repaid

 

 

(3,350

)

 

 

(1,901

)

Deposits to policyholder account balances

 

 

117

 

 

 

110

 

Withdrawals from policyholder account balances

 

 

(2,021

)

 

 

(2,303

)

Net cash (used) by financing activities

 

 

(4,065

)

 

 

(927

)

Net increase (decrease) in cash and cash equivalents

 

 

(23,364

)

 

 

15,364

 

Cash, cash equivalents and restricted cash – beginning of period

 

 

36,242

 

 

 

37,842

 

Cash, cash equivalents and restricted cash – end of period

 

$

12,878

 

 

$

53,206

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

Non-cash transactions:

 

 

 

 

 

 

 

See notes to interim condensed consolidated financial statements

5


Vericity, Inc.

Notes to Interim Condensed Consolidated Financial Statements

(dollars in thousands)

Note 1 – Summary of Significant Accounting Policies

Description of Business

Vericity, Inc. (the Company) is a Delaware corporation organized to be the stock holding company for Members Holding Company (Members) and its subsidiaries. On August 7, 2019, the Company completed the initial public offering of 14,875,000 shares of its common stock at a price of $10.00 per share (the IPO). The IPO was conducted in connection with the conversion of Members Mutual Holding Company from mutual to stock form and the acquisition by the Company of all of the capital stock of Members following its conversion to stock form after its plan of conversion and amended and restated articles of incorporation were approved at a special meeting of eligible members on August 6, 2019 (the Conversion). As a result of the Conversion, the Company became the holding company for converted Members Mutual Holding Company and its indirect subsidiaries, including Fidelity Life Association (Fidelity Life) and Efinancial, LLC (Efinancial).

The Company operates as a holding company and currently has no other business operations. Fidelity Life is an Illinois‑domiciled life insurance company that was founded in 1896.  Fidelity Life markets life insurance products through independent and affiliated distributors and is licensed in the District of Columbia and all states, except New York and Wyoming.  Efinancial markets life and other products for non‑affiliated insurance companies and sells life products for Fidelity Life.

The accompanying interim condensed consolidated financial statements present the accounts of the Company and subsidiaries for the three months ended March 31, 2021 and March 31, 2020 and at March 31, 2021 and December 31, 2020. These interim condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report in the Form 10-K for the year ended December 31, 2020. The results of operations for the interim periods should not be considered indicative of results to be expected for the full year.

Basis of Presentation 

These interim condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The unaudited interim condensed consolidated financial information furnished herein reflects all adjustments which are, in the opinion of management, necessary to fairly state the results for the interim periods presented. All such adjustments are of a normal recurring nature. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated results of operations for the interim periods presented are not necessarily indicative of results for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted from this report, as is permitted by such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the financial statements as of and for the year ended December 31, 2020, and notes thereto, included in the Form 10-K.

Use of Estimates

The preparation of interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  The more significant estimates employed in the preparation of the interim condensed consolidated financial statements include the determination of the valuation of investments in fixed maturity and equity securities, investment impairments, the valuation of deferred tax assets, future policy benefits and other policyholder liabilities.  

 

Note 2 Investments

The Company continuously monitors its investment strategies and individual holdings with consideration of current and projected market conditions, the composition of the Company’s liabilities, projected liquidity and capital investment needs, and compliance with investment policies and state regulatory guidelines.

6


Fixed Maturities

The amortized cost, gross unrealized gains, gross unrealized losses, fair value, and OTTI loss included in accumulated other comprehensive income (AOCI) of fixed maturities available-for-sale are as follows:

 

 

 

March 31, 2021

 

Fixed maturities

 

Amortized

Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Fair

Value

 

 

OTTI

Losses

 

U.S. government and agencies

 

$

11,372

 

 

$

1,951

 

 

$

 

 

$

13,323

 

 

$

 

U.S. agency mortgage-backed

 

 

19,137

 

 

 

1,175

 

 

 

(1

)

 

 

20,311

 

 

 

 

State and political subdivisions

 

 

60,596

 

 

 

2,038

 

 

 

(1,247

)

 

 

61,387

 

 

 

 

Corporate and miscellaneous

 

 

150,585

 

 

 

16,746

 

 

 

(832

)

 

 

166,499

 

 

 

 

Foreign government

 

 

131

 

 

 

29

 

 

 

 

 

 

160

 

 

 

 

Residential mortgage-backed

 

 

5,620

 

 

 

306

 

 

 

(34

)

 

 

5,892

 

 

 

(394

)

Commercial mortgage-backed

 

 

23,882

 

 

 

1,024

 

 

 

(67

)

 

 

24,839

 

 

 

 

Asset-backed

 

 

61,871

 

 

 

574

 

 

 

(139

)

 

 

62,306

 

 

 

 

Total fixed maturities

 

$

333,194

 

 

$

23,843

 

 

$

(2,320

)

 

$

354,717

 

 

$

(394

)

 

 

 

December 31, 2020

 

Fixed maturities

 

Amortized

Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Fair

Value

 

 

OTTI

Losses

 

U.S. government and agencies

 

$

11,386

 

 

$

2,886

 

 

$

 

 

$

14,272

 

 

$

 

U.S. agency mortgage-backed

 

 

21,015

 

 

 

1,461

 

 

 

 

 

 

22,476

 

 

 

 

State and political subdivisions

 

 

57,646

 

 

 

3,798

 

 

 

(15

)

 

 

61,429

 

 

 

 

Corporate and miscellaneous

 

 

143,242

 

 

 

26,069

 

 

 

(258

)

 

 

169,053

 

 

 

 

Foreign government

 

 

131

 

 

 

45

 

 

 

 

 

 

176

 

 

 

 

Residential mortgage-backed

 

 

6,060

 

 

 

388

 

 

 

(27

)

 

 

6,421

 

 

 

(151

)

Commercial mortgage-backed

 

 

18,567

 

 

 

1,503

 

 

 

(53

)

 

 

20,017

 

 

 

 

Asset-backed

 

 

70,216

 

 

 

605

 

 

 

(814

)

 

 

70,007

 

 

 

(260

)

Total fixed maturities

 

$

328,263

 

 

$

36,755

 

 

$

(1,167

)

 

$

363,851

 

 

$

(411

)

 

Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Maturities of mortgage-backed and asset-backed securities may be substantially shorter than their contractual maturity because they may require monthly principal installments and such loans may prepay principal. The amortized cost and fair value of fixed maturities available-for-sale by contractual maturity, are presented in the following table:

 

 

 

March 31, 2021

 

 

 

Amortized

Cost

 

 

Fair

Value

 

Due in one year or less

 

$

2,623

 

 

$

2,649

 

Due after one year through five years

 

 

41,269

 

 

 

44,530

 

Due after five years through ten years

 

 

52,401

 

 

 

56,178

 

Due after ten years

 

 

126,391

 

 

 

138,010

 

Securities not due at a single maturity date — primarily mortgage and

   asset-backed

 

 

110,510

 

 

 

113,350

 

Total fixed maturities

 

$

333,194

 

 

$

354,717

 

 

Fixed maturities with a carrying value of $3,412 and $3,852 were on deposit with governmental authorities, as required by law at March 31, 2021 and December 31, 2020, respectively.

The Company’s fixed maturities portfolio was primarily composed of investment grade securities, defined as a security having a rating of Aaa, Aa, A, or Baa from Moody’s, AAA, AA, A, or BBB from Standard & Poor’s, or National Association of Insurance Commissioners (NAIC) rating of NAIC 1 or NAIC 2. Investment grade securities comprised 97.6% and 97.9% of the Company’s total fixed maturities portfolio at March 31, 2021 and December 31, 2020, respectively.

At March 31, 2021 and December 31, 2020, the Company had commitments to make investments in available-for-sale securities in the amount of $539 and $3,027, respectively.

7


Mortgage Loans

The Company makes investments in commercial mortgage loans. The Company, along with other investors, owns a pro rata share of each loan. The Company participates in 34 such investment instruments with ownership shares ranging from 0.6% to 30.0% of the trust at March 31, 2021. The Company owns a share of 291 mortgage loans with an average loan balance of $172 and a maximum exposure related to any single loan of $555. Mortgage loan holdings are diversified by geography and property type as follows:

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Gross Carrying

Value

 

 

% of Total

 

 

Gross Carrying

Value

 

 

% of Total

 

Property Type:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

$

15,925

 

 

 

31.7

%

 

$

16,252

 

 

 

32.1

%

Office

 

 

12,335

 

 

 

24.6

%

 

 

12,493

 

 

 

24.7

%

Industrial

 

 

8,011

 

 

 

16.0

%

 

 

8,095

 

 

 

16.0

%

Mixed use

 

 

5,954

 

 

 

11.9

%

 

 

6,014

 

 

 

11.9

%

Apartments

 

 

3,689

 

 

 

7.3

%

 

 

3,439

 

 

 

6.8

%

Medical office

 

 

3,096

 

 

 

6.2

%

 

 

3,119

 

 

 

6.2

%

Other

 

 

1,144

 

 

 

2.3

%

 

 

1,156

 

 

 

2.3

%

Gross carrying value of mortgage loans

 

 

50,154

 

 

 

100.0

%

 

 

50,568

 

 

 

100.0

%

Valuation allowance

 

 

(136

)

 

 

 

 

 

 

(141

)

 

 

 

 

Net carrying value of mortgage loans

 

$

50,018

 

 

 

 

 

 

$

50,427

 

 

 

 

 

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Gross Carrying

Value

 

 

% of Total

 

 

Gross Carrying

Value

 

 

% of Total

 

U.S. Region:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

West South Central

 

$

11,913

 

 

 

23.7

%

 

$

11,780

 

 

 

23.3

%

East North Central

 

 

12,032

 

 

 

24.0

%

 

 

12,105

 

 

 

23.9

%

South Atlantic

 

 

10,801

 

 

 

21.5

%

 

 

10,908

 

 

 

21.6

%

West North Central

 

 

3,941

 

 

 

7.9

%

 

 

3,981

 

 

 

7.9

%

Mountain

 

 

4,139

 

 

 

8.3

%

 

 

4,404

 

 

 

8.7

%

Middle Atlantic

 

 

2,806

 

 

 

5.6

%

 

 

2,824

 

 

 

5.6

%

East South Central

 

 

3,025

 

 

 

6.0

%

 

 

3,060

 

 

 

6.1

%

New England

 

 

89

 

 

 

0.2

%

 

 

91

 

 

 

0.2

%

Pacific

 

 

1,408

 

 

 

2.8

%

 

 

1,415

 

 

 

2.8

%

Gross carrying value of mortgage loans

 

 

50,154

 

 

 

100.0

%

 

 

50,568

 

 

 

100.0

%

Valuation allowance

 

 

(136

)

 

 

 

 

 

 

(141

)

 

 

 

 

Net carrying value of mortgage loans

 

$

50,018

 

 

 

 

 

 

$

50,427

 

 

 

 

 

 

During the three months ended March 31, 2021 and March 31, 2020, $274 and $363 of new mortgage loans were purchased, respectively, which did not include second lien mortgage loans. There were no taxes, assessments, or any amounts advanced that were not included in the mortgage loan balances at March 31, 2021 and December 31, 2020.  At March 31, 2021 and December 31, 2020, the Company had 5 and 6 mortgage loans with a total carrying value of $1,361 and $1,408 that were in a restructured status, respectively. There were no impairments for mortgage loans at March 31, 2021 and December 31, 2020.

The changes in the valuation allowance for commercial mortgage loans were as follows:

 

 

 

Three Months Ended March 31, 2021

 

 

Year Ended December 31, 2020

 

Beginning balance

 

$

141

 

 

$

53

 

Net (decrease) increase in valuation allowance

 

 

(5

)

 

 

88

 

Ending balance

 

$

136

 

 

$

141

 

 

At March 31, 2021 and December 31, 2020, the Company had no mortgage loans that were on nonaccrual status.

At March 31, 2021 and December 31, 2020, the Company had commitments to make investments in mortgage loans in the amount of $1,376 and $1,299, respectively.   

8


Net Investment Income

The sources of net investment income are as follows:

 

 

 

Three Months Ended March 31,

 

 

 

 

2021

 

 

2020

 

 

Interest from:

 

 

 

 

 

 

 

 

 

Fixed maturities

 

$

2,914

 

 

$

2,970

 

 

Policyholder loans

 

 

92

 

 

 

86

 

 

Mortgage loans

 

 

626

 

 

 

639

 

 

Short-term investments

 

 

 

 

 

114

 

 

Cash, cash equivalents and restricted cash

 

 

4

 

 

 

101

 

 

Dividends on equity securities

 

 

90

 

 

 

104

 

 

Gross investment income