Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Aug. 01, 2013 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'PROTECTIVE LIFE INSURANCE CO | ' |
Entity Central Index Key | '0000310826 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 5,000,000 |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
CONSOLIDATED_CONDENSED_STATEME
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Revenues | ' | ' | ' | ' |
Premiums and policy fees | $653,664 | $681,324 | $2,129,616 | $2,081,442 |
Reinsurance ceded | -277,628 | -311,862 | -1,000,245 | -944,276 |
Net of reinsurance ceded | 376,036 | 369,462 | 1,129,371 | 1,137,166 |
Net investment income | 434,772 | 446,374 | 1,320,848 | 1,328,554 |
Realized investment gains (losses): | ' | ' | ' | ' |
Derivative financial instruments | 32,212 | -116,663 | 102,410 | -194,340 |
All other investments | -19,268 | 122,476 | -133,741 | 225,838 |
Other-than-temporary impairment losses | -6,635 | -3,402 | -9,764 | -51,083 |
Portion recognized in other comprehensive income (before taxes) | -2,046 | -5,097 | -7,501 | 10,546 |
Net impairment losses recognized in earnings | -8,681 | -8,499 | -17,265 | -40,537 |
Other income | 65,523 | 51,046 | 180,595 | 176,309 |
Total revenues | 880,594 | 864,196 | 2,582,218 | 2,632,990 |
Benefits and expenses | ' | ' | ' | ' |
Benefits and settlement expenses, net of reinsurance ceded: (three months: 2013 - $203,361; 2012 - $307,158; nine months: 2013 - $882,203; 2012 - $896,946) | 622,910 | 627,993 | 1,759,780 | 1,780,416 |
Amortization of deferred policy acquisition costs and value of business acquired | 17,388 | 11,189 | 117,115 | 129,026 |
Other operating expenses, net of reinsurance ceded: (three months: 2013 - $48,371; 2012 - $47,505; nine months: 2013 - $141,136; 2012 - $142,187) | 126,941 | 118,325 | 403,227 | 358,726 |
Total benefits and expenses | 767,239 | 757,507 | 2,280,122 | 2,268,168 |
Income before income tax | 113,355 | 106,689 | 302,096 | 364,822 |
Income tax expense | 37,107 | 35,778 | 98,966 | 116,428 |
Net income | $76,248 | $70,911 | $203,130 | $248,394 |
CONSOLIDATED_CONDENSED_STATEME1
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
CONSOLIDATED CONDENSED STATEMENTS OF INCOME | ' | ' | ' | ' |
Benefits and settlement expenses, reinsurance ceded | $203,361 | $307,158 | $882,203 | $896,946 |
Other operating expenses, reinsurance ceded | $48,371 | $47,505 | $141,136 | $142,187 |
CONSOLIDATED_CONDENSED_STATEME2
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ' | ' | ' | ' |
Net income | $76,248 | $70,911 | $203,130 | $248,394 |
Other comprehensive income (loss): | ' | ' | ' | ' |
Change in net unrealized gains (losses) on investments, net of income tax: (three months: 2013 - $(145,250); 2012 - $205,778; nine months: 2013 - $(641,404); 2012 - $383,781) | -269,751 | 382,163 | -1,191,178 | 712,739 |
Reclassification adjustment for investment amounts included in net income, net of income tax : (three months: 2013 - $(653); 2012 - $(4,951); nine months: 2013 - $(9,533); 2012 - $(6,423)) | -1,212 | -9,198 | -17,705 | -11,931 |
Change in net unrealized gains (losses) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, net of income tax: (three months 2013 - $(1,543); 2012 - $12,810; nine months: 2013 - $1,383; 2012 - $15,744) | -2,865 | 23,789 | 2,570 | 29,240 |
Change in accumulated (loss) gain - derivatives, net of income tax: (three months: 2013 - $8; 2012 - $1,028); nine months: 2013 - $(55); 2012 - $1,424) | 14 | 1,908 | -103 | 2,645 |
Reclassification adjustment for derivative amounts included in net income, net of income tax: (three months: 2013 - $200; 2012 - $385; nine months: 2013 - $577; 2012 - $961) | 372 | 716 | 1,072 | 1,785 |
Total other comprehensive income (loss) | -273,442 | 399,378 | -1,205,344 | 734,478 |
Total comprehensive income (loss) | ($197,194) | $470,289 | ($1,002,214) | $982,872 |
CONSOLIDATED_CONDENSED_STATEME3
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ' | ' | ' | ' |
Change in net unrealized gains (losses) on investments, income tax | ($145,250) | $205,778 | ($641,404) | $383,781 |
Reclassification adjustment for investment amounts included in net income, income tax | -653 | -4,951 | -9,533 | -6,423 |
Change in net unrealized gains (losses) relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, income tax | -1,543 | 12,810 | 1,383 | 15,744 |
Change in accumulated (loss) gain - derivatives, income tax | 8 | 1,028 | -55 | 1,424 |
Reclassification adjustment for derivative amounts included in net income, income tax | $200 | $385 | $577 | $961 |
CONSOLIDATED_CONDENSED_BALANCE
CONSOLIDATED CONDENSED BALANCE SHEETS (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Assets | ' | ' |
Fixed maturities, at fair value (amortized cost: 2013 - $27,004,436; 2012 - $26,661,310) | $28,304,610 | $29,769,978 |
Fixed maturities, at amortized cost (fair value: 2013 - $341,797; 2012 - $319,163) | 350,000 | 300,000 |
Equity securities, at fair value (cost: 2013 - $445,376; 2012 - $371,827) | 420,505 | 373,715 |
Mortgage loans (2013 and 2012 includes $675,805 and $765,520 related to securitizations) | 4,794,924 | 4,948,625 |
Investment real estate, net of accumulated depreciation (2013 - $887; 2012 - $771) | 10,322 | 6,517 |
Policy loans | 856,333 | 865,391 |
Other long-term investments | 411,726 | 378,821 |
Short-term investments | 215,116 | 216,787 |
Total investments | 35,363,536 | 36,859,834 |
Cash | 229,747 | 269,582 |
Accrued investment income | 362,284 | 350,804 |
Accounts and premiums receivable, net of allowance for uncollectible amounts (2013 - $4,259; 2012 - $4,191) | 75,893 | 67,891 |
Reinsurance receivables | 5,583,122 | 5,682,841 |
Deferred policy acquisition costs and value of business acquired | 3,207,372 | 3,225,356 |
Goodwill | 81,449 | 83,773 |
Property and equipment, net of accumulated depreciation (2013 - $108,799; 2012 - $103,625) | 50,401 | 47,391 |
Other assets | 430,079 | 343,925 |
Income tax receivable | 13,253 | 61,952 |
Assets related to separate accounts | ' | ' |
Variable annuity | 11,921,925 | 9,601,417 |
Variable universal life | 663,380 | 562,817 |
Total assets | 57,982,441 | 57,157,583 |
Liabilities | ' | ' |
Future policy benefits and claims | 22,029,075 | 21,626,065 |
Unearned premiums | 1,464,644 | 1,352,872 |
Total policy liabilities and accruals | 23,493,719 | 22,978,937 |
Stable value product account balances | 2,531,262 | 2,510,559 |
Annuity account balances | 10,431,938 | 10,658,463 |
Other policyholders' funds | 602,978 | 566,985 |
Other liabilities | 911,641 | 1,210,579 |
Deferred income taxes | 1,234,930 | 1,783,713 |
Non-recourse funding obligations | 1,491,900 | 1,446,900 |
Repurchase program borrowings | 100,000 | 150,000 |
Liabilities related to separate accounts | ' | ' |
Variable annuity | 11,921,925 | 9,601,417 |
Variable universal life | 663,380 | 562,817 |
Total liabilities | 53,383,673 | 51,470,370 |
Commitments and contingencies - Note 7 | ' | ' |
Shareowner's equity | ' | ' |
Preferred Stock; $1 par value, shares authorized: 2,000; Liquidation preference: $2,000 | 2 | 2 |
Common Stock, $1 par value, shares authorized and issued: 2013 and 2012 - 5,000,000 | 5,000 | 5,000 |
Additional paid-in-capital | 1,363,258 | 1,363,258 |
Retained earnings | 2,624,728 | 2,507,829 |
Accumulated other comprehensive income (loss): | ' | ' |
Net unrealized gains (losses) on investments, net of income tax: (2013 - $328,313; 2012 - $979,251) | 609,725 | 1,818,608 |
Net unrealized (losses) gains relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, net of income tax: (2013 - $(764); 2012 - $(2,147)) | -1,418 | -3,988 |
Accumulated loss - derivatives, net of income tax: (2013 - $(1,361); 2012 - $(1,883)) | -2,527 | -3,496 |
Total shareowner's equity | 4,598,768 | 5,687,213 |
Total liabilities and shareowner's equity | $57,982,441 | $57,157,583 |
CONSOLIDATED_CONDENSED_BALANCE1
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
CONSOLIDATED CONDENSED BALANCE SHEETS | ' | ' |
Fixed maturities, amortized cost | $27,004,436 | $26,661,310 |
Fixed maturities, fair value | 341,797 | 319,163 |
Equity securities, cost | 445,376 | 371,827 |
Mortgage loans, securitizations | 675,805 | 765,520 |
Investment real estate, accumulated depreciation | 887 | 771 |
Accounts and premiums receivable, allowance for uncollectible amounts | 4,259 | 4,191 |
Property and equipment, accumulated depreciation | 108,799 | 103,625 |
Preferred Stock, par value (in dollars per share) | $1 | $1 |
Preferred Stock, shares authorized (in shares) | 2,000 | 2,000 |
Preferred Stock, Liquidation preference | 2,000 | 2,000 |
Common Stock, par value (in dollars per share) | $1 | $1 |
Common Stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Common Stock, shares issued (in shares) | 5,000,000 | 5,000,000 |
Net unrealized gains (losses) on investments, income tax | 328,313 | 979,251 |
Net unrealized (losses) gains relating to other-than-temporary impaired investments for which a portion has been recognized in earnings, income tax | -764 | -2,147 |
Accumulated loss - derivatives, income tax | ($1,361) | ($1,883) |
CONSOLIDATED_CONDENSED_STATEME4
CONSOLIDATED CONDENSED STATEMENTS OF SHAREOWNER'S EQUITY (USD $) | Total | Preferred Stock | Common Stock | Additional Paid-In-Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Comprehensive Income |
In Thousands, unless otherwise specified | |||||||
Balance at Dec. 31, 2012 | $5,687,213 | $2 | $5,000 | $1,363,258 | $2,507,829 | $1,811,124 | ' |
Increase (decrease) in shareowner's equity | ' | ' | ' | ' | ' | ' | ' |
Net income | 203,130 | ' | ' | ' | 203,130 | ' | 203,130 |
Other comprehensive income (loss) | -1,205,344 | ' | ' | ' | ' | -1,205,344 | -1,205,344 |
Total comprehensive income (loss) | -1,002,214 | ' | ' | ' | ' | ' | -1,002,214 |
Dividends to the parent company | -86,231 | ' | ' | ' | -86,231 | ' | ' |
Balance at Sep. 30, 2013 | $4,598,768 | $2 | $5,000 | $1,363,258 | $2,624,728 | $605,780 | ' |
CONSOLIDATED_CONDENSED_STATEME5
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Cash flows from operating activities | ' | ' |
Net income | $203,130 | $248,394 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Realized investment losses (gains) | 48,596 | 9,039 |
Amortization of deferred policy acquisition costs and value of business acquired | 117,115 | 129,026 |
Capitalization of deferred policy acquisition costs | -245,751 | -216,281 |
Depreciation expense | 6,570 | 6,370 |
Deferred income tax | 115,117 | -47,723 |
Accrued income tax | 48,699 | 14,104 |
Interest credited to universal life and investment products | 532,396 | 731,934 |
Policy fees assessed on universal life and investment products | -659,058 | -579,812 |
Change in reinsurance receivables | 99,719 | -93,959 |
Change in accrued investment income and other receivables | -30,645 | -4,430 |
Change in policy liabilities and other policyholders' funds of traditional life and health products | 258,684 | 218,218 |
Trading securities: | ' | ' |
Maturities and principal reductions of investments | 152,948 | 212,048 |
Sale of investments | 220,711 | 365,809 |
Cost of investments acquired | -297,558 | -528,753 |
Other net change in trading securities | -9,069 | 13,758 |
Change in other liabilities | -41,161 | -115,689 |
Other income - gains on repurchase of non-recourse funding obligations | -1,250 | -29,344 |
Other, net | -37,109 | 69,916 |
Net cash provided by operating activities | 482,084 | 402,625 |
Cash flows from investing activities | ' | ' |
Maturities and principal reductions of investments, available-for-sale | 752,754 | 904,876 |
Sale of investments, available-for-sale | 1,730,095 | 1,959,184 |
Cost of investments acquired, available-for-sale | -3,073,905 | -3,113,371 |
Change in investments, held-to-maturity | -50,000 | ' |
Mortgage loans: | ' | ' |
New lendings | -392,758 | -252,727 |
Repayments | 541,597 | 499,524 |
Change in investment real estate, net | -3,805 | 2,447 |
Change in policy loans, net | 9,058 | 10,212 |
Change in other long-term investments, net | -203,622 | -97,855 |
Change in short-term investments, net | -11,574 | -38,561 |
Net unsettled security transactions | 31,686 | 69,845 |
Purchase of property and equipment | -16,611 | -5,405 |
Net cash used in investing activities | -687,085 | -61,831 |
Cash flows from financing activities | ' | ' |
Issuance (repayment) of non-recourse funding obligations | 45,000 | -91,700 |
Repurchase program borrowings | -50,000 | 280,000 |
Dividends paid to the parent company | -44,963 | -257,000 |
Investment product deposits and change in universal life deposits | 2,413,676 | 2,641,899 |
Investment product withdrawals | -2,198,547 | -3,002,824 |
Other financing activities, net | ' | -1,378 |
Net cash provided by (used in) financing activities | 165,166 | -431,003 |
Change in cash | -39,835 | -90,209 |
Cash at beginning of period | 269,582 | 169,775 |
Cash at end of period | $229,747 | $79,566 |
BASIS_OF_PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2013 | |
BASIS OF PRESENTATION | ' |
BASIS OF PRESENTATION | ' |
1. BASIS OF PRESENTATION | |
Basis of Presentation | |
The accompanying unaudited consolidated condensed financial statements of Protective Life Insurance Company (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. In the opinion of management, the accompanying financial statements reflect all adjustments (consisting only of normal recurring items) necessary for a fair statement of the results for the interim periods presented. Operating results for the three and nine month periods ended September 30, 2013, are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. The year-end consolidated condensed financial data was derived from audited financial statements but does not include all disclosures required by GAAP. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. The Company is a wholly owned subsidiary of Protective Life Corporation (“PLC”). | |
The operating results of companies in the insurance industry have historically been subject to significant fluctuations due to changing competition, economic conditions, interest rates, investment performance, insurance ratings, claims, persistency, and other factors. | |
Reclassifications and Accounting Changes | |
Certain reclassifications have been made in the previously reported financial statements and accompanying notes to make the prior year amounts comparable to those of the current year. Such reclassifications had no effect on previously reported net income or shareowner’s equity. | |
Entities Included | |
The consolidated condensed financial statements include the accounts of Protective Life Insurance Company and its affiliate companies in which the Company holds a majority voting or economic interest. Intercompany balances and transactions have been eliminated. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2013 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Significant Accounting Policies | |
For a full description of significant accounting policies, see Note 2 to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. There were no significant changes to the Company’s accounting policies during the nine months ended September 30, 2013 other than those discussed below. | |
Investment Products | |
The Company establishes liabilities for fixed indexed annuity (“FIA”) products. These products are deferred fixed annuities with a guaranteed minimum interest rate plus a contingent return based on equity market performance. The FIA product is considered a hybrid financial instrument under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC” or “Codification”) Topic 815 — Derivatives and Hedging which allows the Company to make the election to value the liabilities of these FIA products at fair value. This election was made for the FIA products issued prior to 2010 as the policies were issued. These products are no longer being marketed. The changes in the fair value of the liability for these FIA products are recorded in Benefit and settlement expenses with the liability being recorded in Annuity account balances. For more information regarding the determination of fair value of annuity account balances please refer to Note 13, Fair Value of Financial Instruments. Premiums and policy fees for these FIA products consist of fees that have been assessed against the policy account balances for surrenders. Such fees are recognized when assessed and earned. | |
During 2013, the Company began marketing a new FIA product. These products are also deferred fixed annuities with a guaranteed minimum interest rate plus a contingent return based on equity market performance and are considered hybrid financial instruments under the FASB’s ASC Topic 815 — Derivatives and Hedging. The Company did not elect to value these FIA products at fair value, as a result the Company accounts for the provision that provides for a contingent return based on equity market performance as an embedded derivative. The embedded derivative is bifurcated from the host contract and recorded at fair value in Other liabilities. Changes in the fair value of the embedded derivative are recorded in Realized investment gains (losses) — Derivative financial instruments. For more information regarding the determination of fair value of the FIA embedded derivative refer to Note 13, Fair Value of Financial Instruments. The host contract is accounted for as a debt instrument in accordance with ASC Topic 944 — Financial Services — Insurance and is recorded in Annuity account balances with any discount to the minimum account value being accreted using the effective yield method. Benefits and settlement expenses include accreted interest and benefit claims incurred during the period. | |
Accounting Pronouncements Recently Adopted | |
ASU No. 2011-11—Balance Sheet—Disclosures about Offsetting Assets and Liabilities. This Update contains new disclosure requirements regarding the nature of an entity’s rights of offset and related arrangements associated with its financial and derivative instruments. The new disclosures are designed to make financial statements that are prepared under GAAP more comparable to those prepared under International Financial Reporting Standards (“IFRSs”). Generally, it is more difficult to qualify for offsetting under IFRSs than it is under GAAP. As a result, entities with significant financial instrument and derivative portfolios that report under IFRSs typically present positions on their balance sheets that are significantly larger than those of entities with similarly sized portfolios whose financial statements are prepared in accordance with GAAP. To facilitate comparison between financial statements prepared under GAAP and IFRSs, the new disclosures will give financial statement users information about both gross and net exposures. In January 2013, the FASB issued ASU No. 2013-01, which clarifies that application of ASU No. 2011-11 is limited to certain derivatives, repurchase and reverse repurchase agreements, and securities borrowing and lending transactions. Both Updates were effective January 1, 2013. Neither Update had an impact on the Company’s results of operations or financial position. | |
ASU No. 2012-02—Intangibles—Goodwill and Other—Testing Indefinite-Lived Intangible Assets for Impairment. This Update is intended to reduce the complexity and cost of performing an impairment test for indefinite-lived intangible assets by allowing an entity the option to make a qualitative evaluation about the likelihood of impairment prior to the quantitative calculation required by current guidance. Under the amendments to Topic 350, an entity has the option to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test. If an entity determines it is not more likely than not that impairment exists, quantitative impairment testing is not required. However, if an entity concludes otherwise, the impairment test outlined in current guidance is required to be completed. The Update does not change the current requirement that indefinite-lived intangible assets be reviewed for impairment at least annually. This Update was effective January 1, 2013. This Update did not have an impact on the Company’s results of operations or financial position. | |
ASU No. 2013-02—Comprehensive Income—Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in this Update supersede the presentation requirements for reclassifications out of accumulated other comprehensive income in ASU No. 2011-05, Comprehensive Income—Presentation of Comprehensive Income, and ASU No. 2011-12, Comprehensive Income—Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05, for all entities. The amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements. The Update requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. For other amounts that are not required under GAAP to be reclassified in their entirety in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. The Company has added the Accumulated Other Comprehensive Income footnote to disclose the required information beginning in the first quarter of 2013. This Update was effective January 1, 2013. This Update did not have an impact on the Company’s results of operations or financial position. | |
ASU No. 2013-10—Derivatives and Hedging—Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes. This Update provides for the inclusion of the Fed Funds Effective Swap Rate as a U.S. benchmark interest rate for hedge accounting purposes, in addition to U.S. Treasury rates and LIBOR. The amendments in the Update also remove the restriction on using different benchmark rates for similar hedges. The amendments are effective prospectively for transactions entered into on or after July 17, 2013. The Company will consider this additional benchmark rate in its future transactions. | |
Accounting Pronouncements Not Yet Adopted | |
ASU No. 2013-11 — Income Taxes — Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The objective of this Update is to eliminate diversity in practice related to the presentation of certain unrecognized tax benefits. The Update provides that unrecognized tax benefits should be presented as a reduction of a deferred tax asset for a net operating loss or other tax credit carryforward when settlement in this manner is available under the tax law. The amendments are effective for annual periods beginning after December 15, 2013 and interim periods therein. The Update does not require new recurring disclosures, and is not expected to have an impact on the Company’s results of operations or financial position. |
INVESTMENT_OPERATIONS
INVESTMENT OPERATIONS | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
INVESTMENT OPERATIONS | ' | |||||||||||||||||||
INVESTMENT OPERATIONS | ' | |||||||||||||||||||
3. INVESTMENT OPERATIONS | ||||||||||||||||||||
Net realized gains (losses) for all other investments are summarized as follows: | ||||||||||||||||||||
For The | For The | |||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Fixed maturities | $ | 10,546 | $ | 22,889 | $ | 42,136 | $ | 58,984 | ||||||||||||
Equity securities | — | (241 | ) | 2,367 | (93 | ) | ||||||||||||||
Impairments on fixed maturity securities | (7,421 | ) | (8,499 | ) | (13,918 | ) | (40,537 | ) | ||||||||||||
Impairments on equity securities | (1,260 | ) | — | (3,347 | ) | — | ||||||||||||||
Modco trading portfolio | (25,960 | ) | 104,865 | (167,982 | ) | 179,027 | ||||||||||||||
Other investments | (3,854 | ) | (5,037 | ) | (10,262 | ) | (12,080 | ) | ||||||||||||
Total realized gains (losses) - investments | $ | (27,949 | ) | $ | 113,977 | $ | (151,006 | ) | $ | 185,301 | ||||||||||
For the three and nine months ended September 30, 2013, gross realized gains on investments available-for-sale (fixed maturities, equity securities, and short-term investments) were $11.7 million and $48.5 million and gross realized losses were $9.6 million and $20.6 million, including $8.5 million and $16.7 million of impairment losses, respectively. | ||||||||||||||||||||
For the three and nine months ended September 30, 2012, gross realized gains on investments available-for-sale (fixed maturities, equity securities, and short-term investments) were $23.6 million and $63.0 million and gross realized losses were $9.3 million and $44.4 million, including $8.3 million and $40.2 million of impairment losses, respectively. | ||||||||||||||||||||
For the three and nine months ended September 30, 2013, the Company sold securities in an unrealized gain position with a fair value (proceeds) of $332.1 million and $1.1 billion, respectively. The gain realized on the sale of these securities was $11.7 million and $48.5 million, respectively. For the three and nine months ended September 30, 2012, the Company sold securities in an unrealized gain position with a fair value (proceeds) of $424.6 million and $1.3 billion, respectively. The gain realized on the sale of these securities was $23.6 million and $63.0 million, respectively. | ||||||||||||||||||||
For the three and nine months ended September 30, 2013, the Company sold securities in an unrealized loss position with a fair value (proceeds) of $7.0 million and $64.2 million, respectively. The losses realized on the sale of these securities were $1.1 million and $4.0 million, respectively. | ||||||||||||||||||||
For the three and nine months ended September 30, 2012, the Company sold securities in an unrealized loss position with a fair value (proceeds) of $14.3 million and $31.7 million, respectively. The losses realized on the sale of these securities were $0.9 million and $4.1 million, respectively. | ||||||||||||||||||||
Certain European countries have experienced varying degrees of financial stress. Risks from the continued debt crisis in Europe could continue to disrupt the financial markets which could have a detrimental impact on global economic conditions and on sovereign and non-sovereign obligations. There remains considerable uncertainty as to future developments in the European debt crisis and the impact on financial markets. | ||||||||||||||||||||
The amortized cost and fair value of the Company’s investments classified as available-for-sale as of September 30, 2013 and December 31, 2012, are as follows: | ||||||||||||||||||||
Gross | Gross | Total OTTI | ||||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | Recognized | ||||||||||||||||
Cost | Gains | Losses | Value | in OCI(1) | ||||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
2013 | ||||||||||||||||||||
Fixed maturities: | ||||||||||||||||||||
Bonds | ||||||||||||||||||||
Residential mortgage-backed securities | $ | 1,438,269 | $ | 48,049 | $ | (22,291 | ) | $ | 1,464,027 | $ | (914 | ) | ||||||||
Commercial mortgage-backed securities | 898,377 | 30,287 | (17,057 | ) | 911,607 | — | ||||||||||||||
Other asset-backed securities | 928,367 | 15,532 | (66,735 | ) | 877,164 | (66 | ) | |||||||||||||
U.S. government-related securities | 1,204,908 | 38,525 | (29,997 | ) | 1,213,436 | — | ||||||||||||||
Other government-related securities | 38,406 | 2,722 | — | 41,128 | — | |||||||||||||||
States, municipals, and political subdivisions | 1,191,682 | 114,898 | (6,259 | ) | 1,300,321 | — | ||||||||||||||
Corporate bonds | 18,521,648 | 1,541,774 | (349,274 | ) | 19,714,148 | (1,308 | ) | |||||||||||||
24,221,657 | 1,791,787 | (491,613 | ) | 25,521,831 | (2,288 | ) | ||||||||||||||
Equity securities | 424,658 | 4,908 | (29,779 | ) | 399,787 | 106 | ||||||||||||||
Short-term investments | 108,685 | — | — | 108,685 | — | |||||||||||||||
$ | 24,755,000 | $ | 1,796,695 | $ | (521,392 | ) | $ | 26,030,303 | $ | (2,182 | ) | |||||||||
2012 | ||||||||||||||||||||
Fixed maturities: | ||||||||||||||||||||
Bonds | ||||||||||||||||||||
Residential mortgage-backed securities | $ | 1,766,260 | $ | 92,417 | $ | (19,347 | ) | $ | 1,839,330 | $ | (406 | ) | ||||||||
Commercial mortgage-backed securities | 797,844 | 72,577 | (598 | ) | 869,823 | — | ||||||||||||||
Other asset-backed securities | 1,023,649 | 12,788 | (61,424 | ) | 975,013 | (241 | ) | |||||||||||||
U.S. government-related securities | 1,097,501 | 71,536 | (591 | ) | 1,168,446 | — | ||||||||||||||
Other government-related securities | 93,565 | 7,258 | (45 | ) | 100,778 | — | ||||||||||||||
States, municipals, and political subdivisions | 1,188,019 | 255,898 | (264 | ) | 1,443,653 | — | ||||||||||||||
Corporate bonds | 17,687,164 | 2,726,858 | (48,395 | ) | 20,365,627 | (5,488 | ) | |||||||||||||
23,654,002 | 3,239,332 | (130,664 | ) | 26,762,670 | (6,135 | ) | ||||||||||||||
Equity securities | 352,272 | 11,881 | (9,993 | ) | 354,160 | — | ||||||||||||||
Short-term investments | 97,852 | — | — | 97,852 | — | |||||||||||||||
$ | 24,104,126 | $ | 3,251,213 | $ | (140,657 | ) | $ | 27,214,682 | $ | (6,135 | ) | |||||||||
(1)These amounts are included in the gross unrealized gains and gross unrealized losses columns above. | ||||||||||||||||||||
The amortized cost and fair value of the Company’s investments classified as held-to-maturity as of September 30, 2013 and December 31, 2012, are as follows: | ||||||||||||||||||||
Gross | Gross | Total OTTI | ||||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | Recognized | ||||||||||||||||
Cost | Gains | Losses | Value | in OCI | ||||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
2013 | ||||||||||||||||||||
Fixed maturities: | ||||||||||||||||||||
Other | $ | 350,000 | $ | — | $ | (8,203 | ) | $ | 341,797 | $ | — | |||||||||
$ | 350,000 | $ | — | $ | (8,203 | ) | $ | 341,797 | $ | — | ||||||||||
2012 | ||||||||||||||||||||
Fixed maturities: | ||||||||||||||||||||
Other | $ | 300,000 | $ | 19,163 | $ | — | $ | 319,163 | $ | — | ||||||||||
$ | 300,000 | $ | 19,163 | $ | — | $ | 319,163 | $ | — | |||||||||||
As of September 30, 2013 and December 31, 2012, the Company had an additional $2.8 billion and $3.0 billion of fixed maturities, $20.7 million and $19.6 million of equity securities, and $106.4 million and $118.9 million of short-term investments classified as trading securities, respectively. | ||||||||||||||||||||
The amortized cost and fair value of available-for-sale and held-to-maturity fixed maturities as of September 30, 2013, by expected maturity, are shown below. Expected maturities of securities without a single maturity date are allocated based on estimated rates of prepayment that may differ from actual rates of prepayment. | ||||||||||||||||||||
Available-for-sale | Held-to-maturity | |||||||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||||||
Cost | Value | Cost | Value | |||||||||||||||||
(Dollars In Thousands) | (Dollars In Thousands) | |||||||||||||||||||
Due in one year or less | $ | 554,916 | $ | 569,362 | $ | — | $ | — | ||||||||||||
Due after one year through five years | 3,227,348 | 3,508,934 | — | — | ||||||||||||||||
Due after five years through ten years | 7,548,558 | 7,870,781 | — | — | ||||||||||||||||
Due after ten years | 12,890,835 | 13,572,754 | 350,000 | 341,797 | ||||||||||||||||
$ | 24,221,657 | $ | 25,521,831 | $ | 350,000 | $ | 341,797 | |||||||||||||
During the three and nine months ended September 30, 2013, the Company recorded pre-tax other-than-temporary impairments of investments of $6.7 million and $9.8 million, of which $5.4 million and $6.4 million related to fixed maturities and $1.3 million and $3.4 million related to equity securities, respectively. Credit impairments recorded in earnings during the three and nine months ended September 30, 2013 were $8.7 million and $17.3 million, respectively. During the three and nine months ended September 30, 2013, $2.0 million and $7.5 million of non-credit losses previously recorded in other comprehensive income were recorded in earnings as credit losses, respectively. For the three and nine months ended September 30, 2013, there were no other-than-temporary impairments related to fixed maturities or equity securities that the Company intended to sell or expected to be required to sell. | ||||||||||||||||||||
During the three and nine months ended September 30, 2012, the Company recorded pre-tax other-than-temporary impairments of investments of $3.4 million and $51.1 million, respectively, all of which were related to fixed maturities. There were no impairments related to equity securities. During the three months ended September 30, 2012, the Company recorded credit impairments in earnings of $8.5 million, $7.0 million of which were non-credit losses previously recorded in other comprehensive income were recorded in earnings as credit losses. Additional non-credit losses during the period were $1.9 million. Of the $51.1 million of impairments for the nine months ended September 30, 2012, $40.5 million was recorded in earnings and $10.6 million was recorded in other comprehensive income (loss). For the three and nine months ended September 30, 2012, there were $0.1 million of other-than-temporary impairments related to fixed maturities or equity securities that the Company intended to sell or expected to be required to sell. | ||||||||||||||||||||
The following chart is a rollforward of available-for-sale credit losses on fixed maturities held by the Company for which a portion of other-than-temporary impairments were recognized in other comprehensive income (loss): | ||||||||||||||||||||
For The | For The | |||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Beginning balance | $ | 51,814 | $ | 100,894 | $ | 121,237 | $ | 69,476 | ||||||||||||
Additions for newly impaired securities | 1,663 | — | 3,278 | 19,307 | ||||||||||||||||
Additions for previously impaired securities | 4,840 | 6,866 | 7,894 | 18,977 | ||||||||||||||||
Reductions for previously impaired securities due to a change in expected cash flows | (6,537 | ) | — | (73,392 | ) | — | ||||||||||||||
Reductions for previously impaired securities that were sold in the current period | — | — | (7,237 | ) | — | |||||||||||||||
Ending balance | $ | 51,780 | $ | 107,760 | $ | 51,780 | $ | 107,760 | ||||||||||||
The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2013: | ||||||||||||||||||||
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Residential mortgage-backed securities | $ | 247,085 | $ | (13,653 | ) | $ | 67,362 | $ | (8,638 | ) | $ | 314,447 | $ | (22,291 | ) | |||||
Commercial mortgage-backed securities | 379,783 | (16,807 | ) | 6,656 | (250 | ) | 386,439 | (17,057 | ) | |||||||||||
Other asset-backed securities | 129,567 | (6,567 | ) | 532,205 | (60,168 | ) | 661,772 | (66,735 | ) | |||||||||||
U.S. government-related securities | 601,537 | (29,179 | ) | 14,847 | (818 | ) | 616,384 | (29,997 | ) | |||||||||||
Other government-related securities | — | — | — | — | — | — | ||||||||||||||
States, municipalities, and political subdivisions | 81,281 | (6,059 | ) | 315 | (200 | ) | 81,596 | (6,259 | ) | |||||||||||
Corporate bonds | 4,289,625 | (322,229 | ) | 189,197 | (27,045 | ) | 4,478,822 | (349,274 | ) | |||||||||||
Equities | 255,007 | (21,313 | ) | 21,680 | (8,466 | ) | 276,687 | (29,779 | ) | |||||||||||
$ | 5,983,885 | $ | (415,807 | ) | $ | 832,262 | $ | (105,585 | ) | $ | 6,816,147 | $ | (521,392 | ) | ||||||
RMBS have a gross unrealized loss greater than twelve months of $8.6 million as of September 30, 2013. Factors such as the credit enhancement within the deal structure, the average life of the securities, and the performance of the underlying collateral support the recoverability of these investments. | ||||||||||||||||||||
The other asset-backed securities have a gross unrealized loss greater than twelve months of $60.2 million as of September 30, 2013. This category predominately includes student-loan backed auction rate securities, the underlying collateral, of which is at least 97% guaranteed by the Federal Family Education Loan Program (“FFELP”). These unrealized losses have occurred within the Company’s auction rate securities (“ARS”) portfolio since the market collapse during 2008. At this time, the Company has no reason to believe that the U.S. Department of Education would not honor the FFELP guarantee, if it were necessary. | ||||||||||||||||||||
The corporate bonds category has gross unrealized losses less than and greater than twelve months of $322.2 million and $27.0 million, respectively, as of September 30, 2013. These declines were primarily related to changes in interest rates during the period. The aggregate decline in market value of these securities was deemed temporary due to positive factors supporting the recoverability of the respective investments. Positive factors considered include credit ratings, the financial health of the issuer, the continued access of the issuer to capital markets, and other pertinent information. | ||||||||||||||||||||
The equities category has a gross unrealized loss greater than twelve months of $8.5 million as of September 30, 2013. The aggregate decline in market value of these securities was deemed temporary due to factors supporting the recoverability of the respective investments. Positive factors include credit ratings, the financial health of the issuer, the continued access of the issuer to the capital markets, and other pertinent information. | ||||||||||||||||||||
The Company does not consider these unrealized loss positions to be other-than-temporary, based on the factors discussed and because the Company has the ability and intent to hold these investments until the fair values recover, and does not intend to sell or expect to be required to sell the securities before recovering the Company’s amortized cost of the securities. | ||||||||||||||||||||
The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2012: | ||||||||||||||||||||
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Residential mortgage-backed securities | $ | 100,412 | $ | (9,578 | ) | $ | 166,000 | $ | (9,769 | ) | $ | 266,412 | $ | (19,347 | ) | |||||
Commercial mortgage-backed securities | 50,506 | (598 | ) | — | — | 50,506 | (598 | ) | ||||||||||||
Other asset-backed securities | 479,223 | (28,179 | ) | 242,558 | (33,245 | ) | 721,781 | (61,424 | ) | |||||||||||
U.S. government-related securities | 106,806 | (591 | ) | — | — | 106,806 | (591 | ) | ||||||||||||
Other government-related securities | 14,955 | (45 | ) | — | — | 14,955 | (45 | ) | ||||||||||||
States, municipalities, and political subdivisions | 11,526 | (264 | ) | — | — | 11,526 | (264 | ) | ||||||||||||
Corporate bonds | 775,593 | (23,630 | ) | 363,128 | (24,765 | ) | 1,138,721 | (48,395 | ) | |||||||||||
Equities | 35,059 | (5,150 | ) | 21,754 | (4,843 | ) | 56,813 | (9,993 | ) | |||||||||||
$ | 1,574,080 | $ | (68,035 | ) | $ | 793,440 | $ | (72,622 | ) | $ | 2,367,520 | $ | (140,657 | ) | ||||||
RMBS had a gross unrealized loss greater than twelve months of $9.8 million as of December 31, 2012. The non-agency RMBS market experienced improvements during the year, but these losses represented securities where credit concerns were more pronounced. Factors such as the credit enhancement within the deal structure, the average life of the securities, and the performance of the underlying collateral support the recoverability of these investments. | ||||||||||||||||||||
The other asset-backed securities had a gross unrealized loss greater than twelve months of $33.2 million as of December 31, 2012. This category predominately includes student-loan backed auction rate securities, the underlying collateral, of which is at least 97% guaranteed by the FFELP. These unrealized losses have occurred within the Company’s ARS portfolio since the market collapse during 2008. At this time, the Company has no reason to believe that the U.S. Department of Education would not honor the FFELP guarantee, if it were necessary. | ||||||||||||||||||||
The corporate bonds category had gross unrealized losses greater than twelve months of $24.8 million as of December 31, 2012. The aggregate decline in market value of these securities was deemed temporary due to positive factors supporting the recoverability of the respective investments. Positive factors considered include credit ratings, the financial health of the issuer, the continued access of the issuer to capital markets, and other pertinent information. | ||||||||||||||||||||
The equities category had a gross unrealized loss greater than twelve months of $4.8 million as of December 31, 2012. The aggregate decline in market value of these securities was deemed temporary due to factors supporting the recoverability of the respective investments. Positive factors include credit ratings, the financial health of the issuer, the continued access of the issuer to the capital markets, and other pertinent information. | ||||||||||||||||||||
The Company does not consider these unrealized loss positions to be other-than-temporary, based on the factors discussed and because the Company has the ability and intent to hold these investments until the fair values recover, and does not intend to sell or expect to be required to sell the securities before recovering the Company’s amortized cost of the securities. | ||||||||||||||||||||
As of September 30, 2013, the Company had securities in its available-for-sale portfolio which were rated below investment grade of $1.5 billion and had an amortized cost of $1.5 billion. In addition, included in the Company’s trading portfolio, the Company held $330.0 million of securities which were rated below investment grade. Approximately $437.7 million of the below investment grade securities were not publicly traded. | ||||||||||||||||||||
The change in unrealized gains (losses), net of income tax, on fixed maturity and equity securities, classified as available-for-sale is summarized as follows: | ||||||||||||||||||||
For The | For The | |||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Fixed maturities | $ | (155,839 | ) | $ | 436,690 | $ | (1,175,521 | ) | $ | 796,549 | ||||||||||
Equity securities | (12,791 | ) | 4,531 | (17,393 | ) | 8,226 | ||||||||||||||
Variable Interest Entities | ||||||||||||||||||||
The Company holds certain investments in entities in which its ownership interests could possibly be considered variable interests under Topic 810 of the FASB ASC (excluding debt and equity securities held as trading, available-for-sale, or held-to-maturity). The Company reviews the characteristics of each of these applicable entities and compares those characteristics to applicable criteria to determine whether the entity is a Variable Interest Entity (“VIE”). If the entity is determined to be a VIE, the Company then performs a detailed review to determine whether the interest would be considered a variable interest under the guidance. The Company then performs a qualitative review of all variable interests with the entity and determines whether the Company is the primary beneficiary. ASC 810 provides that an entity is the primary beneficiary of a VIE if the entity has 1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and 2) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE. | ||||||||||||||||||||
Based on this analysis, the Company had an interest in one wholly owned subsidiary, Red Mountain, LLC (“Red Mountain”), that continued to be classified as a VIE as of September 30, 2013. The activity most significant to Red Mountain is the issuance of a note in connection with a financing transaction involving Golden Gate V Vermont Captive Insurance Company (“Golden Gate V”) and the Company in which Golden Gate V issued non-recourse funding obligations to Red Mountain and Red Mountain issued the note to Golden Gate V. Credit enhancement on the Red Mountain Note is provided by an unrelated third party. For details of this transaction, see Note 6, Debt and Other Obligations. The Company had the power, via its 100% ownership through an affiliate, to direct the activities of the VIE, but did not have the obligation to absorb losses related to the primary risks or sources of variability to the VIE. The variability of loss would be borne primarily by the third party in its function as provider of credit enhancement on the Red Mountain Note. Accordingly, it was determined that the Company is not the primary beneficiary of the VIE. The Company’s risk of loss related to the VIE is limited to its investment of $10,000. Additionally, PLC has guaranteed the VIE’s payment obligation for the credit enhancement fee to the unrelated third party provider. |
MORTGAGE_LOANS
MORTGAGE LOANS | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
MORTGAGE LOANS | ' | |||||||||||||||||||
MORTGAGE LOANS | ' | |||||||||||||||||||
4. MORTGAGE LOANS | ||||||||||||||||||||
Mortgage Loans | ||||||||||||||||||||
The Company invests a portion of its investment portfolio in commercial mortgage loans. As of September 30, 2013, the Company’s mortgage loan holdings were approximately $4.8 billion. The Company has specialized in making loans on either credit-oriented commercial properties or credit-anchored strip shopping centers and apartments. The Company’s underwriting procedures relative to its commercial loan portfolio are based, in the Company’s view, on a conservative and disciplined approach. The Company concentrates on a small number of commercial real estate asset types associated with the necessities of life (retail, multi-family, professional office buildings, and warehouses). The Company believes these asset types tend to weather economic downturns better than other commercial asset classes in which it has chosen not to participate. The Company believes this disciplined approach has helped to maintain a relatively low delinquency and foreclosure rate throughout its history. | ||||||||||||||||||||
The Company’s commercial mortgage loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount, and net of valuation allowances. Interest income is accrued on the principal amount of the loan based on the loan’s contractual interest rate. Amortization of premiums and discounts is recorded using the effective yield method. Interest income, amortization of premiums and discounts and prepayment fees are reported in net investment income. | ||||||||||||||||||||
Many of the mortgage loans have call options or interest rate reset options between 3 and 10 years. However, if interest rates were to significantly increase, the Company may be unable to exercise the call options or increase the interest rates on our existing mortgage loans commensurate with the significantly increased market rates. Assuming the loans with these options are called at their next call dates, approximately $66.4 million would become due for the remainder of 2013, $1.2 billion in 2014 through 2018, $575.0 million in 2019 through 2023, and $174.4 million thereafter. | ||||||||||||||||||||
The Company offers a type of commercial mortgage loan under which the Company will permit a loan-to-value ratio of up to 85% in exchange for a participating interest in the cash flows from the underlying real estate. As of September 30, 2013 and December 31, 2012, approximately $714.5 million and $817.3 million, respectively, of the Company’s mortgage loans have this participation feature. Cash flows received as a result of this participation feature are recorded as interest income. During the three and nine month periods ended September 30, 2013, the Company recognized $3.7 million and $12.9 million of participating mortgage loan income, respectively. | ||||||||||||||||||||
As of September 30, 2013, approximately $16.4 million, or 0.05%, of invested assets consisted of nonperforming, restructured or mortgage loans that were foreclosed and were converted to real estate properties. The Company does not expect these investments to adversely affect its liquidity or ability to maintain proper matching of assets and liabilities. During the three months ended September 30, 2013, two mortgage loan transactions occurred that were accounted for as troubled debt restructurings under Topic 310 of the FASB ASC. For all mortgage loans, the impact of troubled debt restructurings is reflected in the Company’s investment balance and in the allowance for mortgage loan credit losses. Transactions accounted for as troubled debt restructurings during the quarter involved the modification of payment terms pursuant to bankruptcy proceedings. However, the Company expects to collect all amounts due related to these loans as well as expenses incurred as a result of the restructurings, which resulted in no material change to the principal balance of these loans, which was $3.2 million as of September 30, 2013 and no associated reserve. | ||||||||||||||||||||
The Company’s mortgage loan portfolio consists of two categories of loans: (1) those not subject to a pooling and servicing agreement and (2) those subject to a contractual pooling and servicing agreement. As of September 30, 2013, $10.7 million of mortgage loans not subject to a pooling and servicing agreement were nonperforming or restructured. The Company foreclosed on two nonperforming loans during the nine months ended September 30, 2013. | ||||||||||||||||||||
As of September 30, 2013, $5.7 million of loans subject to a pooling and servicing agreement were nonperforming. None of these nonperforming loans have been restructured during the nine months ended September 30, 2013. The Company did not foreclose on any nonperforming loans during the nine months ended September 30, 2013. | ||||||||||||||||||||
As of September 30, 2013 and December 31, 2012, the Company had an allowance for mortgage loan credit losses of $8.0 million and $2.9 million, respectively. Due to the Company’s loss experience and nature of the loan portfolio, the Company believes that a collectively evaluated allowance would be inappropriate. The Company believes an allowance calculated through an analysis of specific loans that are believed to have a higher risk of credit impairment provides a more accurate presentation of expected losses in the portfolio and is consistent with the applicable guidance for loan impairments in ASC Subtopic 310. Since the Company uses the specific identification method for calculating the allowance, it is necessary to review the economic situation of each borrower to determine those that have higher risk of credit impairment. The Company has a team of professionals that monitors borrower conditions such as payment practices, borrower credit, operating performance, and property conditions, as well as ensuring the timely payment of property taxes and insurance. Through this monitoring process, the Company assesses the risk of each loan. When issues are identified, the severity of the issues are assessed and reviewed for possible credit impairment. If a loss is probable, an expected loss calculation is performed and an allowance is established for that loan based on the expected loss. The expected loss is calculated as the excess carrying value of a loan over either the present value of expected future cash flows discounted at the loan’s original effective interest rate, or the current estimated fair value of the loan’s underlying collateral. A loan may be subsequently charged off at such point that the Company no longer expects to receive cash payments, the present value of future expected payments of the renegotiated loan is less than the current principal balance, or at such time that the Company is party to foreclosure or bankruptcy proceedings associated with the borrower and does not expect to recover the principal balance of the loan. | ||||||||||||||||||||
A charge off is recorded by eliminating the allowance against the mortgage loan and recording the renegotiated loan or the collateral property related to the loan as investment real estate on the balance sheet, which is carried at the lower of the appraised fair value of the property or the unpaid principal balance of the loan, less estimated selling costs associated with the property: | ||||||||||||||||||||
As of | ||||||||||||||||||||
September 30, 2013 | December 31, 2012 | |||||||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Beginning balance | $ | 2,875 | $ | 4,975 | ||||||||||||||||
Charge offs | (2,643 | ) | (8,340 | ) | ||||||||||||||||
Recoveries | (374 | ) | (628 | ) | ||||||||||||||||
Provision | 8,112 | 6,868 | ||||||||||||||||||
Ending balance | $ | 7,970 | $ | 2,875 | ||||||||||||||||
It is the Company’s policy to cease to carry accrued interest on loans that are over 90 days delinquent. For loans less than 90 days delinquent, interest is accrued unless it is determined that the accrued interest is not collectible. If a loan becomes over 90 days delinquent, it is the Company’s general policy to initiate foreclosure proceedings unless a workout arrangement to bring the loan current is in place. For loans subject to a pooling and servicing agreement, there are certain additional restrictions and/or requirements related to workout proceedings, and as such, these loans may have different attributes and/or circumstances affecting the status of delinquency or categorization of those in nonperforming status. An analysis of the delinquent loans is shown in the following chart as of September 30, 2013. | ||||||||||||||||||||
Greater | ||||||||||||||||||||
30-59 Days | 60-89 Days | than 90 Days | Total | |||||||||||||||||
Delinquent | Delinquent | Delinquent | Delinquent | |||||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Commercial mortgage loans | $ | 20,531 | $ | — | $ | 9,318 | $ | 29,849 | ||||||||||||
Number of delinquent commercial mortgage loans | 7 | — | 3 | 10 | ||||||||||||||||
The Company’s commercial mortgage loan portfolio consists of mortgage loans that are collateralized by real estate. Due to the collateralized nature of the loans, any assessment of impairment and ultimate loss given a default on the loans is based upon a consideration of the estimated fair value of the real estate. The Company limits accrued interest income on impaired loans to ninety days of interest. Once accrued interest on the impaired loan is received, interest income is recognized on a cash basis. For information regarding impaired loans, please refer to the following chart as of September 30, 2013 and December 31, 2012: | ||||||||||||||||||||
Unpaid | Average | Interest | Cash Basis | |||||||||||||||||
Recorded | Principal | Related | Recorded | Income | Interest | |||||||||||||||
Investment | Balance | Allowance | Investment | Recognized | Income | |||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
2013 | ||||||||||||||||||||
Commercial mortgage loans: | ||||||||||||||||||||
With no related allowance recorded | $ | 2,243 | $ | 3,021 | $ | — | $ | 2,243 | $ | 42 | $ | 32 | ||||||||
With an allowance recorded | 37,485 | 37,482 | 7,970 | 5,355 | 499 | 478 | ||||||||||||||
2012 | ||||||||||||||||||||
Commercial mortgage loans: | ||||||||||||||||||||
With no related allowance recorded | $ | 13,044 | $ | 14,419 | $ | — | $ | 2,609 | $ | 53 | $ | 69 | ||||||||
With an allowance recorded | 13,927 | 13,927 | 2,875 | 3,482 | 154 | 154 |
GOODWILL
GOODWILL | 9 Months Ended |
Sep. 30, 2013 | |
GOODWILL | ' |
GOODWILL | ' |
5. GOODWILL | |
During the nine months ended September 30, 2013, the Company decreased its goodwill balance by approximately $2.3 million. The decrease was due to adjustments in the Acquisitions segment related to tax benefits realized during 2013 on the portion of tax goodwill in excess of GAAP basis goodwill. As of September 30, 2013, the Company had an aggregate goodwill balance of $81.4 million. | |
Accounting for goodwill requires an estimate of the future profitability of the associated lines of business to assess the recoverability of the capitalized acquisition goodwill. The Company evaluates the carrying value of goodwill at the segment (or reporting unit) level at least annually and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Such circumstances could include, but are not limited to: 1) a significant adverse change in legal factors or in business climate, 2) unanticipated competition, or 3) an adverse action or assessment by a regulator. When evaluating whether goodwill is impaired, the Company first determines through qualitative analysis whether relevant events and circumstances indicate that it is more likely than not that segment goodwill balances are impaired as of the testing date. If it is determined that it is more likely than not that impairment exists, the Company compares its estimate of the fair value of the reporting unit to which the goodwill is assigned to the reporting unit’s carrying amount, including goodwill. The Company utilizes a fair value measurement (which includes a discounted cash flows analysis) to assess the carrying value of the reporting units in consideration of the recoverability of the goodwill balance assigned to each reporting unit as of the measurement date. The Company’s material goodwill balances are attributable to certain of its operating segments (which are each considered to be reporting units). The cash flows used to determine the fair value of the Company’s reporting units are dependent on a number of significant assumptions. The Company’s estimates, which consider a market participant view of fair value, are subject to change given the inherent uncertainty in predicting future results and cash flows, which are impacted by such things as policyholder behavior, competitor pricing, capital limitations, new product introductions, and specific industry and market conditions. Additionally, the discount rate used is based on the Company’s judgment of the appropriate rate for each reporting unit based on the relative risk associated with the projected cash flows. As of December 31, 2012, the Company performed its annual evaluation of goodwill and determined that no adjustment to impair goodwill was necessary. During the nine months ended September 30, 2013, no events occurred which indicate an impairment should be recorded or which would invalidate the previous results of the Company’s impairment assessment. |
DEBT_AND_OTHER_OBLIGATIONS
DEBT AND OTHER OBLIGATIONS | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
DEBT AND OTHER OBLIGATIONS | ' | ||||||||
DEBT AND OTHER OBLIGATIONS | ' | ||||||||
6. DEBTAND OTHER OBLIGATIONS | |||||||||
The Company has access to a Credit Facility that provides the Company and PLC the ability to borrow on an unsecured basis up to an aggregate principal amount of $750 million. The Company has the right in certain circumstances to request that the commitment under the Credit Facility be increased up to a maximum principal amount of $1.0 billion. Balances outstanding under the Credit Facility accrue interest at a rate equal to, at the option of the Borrowers, (i) LIBOR plus a spread based on the ratings of PLC’s senior unsecured long-term debt (“Senior Debt”), or (ii) the sum of (A) a rate equal to the highest of (x) the Administrative Agent’s prime rate, (y) 0.50% above the Federal Funds rate, or (z) the one-month LIBOR plus 1.00% and (B) a spread based on the ratings of PLC’s Senior Debt. The Credit Facility also provides for a facility fee at a rate that varies with the ratings of PLC’s Senior Debt and that is calculated on the aggregate amount of commitments under the Credit Facility, whether used or unused. The maturity date on the Credit Facility is July 17, 2017. The Company is not aware of any non-compliance with the financial debt covenants of the Credit Facility as of September 30, 2013. The Company did not have an outstanding balance under the Credit Facility as of September 30, 2013. PLC had an outstanding balance of $350.0 million at an interest rate of LIBOR plus 1.20% under the Credit Facility as of September 30, 2013. | |||||||||
Non-RecourseFunding Obligations | |||||||||
Golden Gate Captive Insurance Company | |||||||||
Golden Gate Captive Insurance Company (“Golden Gate”), a South Carolina special purpose financial captive insurance company and wholly owned subsidiary, had three series of Surplus Notes with a total outstanding balance of $800 million as of September 30, 2013. PLC holds the entire outstanding balance of Surplus Notes. The Series A1 Surplus Notes have a balance of $400 million and accrue interest at a fixed rate of 7.375%, the Series A2 Surplus Notes have a balance of $100 million and accrue interest at a fixed rate of 8%, and the Series A3 Surplus Notes have a balance of $300 million and accrue interest at a fixed rate of 8.45%. | |||||||||
Golden Gate II Captive Insurance Company | |||||||||
Golden Gate II Captive Insurance Company (“Golden Gate II”), a wholly owned special purpose financial captive insurance company, had $575.0 million of outstanding non-recourse funding obligations as of September 30, 2013. These outstanding non-recourse funding obligations were issued to special purpose trusts, which in turn issued securities to third parties. Certain of our affiliates own a portion of these securities. As of September 30, 2013, securities related to $269.9 million of the outstanding balance of the non-recourse funding obligations were held by external parties, securities related to $72.0 million of the non-recourse funding obligations were held by nonconsolidated affiliates, and $233.1 million were held by consolidated subsidiaries of the Company. PLC has entered into certain support agreements with Golden Gate II obligating it to make capital contributions or provide support related to certain of Golden Gate II’s expenses and in certain circumstances, to collateralize certain of PLC’s obligations to Golden Gate II. These support agreements provide that amounts would become payable by PLC to Golden Gate II if its annual general corporate expenses were higher than modeled amounts or if Golden Gate II’s investment income on certain investments or premium income was below certain actuarially determined amounts. As of September 30, 2013, no payments are expected to be required under these agreements, however, PLC has collateralized certain support agreement obligations to Golden Gate II of approximately $0.3 million. Re-evaluation and, if necessary, adjustment of any support agreement collateralization amounts occurs annually during the first quarter pursuant to the terms of the support agreements. There are no support agreements between the Company and Golden Gate II. | |||||||||
Golden Gate V Vermont Captive Insurance Company | |||||||||
On October 10, 2012, Golden Gate V Vermont Captive Insurance Company (“Golden Gate V”) and Red Mountain, LLC (“Red Mountain”), a wholly owned subsidiary, entered into a 20-year transaction to finance up to $945 million of “AXXX” reserves related to a block of universal life insurance policies with secondary guarantees issued by the Company and its subsidiary, WCL. Golden Gate V issued non-recourse funding obligations to Red Mountain, and Red Mountain issued a note with an initial principal amount of $275 million, increasing to a maximum of $945 million in 2027, to Golden Gate V for deposit to a reinsurance trust supporting Golden Gate V’s obligations under a reinsurance agreement with WCL, pursuant to which WCL cedes liabilities relating to the policies of WCL and retrocedes liabilities relating to the policies of the Company. Through the structure, Hannover Life Reassurance Company of America (“Hannover Re”), the ultimate risk taker in the transaction, provides credit enhancement to the Red Mountain note for the 20-year term in exchange for a fee. The transaction is “non-recourse” to Golden Gate V, Red Mountain, WCL, PLC and the Company, meaning that none of these companies are liable for the reimbursement of any credit enhancement payments required to be made. As of September 30, 2013, the principal balance of the Red Mountain note was $350 million. In connection with the transaction, PLC has entered into certain support agreements under which PLC guarantees or otherwise supports certain obligations of Golden Gate V or Red Mountain. Future scheduled capital contributions to prefund credit enhancement fees amount to approximately $144.3 million and will be paid in annual installments through 2031. The support agreements provide that amounts would become payable by PLC if Golden Gate V’s annual general corporate expenses were higher than modeled amounts or in the event write-downs due to other-than-temporary impairments on assets held in certain accounts exceed defined threshold levels. Additionally, PLC has entered into separate agreements to indemnify Golden Gate V with respect to material adverse changes in non-guaranteed elements of insurance policies reinsured by Golden Gate V, and to guarantee payment of certain fee amounts in connection with the credit enhancement of the Red Mountain note. As of September 30, 2013, no payments are expected to be required under these agreements. | |||||||||
In connection with the transaction outlined above, Golden Gate V had a $350 million outstanding non-recourse funding obligation as of September 30, 2013. This non-recourse funding obligation matures in 2037, has scheduled increases in principal to a maximum of $945 million, and accrues interest at a fixed annual rate of 6.25%. | |||||||||
Non-recourse funding obligations outstanding as of September 30, 2013, on a consolidated basis, are shown in the following table: | |||||||||
Year-to-Date | |||||||||
Maturity | Weighted-Avg | ||||||||
Issuer | Balance | Year | Interest Rate | ||||||
(Dollars In Thousands) | |||||||||
Golden Gate Captive Insurance Company(1) | $ | 800,000 | 2037 | n/m | |||||
Golden Gate II Captive Insurance Company | 341,900 | 2052 | 1.12 | % | |||||
Golden Gate V Vermont Captive Insurance Company | 350,000 | 2037 | 6.25 | % | |||||
Total | $ | 1,491,900 | |||||||
(1) The weighted average rate is not meaningful as these are fixed rate obligations. | |||||||||
During the nine months ended September 30, 2013, the Company repurchased $5.0 million of its outstanding non-recourse funding obligations, at a discount. These repurchases resulted in a $1.3 million pre-tax gain for the Company. During the nine months ended September 30, 2012, the Company repurchased $91.7 million of its outstanding non-recourse funding obligations, at a discount. These repurchases resulted in a $29.3 million pre-tax gain. These gains are recorded in other income in the consolidated condensed statements of income. | |||||||||
Letters of Credit | |||||||||
Golden Gate III Vermont Captive Insurance Company (“Golden Gate III”), a wholly owned Vermont special purpose financial captive insurance company, is party to a Reimbursement Agreement (the “Reimbursement Agreement”) with UBS AG, Stamford Branch (“UBS”), as issuing lender. Under the original Reimbursement Agreement, dated April 23, 2010, UBS issued a letter of credit (the “LOC”) in the initial amount of $505 million to a trust for the benefit of West Coast Life Insurance Company (“WCL”). The Reimbursement Agreement was subsequently amended and restated effective November 21, 2011 (the “First Amended and Restated Reimbursement Agreement”), to replace the existing LOC with one or more letters of credit from UBS, and to extend the maturity date from April 1, 2018, to April 1, 2022. On August 7, 2013, the Company entered into a Second Amended and Restated Reimbursement Agreement with UBS (the “Second Amended and Restated Reimbursement Agreement”), which amended and restated the First Amended and Restated Reimbursement Agreement. Under the Second and Amended and Restated Reimbursement Agreement a new LOC in an initial amount of $710 million was issued by UBS in replacement of the existing LOC issued under the First Amended and Restated Reimbursement Agreement. The term of the LOC was extended from April 1, 2022 to October 1, 2023, subject to certain conditions being satisfied including scheduled capital contributions being made to Golden Gate III by one of its affiliates. The maximum stated amount of the LOC was increased from $610 million to $720 million in 2015 if certain conditions are met. The LOC is held in trust for the benefit of WCL, and supports certain obligations of Golden Gate III to WCL under an indemnity reinsurance agreement originally effective April 1, 2010, as amended and restated on November 21, 2011, and as further amended and restated on August 7, 2013 to include an additional block of policies, and pursuant to which WCL cedes liabilities relating to the policies of WCL and retrocedes liabilities relating to the policies of the Company. The LOC balance was $710 million as of September 30, 2013. Subject to certain conditions, the amount of the LOC will be periodically increased up to a maximum of $720 million in 2015. The term of the LOC is expected to be approximately 13.5 years from the original issuance date. This transaction is “non-recourse” to WCL, PLC, and the Company, meaning that none of these companies other than Golden Gate III are liable for reimbursement on a draw of the LOC. PLC has entered into certain support agreements with Golden Gate III obligating PLC to make capital contributions or provide support related to certain of Golden Gate III’s expenses and in certain circumstances, to collateralize certain of PLC’s obligations to Golden Gate III. Future scheduled capital contributions amount to approximately $149.8 million and will be paid in three installments with the last payment occurring in 2019, and these contributions may be subject to potential offset against dividend payments as permitted under the terms of the Second Amended and Restated Reimbursement Agreement. The support agreements provide that amounts would become payable by PLC to Golden Gate III if Golden Gate III’s annual general corporate expenses were higher than modeled amounts or if specified catastrophic losses occur during defined time periods with respect to the policies reinsured by Golden Gate III. There were no support agreements between the Company and Golden Gate III. Pursuant to the terms of an amended and restated letter agreement with UBS, PLC has continued to guarantee the payment of fees to UBS as specified in the Second and Amended and Restated Agreement. As of September 30, 2013, no payments are expected to be required under these agreements. | |||||||||
Golden Gate IV Vermont Captive Insurance Company (“Golden Gate IV”), a wholly owned Vermont special purpose financial captive insurance company, is party to a Reimbursement Agreement with UBS AG, Stamford Branch, as issuing lender. Under the Reimbursement Agreement, dated December 10, 2010, UBS issued an LOC in the initial amount of $270 million to a trust for the benefit of WCL. The LOC balance has increased, in accordance with the terms of the Reimbursement Agreement, during each of the first three quarters of 2013 and was $690 million as of September 30, 2013. Subject to certain conditions, the amount of the LOC will be periodically increased up to a maximum of $790 million in 2016. The term of the LOC is expected to be 12 years from the original issuance date and with a maturity date of December 30, 2022. The LOC was issued to support certain obligations of Golden Gate IV to WCL under an indemnity reinsurance agreement, pursuant to which WCL cedes liabilities related to the policies of WCL and retrocedes liabilities related to the policies of the Company. This transaction is “non-recourse” to WCL, PLC, and the Company, meaning that none of these companies other than Golden Gate IV are liable for reimbursement on a draw of the LOC. PLC has entered into certain support agreements with Golden Gate IV obligating PLC to make capital contributions or provide support related to certain of Golden Gate IV’s expenses and in certain circumstances, to collateralize certain of PLC’s obligations to Golden Gate IV. The support agreements provide that amounts would become payable by PLC to Golden Gate IV if Golden Gate IV’s annual general corporate expenses were higher than modeled amounts or if specified catastrophic losses occur during defined time periods with respect to the policies reinsured by Golden Gate IV. PLC has also entered into a separate agreement to guarantee the payments of LOC fees under the terms of the Reimbursement Agreement. As of September 30, 2013, no payments are expected to be required under these agreements. | |||||||||
Repurchase Program Borrowings | |||||||||
While the Company anticipates that the cash flows of its operating subsidiaries will be sufficient to meet its investment commitments and operating cash needs in a normal credit market environment, the Company recognizes that investment commitments scheduled to be funded may, from time to time, exceed the funds then available. Therefore, the Company has established repurchase agreement programs for certain of its insurance subsidiaries to provide liquidity when needed. The Company expects that the rate received on its investments will equal or exceed its borrowing rate. Under this program, the Company may, from time to time, sell an investment security at a specific price and agree to repurchase that security at another specified price at a later date. These borrowings are for a term less than ninety days. The market value of securities to be repurchased is monitored and collateral levels are adjusted where appropriate to protect the counterparty against credit exposure. The agreements provided for net settlement in the event of default or on termination of the agreements. As of September 30, 2013, the fair value of securities pledged under the repurchase program was $109.6 million and the repurchase obligation of $100.0 million was included in the Company’s consolidated condensed balance sheets (at an average borrowing rate of 11 basis points). During the nine months ended September 30, 2013, the maximum balance outstanding at any one point in time related to these programs was $645.1 million. The average daily balance was $417.5 million (at an average borrowing rate of 11 basis points) during the nine months ended September 30, 2013. As of December 31, 2012, the Company had a $150.0 million outstanding balance related to such borrowings. During 2012, the maximum balance outstanding at any one point in time related to these programs was $425.0 million. The average daily balance was $266.3 million (at an average borrowing rate of 14 basis points) during the year ended December 31, 2012. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2013 | |
COMMITMENTS AND CONTINGENCIES | ' |
COMMITMENTS AND CONTINGENCIES | ' |
7. COMMITMENTS AND CONTINGENCIES | |
Under insurance guaranty fund laws, in most states insurance companies doing business therein can be assessed up to prescribed limits for policyholder losses incurred by insolvent companies. In addition, from time to time, companies may be asked to contribute amounts beyond prescribed limits. Most insurance guaranty fund laws provide that an assessment may be excused or deferred if it would threaten an insurer’s own financial strength. The Company does not believe its insurance guaranty fund assessments will be materially different from amounts already provided for in the financial statements. | |
A number of civil jury verdicts have been returned against insurers, broker dealers and other providers of financial services involving sales, refund or claims practices, alleged agent misconduct, failure to properly supervise representatives, relationships with agents or persons with whom the insurer does business, and other matters. Often these lawsuits have resulted in the award of substantial judgments that are disproportionate to the actual damages, including material amounts of punitive and non-economic compensatory damages. In some states, juries, judges, and arbitrators have substantial discretion in awarding punitive non-economic compensatory damages which creates the potential for unpredictable material adverse judgments or awards in any given lawsuit or arbitration. Arbitration awards are subject to very limited appellate review. In addition, in some class action and other lawsuits, companies have made material settlement payments. Companies in the financial services and insurance industries are also sometimes the target of law enforcement and regulatory investigations relating to the numerous laws and regulations that govern such companies. Some companies have been the subject of law enforcement or regulatory actions or other actions resulting from such investigations. The Company, in the ordinary course of business, is involved in such matters. | |
The Company establishes liabilities for litigation and regulatory actions when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. For matters where a loss is believed to be reasonably possible, but not probable, no liability is established. For such matters, the Company may provide an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. The Company reviews relevant information with respect to litigation and regulatory matters on a quarterly and annual basis and updates its established liabilities, disclosures and estimates of reasonably possible losses or range of loss based on such reviews. | |
Although the Company cannot predict the outcome of any litigation or regulatory action, the Company does not believe that any such outcome will have an impact, either individually or in the aggregate, on its financial condition or results of operations that differs materially from the Company’s established liabilities. Given the inherent difficulty in predicting the outcome of such matters, however, it is possible that an adverse outcome in certain such matters could be material to the Company’s financial condition or results of operations for any particular reporting period. | |
In the IRS audit that concluded during the prior year, the IRS proposed favorable and unfavorable adjustments to the Company’s 2003 through 2007 reported taxable incomes. The Company protested certain unfavorable adjustments and is seeking resolution at the IRS’ Appeals Division. If the IRS prevails on every issue that it identified in this audit, and the Company does not litigate these issues, then the Company will make an income tax payment of approximately $24.3 million. However, this payment, if it were to occur, would not materially impact the Company or its effective tax rate. | |
The Company has received notice from two third party auditors that the Company, as well as certain of its insurance affiliates and certain other insurance companies for which the Company has co-insured blocks of life insurance and annuity products, will be audited for compliance with the unclaimed property laws of a number of states. The audits are being conducted on behalf of the treasury departments in such states. The focus of the audits is on whether there have been unreported deaths, maturities, or policies that have exceeded limiting age with respect to which death benefits or other payments under life insurance or annuity policies should be treated as unclaimed property that should be escheated to the state. The Company has recorded a reserve with respect to life insurance policies and certain co-insured blocks of life insurance policies issued by other companies in connection with these pending audits. The Company does not consider the amount of this reserve to be material to the Company’s financial condition or results of operations. With respect to a separate block of life insurance policies that is co-insured by the Company, the Company is presently unable to estimate the reasonably possible loss or range of loss due to a number of factors, including uncertainty as to the legal theory or theories that may give rise to liability, uncertainty as to whether the Company or other companies are responsible for the liabilities, if any, arising in connection with such policies, the distinct characteristics of this co-insured block of policies which differentiate it from the blocks of life insurance policies for which the Company has recorded a reserve, and the early stages of the audits being conducted. The Company will continue to monitor the matter for any developments that would make the loss contingency associated with this block of co-insured policies probable or reasonably estimable. | |
The Company has received notice that it and its affiliated life insurance companies are subject to a targeted multi-state examination with respect to their claims paying practices and their use of the U.S. Social Security Administration’s Death Master File or similar databases (a “Death Database”) to identify unreported deaths in their life insurance policies, annuity contracts and retained asset accounts. There is no clear basis in previously existing law for requiring a life insurer to search for unreported deaths in order to determine whether a benefit is owed, and substantial legal authority exists to support the position that the prevailing industry practice was lawful. A number of life insurers, however, have entered into settlement or consent agreements with state insurance regulators under which the life insurers agreed to implement procedures for periodically comparing their life insurance and annuity contracts and retained asset accounts against a Death Database, treating confirmed deaths as giving rise to a death benefit under their policies, locating beneficiaries and paying them the benefits and interest, and escheating the benefits and interest as well as penalties to the state if the beneficiary could not be found. It has been publicly reported that the life insurers have paid substantial administrative and/or examination fees to the insurance regulators in connection with the settlement or consent agreements. The Company believes it is reasonably possible that insurance regulators could demand from the Company administrative and/or examination fees relating to the targeted multi-state examination. Based on publicly reported payments by other life insurers, the Company estimates the range of such fees to be from $0 to $3.5 million. |
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended | ||||||
Sep. 30, 2013 | |||||||
STOCK-BASED COMPENSATION | ' | ||||||
STOCK-BASED COMPENSATION | ' | ||||||
8. STOCK-BASED COMPENSATION | |||||||
During the nine months ended September 30, 2013, 298,500 performance shares with an estimated fair value of $9.3 million were awarded. The criteria for payment of the 2013 performance awards is based primarily on PLC’s average operating return on average equity (“ROE”) over a three-year period. If PLC’s ROE is below 10.0%, no award is earned. If PLC’s ROE is at or above 11.5%, the award maximum is earned. Awards are paid in shares of PLC’s common stock. | |||||||
Restricted stock units are awarded to participants and include certain restrictions relating to vesting periods. PLC issued 163,850 restricted stock units for the nine months ended September 30, 2013. These awards had a total fair value at grant date of $5.4 million. Approximately half of these restricted stock units vest in 2016, and the remainder vest in 2017. These awards have been recorded as equity-classified awards for the period ended September 30, 2013. | |||||||
Stock appreciation rights (“SARs”) of PLC have historically been granted to certain officers to provide long-term incentive compensation based solely on the performance of PLC’s common stock. The SARs are exercisable either five years after the date of grant or in three or four equal annual installments beginning one year after the date of grant (earlier upon the death, disability, or retirement of the officer, or in certain circumstances, of a change in control of PLC) and expire after ten years or upon termination of employment. The SARs activity as well as weighted-average base price is as follows: | |||||||
Weighted-Average | |||||||
Base Price per share | No. of SARs | ||||||
Balance at December 31, 2012 | $ | 22.15 | 1,641,167 | ||||
SARs granted | — | — | |||||
SARs exercised / forfeited | 18.02 | (315,616 | ) | ||||
Balance at September 30, 2013 | $ | 23.13 | 1,325,551 | ||||
PLC will pay an amount in stock equal to the difference between the specified base price of PLC’s common stock and the market value at the exercise date for each SAR. There were no SARs issued for the nine months ended September 30, 2013. |
EMPLOYEE_BENEFIT_PLANS
EMPLOYEE BENEFIT PLANS | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
EMPLOYEE BENEFIT PLANS | ' | |||||||||||||
EMPLOYEE BENEFIT PLANS | ' | |||||||||||||
9. EMPLOYEE BENEFIT PLANS | ||||||||||||||
Components of the net periodic benefit cost of PLC’s defined benefit pension plan and unfunded excess benefit plan are as follows: | ||||||||||||||
For The | For The | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
(Dollars In Thousands) | ||||||||||||||
Service cost — benefits earned during the period | $ | 2,708 | $ | 2,561 | $ | 8,124 | $ | 7,683 | ||||||
Interest cost on projected benefit obligation | 2,553 | 2,604 | 7,659 | 7,812 | ||||||||||
Expected return on plan assets | (2,759 | ) | (2,673 | ) | (8,277 | ) | (8,019 | ) | ||||||
Amortization of prior service cost/(credit) | (95 | ) | (95 | ) | (285 | ) | (285 | ) | ||||||
Amortization of actuarial losses | 2,729 | 2,175 | 8,187 | 6,525 | ||||||||||
Total benefit cost | $ | 5,136 | $ | 4,572 | $ | 15,408 | $ | 13,716 | ||||||
During the nine months ended September 30, 2013, PLC contributed $2.0 million to its defined benefit pension plan for the 2012 plan year and $4.6 million for the 2013 plan year. During October of 2013, PLC contributed $2.3 million to the defined benefit pension plan for the 2013 plan year. PLC will continue to make contributions in future periods as necessary to at least satisfy minimum funding requirements. PLC may also make additional contributions in future periods to maintain an adjusted funding target attainment percentage (“AFTAP”) of at least 80%. | ||||||||||||||
In July of 2012, the Moving Ahead for Progress in the 21st Century Act (“MAP-21”), which includes pension funding stabilization provisions, was signed into law. These provisions establish an interest rate corridor which is designed to stabilize the segment rates used to determine funding requirements from the effects of interest rate volatility. The funding stabilization provisions of MAP-21 reduced PLC’s minimum required defined benefit plan contributions for the 2012 and 2013 plan year. Since the funding stabilization provisions of MAP-21 do not apply for Pension Benefit Guaranty Corporation (“PBGC”) reporting purposes, PLC may also make additional contributions in future periods to avoid certain PBGC reporting triggers. | ||||||||||||||
In addition to pension benefits, PLC provides life insurance benefits to eligible retirees and limited healthcare benefits to eligible retirees who are not yet eligible for Medicare. For a closed group of retirees over age 65, PLC provides a prescription drug benefit. The cost of these plans for the nine months ended September 30, 2013, was immaterial to the Company’s financial statements. |
ACCUMULATED_OTHER_COMPREHENSIV
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ' | ||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ' | ||||||||||
10. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |||||||||||
The following table summarizes the changes in the accumulated balances for each component of accumulated other comprehensive income (loss) (“AOCI”) as of September 30, 2013. | |||||||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||||||
Total | |||||||||||
Accumulated | |||||||||||
Unrealized | Accumulated | Other | |||||||||
Gains and Losses | Gain and Loss | Comprehensive | |||||||||
on Investments | Derivatives | Income (Loss) | |||||||||
(Dollars In Thousands, Net of Tax) | |||||||||||
Beginning Balance, December 31, 2012 | $ | 1,814,620 | $ | (3,496 | ) | $ | 1,811,124 | ||||
Other comprehensive income (loss) before reclassifications | (1,191,178 | ) | (103 | ) | (1,191,281 | ) | |||||
Other comprehensive income relating to other- than-temporary impaired investments for which a portion has been recognized in earnings | 2,570 | — | 2,570 | ||||||||
Amounts reclassified from accumulated other comprehensive income (loss)(1) | (17,705 | ) | 1,072 | (16,633 | ) | ||||||
Net current-period other comprehensive income (loss) | (1,206,313 | ) | 969 | (1,205,344 | ) | ||||||
Ending Balance, September 30, 2013 | $ | 608,307 | $ | (2,527 | ) | $ | 605,780 | ||||
(1) See Reclassification table below for details. | |||||||||||
The following table summarizes the reclassifications amounts out of AOCI for the three and nine months ended September 30, 2013. | |||||||||||
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | |||||||||||
Amount | |||||||||||
Reclassified | |||||||||||
from Accumulated | |||||||||||
Other Comprehensive | Affected Line Item in the | ||||||||||
Income (Loss) | Consolidated Condensed Statements of Income | ||||||||||
(Dollars In Thousands) | |||||||||||
Accumulated Other Comprehensive Income (Loss) Components | |||||||||||
For The Three Months Ended September 30, 2013 | |||||||||||
Gains and losses on derivative instruments | |||||||||||
Net settlement (expense)/benefit(1) | $ | (572 | ) | Benefits and settlement expenses, net of reinsurance ceded | |||||||
(572 | ) | Total before tax | |||||||||
200 | Tax (expense) or benefit | ||||||||||
$ | (372 | ) | Net of tax | ||||||||
Unrealized gains and losses on available-for-sale securities | |||||||||||
Net investment gains/(losses) | $ | 10,546 | Realized investment gains (losses): All other investments | ||||||||
Impairments recognized in earnings | (8,681 | ) | Net impairment losses recognized in earnings | ||||||||
1,865 | Total before tax | ||||||||||
(653 | ) | Tax (expense) or benefit | |||||||||
$ | 1,212 | Net of tax | |||||||||
(1) See Note 14, Derivative Financial Instruments, for additional information. | |||||||||||
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | |||||||||||
Amount | |||||||||||
Reclassified | |||||||||||
from Accumulated | |||||||||||
Other Comprehensive | Affected Line Item in the | ||||||||||
Income (Loss) | Consolidated Condensed Statements of Income | ||||||||||
(Dollars In Thousands) | |||||||||||
Accumulated Other Comprehensive Income (Loss) Components | |||||||||||
For The Nine Months Ended September 30, 2013 | |||||||||||
Gains and losses on derivative instruments | |||||||||||
Net settlement (expense)/benefit(1) | $ | (1,649 | ) | Benefits and settlement expenses, net of reinsurance ceded | |||||||
(1,649 | ) | Total before tax | |||||||||
577 | Tax (expense) or benefit | ||||||||||
$ | (1,072 | ) | Net of tax | ||||||||
Unrealized gains and losses on available-for-sale securities | |||||||||||
Net investment gains/(losses) | $ | 44,503 | Realized investment gains (losses): All other investments | ||||||||
Impairments recognized in earnings | (17,265 | ) | Net impairment losses recognized in earnings | ||||||||
27,238 | Total before tax | ||||||||||
(9,533 | ) | Tax (expense) or benefit | |||||||||
$ | 17,705 | Net of tax | |||||||||
(1) See Note 14, Derivative Financial Instruments, for additional information. |
INCOME_TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2013 | |
INCOME TAXES | ' |
INCOME TAXES | ' |
11. INCOME TAXES | |
There have been no material changes to the balance of unrecognized tax benefits where such benefits impacted earnings for the nine months ended September 30, 2013. | |
In the IRS audit that concluded during the prior year, the IRS proposed favorable and unfavorable adjustments to the Company’s 2003 through 2007 reported taxable incomes. The Company protested certain unfavorable adjustments and is seeking resolution at the IRS’ Appeals Division. If the IRS prevails at Appeals, and the Company does not litigate these issues, then an acceleration of tax payments will occur. However, if these payments were to occur, they would not materially impact the Company or its effective tax rate. | |
The Company believes that it is possible that in the next 12 months approximately $16 million of these unrecognized tax benefits will be reduced due to the expected closure of the aforementioned Appeals process. In general, this closure would represent the Company’s possible successful negotiation of certain issues, coupled with its payment of the assessed taxes on the remaining issues. | |
The Company used its estimate of its annual 2013 and 2012 income in computing its effective income tax rates for the three and nine months ended September 30, 2013 and 2012. The effective tax rates for the three and nine months ended September 30, 2013 were 32.7% and 32.8%, respectively, and 33.5% and 31.9% for the three and nine months ended September 30, 2012, respectively. | |
In general, the Company is no longer subject to U.S. federal, state, and local income tax examinations by taxing authorities for tax years that began before 2003. | |
Based on the Company’s current assessment of future taxable income, including available tax planning opportunities, the Company anticipates that it is more likely than not that it will generate sufficient taxable income to realize all of its material deferred tax assets. The Company did not record a valuation allowance against its material deferred tax assets as of September 30, 2013. |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
RELATED PARTY TRANSACTIONS | ' | ||||
RELATED PARTY TRANSACTIONS | ' | ||||
12. RELATED PARTY TRANSACTIONS | |||||
As of March 31, 2013, Shades Creek Captive Insurance Company (“Shades Creek”) was a direct wholly owned insurance subsidiary of the Company. On April 1, 2013, the Company paid to its parent, PLC, a dividend that consisted of all outstanding stock of Shades Creek. The Company will continue to reinsure guaranteed minimum withdrawal benefits (“GMWB”) and guaranteed minimum death benefits (“GMDB”) riders to Shades Creek, which includes a funds withheld account that is considered a derivative. For more information related to the derivative, refer to Note 13, Fair Value of Financial Instruments and Note 14, Derivative Financial Instruments. For cash flow purposes, portions of the dividend were treated as non-cash transactions. | |||||
The following balances from Shades Creek’s balance sheet as of March 31, 2013, with the exception of cash, were excluded from the Company’s cash flow statement for the nine months ended September 30, 2013. | |||||
As of | |||||
March 31, 2013 | |||||
(Dollars In Thousands) | |||||
Assets | |||||
Other long-term investments | $ | 34,093 | |||
Short-term investments | 745 | ||||
Total investments | 34,838 | ||||
Cash | 44,963 | ||||
Accounts and premiums receivable | 16,036 | ||||
Deferred policy acquisition cost | 123,847 | ||||
Other assets | 48,953 | ||||
Total assets | $ | 268,637 | |||
Liabilities | |||||
Future policy benefits and claims | $ | 1,626 | |||
Other liabilities | 178,321 | ||||
Deferred income taxes | 2,459 | ||||
Total liabilities | 182,406 | ||||
Total equity | 86,231 | ||||
Total liabilities and equity | $ | 268,637 |
FAIR_VALUE_OF_FINANCIAL_INSTRU
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ||||||||||||||||||||||||||||||||||||||||
13. FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||||||||||||||||||||||||||||||||||||
The Company determined the fair value of its financial instruments based on the fair value hierarchy established in FASB guidance referenced in the Fair Value Measurements and Disclosures Topic which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company has adopted the provisions from the FASB guidance that is referenced in the Fair Value Measurements and Disclosures Topic for non-financial assets and liabilities (such as property and equipment, goodwill, and other intangible assets) that are required to be measured at fair value on a periodic basis. The effect on the Company’s periodic fair value measurements for non-financial assets and liabilities was not material. | |||||||||||||||||||||||||||||||||||||||||
The Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into a three level hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. | |||||||||||||||||||||||||||||||||||||||||
Financial assets and liabilities recorded at fair value on the consolidated balance sheets are categorized as follows: | |||||||||||||||||||||||||||||||||||||||||
· Level 1: Unadjusted quoted prices for identical assets or liabilities in an active market. | |||||||||||||||||||||||||||||||||||||||||
· Level 2: Quoted prices in markets that are not active or significant inputs that are observable either directly or indirectly. Level 2 inputs include the following: | |||||||||||||||||||||||||||||||||||||||||
a) Quoted prices for similar assets or liabilities in active markets | |||||||||||||||||||||||||||||||||||||||||
b) Quoted prices for identical or similar assets or liabilities in non-active markets | |||||||||||||||||||||||||||||||||||||||||
c) Inputs other than quoted market prices that are observable | |||||||||||||||||||||||||||||||||||||||||
d) Inputs that are derived principally from or corroborated by observable market data through correlation or other means. | |||||||||||||||||||||||||||||||||||||||||
· Level 3: Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. They reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability. | |||||||||||||||||||||||||||||||||||||||||
The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of September 30, 2013: | |||||||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities - available-for-sale | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | $ | — | $ | 1,463,989 | $ | 38 | $ | 1,464,027 | |||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 911,607 | — | 911,607 | |||||||||||||||||||||||||||||||||||||
Other asset-backed securities | — | 328,393 | 548,771 | 877,164 | |||||||||||||||||||||||||||||||||||||
U.S. government-related securities | 1,063,584 | 149,852 | — | 1,213,436 | |||||||||||||||||||||||||||||||||||||
State, municipalities, and political subdivisions | — | 1,296,046 | 4,275 | 1,300,321 | |||||||||||||||||||||||||||||||||||||
Other government-related securities | — | 41,128 | — | 41,128 | |||||||||||||||||||||||||||||||||||||
Corporate bonds | 107 | 19,526,553 | 187,488 | 19,714,148 | |||||||||||||||||||||||||||||||||||||
Total fixed maturity securities - available-for-sale | 1,063,691 | 23,717,568 | 740,572 | 25,521,831 | |||||||||||||||||||||||||||||||||||||
Fixed maturity securities - trading | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | — | 308,356 | — | 308,356 | |||||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 169,046 | — | 169,046 | |||||||||||||||||||||||||||||||||||||
Other asset-backed securities | — | 90,726 | 170,967 | 261,693 | |||||||||||||||||||||||||||||||||||||
U.S. government-related securities | 198,717 | 5,147 | — | 203,864 | |||||||||||||||||||||||||||||||||||||
State, municipalities, and political subdivisions | — | 262,036 | — | 262,036 | |||||||||||||||||||||||||||||||||||||
Other government-related securities | — | 57,525 | — | 57,525 | |||||||||||||||||||||||||||||||||||||
Corporate bonds | — | 1,515,167 | 5,092 | 1,520,259 | |||||||||||||||||||||||||||||||||||||
Total fixed maturity securities - trading | 198,717 | 2,408,003 | 176,059 | 2,782,779 | |||||||||||||||||||||||||||||||||||||
Total fixed maturity securities | 1,262,408 | 26,125,571 | 916,631 | 28,304,610 | |||||||||||||||||||||||||||||||||||||
Equity securities | 311,637 | 43,341 | 65,527 | 420,505 | |||||||||||||||||||||||||||||||||||||
Other long-term investments (1) | 58,567 | 54,600 | 83,005 | 196,172 | |||||||||||||||||||||||||||||||||||||
Short-term investments | 212,816 | 2,300 | — | 215,116 | |||||||||||||||||||||||||||||||||||||
Total investments | 1,845,428 | 26,225,812 | 1,065,163 | 29,136,403 | |||||||||||||||||||||||||||||||||||||
Cash | 229,747 | — | — | 229,747 | |||||||||||||||||||||||||||||||||||||
Assets related to separate accounts | |||||||||||||||||||||||||||||||||||||||||
Variable annuity | 11,921,925 | — | — | 11,921,925 | |||||||||||||||||||||||||||||||||||||
Variable universal life | 663,380 | — | — | 663,380 | |||||||||||||||||||||||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | 14,660,480 | $ | 26,225,812 | $ | 1,065,163 | $ | 41,951,455 | |||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Annuity account balances(2) | $ | — | $ | — | $ | 110,590 | $ | 110,590 | |||||||||||||||||||||||||||||||||
Other liabilities (1) | 11,304 | 185,443 | 230,723 | 427,470 | |||||||||||||||||||||||||||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | 11,304 | $ | 185,443 | $ | 341,313 | $ | 538,060 | |||||||||||||||||||||||||||||||||
(1)Includes certain freestanding and embedded derivatives. | |||||||||||||||||||||||||||||||||||||||||
(2)Represents liabilities related to fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2012: | |||||||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities - available-for-sale | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | $ | — | $ | 1,839,326 | $ | 4 | $ | 1,839,330 | |||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 869,823 | — | 869,823 | |||||||||||||||||||||||||||||||||||||
Other asset-backed securities | — | 378,870 | 596,143 | 975,013 | |||||||||||||||||||||||||||||||||||||
U.S. government-related securities | 909,988 | 258,458 | — | 1,168,446 | |||||||||||||||||||||||||||||||||||||
State, municipalities, and political subdivisions | — | 1,439,378 | 4,275 | 1,443,653 | |||||||||||||||||||||||||||||||||||||
Other government-related securities | — | 80,767 | 20,011 | 100,778 | |||||||||||||||||||||||||||||||||||||
Corporate bonds | 207 | 20,197,528 | 167,892 | 20,365,627 | |||||||||||||||||||||||||||||||||||||
Total fixed maturity securities - available-for-sale | 910,195 | 25,064,150 | 788,325 | 26,762,670 | |||||||||||||||||||||||||||||||||||||
Fixed maturity securities - trading | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | — | 357,803 | — | 357,803 | |||||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 171,073 | — | 171,073 | |||||||||||||||||||||||||||||||||||||
Other asset-backed securities | — | 87,395 | 70,535 | 157,930 | |||||||||||||||||||||||||||||||||||||
U.S. government-related securities | 304,704 | 1,169 | — | 305,873 | |||||||||||||||||||||||||||||||||||||
State, municipalities, and political subdivisions | — | 278,898 | — | 278,898 | |||||||||||||||||||||||||||||||||||||
Other government-related securities | — | 63,444 | — | 63,444 | |||||||||||||||||||||||||||||||||||||
Corporate bonds | — | 1,672,172 | 115 | 1,672,287 | |||||||||||||||||||||||||||||||||||||
Total fixed maturity securities - trading | 304,704 | 2,631,954 | 70,650 | 3,007,308 | |||||||||||||||||||||||||||||||||||||
Total fixed maturity securities | 1,214,899 | 27,696,104 | 858,975 | 29,769,978 | |||||||||||||||||||||||||||||||||||||
Equity securities | 273,072 | 35,116 | 65,527 | 373,715 | |||||||||||||||||||||||||||||||||||||
Other long-term investments (1) | 23,639 | 58,134 | 48,655 | 130,428 | |||||||||||||||||||||||||||||||||||||
Short-term investments | 214,295 | 2,492 | — | 216,787 | |||||||||||||||||||||||||||||||||||||
Total investments | 1,725,905 | 27,791,846 | 973,157 | 30,490,908 | |||||||||||||||||||||||||||||||||||||
Cash | 269,582 | — | — | 269,582 | |||||||||||||||||||||||||||||||||||||
Other assets | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Assets related to separate accounts | |||||||||||||||||||||||||||||||||||||||||
Variable annuity | 9,601,417 | — | — | 9,601,417 | |||||||||||||||||||||||||||||||||||||
Variable universal life | 562,817 | — | — | 562,817 | |||||||||||||||||||||||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | 12,159,721 | $ | 27,791,846 | $ | 973,157 | $ | 40,924,724 | |||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Annuity account balances (2) | $ | — | $ | — | $ | 129,468 | $ | 129,468 | |||||||||||||||||||||||||||||||||
Other liabilities (1) | 19,187 | 27,250 | 611,437 | 657,874 | |||||||||||||||||||||||||||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | 19,187 | $ | 27,250 | $ | 740,905 | $ | 787,342 | |||||||||||||||||||||||||||||||||
(1) Includes certain freestanding and embedded derivatives. | |||||||||||||||||||||||||||||||||||||||||
(2) Represents liabilities related to fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
Determination of fair values | |||||||||||||||||||||||||||||||||||||||||
The valuation methodologies used to determine the fair values of assets and liabilities reflect market participant assumptions and are based on the application of the fair value hierarchy that prioritizes observable market inputs over unobservable inputs. The Company determines the fair values of certain financial assets and financial liabilities based on quoted market prices, where available. The Company also determines certain fair values based on future cash flows discounted at the appropriate current market rate. Fair values reflect adjustments for counterparty credit quality, the Company’s credit standing, liquidity, and where appropriate, risk margins on unobservable parameters. The following is a discussion of the methodologies used to determine fair values for the financial instruments as listed in the above table. | |||||||||||||||||||||||||||||||||||||||||
The fair value of fixed maturity, short-term, and equity securities is determined by management after considering one of three primary sources of information: third party pricing services, non-binding independent broker quotations, or pricing matrices. Security pricing is applied using a ‘‘waterfall’’ approach whereby publicly available prices are first sought from third party pricing services, the remaining unpriced securities are submitted to independent brokers for non-binding prices, or lastly, securities are priced using a pricing matrix. Typical inputs used by these three pricing methods include, but are not limited to: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. Third party pricing services price over 90% of the Company’s available-for-sale and trading fixed maturity securities. Based on the typical trading volumes and the lack of quoted market prices for available-for-sale and trading fixed maturities, third party pricing services derive the majority of security prices from observable market inputs such as recent reported trades for identical or similar securities making adjustments through the reporting date based upon available market observable information outlined above. If there are no recent reported trades, the third party pricing services and brokers may use matrix or model processes to develop a security price where future cash flow expectations are developed based upon collateral performance and discounted at an estimated market rate. Certain securities are priced via independent non-binding broker quotations, which are considered to have no significant unobservable inputs. When using non-binding independent broker quotations, the Company obtains one quote per security, typically from the broker from which we purchased the security. A pricing matrix is used to price securities for which the Company is unable to obtain or effectively rely on either a price from a third party pricing service or an independent broker quotation. | |||||||||||||||||||||||||||||||||||||||||
The pricing matrix used by the Company begins with current spread levels to determine the market price for the security. The credit spreads, assigned by brokers, incorporate the issuer’s credit rating, liquidity discounts, weighted-average of contracted cash flows, risk premium, if warranted, due to the issuer’s industry, and the security’s time to maturity. The Company uses credit ratings provided by nationally recognized rating agencies. | |||||||||||||||||||||||||||||||||||||||||
For securities that are priced via non-binding independent broker quotations, the Company assesses whether prices received from independent brokers represent a reasonable estimate of fair value through an analysis using internal and external cash flow models developed based on spreads and, when available, market indices. The Company uses a market-based cash flow analysis to validate the reasonableness of prices received from independent brokers. These analytics, which are updated daily, incorporate various metrics (yield curves, credit spreads, prepayment rates, etc.) to determine the valuation of such holdings. As a result of this analysis, if the Company determines there is a more appropriate fair value based upon the analytics, the price received from the independent broker is adjusted accordingly. The Company did not adjust any quotes or prices received from brokers during the nine months ended September 30, 2013. | |||||||||||||||||||||||||||||||||||||||||
The Company has analyzed the third party pricing services’ valuation methodologies and related inputs and has also evaluated the various types of securities in its investment portfolio to determine an appropriate fair value hierarchy level based upon trading activity and the observability of market inputs that is in accordance with the Fair Value Measurements and Disclosures Topic of the ASC. Based on this evaluation and investment class analysis, each price was classified into Level 1, 2, or 3. Most prices provided by third party pricing services are classified into Level 2 because the significant inputs used in pricing the securities are market observable and the observable inputs are corroborated by the Company. Since the matrix pricing of certain fixed maturities includes significant non-observable inputs, they are classified as Level 3. | |||||||||||||||||||||||||||||||||||||||||
Asset-Backed Securities | |||||||||||||||||||||||||||||||||||||||||
This category mainly consists of residential mortgage-backed securities, commercial mortgage-backed securities, and other asset-backed securities (collectively referred to as asset-backed securities or “ABS”). As of September 30, 2013, the Company held $3.3 billion of ABS classified as Level 2. These securities are priced from information provided by a third party pricing service and independent broker quotes. The third party pricing services and brokers mainly value securities using both a market and income approach to valuation. As part of this valuation process they consider the following characteristics of the item being measured to be relevant inputs: 1) weighted-average coupon rate, 2) weighted-average years to maturity, 3) types of underlying assets, 4) weighted-average coupon rate of the underlying assets, 5) weighted-average years to maturity of the underlying assets, 6) seniority level of the tranches owned, and 7) credit ratings of the securities. | |||||||||||||||||||||||||||||||||||||||||
After reviewing these characteristics of the ABS, the third party pricing service and brokers use certain inputs to determine the value of the security. For ABS classified as Level 2, the valuation would consist of predominantly market observable inputs such as, but not limited to: 1) monthly principal and interest payments on the underlying assets, 2) average life of the security, 3) prepayment speeds, 4) credit spreads, 5) treasury and swap yield curves, and 6) discount margin. | |||||||||||||||||||||||||||||||||||||||||
As of September 30, 2013, the Company held $719.8 million of Level 3 ABS, which included $548.8 million of other asset-backed securities classified as available-for-sale and $171.0 million of other asset-backed securities classified as trading. These securities are predominantly ARS whose underlying collateral is at least 97% guaranteed by the FFELP. As a result of the ARS market collapse during 2008, the Company prices its ARS using an income approach valuation model. As part of the valuation process the Company reviews the following characteristics of the ARS in determining the relevant inputs: 1) weighted-average coupon rate, 2) weighted-average years to maturity, 3) types of underlying assets, 4) weighted-average coupon rate of the underlying assets, 5) weighted-average years to maturity of the underlying assets, 6) seniority level of the tranches owned, 7) credit ratings of the securities, 8) liquidity premium, and 9) paydown rate. | |||||||||||||||||||||||||||||||||||||||||
Corporate bonds, U.S. Government-related securities, States, municipals, and political subdivisions, and Other government related securities | |||||||||||||||||||||||||||||||||||||||||
As of September 30, 2013, the Company classified approximately $22.9 billion of corporate bonds, U.S. government-related securities, states, municipals, and political subdivisions, and other government-related securities as Level 2. The fair value of the Level 2 bonds and securities is predominantly priced by broker quotes and a third party pricing service. The Company has reviewed the valuation techniques of the brokers and third party pricing service and has determined that such techniques used Level 2 market observable inputs. The following characteristics of the bonds and securities are considered to be the primary relevant inputs to the valuation: 1) weighted-average coupon rate, 2) weighted-average years to maturity, 3) seniority, and 4) credit ratings. | |||||||||||||||||||||||||||||||||||||||||
The brokers and third party pricing service utilize valuation models that consist of a hybrid income and market approach to valuation. The pricing models utilize the following inputs: 1) principal and interest payments, 2) treasury yield curve, 3) credit spreads from new issue and secondary trading markets, 4) dealer quotes with adjustments for issues with early redemption features, 5) liquidity premiums present on private placements, and 6) discount margins from dealers in the new issue market. | |||||||||||||||||||||||||||||||||||||||||
As of September 30, 2013, the Company classified approximately $196.9 million of bonds and securities as Level 3 valuations. Level 3 bonds and securities primarily represent investments in illiquid bonds for which no price is readily available. To determine a price, the Company uses a discounted cash flow model with both observable and unobservable inputs. These inputs are entered into an industry standard pricing model to determine the final price of the security. These inputs include: 1) principal and interest payments, 2) coupon rate, 3) sector and issuer level spread over treasury, 4) underlying collateral, 5) credit ratings, 6) maturity, 7) embedded options, 8) recent new issuance, 9) comparative bond analysis, and 10) an illiquidity premium. | |||||||||||||||||||||||||||||||||||||||||
Equities | |||||||||||||||||||||||||||||||||||||||||
As of September 30, 2013, the Company held approximately $108.9 million of equity securities classified as Level 2 and Level 3. Of this total, $64.6 million represents Federal Home Loan Bank (“FHLB”) stock. The Company believes that the cost of the FHLB stock approximates fair value. The remainder of these equity securities is primarily made up of holdings we have obtained through bankruptcy proceedings or debt restructurings. | |||||||||||||||||||||||||||||||||||||||||
Other long-term investments and Other liabilities | |||||||||||||||||||||||||||||||||||||||||
Other long-term investments and other liabilities consist entirely of free-standing and embedded derivative financial instruments. Refer to Note 14, Derivative Financial Instruments for additional information related to derivatives. Derivative financial instruments are valued using exchange prices, independent broker quotations, or pricing valuation models, which utilize market data inputs. Excluding embedded derivatives, as of September 30, 2013, 72.6% of derivatives based upon notional values were priced using exchange prices or independent broker quotations. The remaining derivatives were priced by pricing valuation models, which predominantly utilize observable market data inputs. Inputs used to value derivatives include, but are not limited to, interest swap rates, credit spreads, interest rate and equity market volatility indices, equity index levels, and treasury rates. The Company performs monthly analysis on derivative valuations that includes both quantitative and qualitative analyses. | |||||||||||||||||||||||||||||||||||||||||
Derivative instruments classified as Level 1 generally include futures and puts, which are traded on active exchange markets. | |||||||||||||||||||||||||||||||||||||||||
Derivative instruments classified as Level 2 primarily include interest rate and inflation swaps, puts, and swaptions. These derivative valuations are determined using independent broker quotations, which are corroborated with observable market inputs. | |||||||||||||||||||||||||||||||||||||||||
Derivative instruments classified as Level 3 were embedded derivatives and include at least one significant non-observable input. A derivative instrument containing Level 1 and Level 2 inputs will be classified as a Level 3 financial instrument in its entirety if it has at least one significant Level 3 input. | |||||||||||||||||||||||||||||||||||||||||
The Company utilizes derivative instruments to manage the risk associated with certain assets and liabilities. However, the derivative instruments may not be classified within the same fair value hierarchy level as the associated assets and liabilities. Therefore, the changes in fair value on derivatives reported in Level 3 may not reflect the offsetting impact of the changes in fair value of the associated assets and liabilities. | |||||||||||||||||||||||||||||||||||||||||
The embedded derivatives are carried at fair value in “other long-term investments” and “other liabilities” on the Company’s consolidated balance sheet. The changes in fair value are recorded in earnings as “Realized investment gains (losses) — Derivative financial instruments”. Refer to Note 14, Derivative Financial Instruments for more information related to each embedded derivatives gains and losses. | |||||||||||||||||||||||||||||||||||||||||
The fair value of the guaranteed minimum withdrawal benefits (“GMWB”) embedded derivative is derived through the income method of valuation using a valuation model that projects future cash flows using multiple risk neutral stochastic equity scenarios and policyholder behavior assumptions. The risk neutral scenarios are generated using the current swap curve and projected equity volatilities and correlations. The projected equity volatilities are based on a blend of historical volatility and near-term equity market implied volatilities. The equity correlations are based on historical price observations. For policyholder behavior assumptions, expected lapse and utilization assumptions are used and updated for actual experience, as necessary. The Company assumes age-based mortality from the National Association of Insurance Commissioners 1994 Variable Annuity MGDB Mortality Table for company experience, with attained age factors varying from 49% - 80%. The present value of the cash flows is determined using the discount rate curve, which is based upon LIBOR plus a credit spread (to represent the Company’s non-performance risk). As a result of using significant unobservable inputs, the GMWB embedded derivative is categorized as Level 3. These assumptions are reviewed on a quarterly basis. | |||||||||||||||||||||||||||||||||||||||||
The fair value of the FIA embedded derivative is derived through the income method of valuation using a valuation model that projects future cash flows using current index values and volatility, the hedge budget used to price the product, and policyholder assumptions (both elective and non-elective). For policyholder behavior assumptions, expected lapse and withdrawal assumptions are used and updated for actual experience, as necessary. The Company assumes age-based mortality from the 1994 Variable Annuity MGDB mortality table modified for company experience, with attained age factors varying from 49% - 80%. The present value of the cash flows is determined using the discount rate curve, which is based upon LIBOR up to one year and constant maturity treasury rates plus a credit spread (to represent the Company’s non-performance risk) thereafter. Policyholder assumptions are reviewed on an annual basis. As a result of using significant unobservable inputs, the FIA embedded derivative is categorized as Level 3. | |||||||||||||||||||||||||||||||||||||||||
The Company has assumed and ceded certain blocks of policies under modified coinsurance agreements in which the investment results of the underlying portfolios inure directly to the reinsurers. As a result, these agreements contain embedded derivatives that are reported at fair value. Changes in their fair value are reported in earnings. The investments supporting these agreements are designated as “trading securities”; therefore changes in their fair value are also reported in earnings. The fair value of the embedded derivative is the difference between the policy liabilities (net of policy loans) of $2.6 billion and the fair value of the trading securities of $2.9 billion. As a result, changes in the fair value of the embedded derivatives are largely offset by the changes in fair value of the related investments and each are reported in earnings. The fair value of the embedded derivative is considered a Level 3 valuation due to the unobservable nature of the policy liabilities. | |||||||||||||||||||||||||||||||||||||||||
Certain of the Company’s subsidiaries have entered into interest support, a yearly renewable term (“YRT”) premium support, and portfolio maintenance agreements with PLC. These agreements meet the definition of a derivative and are accounted for at fair value and are considered Level 3 valuations. The fair value of these derivatives as of September 30, 2013 was $2.4 million and is included in Other long-term investments. For information regarding realized gains on these derivatives please refer to Note 14, Derivative Financial Instruments. | |||||||||||||||||||||||||||||||||||||||||
The Interest Support Agreement provides that PLC will make payments to Golden Gate II if actual investment income on certain of Golden Gate II’s asset portfolios falls below a calculated investment income amount as defined in the Interest Support Agreement. The calculated investment income amount is a level of investment income deemed to be sufficient to support certain of Golden Gate II’s obligations under a reinsurance agreement with the Company, dated July 1, 2007. The derivative is valued using an internal valuation model that assumes a conservative projection of investment income under an adverse interest rate scenario and the probability that the expectation falls below the calculated investment income amount. This derivative had a fair value of zero as of September 30, 2013. The assessment of required payments from PLC under the Interest Support Agreement occurs annually. | |||||||||||||||||||||||||||||||||||||||||
The YRT Premium support agreement provides that PLC will make payments to Golden Gate II in the event that YRT premium rates increase. The derivative is valued using an internal valuation model. The valuation model is a probability weighted discounted cash flow model. The value is primarily a function of the likelihood and severity of future YRT premium increases. The fair value of this derivative as of September 30, 2013 was $2.0 million. | |||||||||||||||||||||||||||||||||||||||||
The portfolio maintenance agreements provide that PLC will make payments to Golden Gate V and WCL in the event of other-than-temporary impairments on investments that exceed defined thresholds. The derivatives are valued using an internal discounted cash flow model. The significant unobservable inputs are the projected probability and severity of credit losses used to project future cash flows on the investment portfolios. The fair value of the portfolio maintenance agreements as of September 30, 2013, was approximately $0.4 million. | |||||||||||||||||||||||||||||||||||||||||
The Funds Withheld derivative results from a reinsurance agreement with Shades Creek where the economic performance of certain hedging instruments held by the Company is ceded to Shades Creek. The value of the Funds Withheld derivative is directly tied to the value of the hedging instruments held in the funds withheld account. The hedging instruments predominantly consist of derivative instruments the fair values of which are classified as a Level 2 measurement; as such, the fair value of the Funds Withheld derivative has been classified as a Level 2 measurement. The fair value of the Funds Withheld derivative as of September 30, 2013, was a liability of $49.0 million. | |||||||||||||||||||||||||||||||||||||||||
Annuity account balances | |||||||||||||||||||||||||||||||||||||||||
The Company records certain of its FIA reserves at fair value. The fair value is considered a Level 3 valuation. The FIA valuation model calculates the present value of future benefit cash flows less the projected future profits to quantify the net liability that is held as a reserve. This calculation is done using multiple risk neutral stochastic equity scenarios. The cash flows are discounted using LIBOR plus a credit spread. Best estimate assumptions are used for partial withdrawals, lapses, expenses and asset earned rate with a risk margin applied to each. These assumptions are reviewed at least annually as a part of the formal unlocking process. If an event were to occur within a quarter that would make the assumptions unreasonable, the assumptions would be reviewed within the quarter. | |||||||||||||||||||||||||||||||||||||||||
The discount rate for the fixed indexed annuities is based on an upward sloping rate curve which is updated each quarter. The discount rates for September 30, 2013, ranged from a one month rate of 0.36%, a 5 year rate of 2.44%, and a 30 year rate of 4.97%. A credit spread component is also included in the calculation to accommodate non-performance risk. | |||||||||||||||||||||||||||||||||||||||||
Separate Accounts | |||||||||||||||||||||||||||||||||||||||||
Separate account assets are invested in open-ended mutual funds and are included in Level 1. | |||||||||||||||||||||||||||||||||||||||||
Valuation of Level 3 Financial Instruments | |||||||||||||||||||||||||||||||||||||||||
The following table presents the valuation method for material financial instruments included in Level 3, as well as the unobservable inputs used in the valuation of those financial instruments: | |||||||||||||||||||||||||||||||||||||||||
Fair Value | |||||||||||||||||||||||||||||||||||||||||
As of | Valuation | Unobservable | Range | ||||||||||||||||||||||||||||||||||||||
September 30, 2013 | Technique | Input | (Weighted Average) | ||||||||||||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Other asset-backed securities | $ | 548,771 | Discounted cash flow | Liquidity premium | 0.69% - 1.32% (0.80%) | ||||||||||||||||||||||||||||||||||||
Paydown rate | 8.37% - 17.50% (12.45%) | ||||||||||||||||||||||||||||||||||||||||
Corporate bonds | 192,580 | Discounted cash flow | Spread over treasury | 0.32% - 6.75% (2.89%) | |||||||||||||||||||||||||||||||||||||
Embedded derivatives - | 77,835 | Actuarial cash flow | Mortality | 49% to 80% of 1994 MGDB table | |||||||||||||||||||||||||||||||||||||
GMWB(1) | model | Lapse | 0% - 24%, depending on product/duration/funded status of guarantee | ||||||||||||||||||||||||||||||||||||||
Utilization | 97% - 103% | ||||||||||||||||||||||||||||||||||||||||
Nonperformance risk | 0.19% - 1.31% | ||||||||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Annuity account balances(2) | $ | 110,590 | Actuarial cash flow | Asset earned rate | 5.37% | ||||||||||||||||||||||||||||||||||||
model | Expenses | $88 - $102 per policy | |||||||||||||||||||||||||||||||||||||||
Withdrawal rate | 2.20% | ||||||||||||||||||||||||||||||||||||||||
Mortality | 49% to 80% of 1994 MGDB table | ||||||||||||||||||||||||||||||||||||||||
Lapse | 2.2% - 33.0%, depending on duration/surrender charge period | ||||||||||||||||||||||||||||||||||||||||
Return on assets | 1.50% - 1.85% depending on surrender charge period | ||||||||||||||||||||||||||||||||||||||||
Nonperformance risk | 0.19% - 1.31% | ||||||||||||||||||||||||||||||||||||||||
Embedded derivative - FIA | 9,199 | Actuarial cash flow | Expenses | $83 - $97 per policy | |||||||||||||||||||||||||||||||||||||
model | Withdrawal rate | 1.1% - 4.5% depending on duration and tax qualification | |||||||||||||||||||||||||||||||||||||||
Mortality | 49% - 80% of 1994 MGDB table | ||||||||||||||||||||||||||||||||||||||||
Lapse | 2.5% - 40.0%, depending on duration/surrender charge period | ||||||||||||||||||||||||||||||||||||||||
Nonperformance risk | 0.19% - 1.31% | ||||||||||||||||||||||||||||||||||||||||
(1)The fair value for the GMWB embedded derivative is presented as a net asset for the purposes of this chart. Excludes modified coinsurance agreements. | |||||||||||||||||||||||||||||||||||||||||
(2)Represents account balance liabilities related to fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
The chart above excludes Level 3 financial instruments that are valued using broker quotes and those which book value approximates fair value. | |||||||||||||||||||||||||||||||||||||||||
The Company has considered all reasonably available quantitative inputs as of September 30, 2013, but the valuation techniques and inputs used by some brokers in pricing certain financial instruments are not shared with the Company. This resulted in $171.0 million of financial instruments, all asset backed securities, being classified as Level 3 as of September 30, 2013. | |||||||||||||||||||||||||||||||||||||||||
In certain cases the Company has determined that book value materially approximates fair value. As of September 30, 2013, the Company held $69.8 million of financial instruments where book value approximates fair value. Of the $69.8 million, $65.5 million represents equity securities, which are predominantly FHLB stock, and $4.3 million of other fixed maturity securities. | |||||||||||||||||||||||||||||||||||||||||
The following table presents the valuation method for material financial instruments included in Level 3, as well as the unobservable inputs used in the valuation of those financial instruments: | |||||||||||||||||||||||||||||||||||||||||
Fair Value | |||||||||||||||||||||||||||||||||||||||||
As of | Valuation | Unobservable | Range | ||||||||||||||||||||||||||||||||||||||
December 31, 2012 | Technique | Input | (Weighted Average) | ||||||||||||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Other asset-backed securities | $ | 596,143 | Discounted cash flow | Liquidity premium | 0.72% - 1.68% (1.29%) | ||||||||||||||||||||||||||||||||||||
Paydown rate | 8.51% - 18.10% (11.40%) | ||||||||||||||||||||||||||||||||||||||||
Other government-related securities | 20,011 | Discounted cash flow | Spread over treasury | -0.30% | |||||||||||||||||||||||||||||||||||||
Corporate bonds | 168,007 | Discounted cash flow | Spread over treasury | 0.92% - 7.75% (3.34%) | |||||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Embedded derivatives - GMWB(1) | $ | 169,041 | Actuarial cash flow model | Mortality | 57% of 1994 MGDB table | ||||||||||||||||||||||||||||||||||||
Lapse | 0% - 24%, depending on product/duration/funded status of guarantee | ||||||||||||||||||||||||||||||||||||||||
Utilization | 93% - 100% | ||||||||||||||||||||||||||||||||||||||||
Nonperformance risk | 0.09% - 1.34% | ||||||||||||||||||||||||||||||||||||||||
Annuity account balances(2) | 129,468 | Actuarial cash flow model | Asset earned rate | 5.81% | |||||||||||||||||||||||||||||||||||||
Expenses | $ 88 - $108 per policy | ||||||||||||||||||||||||||||||||||||||||
Withdrawal rate | 2.20% | ||||||||||||||||||||||||||||||||||||||||
Mortality | 57% of 1994 MGDB table | ||||||||||||||||||||||||||||||||||||||||
Lapse | 2.2% - 45.0%, depending on duration/surrender charge period | ||||||||||||||||||||||||||||||||||||||||
Return on assets | 1.50% - 1.85% depending on surrender charge period | ||||||||||||||||||||||||||||||||||||||||
Nonperformance risk | 0.09% - 1.34% | ||||||||||||||||||||||||||||||||||||||||
(1)The fair value for the GMWB embedded derivative is presented as a net liability for the purposes of this chart. Excludes modified coinsurance agreements. | |||||||||||||||||||||||||||||||||||||||||
(2)Represents account balance liabilities related to fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
The chart above excludes Level 3 financial instruments that are valued using broker quotes and those which book value approximates fair value. | |||||||||||||||||||||||||||||||||||||||||
The valuation techniques and inputs used by some brokers in pricing certain financial instruments are not shared with the Company which resulted in $70.5 million of financial instruments being classified as Level 3 as of December 31, 2012. | |||||||||||||||||||||||||||||||||||||||||
In certain cases the Company has determined that book value materially approximates fair value. As of December 31, 2012, the Company held $69.8 million of financial instruments where book value approximates fair value. Of the $69.8 million, $65.5 million represents equity securities, which are predominantly FHLB stock, and $4.3 million of other fixed maturity securities. | |||||||||||||||||||||||||||||||||||||||||
The asset-backed securities classified as Level 3 are predominantly ARS. A change in the paydown rate (the projected annual rate of principal reduction) of the ARS can significantly impact the fair value of these securities. A decrease in the paydown rate would increase the projected weighted average life of the ARS and increase the sensitivity of the ARS’ fair value to changes in interest rates. An increase in the liquidity premium would result in a decrease in the fair value of the securities, while a decrease in the liquidity premium would increase the fair value of these securities. | |||||||||||||||||||||||||||||||||||||||||
The fair value of corporate bonds classified as Level 3 is sensitive to changes in the interest rate spread over the corresponding U.S. Treasury rate. This spread represents a risk premium that is impacted by company specific and market factors. An increase in the spread can be caused by a perceived increase in credit risk of a specific issuer and/or an increase in the overall market risk premium associated with similar securities. The fair values of corporate bonds are sensitive to changes in spread. When holding the treasury rate constant, the fair value of corporate bonds increases when spreads decrease, and decreases when spreads increases. | |||||||||||||||||||||||||||||||||||||||||
The GMWB liability is sensitive to changes in the discount rate which includes the Company’s nonperformance risk, volatility, lapse, and mortality assumptions. The volatility assumption is an observable input as it is based on market inputs. The Company’s nonperformance risk, lapse, and mortality are unobservable. An increase in the three unobservable assumptions would result in a decrease in the liability and conversely, if there is a decrease in the assumptions the liability would increase. The liability is also dependent on the assumed policyholder utilization of the GMWB where an increase in assumed utilization would result in an increase in the liability and conversely, if there is a decrease in the assumption, the liability would decrease. | |||||||||||||||||||||||||||||||||||||||||
The fair value of the FIA account balance liability is predominantly impacted by observable inputs such as discount rates and equity returns. However, the fair value of the FIA account balance liability is sensitive to the asset earned rate and required return on assets. The value of the liability increases with an increase in required return on assets and decreases with an increase in the asset earned rate and conversely, the value of the liability decreases with a decrease in required return on assets and an increase in the asset earned rate. | |||||||||||||||||||||||||||||||||||||||||
The fair value of the FIA embedded derivative is predominantly impacted by observable inputs such as discount rates and equity returns. However, the fair value of the FIA embedded derivative is sensitive to non-performance risk. The value of the liability increases with decreases in the discount rate and non-performance risk and decreases with increases in the discount rate and non-performance risk. The value of the liability increases with increases in equity returns and the liability decreases with a decrease in equity returns. | |||||||||||||||||||||||||||||||||||||||||
The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the three months ended September 30, 2013, for which the Company has used significant unobservable inputs (Level 3): | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Gains (losses) | |||||||||||||||||||||||||||||||||||||||||
Total | Total | included in | |||||||||||||||||||||||||||||||||||||||
Realized and Unrealized | Realized and Unrealized | Earnings | |||||||||||||||||||||||||||||||||||||||
Gains | Losses | related to | |||||||||||||||||||||||||||||||||||||||
Included in | Included in | Instruments | |||||||||||||||||||||||||||||||||||||||
Other | Other | Transfers | still held at | ||||||||||||||||||||||||||||||||||||||
Beginning | Included in | Comprehensive | Included in | Comprehensive | in/out of | Ending | the Reporting | ||||||||||||||||||||||||||||||||||
Balance | Earnings | Income | Earnings | Income | Purchases | Sales | Issuances | Settlements | Level 3 | Other | Balance | Date | |||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities available-for-sale | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | $ | 14,062 | $ | — | $ | 1,310 | $ | — | $ | — | $ | — | $ | (12 | ) | $ | — | $ | — | $ | (15,333 | ) | $ | 11 | $ | 38 | $ | — | |||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other asset-backed securities | 576,396 | — | 52 | — | (26,969 | ) | 11,769 | (12,085 | ) | — | — | — | (392 | ) | 548,771 | — | |||||||||||||||||||||||||
U.S. government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
States, municipals, and political subdivisions | 4,275 | — | — | — | — | — | — | — | — | — | — | 4,275 | — | ||||||||||||||||||||||||||||
Other government-related securities | 20,000 | — | 1 | — | — | — | (20,000 | ) | — | — | — | (1 | ) | — | — | ||||||||||||||||||||||||||
Corporate bonds | 194,895 | — | 1,662 | — | (3,513 | ) | 11,002 | (13,558 | ) | — | — | (3,385 | ) | 385 | 187,488 | — | |||||||||||||||||||||||||
Total fixed maturity securities - available-for-sale | 809,628 | — | 3,025 | — | (30,482 | ) | 22,771 | (45,655 | ) | — | — | (18,718 | ) | 3 | 740,572 | — | |||||||||||||||||||||||||
Fixed maturity securities - trading | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | 1,582 | — | — | (1 | ) | — | — | (72 | ) | — | — | (1,494 | ) | (15 | ) | — | — | ||||||||||||||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other asset-backed securities | 168,851 | 3,167 | — | (1,080 | ) | — | 16,394 | (16,568 | ) | — | — | — | 203 | 170,967 | 1,596 | ||||||||||||||||||||||||||
U.S. government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
States, municipals and political subdivisions | 3,500 | — | — | (123 | ) | — | — | — | — | — | (3,377 | ) | — | — | — | ||||||||||||||||||||||||||
Other government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Corporate bonds | 5,092 | — | — | (4 | ) | — | — | — | — | — | — | 4 | 5,092 | (4 | ) | ||||||||||||||||||||||||||
Total fixed maturity securities - trading | 179,025 | 3,167 | — | (1,208 | ) | — | 16,394 | (16,640 | ) | — | — | (4,871 | ) | 192 | 176,059 | 1,592 | |||||||||||||||||||||||||
Total fixed maturity securities | 988,653 | 3,167 | 3,025 | (1,208 | ) | (30,482 | ) | 39,165 | (62,295 | ) | — | — | (23,589 | ) | 195 | 916,631 | 1,592 | ||||||||||||||||||||||||
Equity securities | 65,527 | — | — | — | — | — | — | — | — | — | — | 65,527 | — | ||||||||||||||||||||||||||||
Other long-term investments(1) | 47,838 | 36,917 | (1,750 | ) | — | — | — | — | — | — | — | — | 83,005 | 35,167 | |||||||||||||||||||||||||||
Short-term investments | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Total investments | 1,102,018 | 40,084 | 1,275 | (1,208 | ) | (30,482 | ) | 39,165 | (62,295 | ) | — | — | (23,589 | ) | 195 | 1,065,163 | 36,759 | ||||||||||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | 1,102,018 | $ | 40,084 | $ | 1,275 | $ | (1,208 | ) | $ | (30,482 | ) | $ | 39,165 | $ | (62,295 | ) | $ | — | $ | — | $ | (23,589 | ) | $ | 195 | $ | 1,065,163 | $ | 36,759 | |||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Annuity account balances(2) | $ | 114,614 | $ | — | $ | (2,472 | ) | $ | — | $ | — | $ | — | $ | — | $ | 46 | $ | 6,542 | — | $ | — | $ | 110,590 | $ | — | |||||||||||||||
Other liabilities(1) | 256,776 | 39,109 | (13,056 | ) | — | — | — | — | — | — | — | — | 230,723 | 26,053 | |||||||||||||||||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | 371,390 | $ | 39,109 | $ | (15,528 | ) | $ | — | $ | — | $ | — | $ | — | $ | 46 | $ | 6,542 | $ | — | $ | — | $ | 341,313 | $ | 26,053 | ||||||||||||||
(1)Represents certain freestanding and embedded derivatives. | |||||||||||||||||||||||||||||||||||||||||
(2)Represents liabilities related to fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2013, $1.3 million of securities were transferred into Level 3. This amount was transferred from Level 2. These transfers resulted from securities that were priced by independent pricing services or brokers in previous periods, using no significant unobservable inputs, but were priced internally using significant unobservable inputs where market observable inputs were no longer available as of September 30, 2013. | |||||||||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2013, there were $24.9 million of securities transferred out of Level 3. This amount was transferred to Level 2. These transfers resulted from securities that were priced using significant unobservable inputs in previous periods, but are now priced by independent pricing services or brokers, using no significant unobservable inputs as of September 30, 2013. | |||||||||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2013, there were no transfers from Level 2 to Level 1. | |||||||||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2013, there were no transfers from Level 1. | |||||||||||||||||||||||||||||||||||||||||
The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the three months ended September 30, 2012, for which the Company has used significant unobservable inputs (Level 3): | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Gains (losses) | |||||||||||||||||||||||||||||||||||||||||
Total | Total | included in | |||||||||||||||||||||||||||||||||||||||
Realized and Unrealized | Realized and Unrealized | Earnings | |||||||||||||||||||||||||||||||||||||||
Gains | Losses | related to | |||||||||||||||||||||||||||||||||||||||
Included in | Included in | Instruments | |||||||||||||||||||||||||||||||||||||||
Other | Other | Transfers | still held at | ||||||||||||||||||||||||||||||||||||||
Beginning | Included in | Comprehensive | Included in | Comprehensive | in/out of | Ending | the Reporting | ||||||||||||||||||||||||||||||||||
Balance | Earnings | Income | Earnings | Income | Purchases | Sales | Issuances | Settlements | Level 3 | Other | Balance | Date | |||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities available-for-sale | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | $ | 4 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 4 | $ | — | |||||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other asset-backed securities | 584,641 | 45 | 11,462 | — | (1,157 | ) | — | (5,200 | ) | — | — | — | (153 | ) | 589,638 | — | |||||||||||||||||||||||||
U.S. government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
States, municipals, and political subdivisions | 4,275 | — | — | — | — | — | — | — | — | — | — | 4,275 | — | ||||||||||||||||||||||||||||
Other government-related securities | 20,020 | — | — | (11 | ) | — | — | — | — | — | (4 | ) | 20,005 | — | |||||||||||||||||||||||||||
Corporate bonds | 172,145 | — | 5,349 | — | (221 | ) | — | (2,090 | ) | — | — | (26,802 | ) | 122 | 148,503 | — | |||||||||||||||||||||||||
Total fixed maturity securities - available-for-sale | 781,085 | 45 | 16,811 | — | (1,389 | ) | — | (7,290 | ) | — | — | (26,802 | ) | (35 | ) | 762,425 | — | ||||||||||||||||||||||||
Fixed maturity securities - trading | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other asset-backed securities | 65,059 | 2,972 | — | (148 | ) | — | 7,208 | (1,442 | ) | — | — | — | 413 | 74,062 | 2,823 | ||||||||||||||||||||||||||
U.S. government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
States, municipals and political subdivisions | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Corporate bonds | 114 | 1 | — | — | — | — | — | — | — | — | 115 | 2 | |||||||||||||||||||||||||||||
Total fixed maturity securities - trading | 65,173 | 2,973 | — | (148 | ) | — | 7,208 | (1,442 | ) | — | — | — | 413 | 74,177 | 2,825 | ||||||||||||||||||||||||||
Total fixed maturity securities | 846,258 | 3,018 | 16,811 | (148 | ) | (1,389 | ) | 7,208 | (8,732 | ) | — | — | (26,802 | ) | 378 | 836,602 | 2,825 | ||||||||||||||||||||||||
Equity securities | 69,795 | 8 | — | — | (147 | ) | — | (4,295 | ) | — | — | — | — | 65,361 | — | ||||||||||||||||||||||||||
Other long-term investments(1) | 25,315 | 20,278 | — | (34 | ) | — | — | — | — | — | — | — | 45,559 | 20,244 | |||||||||||||||||||||||||||
Short-term investments | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Total investments | 941,368 | 23,304 | 16,811 | (182 | ) | (1,536 | ) | 7,208 | (13,027 | ) | — | — | (26,802 | ) | 378 | 947,522 | 23,069 | ||||||||||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | 941,368 | $ | 23,304 | $ | 16,811 | $ | (182 | ) | $ | (1,536 | ) | $ | 7,208 | $ | (13,027 | ) | $ | — | $ | — | $ | (26,802 | ) | $ | 378 | $ | 947,522 | $ | 23,069 | |||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Annuity account balances(2) | $ | 134,597 | $ | — | $ | — | $ | (5,766 | ) | $ | — | $ | — | $ | — | $ | 217 | $ | 6,011 | $ | — | $ | — | $ | 134,569 | $ | — | ||||||||||||||
Other liabilities(1) | 516,587 | 11,016 | — | (112,779 | ) | — | — | — | — | — | — | — | 618,350 | (101,763 | ) | ||||||||||||||||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | 651,184 | $ | 11,016 | $ | — | $ | (118,545 | ) | $ | — | $ | — | $ | — | $ | 217 | $ | 6,011 | $ | — | $ | — | $ | 752,919 | $ | (101,763 | ) | |||||||||||||
(1)Represents certain freestanding and embedded derivatives. | |||||||||||||||||||||||||||||||||||||||||
(2)Represents liabilities related to fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2012, there were no securities transferred into Level 3. | |||||||||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2012, $26.8 million of securities were transferred out of Level 3. This amount was transferred into Level 2. These transfers resulted from securities priced by independent pricing services or brokers as of September 30, 2012 that were previously priced internally using significant unobservable inputs where market observable inputs were not available. | |||||||||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2012, there were no transfers from Level 2 to Level 1. | |||||||||||||||||||||||||||||||||||||||||
For the three months ended September 30, 2012, there were no transfers out of Level 1. | |||||||||||||||||||||||||||||||||||||||||
The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the nine months ended September 30, 2013, for which the Company has used significant unobservable inputs (Level 3): | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Gains (losses) | |||||||||||||||||||||||||||||||||||||||||
Total | Total | included in | |||||||||||||||||||||||||||||||||||||||
Realized and Unrealized | Realized and Unrealized | Earnings | |||||||||||||||||||||||||||||||||||||||
Gains | Losses | related to | |||||||||||||||||||||||||||||||||||||||
Included in | Included in | Instruments | |||||||||||||||||||||||||||||||||||||||
Other | Other | Transfers | still held at | ||||||||||||||||||||||||||||||||||||||
Beginning | Included in | Comprehensive | Included in | Comprehensive | in/out of | Ending | the Reporting | ||||||||||||||||||||||||||||||||||
Balance | Earnings | Income | Earnings | Income | Purchases | Sales | Issuances | Settlements | Level 3 | Other | Balance | Date | |||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities available-for-sale | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | $ | 4 | $ | — | $ | 1,310 | $ | — | $ | (337 | ) | $ | 14,349 | $ | (12 | ) | $ | — | $ | — | $ | (15,287 | ) | $ | 11 | $ | 38 | $ | — | ||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other asset-backed securities | 596,143 | — | 43,808 | — | (54,517 | ) | 24,931 | (62,471 | ) | — | — | 1,227 | (350 | ) | 548,771 | — | |||||||||||||||||||||||||
U.S. government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
States, municipals, and political subdivisions | 4,275 | — | — | — | — | — | — | — | — | — | — | 4,275 | — | ||||||||||||||||||||||||||||
Other government-related securities | 20,011 | — | 2 | — | (3 | ) | — | (20,000 | ) | — | — | — | (10 | ) | — | — | |||||||||||||||||||||||||
Corporate bonds | 167,892 | 116 | 2,673 | — | (13,559 | ) | 29,277 | (58,742 | ) | — | — | 58,945 | 886 | 187,488 | — | ||||||||||||||||||||||||||
Total fixed maturity securities - available-for-sale | 788,325 | 116 | 47,793 | — | (68,416 | ) | 68,557 | (141,225 | ) | — | — | 44,885 | 537 | 740,572 | — | ||||||||||||||||||||||||||
Fixed maturity securities - trading | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | — | — | — | (1 | ) | — | 1,582 | (72 | ) | — | — | (1,494 | ) | (15 | ) | — | — | ||||||||||||||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other asset-backed securities | 70,535 | 7,964 | — | (3,949 | ) | — | 122,224 | (29,344 | ) | — | — | 2,210 | 1,327 | 170,967 | 4,814 | ||||||||||||||||||||||||||
U.S. government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
States, municipals and political subdivisions | — | — | — | (123 | ) | — | 3,500 | — | — | — | (3,377 | ) | — | — | — | ||||||||||||||||||||||||||
Other government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Corporate bonds | 115 | 1 | — | (27 | ) | — | — | (17 | ) | — | — | 5,013 | 7 | 5,092 | (4 | ) | |||||||||||||||||||||||||
Total fixed maturity securities - trading | 70,650 | 7,965 | — | (4,100 | ) | — | 127,306 | (29,433 | ) | — | — | 2,352 | 1,319 | 176,059 | 4,810 | ||||||||||||||||||||||||||
Total fixed maturity securities | 858,975 | 8,081 | 47,793 | (4,100 | ) | (68,416 | ) | 195,863 | (170,658 | ) | — | — | 47,237 | 1,856 | 916,631 | 4,810 | |||||||||||||||||||||||||
Equity securities | 65,527 | — | — | — | — | — | — | — | — | — | — | 65,527 | — | ||||||||||||||||||||||||||||
Other long-term investments(1) | 48,655 | 84,176 | (15,733 | ) | — | — | — | — | — | — | — | (34,093 | ) | 83,005 | 68,443 | ||||||||||||||||||||||||||
Short-term investments | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Total investments | 973,157 | 92,257 | 32,060 | (4,100 | ) | (68,416 | ) | 195,863 | (170,658 | ) | — | — | 47,237 | (32,237 | ) | 1,065,163 | 73,253 | ||||||||||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | 973,157 | $ | 92,257 | $ | 32,060 | $ | (4,100 | ) | $ | (68,416 | ) | $ | 195,863 | $ | (170,658 | ) | $ | — | $ | — | $ | 47,237 | $ | (32,237 | ) | $ | 1,065,163 | $ | 73,253 | |||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Annuity account balances(2) | $ | 129,468 | $ | — | $ | (6,159 | ) | $ | — | $ | — | $ | — | $ | — | $ | 247 | $ | 25,284 | $ | — | $ | — | $ | 110,590 | $ | — | ||||||||||||||
Other liabilities(1) | 611,437 | 277,319 | (31,110 | ) | — | — | — | — | — | — | — | 134,505 | 230,723 | 246,209 | |||||||||||||||||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | 740,905 | $ | 277,319 | $ | (37,269 | ) | $ | — | $ | — | $ | — | $ | — | $ | 247 | $ | 25,284 | $ | — | $ | 134,505 | $ | 341,313 | $ | 246,209 | ||||||||||||||
(1)Represents certain freestanding and embedded derivatives. | |||||||||||||||||||||||||||||||||||||||||
(2)Represents liabilities related to fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
For the nine months ended September 30, 2013, $72.1 million of securities were transferred into Level 3. This amount was transferred from Level 2. These transfers resulted from securities that were priced by independent pricing services or brokers in previous periods, using no significant unobservable inputs, but were priced internally using significant unobservable inputs where market observable inputs were no longer available as of September 30, 2013. All transfers are recognized as of the end of the period. | |||||||||||||||||||||||||||||||||||||||||
For the nine months ended September 30, 2013, there were $24.9 million of securities transferred out of Level 3. This amount was transferred to Level 2. These transfers resulted from securities that were priced using significant unobservable inputs in previous periods, but are now priced by independent pricing services or brokers, using no significant unobservable inputs as of September 30, 2013. | |||||||||||||||||||||||||||||||||||||||||
For the nine months ended September 30, 2013, there were no transfers from Level 2 to Level 1. | |||||||||||||||||||||||||||||||||||||||||
For the nine months ended September 30, 2013, there were no transfers out of Level 1. | |||||||||||||||||||||||||||||||||||||||||
The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the nine months ended September 30, 2012, for which the Company has used significant unobservable inputs (Level 3): | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Gains (losses) | |||||||||||||||||||||||||||||||||||||||||
Total | Total | included in | |||||||||||||||||||||||||||||||||||||||
Realized and Unrealized | Realized and Unrealized | Earnings | |||||||||||||||||||||||||||||||||||||||
Gains | Losses | related to | |||||||||||||||||||||||||||||||||||||||
Included in | Included in | Instruments | |||||||||||||||||||||||||||||||||||||||
Other | Other | Transfers | still held at | ||||||||||||||||||||||||||||||||||||||
Beginning | Included in | Comprehensive | Included in | Comprehensive | in/out of | Ending | the Reporting | ||||||||||||||||||||||||||||||||||
Balance | Earnings | Income | Earnings | Income | Purchases | Sales | Issuances | Settlements | Level 3 | Other | Balance | Date | |||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities available-for-sale | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | $ | 7 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (3 | ) | $ | — | $ | — | $ | — | $ | — | $ | 4 | $ | — | ||||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other asset-backed securities | 614,813 | 339 | 15,981 | — | (22,055 | ) | — | (19,050 | ) | — | — | — | (390 | ) | 589,638 | — | |||||||||||||||||||||||||
U.S. government-related securities | 15,000 | — | — | — | (1 | ) | — | (15,000 | ) | — | — | — | 1 | — | — | ||||||||||||||||||||||||||
States, municipals, and political subdivisions | — | — | — | — | — | 4,275 | — | — | — | — | — | 4,275 | — | ||||||||||||||||||||||||||||
Other government-related securities | — | — | 18 | — | (27 | ) | 20,023 | — | — | — | — | (9 | ) | 20,005 | — | ||||||||||||||||||||||||||
Corporate bonds | 119,565 | — | 7,198 | — | (2,131 | ) | 4 | (4,185 | ) | — | — | 27,810 | 242 | 148,503 | — | ||||||||||||||||||||||||||
Total fixed maturity securities - available-for-sale | 749,385 | 339 | 23,197 | — | (24,214 | ) | 24,302 | (38,238 | ) | — | — | 27,810 | (156 | ) | 762,425 | — | |||||||||||||||||||||||||
Fixed maturity securities - trading | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other asset-backed securities | 28,343 | 3,450 | — | (905 | ) | — | 48,255 | (6,516 | ) | — | — | — | 1,435 | 74,062 | 2,545 | ||||||||||||||||||||||||||
U.S. government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
States, municipals and political subdivisions | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Corporate bonds | — | 1 | — | — | — | 1 | — | — | — | 113 | — | 115 | 10 | ||||||||||||||||||||||||||||
Total fixed maturity securities - trading | 28,343 | 3,451 | — | (905 | ) | — | 48,256 | (6,516 | ) | — | — | 113 | 1,435 | 74,177 | 2,555 | ||||||||||||||||||||||||||
Total fixed maturity securities | 777,728 | 3,790 | 23,197 | (905 | ) | (24,214 | ) | 72,558 | (44,754 | ) | — | — | 27,923 | 1,279 | 836,602 | 2,555 | |||||||||||||||||||||||||
Equity securities | 70,080 | 8 | 661 | — | (1,097 | ) | 4 | (4,295 | ) | — | — | — | — | 65,361 | — | ||||||||||||||||||||||||||
Other long-term investments(1) | 19,103 | 33,951 | — | (7,495 | ) | — | — | — | — | — | — | — | 45,559 | 26,456 | |||||||||||||||||||||||||||
Short-term investments | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Total investments | 866,911 | 37,749 | 23,858 | (8,400 | ) | (25,311 | ) | 72,562 | (49,049 | ) | — | — | 27,923 | 1,279 | 947,522 | 29,011 | |||||||||||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | 866,911 | $ | 37,749 | $ | 23,858 | $ | (8,400 | ) | $ | (25,311 | ) | $ | 72,562 | $ | (49,049 | ) | $ | — | $ | — | $ | 27,923 | $ | 1,279 | $ | 947,522 | $ | 29,011 | ||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Annuity account balances(2) | $ | 136,462 | $ | — | $ | — | $ | (9,983 | ) | $ | — | $ | — | $ | — | $ | 645 | $ | 12,521 | $ | — | $ | — | $ | 134,569 | $ | — | ||||||||||||||
Other liabilities(1) | 437,613 | 67,565 | — | (248,302 | ) | — | — | — | — | — | — | — | 618,350 | (180,737 | ) | ||||||||||||||||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | 574,075 | $ | 67,565 | $ | — | $ | (258,285 | ) | $ | — | $ | — | $ | — | $ | 645 | $ | 12,521 | $ | — | $ | — | $ | 752,919 | $ | (180,737 | ) | |||||||||||||
(1)Represents certain freestanding and embedded derivatives. | |||||||||||||||||||||||||||||||||||||||||
(2)Represents liabilities related to fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
For the nine months ended September 30, 2012, $54.7 million of securities were transferred into Level 3. This amount was transferred from Level 2. These transfers resulted from securities that were priced by independent pricing services or brokers in previous periods, using no significant unobservable inputs, but were priced internally using significant unobservable inputs where market observable inputs were no longer available as of September 30, 2012. All transfers are recognized as of the end of the period. | |||||||||||||||||||||||||||||||||||||||||
For the nine months ended September 30, 2012, $26.8 million of securities were transferred out of Level 3. This amount was transferred into Level 2. These transfers resulted from securities priced by independent pricing services or brokers as of September 30, 2012 that were priced internally using significant unobservable inputs where market observable inputs were not available during previous periods. | |||||||||||||||||||||||||||||||||||||||||
For the nine months ended September 30, 2012, there were no transfers from Level 2 to Level 1. | |||||||||||||||||||||||||||||||||||||||||
For the nine months ended September 30, 2012, there were no transfers out of Level 1. | |||||||||||||||||||||||||||||||||||||||||
Total realized and unrealized gains (losses) on Level 3 assets and liabilities are primarily reported in either realized investment gains (losses) within the consolidated statements of income (loss) or other comprehensive income (loss) within shareowners’ equity based on the appropriate accounting treatment for the item. | |||||||||||||||||||||||||||||||||||||||||
Purchases, sales, issuances, and settlements, net, represent the activity that occurred during the period that results in a change of the asset or liability but does not represent changes in fair value for the instruments held at the beginning of the period. Such activity primarily relates to purchases and sales of fixed maturity securities and issuances and settlements of fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
The Company reviews the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets or liabilities. Such reclassifications are reported as transfers in and out of Level 3 at the beginning fair value for the reporting period in which the changes occur. | |||||||||||||||||||||||||||||||||||||||||
The amount of total gains (losses) for assets and liabilities still held as of the reporting date primarily represents changes in fair value of trading securities and certain derivatives that exist as of the reporting date and the change in fair value of fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
Estimated Fair Value of Financial Instruments | |||||||||||||||||||||||||||||||||||||||||
The carrying amounts and estimated fair values of the Company’s financial instruments as of the periods shown below are as follows: | |||||||||||||||||||||||||||||||||||||||||
As of | |||||||||||||||||||||||||||||||||||||||||
September 30, 2013 | December 31, 2012 | ||||||||||||||||||||||||||||||||||||||||
Fair Value | Carrying | Carrying | |||||||||||||||||||||||||||||||||||||||
Level | Amounts | Fair Values | Amounts | Fair Values | |||||||||||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Mortgage loans on real estate | 3 | $ | 4,794,924 | $ | 5,287,854 | $ | 4,948,625 | $ | 5,723,579 | ||||||||||||||||||||||||||||||||
Policy loans | 3 | 856,333 | 856,333 | 865,391 | 865,391 | ||||||||||||||||||||||||||||||||||||
Fixed maturities, held-to-maturity(1) | 3 | 350,000 | 341,797 | 300,000 | 319,163 | ||||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Stable value product account balances | 3 | $ | 2,531,262 | $ | 2,535,865 | $ | 2,510,559 | $ | 2,534,094 | ||||||||||||||||||||||||||||||||
Annuity account balances | 3 | 10,431,938 | 10,074,996 | 10,658,463 | 10,525,702 | ||||||||||||||||||||||||||||||||||||
Debt: | |||||||||||||||||||||||||||||||||||||||||
Non-recourse funding obligations(2) | 3 | $ | 1,491,900 | $ | 1,392,932 | $ | 1,446,900 | $ | 1,357,290 | ||||||||||||||||||||||||||||||||
Except as noted below, fair values were estimated using quoted market prices. | |||||||||||||||||||||||||||||||||||||||||
(1) Security purchased from unconsolidated subsidiary, Red Mountain LLC. | |||||||||||||||||||||||||||||||||||||||||
(2) Of this carrying amount $350 million, fair value of $325.1 million, as of September 30, 2013, and $300 million, fair value of $297.6 million, as of December 31, 2012, relates to non-recourse funding obligations issued by Golden Gate V. | |||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||||||||||||||||||||||
Mortgage loans on real estate | |||||||||||||||||||||||||||||||||||||||||
The Company estimates the fair value of mortgage loans using an internally developed model. This model includes inputs derived by the Company based on assumed discount rates relative to the Company’s current mortgage loan lending rate and an expected cash flow analysis based on a review of the mortgage loan terms. The model also contains the Company’s determined representative risk adjustment assumptions related to credit and liquidity risks. | |||||||||||||||||||||||||||||||||||||||||
Policy loans | |||||||||||||||||||||||||||||||||||||||||
The Company believes the fair value of policy loans approximates book value. Policy loans are funds provided to policy holders in return for a claim on the policy. The funds provided are limited to the cash surrender value of the underlying policy. The nature of policy loans is to have a negligible default risk as the loans are fully collateralized by the value of the policy. Policy loans do not have a stated maturity and the balances and accrued interest are repaid either by the policyholder or with proceeds from the policy. Due to the collateralized nature of policy loans and unpredictable timing of repayments, the Company believes the fair value of policy loans approximates carrying value. | |||||||||||||||||||||||||||||||||||||||||
Fixed maturities, held-to-maturity | |||||||||||||||||||||||||||||||||||||||||
The Company estimates the fair value of its fixed maturity, held-to-maturity securities using internal discounted cash flow models. The discount rates used in the model were based on a current market yield for similar financial instruments. | |||||||||||||||||||||||||||||||||||||||||
Stable value product and Annuity account balances | |||||||||||||||||||||||||||||||||||||||||
The Company estimates the fair value of stable value product account balances and annuity account balances using models based on discounted expected cash flows. The discount rates used in the models were based on a current market rate for similar financial instruments. | |||||||||||||||||||||||||||||||||||||||||
Non-recourse funding obligations | |||||||||||||||||||||||||||||||||||||||||
The Company estimates the fair value of its non-recourse funding obligations using internal discounted cash flow models. The discount rates used in the model were based on a current market yield for similar financial instruments. |
DERIVATIVE_FINANCIAL_INSTRUMEN
DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | ' | |||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | ' | |||||||||||||
14. DERIVATIVE FINANCIAL INSTRUMENTS | ||||||||||||||
Types of Derivative Instruments and Derivative Strategies | ||||||||||||||
The Company utilizes a risk management strategy that incorporates the use of derivative financial instruments to reduce exposure to certain risks, including but not limited to, interest rate risk, inflation risk, currency exchange risk, volatility risk, and equity market risk. These strategies are developed through the Company’s analysis of data from financial simulation models and other internal and industry sources, and are then incorporated into the Company’s risk management program. | ||||||||||||||
Derivative instruments expose the Company to credit and market risk and could result in material changes from period to period. The Company attempts to minimize its credit risk by entering into transactions with highly rated counterparties. The Company manages the market risk by establishing and monitoring limits as to the types and degrees of risk that may be undertaken. The Company monitors its use of derivatives in connection with its overall asset/liability management programs and risk management strategies. In addition, all derivative programs are monitored by our risk management department. | ||||||||||||||
Derivatives Related to Interest Rate Risk Management | ||||||||||||||
Derivative instruments that are used as part of the Company’s interest rate risk management strategy include interest rate swaps, interest rate futures, interest rate caps, and interest rate swaptions. The Company’s inflation risk management strategy involves the use of swaps that requires the Company to pay a fixed rate and receive a floating rate that is based on changes in the Consumer Price Index (“CPI”). | ||||||||||||||
Derivatives Related to Risk Mitigation of Variable Annuity Contracts | ||||||||||||||
The Company may use the following types of derivative contracts to mitigate its exposure to certain guaranteed benefits related to variable annuity contracts: | ||||||||||||||
· Foreign Currency Futures | ||||||||||||||
· Variance Swaps | ||||||||||||||
· Interest Rate Futures | ||||||||||||||
· Equity Options | ||||||||||||||
· Equity Futures | ||||||||||||||
· Credit Derivatives | ||||||||||||||
· Interest Rate Swaps | ||||||||||||||
· Interest Rate Swaptions | ||||||||||||||
· Volatility Futures | ||||||||||||||
· Funds Withheld Agreement | ||||||||||||||
Other Derivatives | ||||||||||||||
Certain of the Company’s subsidiaries have derivatives with PLC. These derivatives consist of an interest support agreement, a YRT premium support agreement, and portfolio maintenance agreements with PLC. | ||||||||||||||
Accounting for Derivative Instruments | ||||||||||||||
The Company records its derivative financial instruments in the consolidated condensed balance sheet in “other long-term investments” and “other liabilities” in accordance with GAAP, which requires that all derivative instruments be recognized in the balance sheet at fair value. The change in the fair value of derivative financial instruments is reported either in the statement of income or in other comprehensive income (loss), depending upon whether it qualified for and also has been properly identified as being part of a hedging relationship, and also on the type of hedging relationship that exists. | ||||||||||||||
For a derivative financial instrument to be accounted for as an accounting hedge, it must be identified and documented as such on the date of designation. For cash flow hedges, the effective portion of their realized gain or loss is reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged item impacts earnings. Any remaining gain or loss, the ineffective portion, is recognized in current earnings. For fair value hedge derivatives, their gain or loss as well as the offsetting loss or gain attributable to the hedged risk of the hedged item is recognized in current earnings. Effectiveness of the Company’s hedge relationships is assessed on a quarterly basis. | ||||||||||||||
The Company reports changes in fair values of derivatives that are not part of a qualifying hedge relationship through earnings in the period of change. Changes in the fair value of derivatives that are recognized in current earnings are reported in “Realized investment gains (losses) - Derivative financial instruments”. | ||||||||||||||
Derivative Instruments Designated and Qualifying as Hedging Instruments | ||||||||||||||
Cash-Flow Hedges | ||||||||||||||
· In connection with the issuance of inflation-adjusted funding agreements, the Company has entered into swaps to convert the floating CPI-linked interest rate on these agreements to a fixed rate. The Company pays a fixed rate on the swap and receives a floating rate primarily determined by the period’s change in the CPI. The amounts that are received on the swaps are equal to the amounts that are paid on the agreements. | ||||||||||||||
Derivative Instruments Not Designated and Not Qualifying as Hedging Instruments | ||||||||||||||
The Company uses various other derivative instruments for risk management purposes that do not qualify for hedge accounting treatment. Changes in the fair value of these derivatives are recognized in earnings during the period of change. | ||||||||||||||
Derivatives related to variable annuity contracts | ||||||||||||||
· The Company uses equity, interest rate, currency, and volatility futures to mitigate the risk related to certain guaranteed minimum benefits, including GMWB, within its variable annuity products. In general, the cost of such benefits varies with the level of equity and interest rate markets, foreign currency levels, and overall volatility. No volatility future positions were held during the three and nine months ended September 30, 2013. | ||||||||||||||
· The Company uses equity options and variance swaps to mitigate the risk related to certain guaranteed minimum benefits, including GMWB, within its variable annuity products. In general, the cost of such benefits varies with the level of equity markets and overall volatility. | ||||||||||||||
· The Company uses interest rate swaps and interest rate swaptions to mitigate the risk related to certain guaranteed minimum benefits, including GMWB, within its variable annuity products. | ||||||||||||||
· The Company markets certain variable annuity products with a GMWB rider. The GMWB component is considered an embedded derivative, not considered to be clearly and closely related to the host contract. | ||||||||||||||
· The Company has a funds withheld account that consists of various derivative instruments held by the Company that are used to hedge the GMWB and GMDB riders. The economic performance of derivatives in the funds withheld account is ceded to Shades Creek. The funds withheld account is accounted for as a derivative financial instrument. | ||||||||||||||
Other Derivatives | ||||||||||||||
· The Company uses certain interest rate swaps to mitigate the price volatility of fixed maturities. | ||||||||||||||
· The Company purchased interest rate caps to mitigate its risk with respect to the Company’s LIBOR exposure and the potential impact of European financial market distress. | ||||||||||||||
· Certain of the Company’s subsidiaries have an interest support agreement, YRT premium support agreement, and two portfolio maintenance agreements with PLC. The Company entered into two separate portfolio maintenance agreements in October 2012. | ||||||||||||||
· The Company uses various swaps and other types of derivatives to manage risk related to other exposures. | ||||||||||||||
· The Company recorded an embedded derivative associated with the FIA product as of September 30, 2013. The Company did not market this product during the three and nine months ended September 30, 2012. | ||||||||||||||
· The Company is involved in various modified coinsurance and funds withheld arrangements which contain embedded derivatives. Changes in their fair value are recorded in current period earnings. The investment portfolios that support the related modified coinsurance reserves and funds withheld arrangements had fair value changes which substantially offset the gains or losses on these embedded derivatives. | ||||||||||||||
The following table sets forth realized investments gains and losses for the periods shown: | ||||||||||||||
Realized investment gains (losses) - derivative financial instruments | ||||||||||||||
For The | For The | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
(Dollars In Thousands) | ||||||||||||||
Derivatives related to variable and FIA annuity contracts: | ||||||||||||||
Interest rate futures - VA | $ | (2,255 | ) | $ | (3,371 | ) | $ | (26,393 | ) | $ | 32,419 | |||
Equity futures - VA | (12,568 | ) | (17,324 | ) | (39,829 | ) | (42,643 | ) | ||||||
Currency futures - VA | (6,531 | ) | (3,078 | ) | 1,440 | (2,298 | ) | |||||||
Volatility futures - VA | — | — | — | (132 | ) | |||||||||
Variance swaps - VA | (1,347 | ) | (5,840 | ) | (9,566 | ) | (6,660 | ) | ||||||
Equity options - VA | (29,094 | ) | (9,184 | ) | (65,631 | ) | (29,903 | ) | ||||||
Interest rate swaptions - VA | 1,725 | (3,019 | ) | (738 | ) | 2,293 | ||||||||
Interest rate swaps - VA | (19,224 | ) | 6,361 | (125,502 | ) | 10,187 | ||||||||
Embedded derivative - GMWB | 40,379 | 2,921 | 146,693 | (32,369 | ) | |||||||||
Funds withheld derivative | 32,207 | — | 42,045 | — | ||||||||||
Total derivatives related to variable annuity contracts | 3,292 | (32,534 | ) | (77,481 | ) | (69,106 | ) | |||||||
Embedded derivative - Modco reinsurance treaties | 30,074 | (101,999 | ) | 191,847 | (139,972 | ) | ||||||||
Embedded derivative - FIA | (104 | ) | — | (145 | ) | — | ||||||||
Interest rate swaps | 72 | 199 | 2,984 | (680 | ) | |||||||||
Interest rate caps | — | (143 | ) | — | (2,658 | ) | ||||||||
Derivatives with PLC(1) | (1,159 | ) | 17,559 | (14,689 | ) | 18,059 | ||||||||
Other derivatives | 37 | 255 | (106 | ) | 17 | |||||||||
Total realized gains (losses) - derivatives | $ | 32,212 | $ | (116,663 | ) | $ | 102,410 | $ | (194,340 | ) | ||||
(1) These derivatives include the Interest, YRT premium support, and portfolio maintenance agreements between certain of the Company’s subsidiaries and PLC. | ||||||||||||||
Realized investment gains (losses) - all other investments | ||||||||||||||
For The | For The | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
(Dollars In Thousands) | ||||||||||||||
Modco trading portfolio(1) | $ | (25,960 | ) | $ | 104,865 | $ | (167,982 | ) | $ | 179,027 | ||||
(1)The Company elected to include the use of alternate disclosures for trading activities. | ||||||||||||||
Gain (Loss) on Derivatives in Cash Flow Relationship | ||||||||||||||
Amount and Location of | ||||||||||||||
Amount of Gains (Losses) | Gains (Losses) | |||||||||||||
Deferred in | Reclassified from | Amount and Location of | ||||||||||||
Accumulated Other | Accumulated Other | (Losses) Recognized in | ||||||||||||
Comprehensive Income | Comprehensive Income | Income (Loss) on | ||||||||||||
(Loss) on Derivatives | (Loss) into Income (Loss) | Derivatives | ||||||||||||
(Effective Portion) | (Effective Portion) | (Ineffective Portion) | ||||||||||||
Benefits and settlement | Realized investment | |||||||||||||
expenses | gains (losses) | |||||||||||||
(Dollars In Thousands) | ||||||||||||||
For The Three Months Ended September 30, 2013 | ||||||||||||||
Inflation | $ | 22 | $ | (572 | ) | $ | (62 | ) | ||||||
Total | $ | 22 | $ | (572 | ) | $ | (62 | ) | ||||||
For The Nine Months Ended September 30, 2013 | ||||||||||||||
Inflation | $ | (157 | ) | $ | (1,649 | ) | $ | (253 | ) | |||||
Total | $ | (157 | ) | $ | (1,649 | ) | $ | (253 | ) | |||||
Gain (Loss) on Derivatives in Cash Flow Relationship | ||||||||||||||
Amount and Location of | ||||||||||||||
Amount of Gains (Losses) | Gains (Losses) | |||||||||||||
Deferred in | Reclassified from | Amount and Location of | ||||||||||||
Accumulated Other | Accumulated Other | (Losses) Recognized in | ||||||||||||
Comprehensive Income | Comprehensive Income | Income (Loss) on | ||||||||||||
(Loss) on Derivatives | (Loss) into Income (Loss) | Derivatives | ||||||||||||
(Effective Portion) | (Effective Portion) | (Ineffective Portion) | ||||||||||||
Benefits and settlement | Realized investment | |||||||||||||
expenses | gains (losses) | |||||||||||||
(Dollars In Thousands) | ||||||||||||||
For The Three Months Ended September 30, 2012 | ||||||||||||||
Interest rate | $ | (1 | ) | $ | (549 | ) | $ | — | ||||||
Inflation | 2,938 | (552 | ) | 221 | ||||||||||
Total | $ | 2,937 | $ | (1,101 | ) | $ | 221 | |||||||
For The Nine Months Ended September 30, 2012 | ||||||||||||||
Interest rate | $ | (77 | ) | $ | (2,261 | ) | $ | — | ||||||
Inflation | 4,146 | (485 | ) | (2 | ) | |||||||||
Total | $ | 4,069 | $ | (2,746 | ) | $ | (2 | ) | ||||||
The tables below present information about the nature and accounting treatment of the Company’s primary derivative financial instruments and the location in and effect on the consolidated condensed financial statements for the periods presented below: | ||||||||||||||
As of | ||||||||||||||
September 30, 2013 | December 31, 2012 | |||||||||||||
Notional | Fair | Notional | Fair | |||||||||||
Amount | Value | Amount | Value | |||||||||||
(Dollars In Thousands) | ||||||||||||||
Other long-term investments | ||||||||||||||
Cash flow hedges: | ||||||||||||||
Inflation | $ | — | $ | — | $ | — | $ | — | ||||||
Derivatives not designated as hedging instruments: | ||||||||||||||
Interest rate swaps | 200,000 | 2,035 | 355,000 | 6,532 | ||||||||||
Variance swaps | — | — | 500 | 406 | ||||||||||
Derivatives with PLC(1) | 1,508,964 | 2,376 | 1,404,750 | 17,064 | ||||||||||
Embedded derivative - Modco reinsurance treaties | 45,314 | 802 | 30,244 | 1,330 | ||||||||||
Embedded derivative — GMWB | 1,692,535 | 79,827 | 1,640,075 | 30,261 | ||||||||||
Interest rate futures | 111,534 | 1,106 | — | — | ||||||||||
Equity futures | 47,994 | 937 | 147,581 | 595 | ||||||||||
Currency futures | — | — | 15,944 | 784 | ||||||||||
Interest rate caps | — | — | 3,000,000 | — | ||||||||||
Equity options | 1,467,720 | 80,754 | 573,493 | 61,833 | ||||||||||
Interest rate swaptions | 625,000 | 27,978 | 400,000 | 11,370 | ||||||||||
Other | 262 | 357 | 224 | 253 | ||||||||||
$ | 5,699,323 | $ | 196,172 | $ | 7,567,811 | $ | 130,428 | |||||||
Other liabilities | ||||||||||||||
Cash flow hedges: | ||||||||||||||
Inflation | $ | 182,965 | $ | 3,806 | $ | 182,965 | $ | 5,027 | ||||||
Derivatives not designated as hedging instruments: | ||||||||||||||
Interest rate swaps | 1,500,000 | 132,592 | 400,000 | 10,025 | ||||||||||
Variance swaps | — | — | 2,675 | 12,198 | ||||||||||
Embedded derivative - Modco reinsurance treaties | 2,598,832 | 219,532 | 2,655,134 | 411,907 | ||||||||||
Funds withheld derivative | 1,178,524 | 49,045 | — | — | ||||||||||
Embedded derivative - GMWB | 114,940 | 1,992 | 5,253,961 | 199,530 | ||||||||||
Embedded derivative - FIA | 104,951 | 9,199 | — | — | ||||||||||
Interest rate futures | 175,681 | 531 | 893,476 | 13,970 | ||||||||||
Equity futures | 94,457 | 1,484 | 152,364 | 3,316 | ||||||||||
Currency futures | 126,389 | 3,350 | 131,979 | 1,901 | ||||||||||
Equity options | 144,408 | 5,939 | — | — | ||||||||||
Other- FIA volatility futures | 35 | — | — | — | ||||||||||
$ | 6,221,182 | $ | 427,470 | $ | 9,672,554 | $ | 657,874 | |||||||
(1) These derivatives include the Interest, YRT premium support, and portfolio maintenance agreements between certain of the Company’s subsidiaries and PLC. | ||||||||||||||
Based on the expected cash flows of the underlying hedged items, the Company expects to reclassify $2.3 million out of accumulated other comprehensive income (loss) into earnings during the next twelve months. | ||||||||||||||
From time to time, the Company is required to post and obligated to return collateral related to derivative transactions. As of September 30, 2013, the Company had posted cash and securities (at fair value) as collateral of approximately $81.0 million and $52.2 million, respectively. As of September 30, 2013, the Company received $6.0 million of cash as collateral. The Company does not net the collateral posted or received with the fair value of the derivative financial instruments for reporting purposes. |
OFFSETTING_OF_ASSETS_AND_LIABI
OFFSETTING OF ASSETS AND LIABILITIES | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
OFFSETTING OF ASSETS AND LIABILITIES | ' | |||||||||||||||||||
OFFSETTING OF ASSETS AND LIABILITIES | ' | |||||||||||||||||||
15. OFFSETTING OF ASSETS AND LIABILITIES | ||||||||||||||||||||
Certain of the Company’s derivative instruments are subject to enforceable master netting arrangements that provide for the net settlement of all derivative contracts between the Company and a counterparty in the event of default or upon the occurrence of certain termination events. Collateral support agreements associated with each master netting arrangement provide that the Company will receive or pledge financial collateral in the event either minimum thresholds, or in certain cases ratings levels, have been reached. Additionally, certain of the Company’s repurchase agreements provide for net settlement on termination of the agreement. Refer to Note 6, Debt and Other Obligations for details of the Company’s repurchase agreement programs. | ||||||||||||||||||||
The tables below present the derivative instruments by assets and liabilities for the Company as of September 30, 2013. | ||||||||||||||||||||
Net Amounts | ||||||||||||||||||||
Gross | of Assets | Gross Amounts Not Offset | ||||||||||||||||||
Amounts | Presented in | in the Statement of | ||||||||||||||||||
Gross | Offset in the | the | Financial Position | |||||||||||||||||
Amounts of | Statement of | Statement of | Cash | |||||||||||||||||
Recognized | Financial | Financial | Financial | Collateral | ||||||||||||||||
Assets | Position | Position | Instruments | Received | Net Amount | |||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Offsetting of Derivative Assets | ||||||||||||||||||||
Derivatives: | ||||||||||||||||||||
Free-Standing derivatives | $ | 112,810 | $ | — | $ | 112,810 | $ | 44,189 | $ | 6,000 | $ | 62,621 | ||||||||
Embedded derivative - Modco reinsurance treaties | 802 | — | 802 | — | — | 802 | ||||||||||||||
Embedded derivative - GMWB | 79,827 | — | 79,827 | — | — | 79,827 | ||||||||||||||
Total derivatives, subject to a master netting arrangement or similar arrangement | 193,439 | — | 193,439 | 44,189 | 6,000 | 143,250 | ||||||||||||||
Total derivatives, not subject to a master netting arrangement or similar arrangement | 2,733 | — | 2,733 | — | — | 2,733 | ||||||||||||||
Total derivatives | 196,172 | — | 196,172 | 44,189 | 6,000 | 145,983 | ||||||||||||||
Total Assets | $ | 196,172 | $ | — | $ | 196,172 | $ | 44,189 | $ | 6,000 | $ | 145,983 | ||||||||
Net Amounts | ||||||||||||||||||||
Gross | of Liabilities | Gross Amounts Not Offset | ||||||||||||||||||
Amounts | Presented in | in the Statement of | ||||||||||||||||||
Gross | Offset in the | the | Financial Position | |||||||||||||||||
Amounts of | Statement of | Statement of | Cash | |||||||||||||||||
Recognized | Financial | Financial | Financial | Collateral | ||||||||||||||||
Liabilities | Position | Position | Instruments | Paid | Net Amount | |||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Offsetting of Derivative Liabilities | ||||||||||||||||||||
Derivatives: | ||||||||||||||||||||
Free-Standing derivatives | $ | 147,702 | $ | — | $ | 147,702 | $ | 44,189 | $ | 72,813 | $ | 30,700 | ||||||||
Embedded derivative - Modco reinsurance treaties | 219,532 | — | 219,532 | — | — | 219,532 | ||||||||||||||
Funds withheld derivative | 49,045 | 49,045 | 49,045 | |||||||||||||||||
Embedded derivative - GMWB | 1,992 | — | 1,992 | — | — | 1,992 | ||||||||||||||
Embedded derivative - FIA | 9,199 | — | 9,199 | — | — | 9,199 | ||||||||||||||
Total derivatives, subject to a master netting arrangement or similar arrangement | 427,470 | — | 427,470 | 44,189 | 72,813 | 310,468 | ||||||||||||||
Total derivatives, not subject to a master netting arrangement or similar arrangement | — | — | — | — | — | — | ||||||||||||||
Total derivatives | 427,470 | — | 427,470 | 44,189 | 72,813 | 310,468 | ||||||||||||||
Repurchase agreements(1) | 100,000 | — | 100,000 | — | — | 100,000 | ||||||||||||||
Total Liabilities | $ | 527,470 | $ | — | $ | 527,470 | $ | 44,189 | $ | 72,813 | $ | 410,468 | ||||||||
(1) Borrowings under repurchase agreements are for a term less than 90 days. | ||||||||||||||||||||
The tables below present the derivative instruments by assets and liabilities for the Company as of December 31, 2012. | ||||||||||||||||||||
Net Amounts | ||||||||||||||||||||
Gross | of Assets | Gross Amounts Not Offset | ||||||||||||||||||
Amounts | Presented in | in the Statement of | ||||||||||||||||||
Gross | Offset in the | the | Financial Position | |||||||||||||||||
Amounts of | Statement of | Statement of | Cash | |||||||||||||||||
Recognized | Financial | Financial | Financial | Collateral | ||||||||||||||||
Assets | Position | Position | Instruments | Received | Net Amount | |||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Offsetting of Derivative Assets | ||||||||||||||||||||
Derivatives: | ||||||||||||||||||||
Free-Standing derivatives | $ | 81,520 | $ | — | $ | 81,520 | $ | 21,565 | $ | 11,280 | $ | 48,675 | ||||||||
Embedded derivative - Modco reinsurance treaties | 1,330 | — | 1,330 | — | — | 1,330 | ||||||||||||||
Embedded derivative - GMWB | 30,261 | — | 30,261 | — | — | 30,261 | ||||||||||||||
Total derivatives, subject to a master netting arrangement or similar arrangement | 113,111 | — | 113,111 | 21,565 | 11,280 | 80,266 | ||||||||||||||
Total derivatives, not subject to a master netting arrangement or similar arrangement | 17,317 | — | 17,317 | — | — | 17,317 | ||||||||||||||
Total derivatives | 130,428 | — | 130,428 | 21,565 | 11,280 | 97,583 | ||||||||||||||
Total Assets | $ | 130,428 | $ | — | $ | 130,428 | $ | 21,565 | $ | 11,280 | $ | 97,583 | ||||||||
Net Amounts | ||||||||||||||||||||
Gross | of Liabilities | Gross Amounts Not Offset | ||||||||||||||||||
Amounts | Presented in | in the Statement of | ||||||||||||||||||
Gross | Offset in the | the | Financial Position | |||||||||||||||||
Amounts of | Statement of | Statement of | Cash | |||||||||||||||||
Recognized | Financial | Financial | Financial | Collateral | ||||||||||||||||
Liabilities | Position | Position | Instruments | Paid | Net Amount | |||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Offsetting of Derivative Liabilities | ||||||||||||||||||||
Derivatives: | ||||||||||||||||||||
Free-Standing derivatives | $ | 46,437 | $ | — | $ | 46,437 | $ | 21,565 | $ | 20,373 | $ | 4,499 | ||||||||
Embedded derivative - Modco reinsurance treaties | 411,907 | — | 411,907 | — | — | 411,907 | ||||||||||||||
Embedded derivative - GMWB | 199,530 | — | 199,530 | — | — | 199,530 | ||||||||||||||
Total derivatives, subject to a master netting arrangement or similar arrangement | 657,874 | — | 657,874 | 21,565 | 20,373 | 615,936 | ||||||||||||||
Total derivatives, not subject to a master netting arrangement or similar arrangement | — | — | — | — | — | — | ||||||||||||||
Total derivatives | 657,874 | — | 657,874 | 21,565 | 20,373 | 615,936 | ||||||||||||||
Repurchase agreements(1) | 150,000 | — | 150,000 | — | — | 150,000 | ||||||||||||||
Total Liabilities | $ | 807,874 | $ | — | $ | 807,874 | $ | 21,565 | $ | 20,373 | $ | 765,936 | ||||||||
(1) Borrowings under repurchase agreements are for a term less than 90 days. |
OPERATING_SEGMENTS
OPERATING SEGMENTS | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
OPERATING SEGMENTS | ' | |||||||||||||
OPERATING SEGMENTS | ' | |||||||||||||
16. OPERATINGSEGMENTS | ||||||||||||||
The Company has several operating segments each having a strategic focus. An operating segment is distinguished by products, channels of distribution, and/or other strategic distinctions. The Company periodically evaluates its operating segments, as prescribed in the ASC Segment Reporting Topic, and makes adjustments to its segment reporting as needed. A brief description of each segment follows. | ||||||||||||||
· The Life Marketing segment markets UL, variable universal life, bank-owned life insurance (“BOLI”), and level premium term insurance (“traditional”) products on a national basis primarily through networks of independent insurance agents and brokers, stockbrokers, and independent marketing organizations. | ||||||||||||||
· The Acquisitions segment focuses on acquiring, converting, and servicing policies from other companies. The segment’s primary focus is on life insurance policies and annuity products that were sold to individuals. The level of the segment’s acquisition activity is predicated upon many factors, including available capital, operating capacity, potential return on capital, and market dynamics. Policies acquired through the Acquisitions segment are typically “closed” blocks of business (no new policies are being marketed). Therefore earnings and account values are expected to decline as the result of lapses, deaths, and other terminations of coverage unless new acquisitions are made. | ||||||||||||||
· The Annuities segment markets fixed and variable annuity products. These products are primarily sold through broker-dealers, financial institutions, and independent agents and brokers. | ||||||||||||||
· The Stable Value Products segment sells fixed and floating rate funding agreements directly to the trustees of municipal bond proceeds, money market funds, bank trust departments, and other institutional investors. The segment also issues funding agreements to the FHLB, and markets guaranteed investment contracts (“GICs”) to 401(k) and other qualified retirement savings plans. Additionally, the Company has contracts outstanding pursuant to a funding agreement-backed notes program registered with the United States Securities and Exchange Commission (the “SEC”) which offered notes to both institutional and retail investors. | ||||||||||||||
· The Asset Protection segment markets extended service contracts and credit life and disability insurance to protect consumers’ investments in automobiles and recreational vehicles. In addition, the segment markets a guaranteed asset protection (“GAP”) product. GAP coverage covers the difference between the loan pay-off amount and an asset’s actual cash value in the case of a total loss. | ||||||||||||||
· The Corporate and Other segment primarily consists of net investment income not assigned to the segments above (including the impact of carrying liquidity) and expenses not attributable to the segments above. This segment includes earnings from several non-strategic or runoff lines of business, various investment-related transactions, the operations of several small subsidiaries, and the repurchase of non-recourse funding obligations. | ||||||||||||||
The Company uses the same accounting policies and procedures to measure segment operating income (loss) and assets as it uses to measure consolidated net income and assets. Segment operating income (loss) is income before income tax, excluding realized gains and losses on investments and derivatives net of the amortization related to deferred acquisition costs (“DAC”), value of business acquired (“VOBA”), and benefits and settlement expenses. Operating earnings exclude changes in the GMWB embedded derivatives (excluding the portion attributed to economic cost), realized and unrealized gains (losses) on derivatives used to hedge the VA product, actual GMWB incurred claims and the related amortization of DAC attributed to each of these items. | ||||||||||||||
Segment operating income (loss) represents the basis on which the performance of the Company’s business is internally assessed by management. Premiums and policy fees, other income, benefits and settlement expenses, and amortization of DAC/VOBA are attributed directly to each operating segment. Net investment income is allocated based on directly related assets required for transacting the business of that segment. Realized investment gains (losses) and other operating expenses are allocated to the segments in a manner that most appropriately reflects the operations of that segment. Investments and other assets are allocated based on statutory policy liabilities net of associated statutory policy assets, while DAC/VOBA and goodwill are shown in the segments to which they are attributable. | ||||||||||||||
There were no significant intersegment transactions during the three or nine months ended September 30, 2013 and 2012. | ||||||||||||||
The following tables summarize financial information for the Company’s segments: | ||||||||||||||
For The | For The | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
(Dollars In Thousands) | ||||||||||||||
Revenues | ||||||||||||||
Life Marketing | $ | 346,294 | $ | 313,170 | $ | 1,002,522 | $ | 938,920 | ||||||
Acquisitions | 240,067 | 251,550 | 752,247 | 812,355 | ||||||||||
Annuities | 170,065 | 140,563 | 435,480 | 460,822 | ||||||||||
Stable Value Products | 25,207 | 26,933 | 91,735 | 96,374 | ||||||||||
Asset Protection | 76,157 | 75,217 | 223,709 | 222,984 | ||||||||||
Corporate and Other | 22,804 | 56,763 | 76,525 | 101,535 | ||||||||||
Total revenues | $ | 880,594 | $ | 864,196 | $ | 2,582,218 | $ | 2,632,990 | ||||||
Segment Operating Income (Loss) | ||||||||||||||
Life Marketing | $ | 28,158 | $ | 27,885 | $ | 75,505 | $ | 87,678 | ||||||
Acquisitions | 29,429 | 46,155 | 93,241 | 128,869 | ||||||||||
Annuities | 43,825 | 9,041 | 120,260 | 72,864 | ||||||||||
Stable Value Products | 19,206 | 13,050 | 59,514 | 41,654 | ||||||||||
Asset Protection | 5,365 | 2,825 | 15,347 | 10,171 | ||||||||||
Corporate and Other | (17,856 | ) | (5,968 | ) | (45,793 | ) | (959 | ) | ||||||
Total segment operating income | 108,127 | 92,988 | 318,074 | 340,277 | ||||||||||
Realized investment (losses) gains - investments(1) | (31,968 | ) | 120,723 | (140,299 | ) | 193,649 | ||||||||
Realized investment (losses) gains - derivatives | 37,196 | (107,022 | ) | 124,321 | (169,104 | ) | ||||||||
Income tax expense | (37,107 | ) | (35,778 | ) | (98,966 | ) | (116,428 | ) | ||||||
Net Income | $ | 76,248 | $ | 70,911 | $ | 203,130 | $ | 248,394 | ||||||
Investment gains (losses)(2) | $ | (27,949 | ) | $ | 113,977 | $ | (151,006 | ) | $ | 185,301 | ||||
Less: amortization related to DAC/VOBA and benefits settlement expenses | 4,019 | (6,746 | ) | (10,707 | ) | (8,348 | ) | |||||||
Realized investment gains (losses) in investments | $ | (31,968 | ) | $ | 120,723 | $ | (140,299 | ) | $ | 193,649 | ||||
Derivative gains (losses)(3) | $ | 32,212 | $ | (116,663 | ) | $ | 102,410 | $ | (194,340 | ) | ||||
Less: VA GMWB economic cost | (4,984 | ) | (9,641 | ) | (21,911 | ) | (25,236 | ) | ||||||
Realized investment gains (losses) - derivatives | $ | 37,196 | $ | (107,022 | ) | $ | 124,321 | $ | (169,104 | ) | ||||
(1) Includes credit related other-than-temporary impairments of $8.7 million and $17.3 million for the three and nine months ended September 30, 2013, respectively, as compared to $8.5 million and $40.5 million for the three and nine months ended September 30, 2012, respectively. | ||||||||||||||
(2) Includes realized investment gains (losses) before related amortization. | ||||||||||||||
(3)Includes realized gains (losses) on derivatives before the VA GMWB economic cost. | ||||||||||||||
Operating Segment Assets | ||||||||||||||
As of September 30, 2013 | ||||||||||||||
(Dollars In Thousands) | ||||||||||||||
Life | Stable Value | |||||||||||||
Marketing | Acquisitions | Annuities | Products | |||||||||||
Investments and other assets | $ | 12,913,177 | $ | 11,196,504 | $ | 19,372,420 | $ | 2,530,150 | ||||||
Deferred policy acquisition costs and value of business acquired | 2,030,605 | 597,284 | 526,780 | 1,112 | ||||||||||
Goodwill | — | 33,291 | — | — | ||||||||||
Total assets | $ | 14,943,782 | $ | 11,827,079 | $ | 19,899,200 | $ | 2,531,262 | ||||||
Asset | Corporate | Total | ||||||||||||
Protection | and Other | Adjustments | Consolidated | |||||||||||
Investments and other assets | $ | 775,563 | $ | 7,888,528 | $ | 17,278 | $ | 54,693,620 | ||||||
Deferred policy acquisition costs and value of business acquired | 50,883 | 708 | — | 3,207,372 | ||||||||||
Goodwill | 48,158 | — | — | 81,449 | ||||||||||
Total assets | $ | 874,604 | $ | 7,889,236 | $ | 17,278 | $ | 57,982,441 | ||||||
Operating Segment Assets | ||||||||||||||
As of December 31, 2012 | ||||||||||||||
(Dollars In Thousands) | ||||||||||||||
Life | Stable Value | |||||||||||||
Marketing | Acquisitions | Annuities | Products | |||||||||||
Investments and other assets | $ | 12,171,384 | $ | 11,312,550 | $ | 17,649,488 | $ | 2,509,160 | ||||||
Deferred policy acquisition costs and value of business acquired | 2,001,708 | 679,746 | 491,184 | 1,399 | ||||||||||
Goodwill | — | 35,615 | — | — | ||||||||||
Total assets | $ | 14,173,092 | $ | 12,027,911 | $ | 18,140,672 | $ | 2,510,559 | ||||||
Asset | Corporate | Total | ||||||||||||
Protection | and Other | Adjustments | Consolidated | |||||||||||
Investments and other assets | $ | 740,153 | $ | 9,446,057 | $ | 19,662 | $ | 53,848,454 | ||||||
Deferred policy acquisition costs and value of business acquired | 50,253 | 1,066 | — | 3,225,356 | ||||||||||
Goodwill | 48,158 | — | — | 83,773 | ||||||||||
Total assets | $ | 838,564 | $ | 9,447,123 | $ | 19,662 | $ | 57,157,583 |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2013 | |
SUBSEQUENT EVENTS | ' |
SUBSEQUENT EVENTS | ' |
17. SUBSEQUENT EVENTS | |
The Company has evaluated the effects of events subsequent to September 30, 2013, and through the date we filed our consolidated condensed financial statements with the United States Securities and Exchange Commission. All accounting and disclosure requirements related to subsequent events are included in the Company’s consolidated condensed financial statements. | |
On October 1, 2013, the Company completed the acquisition contemplated by the master agreement (the “Master Agreement”) previously reported in our Current Report on Form 8-K dated April 11, 2013. Pursuant to that Master Agreement with AXA Financial, Inc. (“AXA”) and AXA Equitable Financial Services, LLC (“AEFS”), the Company acquired the stock of MONY Life Insurance Company (“MONY”) from AEFS and entered into a reinsurance agreement pursuant to which it is reinsuring on a 100% indemnity reinsurance basis certain business (the “MLOA Business”) of MONY Life Insurance Company of America (“MLOA”). The aggregate purchase price for MONY was $686 million, and will be subject to a customary post-closing adjustment. The ceding commission for the reinsurance of the MLOA Business was $370 million. | |
At the closing of the transaction, the Company entered into an administrative services agreement with MLOA, which governs the ongoing administration of the MLOA Business by the Company, and a transition services agreement with AXA Equitable Life Insurance Company (“AXA Equitable”), pursuant to which AXA Equitable and its affiliates will make available to the Company and its affiliates, for a limited period of time, certain services required for the operation of the business following the closing. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
Investment Products | ' |
Investment Products | |
The Company establishes liabilities for fixed indexed annuity (“FIA”) products. These products are deferred fixed annuities with a guaranteed minimum interest rate plus a contingent return based on equity market performance. The FIA product is considered a hybrid financial instrument under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC” or “Codification”) Topic 815 — Derivatives and Hedging which allows the Company to make the election to value the liabilities of these FIA products at fair value. This election was made for the FIA products issued prior to 2010 as the policies were issued. These products are no longer being marketed. The changes in the fair value of the liability for these FIA products are recorded in Benefit and settlement expenses with the liability being recorded in Annuity account balances. For more information regarding the determination of fair value of annuity account balances please refer to Note 13, Fair Value of Financial Instruments. Premiums and policy fees for these FIA products consist of fees that have been assessed against the policy account balances for surrenders. Such fees are recognized when assessed and earned. | |
During 2013, the Company began marketing a new FIA product. These products are also deferred fixed annuities with a guaranteed minimum interest rate plus a contingent return based on equity market performance and are considered hybrid financial instruments under the FASB’s ASC Topic 815 — Derivatives and Hedging. The Company did not elect to value these FIA products at fair value, as a result the Company accounts for the provision that provides for a contingent return based on equity market performance as an embedded derivative. The embedded derivative is bifurcated from the host contract and recorded at fair value in Other liabilities. Changes in the fair value of the embedded derivative are recorded in Realized investment gains (losses) — Derivative financial instruments. For more information regarding the determination of fair value of the FIA embedded derivative refer to Note 13, Fair Value of Financial Instruments. The host contract is accounted for as a debt instrument in accordance with ASC Topic 944 — Financial Services — Insurance and is recorded in Annuity account balances with any discount to the minimum account value being accreted using the effective yield method. Benefits and settlement expenses include accreted interest and benefit claims incurred during the period. | |
Accounting Pronouncements Recently Adopted | ' |
Accounting Pronouncements Recently Adopted | |
ASU No. 2011-11—Balance Sheet—Disclosures about Offsetting Assets and Liabilities. This Update contains new disclosure requirements regarding the nature of an entity’s rights of offset and related arrangements associated with its financial and derivative instruments. The new disclosures are designed to make financial statements that are prepared under GAAP more comparable to those prepared under International Financial Reporting Standards (“IFRSs”). Generally, it is more difficult to qualify for offsetting under IFRSs than it is under GAAP. As a result, entities with significant financial instrument and derivative portfolios that report under IFRSs typically present positions on their balance sheets that are significantly larger than those of entities with similarly sized portfolios whose financial statements are prepared in accordance with GAAP. To facilitate comparison between financial statements prepared under GAAP and IFRSs, the new disclosures will give financial statement users information about both gross and net exposures. In January 2013, the FASB issued ASU No. 2013-01, which clarifies that application of ASU No. 2011-11 is limited to certain derivatives, repurchase and reverse repurchase agreements, and securities borrowing and lending transactions. Both Updates were effective January 1, 2013. Neither Update had an impact on the Company’s results of operations or financial position. | |
ASU No. 2012-02—Intangibles—Goodwill and Other—Testing Indefinite-Lived Intangible Assets for Impairment. This Update is intended to reduce the complexity and cost of performing an impairment test for indefinite-lived intangible assets by allowing an entity the option to make a qualitative evaluation about the likelihood of impairment prior to the quantitative calculation required by current guidance. Under the amendments to Topic 350, an entity has the option to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test. If an entity determines it is not more likely than not that impairment exists, quantitative impairment testing is not required. However, if an entity concludes otherwise, the impairment test outlined in current guidance is required to be completed. The Update does not change the current requirement that indefinite-lived intangible assets be reviewed for impairment at least annually. This Update was effective January 1, 2013. This Update did not have an impact on the Company’s results of operations or financial position. | |
ASU No. 2013-02—Comprehensive Income—Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in this Update supersede the presentation requirements for reclassifications out of accumulated other comprehensive income in ASU No. 2011-05, Comprehensive Income—Presentation of Comprehensive Income, and ASU No. 2011-12, Comprehensive Income—Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05, for all entities. The amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements. The Update requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. For other amounts that are not required under GAAP to be reclassified in their entirety in the same reporting period, an entity is required to cross-reference other disclosures required under GAAP that provide additional detail about those amounts. The Company has added the Accumulated Other Comprehensive Income footnote to disclose the required information beginning in the first quarter of 2013. This Update was effective January 1, 2013. This Update did not have an impact on the Company’s results of operations or financial position. | |
ASU No. 2013-10—Derivatives and Hedging—Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes. This Update provides for the inclusion of the Fed Funds Effective Swap Rate as a U.S. benchmark interest rate for hedge accounting purposes, in addition to U.S. Treasury rates and LIBOR. The amendments in the Update also remove the restriction on using different benchmark rates for similar hedges. The amendments are effective prospectively for transactions entered into on or after July 17, 2013. The Company will consider this additional benchmark rate in its future transactions. | |
Accounting Pronouncements Not Yet Adopted | ' |
Accounting Pronouncements Not Yet Adopted | |
ASU No. 2013-11 — Income Taxes — Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The objective of this Update is to eliminate diversity in practice related to the presentation of certain unrecognized tax benefits. The Update provides that unrecognized tax benefits should be presented as a reduction of a deferred tax asset for a net operating loss or other tax credit carryforward when settlement in this manner is available under the tax law. The amendments are effective for annual periods beginning after December 15, 2013 and interim periods therein. The Update does not require new recurring disclosures, and is not expected to have an impact on the Company’s results of operations or financial position. |
INVESTMENT_OPERATIONS_Tables
INVESTMENT OPERATIONS (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
INVESTMENT OPERATIONS | ' | |||||||||||||||||||
Summary of net realized investment gains (losses) for invested assets | ' | |||||||||||||||||||
For The | For The | |||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Fixed maturities | $ | 10,546 | $ | 22,889 | $ | 42,136 | $ | 58,984 | ||||||||||||
Equity securities | — | (241 | ) | 2,367 | (93 | ) | ||||||||||||||
Impairments on fixed maturity securities | (7,421 | ) | (8,499 | ) | (13,918 | ) | (40,537 | ) | ||||||||||||
Impairments on equity securities | (1,260 | ) | — | (3,347 | ) | — | ||||||||||||||
Modco trading portfolio | (25,960 | ) | 104,865 | (167,982 | ) | 179,027 | ||||||||||||||
Other investments | (3,854 | ) | (5,037 | ) | (10,262 | ) | (12,080 | ) | ||||||||||||
Total realized gains (losses) - investments | $ | (27,949 | ) | $ | 113,977 | $ | (151,006 | ) | $ | 185,301 | ||||||||||
Schedule of amortized cost and fair value of the Company's investments classified as available-for-sale | ' | |||||||||||||||||||
The amortized cost and fair value of the Company’s investments classified as available-for-sale as of September 30, 2013 and December 31, 2012, are as follows: | ||||||||||||||||||||
Gross | Gross | Total OTTI | ||||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | Recognized | ||||||||||||||||
Cost | Gains | Losses | Value | in OCI(1) | ||||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
2013 | ||||||||||||||||||||
Fixed maturities: | ||||||||||||||||||||
Bonds | ||||||||||||||||||||
Residential mortgage-backed securities | $ | 1,438,269 | $ | 48,049 | $ | (22,291 | ) | $ | 1,464,027 | $ | (914 | ) | ||||||||
Commercial mortgage-backed securities | 898,377 | 30,287 | (17,057 | ) | 911,607 | — | ||||||||||||||
Other asset-backed securities | 928,367 | 15,532 | (66,735 | ) | 877,164 | (66 | ) | |||||||||||||
U.S. government-related securities | 1,204,908 | 38,525 | (29,997 | ) | 1,213,436 | — | ||||||||||||||
Other government-related securities | 38,406 | 2,722 | — | 41,128 | — | |||||||||||||||
States, municipals, and political subdivisions | 1,191,682 | 114,898 | (6,259 | ) | 1,300,321 | — | ||||||||||||||
Corporate bonds | 18,521,648 | 1,541,774 | (349,274 | ) | 19,714,148 | (1,308 | ) | |||||||||||||
24,221,657 | 1,791,787 | (491,613 | ) | 25,521,831 | (2,288 | ) | ||||||||||||||
Equity securities | 424,658 | 4,908 | (29,779 | ) | 399,787 | 106 | ||||||||||||||
Short-term investments | 108,685 | — | — | 108,685 | — | |||||||||||||||
$ | 24,755,000 | $ | 1,796,695 | $ | (521,392 | ) | $ | 26,030,303 | $ | (2,182 | ) | |||||||||
2012 | ||||||||||||||||||||
Fixed maturities: | ||||||||||||||||||||
Bonds | ||||||||||||||||||||
Residential mortgage-backed securities | $ | 1,766,260 | $ | 92,417 | $ | (19,347 | ) | $ | 1,839,330 | $ | (406 | ) | ||||||||
Commercial mortgage-backed securities | 797,844 | 72,577 | (598 | ) | 869,823 | — | ||||||||||||||
Other asset-backed securities | 1,023,649 | 12,788 | (61,424 | ) | 975,013 | (241 | ) | |||||||||||||
U.S. government-related securities | 1,097,501 | 71,536 | (591 | ) | 1,168,446 | — | ||||||||||||||
Other government-related securities | 93,565 | 7,258 | (45 | ) | 100,778 | — | ||||||||||||||
States, municipals, and political subdivisions | 1,188,019 | 255,898 | (264 | ) | 1,443,653 | — | ||||||||||||||
Corporate bonds | 17,687,164 | 2,726,858 | (48,395 | ) | 20,365,627 | (5,488 | ) | |||||||||||||
23,654,002 | 3,239,332 | (130,664 | ) | 26,762,670 | (6,135 | ) | ||||||||||||||
Equity securities | 352,272 | 11,881 | (9,993 | ) | 354,160 | — | ||||||||||||||
Short-term investments | 97,852 | — | — | 97,852 | — | |||||||||||||||
$ | 24,104,126 | $ | 3,251,213 | $ | (140,657 | ) | $ | 27,214,682 | $ | (6,135 | ) | |||||||||
(1)These amounts are included in the gross unrealized gains and gross unrealized losses columns above. | ||||||||||||||||||||
Schedule of amortized cost and fair value of the Company's investments classified as held-to-maturity | ' | |||||||||||||||||||
The amortized cost and fair value of the Company’s investments classified as held-to-maturity as of September 30, 2013 and December 31, 2012, are as follows: | ||||||||||||||||||||
Gross | Gross | Total OTTI | ||||||||||||||||||
Amortized | Unrealized | Unrealized | Fair | Recognized | ||||||||||||||||
Cost | Gains | Losses | Value | in OCI | ||||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
2013 | ||||||||||||||||||||
Fixed maturities: | ||||||||||||||||||||
Other | $ | 350,000 | $ | — | $ | (8,203 | ) | $ | 341,797 | $ | — | |||||||||
$ | 350,000 | $ | — | $ | (8,203 | ) | $ | 341,797 | $ | — | ||||||||||
2012 | ||||||||||||||||||||
Fixed maturities: | ||||||||||||||||||||
Other | $ | 300,000 | $ | 19,163 | $ | — | $ | 319,163 | $ | — | ||||||||||
$ | 300,000 | $ | 19,163 | $ | — | $ | 319,163 | $ | — | |||||||||||
Schedule of amortized cost and fair value of available-for-sale and held-to-maturity fixed maturities, by expected maturity | ' | |||||||||||||||||||
Available-for-sale | Held-to-maturity | |||||||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||||||
Cost | Value | Cost | Value | |||||||||||||||||
(Dollars In Thousands) | (Dollars In Thousands) | |||||||||||||||||||
Due in one year or less | $ | 554,916 | $ | 569,362 | $ | — | $ | — | ||||||||||||
Due after one year through five years | 3,227,348 | 3,508,934 | — | — | ||||||||||||||||
Due after five years through ten years | 7,548,558 | 7,870,781 | — | — | ||||||||||||||||
Due after ten years | 12,890,835 | 13,572,754 | 350,000 | 341,797 | ||||||||||||||||
$ | 24,221,657 | $ | 25,521,831 | $ | 350,000 | $ | 341,797 | |||||||||||||
Schedule of credit losses on fixed maturities held by the Company for which a portion of other-than-temporary impairments were recognized in other comprehensive income (loss) | ' | |||||||||||||||||||
For The | For The | |||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Beginning balance | $ | 51,814 | $ | 100,894 | $ | 121,237 | $ | 69,476 | ||||||||||||
Additions for newly impaired securities | 1,663 | — | 3,278 | 19,307 | ||||||||||||||||
Additions for previously impaired securities | 4,840 | 6,866 | 7,894 | 18,977 | ||||||||||||||||
Reductions for previously impaired securities due to a change in expected cash flows | (6,537 | ) | — | (73,392 | ) | — | ||||||||||||||
Reductions for previously impaired securities that were sold in the current period | — | — | (7,237 | ) | — | |||||||||||||||
Ending balance | $ | 51,780 | $ | 107,760 | $ | 51,780 | $ | 107,760 | ||||||||||||
Schedule of investments' gross unrealized losses and fair value of the Company's investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position | ' | |||||||||||||||||||
The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2013: | ||||||||||||||||||||
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Residential mortgage-backed securities | $ | 247,085 | $ | (13,653 | ) | $ | 67,362 | $ | (8,638 | ) | $ | 314,447 | $ | (22,291 | ) | |||||
Commercial mortgage-backed securities | 379,783 | (16,807 | ) | 6,656 | (250 | ) | 386,439 | (17,057 | ) | |||||||||||
Other asset-backed securities | 129,567 | (6,567 | ) | 532,205 | (60,168 | ) | 661,772 | (66,735 | ) | |||||||||||
U.S. government-related securities | 601,537 | (29,179 | ) | 14,847 | (818 | ) | 616,384 | (29,997 | ) | |||||||||||
Other government-related securities | — | — | — | — | — | — | ||||||||||||||
States, municipalities, and political subdivisions | 81,281 | (6,059 | ) | 315 | (200 | ) | 81,596 | (6,259 | ) | |||||||||||
Corporate bonds | 4,289,625 | (322,229 | ) | 189,197 | (27,045 | ) | 4,478,822 | (349,274 | ) | |||||||||||
Equities | 255,007 | (21,313 | ) | 21,680 | (8,466 | ) | 276,687 | (29,779 | ) | |||||||||||
$ | 5,983,885 | $ | (415,807 | ) | $ | 832,262 | $ | (105,585 | ) | $ | 6,816,147 | $ | (521,392 | ) | ||||||
The following table includes the gross unrealized losses and fair value of the Company’s investments that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2012: | ||||||||||||||||||||
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Residential mortgage-backed securities | $ | 100,412 | $ | (9,578 | ) | $ | 166,000 | $ | (9,769 | ) | $ | 266,412 | $ | (19,347 | ) | |||||
Commercial mortgage-backed securities | 50,506 | (598 | ) | — | — | 50,506 | (598 | ) | ||||||||||||
Other asset-backed securities | 479,223 | (28,179 | ) | 242,558 | (33,245 | ) | 721,781 | (61,424 | ) | |||||||||||
U.S. government-related securities | 106,806 | (591 | ) | — | — | 106,806 | (591 | ) | ||||||||||||
Other government-related securities | 14,955 | (45 | ) | — | — | 14,955 | (45 | ) | ||||||||||||
States, municipalities, and political subdivisions | 11,526 | (264 | ) | — | — | 11,526 | (264 | ) | ||||||||||||
Corporate bonds | 775,593 | (23,630 | ) | 363,128 | (24,765 | ) | 1,138,721 | (48,395 | ) | |||||||||||
Equities | 35,059 | (5,150 | ) | 21,754 | (4,843 | ) | 56,813 | (9,993 | ) | |||||||||||
$ | 1,574,080 | $ | (68,035 | ) | $ | 793,440 | $ | (72,622 | ) | $ | 2,367,520 | $ | (140,657 | ) | ||||||
Summary of change in unrealized gains (losses), net of income tax, on fixed maturity and equity securities, classified as available-for-sale | ' | |||||||||||||||||||
For The | For The | |||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Fixed maturities | $ | (155,839 | ) | $ | 436,690 | $ | (1,175,521 | ) | $ | 796,549 | ||||||||||
Equity securities | (12,791 | ) | 4,531 | (17,393 | ) | 8,226 | ||||||||||||||
MORTGAGE_LOANS_Tables
MORTGAGE LOANS (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
MORTGAGE LOANS | ' | |||||||||||||||||||
Schedule of changes in the allowance for mortgage loan credit losses | ' | |||||||||||||||||||
As of | ||||||||||||||||||||
September 30, 2013 | December 31, 2012 | |||||||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Beginning balance | $ | 2,875 | $ | 4,975 | ||||||||||||||||
Charge offs | (2,643 | ) | (8,340 | ) | ||||||||||||||||
Recoveries | (374 | ) | (628 | ) | ||||||||||||||||
Provision | 8,112 | 6,868 | ||||||||||||||||||
Ending balance | $ | 7,970 | $ | 2,875 | ||||||||||||||||
Schedule of an analysis of the delinquent loans | ' | |||||||||||||||||||
Greater | ||||||||||||||||||||
30-59 Days | 60-89 Days | than 90 Days | Total | |||||||||||||||||
Delinquent | Delinquent | Delinquent | Delinquent | |||||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Commercial mortgage loans | $ | 20,531 | $ | — | $ | 9,318 | $ | 29,849 | ||||||||||||
Number of delinquent commercial mortgage loans | 7 | — | 3 | 10 | ||||||||||||||||
Schedule of information regarding impaired loans | ' | |||||||||||||||||||
For information regarding impaired loans, please refer to the following chart as of September 30, 2013 and December 31, 2012: | ||||||||||||||||||||
Unpaid | Average | Interest | Cash Basis | |||||||||||||||||
Recorded | Principal | Related | Recorded | Income | Interest | |||||||||||||||
Investment | Balance | Allowance | Investment | Recognized | Income | |||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
2013 | ||||||||||||||||||||
Commercial mortgage loans: | ||||||||||||||||||||
With no related allowance recorded | $ | 2,243 | $ | 3,021 | $ | — | $ | 2,243 | $ | 42 | $ | 32 | ||||||||
With an allowance recorded | 37,485 | 37,482 | 7,970 | 5,355 | 499 | 478 | ||||||||||||||
2012 | ||||||||||||||||||||
Commercial mortgage loans: | ||||||||||||||||||||
With no related allowance recorded | $ | 13,044 | $ | 14,419 | $ | — | $ | 2,609 | $ | 53 | $ | 69 | ||||||||
With an allowance recorded | 13,927 | 13,927 | 2,875 | 3,482 | 154 | 154 |
DEBT_AND_OTHER_OBLIGATIONS_Tab
DEBT AND OTHER OBLIGATIONS (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
DEBT AND OTHER OBLIGATIONS | ' | ||||||||
Non-recourse funding obligations outstanding | ' | ||||||||
Year-to-Date | |||||||||
Maturity | Weighted-Avg | ||||||||
Issuer | Balance | Year | Interest Rate | ||||||
(Dollars In Thousands) | |||||||||
Golden Gate Captive Insurance Company(1) | $ | 800,000 | 2037 | n/m | |||||
Golden Gate II Captive Insurance Company | 341,900 | 2052 | 1.12 | % | |||||
Golden Gate V Vermont Captive Insurance Company | 350,000 | 2037 | 6.25 | % | |||||
Total | $ | 1,491,900 | |||||||
(1) The weighted average rate is not meaningful as these are fixed rate obligations. |
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended | ||||||
Sep. 30, 2013 | |||||||
STOCK-BASED COMPENSATION | ' | ||||||
Schedule of the SARs activity as well as weighted-average base price | ' | ||||||
Weighted-Average | |||||||
Base Price per share | No. of SARs | ||||||
Balance at December 31, 2012 | $ | 22.15 | 1,641,167 | ||||
SARs granted | — | — | |||||
SARs exercised / forfeited | 18.02 | (315,616 | ) | ||||
Balance at September 30, 2013 | $ | 23.13 | 1,325,551 |
EMPLOYEE_BENEFIT_PLANS_Tables
EMPLOYEE BENEFIT PLANS (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
EMPLOYEE BENEFIT PLANS | ' | |||||||||||||
Components of the net periodic benefit cost of PLC's defined benefit pension plan and unfunded excess benefit plan | ' | |||||||||||||
For The | For The | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
(Dollars In Thousands) | ||||||||||||||
Service cost — benefits earned during the period | $ | 2,708 | $ | 2,561 | $ | 8,124 | $ | 7,683 | ||||||
Interest cost on projected benefit obligation | 2,553 | 2,604 | 7,659 | 7,812 | ||||||||||
Expected return on plan assets | (2,759 | ) | (2,673 | ) | (8,277 | ) | (8,019 | ) | ||||||
Amortization of prior service cost/(credit) | (95 | ) | (95 | ) | (285 | ) | (285 | ) | ||||||
Amortization of actuarial losses | 2,729 | 2,175 | 8,187 | 6,525 | ||||||||||
Total benefit cost | $ | 5,136 | $ | 4,572 | $ | 15,408 | $ | 13,716 |
ACCUMULATED_OTHER_COMPREHENSIV1
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ' | ||||||||||
Summary of changes in the accumulated balances for each component of accumulated other comprehensive income (loss) | ' | ||||||||||
Changes in Accumulated Other Comprehensive Income (Loss) by Component | |||||||||||
Total | |||||||||||
Accumulated | |||||||||||
Unrealized | Accumulated | Other | |||||||||
Gains and Losses | Gain and Loss | Comprehensive | |||||||||
on Investments | Derivatives | Income (Loss) | |||||||||
(Dollars In Thousands, Net of Tax) | |||||||||||
Beginning Balance, December 31, 2012 | $ | 1,814,620 | $ | (3,496 | ) | $ | 1,811,124 | ||||
Other comprehensive income (loss) before reclassifications | (1,191,178 | ) | (103 | ) | (1,191,281 | ) | |||||
Other comprehensive income relating to other- than-temporary impaired investments for which a portion has been recognized in earnings | 2,570 | — | 2,570 | ||||||||
Amounts reclassified from accumulated other comprehensive income (loss)(1) | (17,705 | ) | 1,072 | (16,633 | ) | ||||||
Net current-period other comprehensive income (loss) | (1,206,313 | ) | 969 | (1,205,344 | ) | ||||||
Ending Balance, September 30, 2013 | $ | 608,307 | $ | (2,527 | ) | $ | 605,780 | ||||
(1) See Reclassification table below for details. | |||||||||||
Schedule of reclassifications amounts out of AOCI | ' | ||||||||||
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | |||||||||||
Amount | |||||||||||
Reclassified | |||||||||||
from Accumulated | |||||||||||
Other Comprehensive | Affected Line Item in the | ||||||||||
Income (Loss) | Consolidated Condensed Statements of Income | ||||||||||
(Dollars In Thousands) | |||||||||||
Accumulated Other Comprehensive Income (Loss) Components | |||||||||||
For The Three Months Ended September 30, 2013 | |||||||||||
Gains and losses on derivative instruments | |||||||||||
Net settlement (expense)/benefit(1) | $ | (572 | ) | Benefits and settlement expenses, net of reinsurance ceded | |||||||
(572 | ) | Total before tax | |||||||||
200 | Tax (expense) or benefit | ||||||||||
$ | (372 | ) | Net of tax | ||||||||
Unrealized gains and losses on available-for-sale securities | |||||||||||
Net investment gains/(losses) | $ | 10,546 | Realized investment gains (losses): All other investments | ||||||||
Impairments recognized in earnings | (8,681 | ) | Net impairment losses recognized in earnings | ||||||||
1,865 | Total before tax | ||||||||||
(653 | ) | Tax (expense) or benefit | |||||||||
$ | 1,212 | Net of tax | |||||||||
(1) See Note 14, Derivative Financial Instruments, for additional information. | |||||||||||
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | |||||||||||
Amount | |||||||||||
Reclassified | |||||||||||
from Accumulated | |||||||||||
Other Comprehensive | Affected Line Item in the | ||||||||||
Income (Loss) | Consolidated Condensed Statements of Income | ||||||||||
(Dollars In Thousands) | |||||||||||
Accumulated Other Comprehensive Income (Loss) Components | |||||||||||
For The Nine Months Ended September 30, 2013 | |||||||||||
Gains and losses on derivative instruments | |||||||||||
Net settlement (expense)/benefit(1) | $ | (1,649 | ) | Benefits and settlement expenses, net of reinsurance ceded | |||||||
(1,649 | ) | Total before tax | |||||||||
577 | Tax (expense) or benefit | ||||||||||
$ | (1,072 | ) | Net of tax | ||||||||
Unrealized gains and losses on available-for-sale securities | |||||||||||
Net investment gains/(losses) | $ | 44,503 | Realized investment gains (losses): All other investments | ||||||||
Impairments recognized in earnings | (17,265 | ) | Net impairment losses recognized in earnings | ||||||||
27,238 | Total before tax | ||||||||||
(9,533 | ) | Tax (expense) or benefit | |||||||||
$ | 17,705 | Net of tax | |||||||||
(1) See Note 14, Derivative Financial Instruments, for additional information. |
RELATED_PARTY_TRANSACTIONS_Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
RELATED PARTY TRANSACTIONS | ' | ||||
Schedule of balances from related party's balance sheet | ' | ||||
As of | |||||
March 31, 2013 | |||||
(Dollars In Thousands) | |||||
Assets | |||||
Other long-term investments | $ | 34,093 | |||
Short-term investments | 745 | ||||
Total investments | 34,838 | ||||
Cash | 44,963 | ||||
Accounts and premiums receivable | 16,036 | ||||
Deferred policy acquisition cost | 123,847 | ||||
Other assets | 48,953 | ||||
Total assets | $ | 268,637 | |||
Liabilities | |||||
Future policy benefits and claims | $ | 1,626 | |||
Other liabilities | 178,321 | ||||
Deferred income taxes | 2,459 | ||||
Total liabilities | 182,406 | ||||
Total equity | 86,231 | ||||
Total liabilities and equity | $ | 268,637 |
FAIR_VALUE_OF_FINANCIAL_INSTRU1
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities measured at fair value on a recurring basis | ' | ||||||||||||||||||||||||||||||||||||||||
The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of September 30, 2013: | |||||||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities - available-for-sale | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | $ | — | $ | 1,463,989 | $ | 38 | $ | 1,464,027 | |||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 911,607 | — | 911,607 | |||||||||||||||||||||||||||||||||||||
Other asset-backed securities | — | 328,393 | 548,771 | 877,164 | |||||||||||||||||||||||||||||||||||||
U.S. government-related securities | 1,063,584 | 149,852 | — | 1,213,436 | |||||||||||||||||||||||||||||||||||||
State, municipalities, and political subdivisions | — | 1,296,046 | 4,275 | 1,300,321 | |||||||||||||||||||||||||||||||||||||
Other government-related securities | — | 41,128 | — | 41,128 | |||||||||||||||||||||||||||||||||||||
Corporate bonds | 107 | 19,526,553 | 187,488 | 19,714,148 | |||||||||||||||||||||||||||||||||||||
Total fixed maturity securities - available-for-sale | 1,063,691 | 23,717,568 | 740,572 | 25,521,831 | |||||||||||||||||||||||||||||||||||||
Fixed maturity securities - trading | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | — | 308,356 | — | 308,356 | |||||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 169,046 | — | 169,046 | |||||||||||||||||||||||||||||||||||||
Other asset-backed securities | — | 90,726 | 170,967 | 261,693 | |||||||||||||||||||||||||||||||||||||
U.S. government-related securities | 198,717 | 5,147 | — | 203,864 | |||||||||||||||||||||||||||||||||||||
State, municipalities, and political subdivisions | — | 262,036 | — | 262,036 | |||||||||||||||||||||||||||||||||||||
Other government-related securities | — | 57,525 | — | 57,525 | |||||||||||||||||||||||||||||||||||||
Corporate bonds | — | 1,515,167 | 5,092 | 1,520,259 | |||||||||||||||||||||||||||||||||||||
Total fixed maturity securities - trading | 198,717 | 2,408,003 | 176,059 | 2,782,779 | |||||||||||||||||||||||||||||||||||||
Total fixed maturity securities | 1,262,408 | 26,125,571 | 916,631 | 28,304,610 | |||||||||||||||||||||||||||||||||||||
Equity securities | 311,637 | 43,341 | 65,527 | 420,505 | |||||||||||||||||||||||||||||||||||||
Other long-term investments (1) | 58,567 | 54,600 | 83,005 | 196,172 | |||||||||||||||||||||||||||||||||||||
Short-term investments | 212,816 | 2,300 | — | 215,116 | |||||||||||||||||||||||||||||||||||||
Total investments | 1,845,428 | 26,225,812 | 1,065,163 | 29,136,403 | |||||||||||||||||||||||||||||||||||||
Cash | 229,747 | — | — | 229,747 | |||||||||||||||||||||||||||||||||||||
Assets related to separate accounts | |||||||||||||||||||||||||||||||||||||||||
Variable annuity | 11,921,925 | — | — | 11,921,925 | |||||||||||||||||||||||||||||||||||||
Variable universal life | 663,380 | — | — | 663,380 | |||||||||||||||||||||||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | 14,660,480 | $ | 26,225,812 | $ | 1,065,163 | $ | 41,951,455 | |||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Annuity account balances(2) | $ | — | $ | — | $ | 110,590 | $ | 110,590 | |||||||||||||||||||||||||||||||||
Other liabilities (1) | 11,304 | 185,443 | 230,723 | 427,470 | |||||||||||||||||||||||||||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | 11,304 | $ | 185,443 | $ | 341,313 | $ | 538,060 | |||||||||||||||||||||||||||||||||
(1)Includes certain freestanding and embedded derivatives. | |||||||||||||||||||||||||||||||||||||||||
(2)Represents liabilities related to fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2012: | |||||||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities - available-for-sale | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | $ | — | $ | 1,839,326 | $ | 4 | $ | 1,839,330 | |||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 869,823 | — | 869,823 | |||||||||||||||||||||||||||||||||||||
Other asset-backed securities | — | 378,870 | 596,143 | 975,013 | |||||||||||||||||||||||||||||||||||||
U.S. government-related securities | 909,988 | 258,458 | — | 1,168,446 | |||||||||||||||||||||||||||||||||||||
State, municipalities, and political subdivisions | — | 1,439,378 | 4,275 | 1,443,653 | |||||||||||||||||||||||||||||||||||||
Other government-related securities | — | 80,767 | 20,011 | 100,778 | |||||||||||||||||||||||||||||||||||||
Corporate bonds | 207 | 20,197,528 | 167,892 | 20,365,627 | |||||||||||||||||||||||||||||||||||||
Total fixed maturity securities - available-for-sale | 910,195 | 25,064,150 | 788,325 | 26,762,670 | |||||||||||||||||||||||||||||||||||||
Fixed maturity securities - trading | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | — | 357,803 | — | 357,803 | |||||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | 171,073 | — | 171,073 | |||||||||||||||||||||||||||||||||||||
Other asset-backed securities | — | 87,395 | 70,535 | 157,930 | |||||||||||||||||||||||||||||||||||||
U.S. government-related securities | 304,704 | 1,169 | — | 305,873 | |||||||||||||||||||||||||||||||||||||
State, municipalities, and political subdivisions | — | 278,898 | — | 278,898 | |||||||||||||||||||||||||||||||||||||
Other government-related securities | — | 63,444 | — | 63,444 | |||||||||||||||||||||||||||||||||||||
Corporate bonds | — | 1,672,172 | 115 | 1,672,287 | |||||||||||||||||||||||||||||||||||||
Total fixed maturity securities - trading | 304,704 | 2,631,954 | 70,650 | 3,007,308 | |||||||||||||||||||||||||||||||||||||
Total fixed maturity securities | 1,214,899 | 27,696,104 | 858,975 | 29,769,978 | |||||||||||||||||||||||||||||||||||||
Equity securities | 273,072 | 35,116 | 65,527 | 373,715 | |||||||||||||||||||||||||||||||||||||
Other long-term investments (1) | 23,639 | 58,134 | 48,655 | 130,428 | |||||||||||||||||||||||||||||||||||||
Short-term investments | 214,295 | 2,492 | — | 216,787 | |||||||||||||||||||||||||||||||||||||
Total investments | 1,725,905 | 27,791,846 | 973,157 | 30,490,908 | |||||||||||||||||||||||||||||||||||||
Cash | 269,582 | — | — | 269,582 | |||||||||||||||||||||||||||||||||||||
Other assets | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Assets related to separate accounts | |||||||||||||||||||||||||||||||||||||||||
Variable annuity | 9,601,417 | — | — | 9,601,417 | |||||||||||||||||||||||||||||||||||||
Variable universal life | 562,817 | — | — | 562,817 | |||||||||||||||||||||||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | 12,159,721 | $ | 27,791,846 | $ | 973,157 | $ | 40,924,724 | |||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Annuity account balances (2) | $ | — | $ | — | $ | 129,468 | $ | 129,468 | |||||||||||||||||||||||||||||||||
Other liabilities (1) | 19,187 | 27,250 | 611,437 | 657,874 | |||||||||||||||||||||||||||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | 19,187 | $ | 27,250 | $ | 740,905 | $ | 787,342 | |||||||||||||||||||||||||||||||||
(1) Includes certain freestanding and embedded derivatives. | |||||||||||||||||||||||||||||||||||||||||
(2) Represents liabilities related to fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
Schedule of valuation method for material financial instruments included in Level 3, as well as the unobservable inputs used in the valuation of those financial instruments | ' | ||||||||||||||||||||||||||||||||||||||||
Fair Value | |||||||||||||||||||||||||||||||||||||||||
As of | Valuation | Unobservable | Range | ||||||||||||||||||||||||||||||||||||||
September 30, 2013 | Technique | Input | (Weighted Average) | ||||||||||||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Other asset-backed securities | $ | 548,771 | Discounted cash flow | Liquidity premium | 0.69% - 1.32% (0.80%) | ||||||||||||||||||||||||||||||||||||
Paydown rate | 8.37% - 17.50% (12.45%) | ||||||||||||||||||||||||||||||||||||||||
Corporate bonds | 192,580 | Discounted cash flow | Spread over treasury | 0.32% - 6.75% (2.89%) | |||||||||||||||||||||||||||||||||||||
Embedded derivatives - | 77,835 | Actuarial cash flow | Mortality | 49% to 80% of 1994 MGDB table | |||||||||||||||||||||||||||||||||||||
GMWB(1) | model | Lapse | 0% - 24%, depending on product/duration/funded status of guarantee | ||||||||||||||||||||||||||||||||||||||
Utilization | 97% - 103% | ||||||||||||||||||||||||||||||||||||||||
Nonperformance risk | 0.19% - 1.31% | ||||||||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Annuity account balances(2) | $ | 110,590 | Actuarial cash flow | Asset earned rate | 5.37% | ||||||||||||||||||||||||||||||||||||
model | Expenses | $88 - $102 per policy | |||||||||||||||||||||||||||||||||||||||
Withdrawal rate | 2.20% | ||||||||||||||||||||||||||||||||||||||||
Mortality | 49% to 80% of 1994 MGDB table | ||||||||||||||||||||||||||||||||||||||||
Lapse | 2.2% - 33.0%, depending on duration/surrender charge period | ||||||||||||||||||||||||||||||||||||||||
Return on assets | 1.50% - 1.85% depending on surrender charge period | ||||||||||||||||||||||||||||||||||||||||
Nonperformance risk | 0.19% - 1.31% | ||||||||||||||||||||||||||||||||||||||||
Embedded derivative - FIA | 9,199 | Actuarial cash flow | Expenses | $83 - $97 per policy | |||||||||||||||||||||||||||||||||||||
model | Withdrawal rate | 1.1% - 4.5% depending on duration and tax qualification | |||||||||||||||||||||||||||||||||||||||
Mortality | 49% - 80% of 1994 MGDB table | ||||||||||||||||||||||||||||||||||||||||
Lapse | 2.5% - 40.0%, depending on duration/surrender charge period | ||||||||||||||||||||||||||||||||||||||||
Nonperformance risk | 0.19% - 1.31% | ||||||||||||||||||||||||||||||||||||||||
(1)The fair value for the GMWB embedded derivative is presented as a net asset for the purposes of this chart. Excludes modified coinsurance agreements. | |||||||||||||||||||||||||||||||||||||||||
(2)Represents account balance liabilities related to fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
Fair Value | |||||||||||||||||||||||||||||||||||||||||
As of | Valuation | Unobservable | Range | ||||||||||||||||||||||||||||||||||||||
December 31, 2012 | Technique | Input | (Weighted Average) | ||||||||||||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Other asset-backed securities | $ | 596,143 | Discounted cash flow | Liquidity premium | 0.72% - 1.68% (1.29%) | ||||||||||||||||||||||||||||||||||||
Paydown rate | 8.51% - 18.10% (11.40%) | ||||||||||||||||||||||||||||||||||||||||
Other government-related securities | 20,011 | Discounted cash flow | Spread over treasury | -0.30% | |||||||||||||||||||||||||||||||||||||
Corporate bonds | 168,007 | Discounted cash flow | Spread over treasury | 0.92% - 7.75% (3.34%) | |||||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Embedded derivatives - GMWB(1) | $ | 169,041 | Actuarial cash flow model | Mortality | 57% of 1994 MGDB table | ||||||||||||||||||||||||||||||||||||
Lapse | 0% - 24%, depending on product/duration/funded status of guarantee | ||||||||||||||||||||||||||||||||||||||||
Utilization | 93% - 100% | ||||||||||||||||||||||||||||||||||||||||
Nonperformance risk | 0.09% - 1.34% | ||||||||||||||||||||||||||||||||||||||||
Annuity account balances(2) | 129,468 | Actuarial cash flow model | Asset earned rate | 5.81% | |||||||||||||||||||||||||||||||||||||
Expenses | $ 88 - $108 per policy | ||||||||||||||||||||||||||||||||||||||||
Withdrawal rate | 2.20% | ||||||||||||||||||||||||||||||||||||||||
Mortality | 57% of 1994 MGDB table | ||||||||||||||||||||||||||||||||||||||||
Lapse | 2.2% - 45.0%, depending on duration/surrender charge period | ||||||||||||||||||||||||||||||||||||||||
Return on assets | 1.50% - 1.85% depending on surrender charge period | ||||||||||||||||||||||||||||||||||||||||
Nonperformance risk | 0.09% - 1.34% | ||||||||||||||||||||||||||||||||||||||||
(1)The fair value for the GMWB embedded derivative is presented as a net liability for the purposes of this chart. Excludes modified coinsurance agreements. | |||||||||||||||||||||||||||||||||||||||||
(2)Represents account balance liabilities related to fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
Schedule of reconciliation of the beginning and ending balances for fair value measurements, for which the Company has used significant unobservable inputs (Level 3) | ' | ||||||||||||||||||||||||||||||||||||||||
The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the three months ended September 30, 2013, for which the Company has used significant unobservable inputs (Level 3): | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Gains (losses) | |||||||||||||||||||||||||||||||||||||||||
Total | Total | included in | |||||||||||||||||||||||||||||||||||||||
Realized and Unrealized | Realized and Unrealized | Earnings | |||||||||||||||||||||||||||||||||||||||
Gains | Losses | related to | |||||||||||||||||||||||||||||||||||||||
Included in | Included in | Instruments | |||||||||||||||||||||||||||||||||||||||
Other | Other | Transfers | still held at | ||||||||||||||||||||||||||||||||||||||
Beginning | Included in | Comprehensive | Included in | Comprehensive | in/out of | Ending | the Reporting | ||||||||||||||||||||||||||||||||||
Balance | Earnings | Income | Earnings | Income | Purchases | Sales | Issuances | Settlements | Level 3 | Other | Balance | Date | |||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities available-for-sale | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | $ | 14,062 | $ | — | $ | 1,310 | $ | — | $ | — | $ | — | $ | (12 | ) | $ | — | $ | — | $ | (15,333 | ) | $ | 11 | $ | 38 | $ | — | |||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other asset-backed securities | 576,396 | — | 52 | — | (26,969 | ) | 11,769 | (12,085 | ) | — | — | — | (392 | ) | 548,771 | — | |||||||||||||||||||||||||
U.S. government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
States, municipals, and political subdivisions | 4,275 | — | — | — | — | — | — | — | — | — | — | 4,275 | — | ||||||||||||||||||||||||||||
Other government-related securities | 20,000 | — | 1 | — | — | — | (20,000 | ) | — | — | — | (1 | ) | — | — | ||||||||||||||||||||||||||
Corporate bonds | 194,895 | — | 1,662 | — | (3,513 | ) | 11,002 | (13,558 | ) | — | — | (3,385 | ) | 385 | 187,488 | — | |||||||||||||||||||||||||
Total fixed maturity securities - available-for-sale | 809,628 | — | 3,025 | — | (30,482 | ) | 22,771 | (45,655 | ) | — | — | (18,718 | ) | 3 | 740,572 | — | |||||||||||||||||||||||||
Fixed maturity securities - trading | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | 1,582 | — | — | (1 | ) | — | — | (72 | ) | — | — | (1,494 | ) | (15 | ) | — | — | ||||||||||||||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other asset-backed securities | 168,851 | 3,167 | — | (1,080 | ) | — | 16,394 | (16,568 | ) | — | — | — | 203 | 170,967 | 1,596 | ||||||||||||||||||||||||||
U.S. government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
States, municipals and political subdivisions | 3,500 | — | — | (123 | ) | — | — | — | — | — | (3,377 | ) | — | — | — | ||||||||||||||||||||||||||
Other government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Corporate bonds | 5,092 | — | — | (4 | ) | — | — | — | — | — | — | 4 | 5,092 | (4 | ) | ||||||||||||||||||||||||||
Total fixed maturity securities - trading | 179,025 | 3,167 | — | (1,208 | ) | — | 16,394 | (16,640 | ) | — | — | (4,871 | ) | 192 | 176,059 | 1,592 | |||||||||||||||||||||||||
Total fixed maturity securities | 988,653 | 3,167 | 3,025 | (1,208 | ) | (30,482 | ) | 39,165 | (62,295 | ) | — | — | (23,589 | ) | 195 | 916,631 | 1,592 | ||||||||||||||||||||||||
Equity securities | 65,527 | — | — | — | — | — | — | — | — | — | — | 65,527 | — | ||||||||||||||||||||||||||||
Other long-term investments(1) | 47,838 | 36,917 | (1,750 | ) | — | — | — | — | — | — | — | — | 83,005 | 35,167 | |||||||||||||||||||||||||||
Short-term investments | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Total investments | 1,102,018 | 40,084 | 1,275 | (1,208 | ) | (30,482 | ) | 39,165 | (62,295 | ) | — | — | (23,589 | ) | 195 | 1,065,163 | 36,759 | ||||||||||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | 1,102,018 | $ | 40,084 | $ | 1,275 | $ | (1,208 | ) | $ | (30,482 | ) | $ | 39,165 | $ | (62,295 | ) | $ | — | $ | — | $ | (23,589 | ) | $ | 195 | $ | 1,065,163 | $ | 36,759 | |||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Annuity account balances(2) | $ | 114,614 | $ | — | $ | (2,472 | ) | $ | — | $ | — | $ | — | $ | — | $ | 46 | $ | 6,542 | — | $ | — | $ | 110,590 | $ | — | |||||||||||||||
Other liabilities(1) | 256,776 | 39,109 | (13,056 | ) | — | — | — | — | — | — | — | — | 230,723 | 26,053 | |||||||||||||||||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | 371,390 | $ | 39,109 | $ | (15,528 | ) | $ | — | $ | — | $ | — | $ | — | $ | 46 | $ | 6,542 | $ | — | $ | — | $ | 341,313 | $ | 26,053 | ||||||||||||||
(1)Represents certain freestanding and embedded derivatives. | |||||||||||||||||||||||||||||||||||||||||
(2)Represents liabilities related to fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the three months ended September 30, 2012, for which the Company has used significant unobservable inputs (Level 3): | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Gains (losses) | |||||||||||||||||||||||||||||||||||||||||
Total | Total | included in | |||||||||||||||||||||||||||||||||||||||
Realized and Unrealized | Realized and Unrealized | Earnings | |||||||||||||||||||||||||||||||||||||||
Gains | Losses | related to | |||||||||||||||||||||||||||||||||||||||
Included in | Included in | Instruments | |||||||||||||||||||||||||||||||||||||||
Other | Other | Transfers | still held at | ||||||||||||||||||||||||||||||||||||||
Beginning | Included in | Comprehensive | Included in | Comprehensive | in/out of | Ending | the Reporting | ||||||||||||||||||||||||||||||||||
Balance | Earnings | Income | Earnings | Income | Purchases | Sales | Issuances | Settlements | Level 3 | Other | Balance | Date | |||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities available-for-sale | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | $ | 4 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 4 | $ | — | |||||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other asset-backed securities | 584,641 | 45 | 11,462 | — | (1,157 | ) | — | (5,200 | ) | — | — | — | (153 | ) | 589,638 | — | |||||||||||||||||||||||||
U.S. government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
States, municipals, and political subdivisions | 4,275 | — | — | — | — | — | — | — | — | — | — | 4,275 | — | ||||||||||||||||||||||||||||
Other government-related securities | 20,020 | — | — | (11 | ) | — | — | — | — | — | (4 | ) | 20,005 | — | |||||||||||||||||||||||||||
Corporate bonds | 172,145 | — | 5,349 | — | (221 | ) | — | (2,090 | ) | — | — | (26,802 | ) | 122 | 148,503 | — | |||||||||||||||||||||||||
Total fixed maturity securities - available-for-sale | 781,085 | 45 | 16,811 | — | (1,389 | ) | — | (7,290 | ) | — | — | (26,802 | ) | (35 | ) | 762,425 | — | ||||||||||||||||||||||||
Fixed maturity securities - trading | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other asset-backed securities | 65,059 | 2,972 | — | (148 | ) | — | 7,208 | (1,442 | ) | — | — | — | 413 | 74,062 | 2,823 | ||||||||||||||||||||||||||
U.S. government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
States, municipals and political subdivisions | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Corporate bonds | 114 | 1 | — | — | — | — | — | — | — | — | 115 | 2 | |||||||||||||||||||||||||||||
Total fixed maturity securities - trading | 65,173 | 2,973 | — | (148 | ) | — | 7,208 | (1,442 | ) | — | — | — | 413 | 74,177 | 2,825 | ||||||||||||||||||||||||||
Total fixed maturity securities | 846,258 | 3,018 | 16,811 | (148 | ) | (1,389 | ) | 7,208 | (8,732 | ) | — | — | (26,802 | ) | 378 | 836,602 | 2,825 | ||||||||||||||||||||||||
Equity securities | 69,795 | 8 | — | — | (147 | ) | — | (4,295 | ) | — | — | — | — | 65,361 | — | ||||||||||||||||||||||||||
Other long-term investments(1) | 25,315 | 20,278 | — | (34 | ) | — | — | — | — | — | — | — | 45,559 | 20,244 | |||||||||||||||||||||||||||
Short-term investments | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Total investments | 941,368 | 23,304 | 16,811 | (182 | ) | (1,536 | ) | 7,208 | (13,027 | ) | — | — | (26,802 | ) | 378 | 947,522 | 23,069 | ||||||||||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | 941,368 | $ | 23,304 | $ | 16,811 | $ | (182 | ) | $ | (1,536 | ) | $ | 7,208 | $ | (13,027 | ) | $ | — | $ | — | $ | (26,802 | ) | $ | 378 | $ | 947,522 | $ | 23,069 | |||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Annuity account balances(2) | $ | 134,597 | $ | — | $ | — | $ | (5,766 | ) | $ | — | $ | — | $ | — | $ | 217 | $ | 6,011 | $ | — | $ | — | $ | 134,569 | $ | — | ||||||||||||||
Other liabilities(1) | 516,587 | 11,016 | — | (112,779 | ) | — | — | — | — | — | — | — | 618,350 | (101,763 | ) | ||||||||||||||||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | 651,184 | $ | 11,016 | $ | — | $ | (118,545 | ) | $ | — | $ | — | $ | — | $ | 217 | $ | 6,011 | $ | — | $ | — | $ | 752,919 | $ | (101,763 | ) | |||||||||||||
(1)Represents certain freestanding and embedded derivatives. | |||||||||||||||||||||||||||||||||||||||||
(2)Represents liabilities related to fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the nine months ended September 30, 2013, for which the Company has used significant unobservable inputs (Level 3): | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Gains (losses) | |||||||||||||||||||||||||||||||||||||||||
Total | Total | included in | |||||||||||||||||||||||||||||||||||||||
Realized and Unrealized | Realized and Unrealized | Earnings | |||||||||||||||||||||||||||||||||||||||
Gains | Losses | related to | |||||||||||||||||||||||||||||||||||||||
Included in | Included in | Instruments | |||||||||||||||||||||||||||||||||||||||
Other | Other | Transfers | still held at | ||||||||||||||||||||||||||||||||||||||
Beginning | Included in | Comprehensive | Included in | Comprehensive | in/out of | Ending | the Reporting | ||||||||||||||||||||||||||||||||||
Balance | Earnings | Income | Earnings | Income | Purchases | Sales | Issuances | Settlements | Level 3 | Other | Balance | Date | |||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities available-for-sale | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | $ | 4 | $ | — | $ | 1,310 | $ | — | $ | (337 | ) | $ | 14,349 | $ | (12 | ) | $ | — | $ | — | $ | (15,287 | ) | $ | 11 | $ | 38 | $ | — | ||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other asset-backed securities | 596,143 | — | 43,808 | — | (54,517 | ) | 24,931 | (62,471 | ) | — | — | 1,227 | (350 | ) | 548,771 | — | |||||||||||||||||||||||||
U.S. government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
States, municipals, and political subdivisions | 4,275 | — | — | — | — | — | — | — | — | — | — | 4,275 | — | ||||||||||||||||||||||||||||
Other government-related securities | 20,011 | — | 2 | — | (3 | ) | — | (20,000 | ) | — | — | — | (10 | ) | — | — | |||||||||||||||||||||||||
Corporate bonds | 167,892 | 116 | 2,673 | — | (13,559 | ) | 29,277 | (58,742 | ) | — | — | 58,945 | 886 | 187,488 | — | ||||||||||||||||||||||||||
Total fixed maturity securities - available-for-sale | 788,325 | 116 | 47,793 | — | (68,416 | ) | 68,557 | (141,225 | ) | — | — | 44,885 | 537 | 740,572 | — | ||||||||||||||||||||||||||
Fixed maturity securities - trading | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | — | — | — | (1 | ) | — | 1,582 | (72 | ) | — | — | (1,494 | ) | (15 | ) | — | — | ||||||||||||||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other asset-backed securities | 70,535 | 7,964 | — | (3,949 | ) | — | 122,224 | (29,344 | ) | — | — | 2,210 | 1,327 | 170,967 | 4,814 | ||||||||||||||||||||||||||
U.S. government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
States, municipals and political subdivisions | — | — | — | (123 | ) | — | 3,500 | — | — | — | (3,377 | ) | — | — | — | ||||||||||||||||||||||||||
Other government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Corporate bonds | 115 | 1 | — | (27 | ) | — | — | (17 | ) | — | — | 5,013 | 7 | 5,092 | (4 | ) | |||||||||||||||||||||||||
Total fixed maturity securities - trading | 70,650 | 7,965 | — | (4,100 | ) | — | 127,306 | (29,433 | ) | — | — | 2,352 | 1,319 | 176,059 | 4,810 | ||||||||||||||||||||||||||
Total fixed maturity securities | 858,975 | 8,081 | 47,793 | (4,100 | ) | (68,416 | ) | 195,863 | (170,658 | ) | — | — | 47,237 | 1,856 | 916,631 | 4,810 | |||||||||||||||||||||||||
Equity securities | 65,527 | — | — | — | — | — | — | — | — | — | — | 65,527 | — | ||||||||||||||||||||||||||||
Other long-term investments(1) | 48,655 | 84,176 | (15,733 | ) | — | — | — | — | — | — | — | (34,093 | ) | 83,005 | 68,443 | ||||||||||||||||||||||||||
Short-term investments | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Total investments | 973,157 | 92,257 | 32,060 | (4,100 | ) | (68,416 | ) | 195,863 | (170,658 | ) | — | — | 47,237 | (32,237 | ) | 1,065,163 | 73,253 | ||||||||||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | 973,157 | $ | 92,257 | $ | 32,060 | $ | (4,100 | ) | $ | (68,416 | ) | $ | 195,863 | $ | (170,658 | ) | $ | — | $ | — | $ | 47,237 | $ | (32,237 | ) | $ | 1,065,163 | $ | 73,253 | |||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Annuity account balances(2) | $ | 129,468 | $ | — | $ | (6,159 | ) | $ | — | $ | — | $ | — | $ | — | $ | 247 | $ | 25,284 | $ | — | $ | — | $ | 110,590 | $ | — | ||||||||||||||
Other liabilities(1) | 611,437 | 277,319 | (31,110 | ) | — | — | — | — | — | — | — | 134,505 | 230,723 | 246,209 | |||||||||||||||||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | 740,905 | $ | 277,319 | $ | (37,269 | ) | $ | — | $ | — | $ | — | $ | — | $ | 247 | $ | 25,284 | $ | — | $ | 134,505 | $ | 341,313 | $ | 246,209 | ||||||||||||||
(1)Represents certain freestanding and embedded derivatives. | |||||||||||||||||||||||||||||||||||||||||
(2)Represents liabilities related to fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the nine months ended September 30, 2012, for which the Company has used significant unobservable inputs (Level 3): | |||||||||||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||||||||
Gains (losses) | |||||||||||||||||||||||||||||||||||||||||
Total | Total | included in | |||||||||||||||||||||||||||||||||||||||
Realized and Unrealized | Realized and Unrealized | Earnings | |||||||||||||||||||||||||||||||||||||||
Gains | Losses | related to | |||||||||||||||||||||||||||||||||||||||
Included in | Included in | Instruments | |||||||||||||||||||||||||||||||||||||||
Other | Other | Transfers | still held at | ||||||||||||||||||||||||||||||||||||||
Beginning | Included in | Comprehensive | Included in | Comprehensive | in/out of | Ending | the Reporting | ||||||||||||||||||||||||||||||||||
Balance | Earnings | Income | Earnings | Income | Purchases | Sales | Issuances | Settlements | Level 3 | Other | Balance | Date | |||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Fixed maturity securities available-for-sale | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | $ | 7 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (3 | ) | $ | — | $ | — | $ | — | $ | — | $ | 4 | $ | — | ||||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other asset-backed securities | 614,813 | 339 | 15,981 | — | (22,055 | ) | — | (19,050 | ) | — | — | — | (390 | ) | 589,638 | — | |||||||||||||||||||||||||
U.S. government-related securities | 15,000 | — | — | — | (1 | ) | — | (15,000 | ) | — | — | — | 1 | — | — | ||||||||||||||||||||||||||
States, municipals, and political subdivisions | — | — | — | — | — | 4,275 | — | — | — | — | — | 4,275 | — | ||||||||||||||||||||||||||||
Other government-related securities | — | — | 18 | — | (27 | ) | 20,023 | — | — | — | — | (9 | ) | 20,005 | — | ||||||||||||||||||||||||||
Corporate bonds | 119,565 | — | 7,198 | — | (2,131 | ) | 4 | (4,185 | ) | — | — | 27,810 | 242 | 148,503 | — | ||||||||||||||||||||||||||
Total fixed maturity securities - available-for-sale | 749,385 | 339 | 23,197 | — | (24,214 | ) | 24,302 | (38,238 | ) | — | — | 27,810 | (156 | ) | 762,425 | — | |||||||||||||||||||||||||
Fixed maturity securities - trading | |||||||||||||||||||||||||||||||||||||||||
Residential mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Commercial mortgage-backed securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other asset-backed securities | 28,343 | 3,450 | — | (905 | ) | — | 48,255 | (6,516 | ) | — | — | — | 1,435 | 74,062 | 2,545 | ||||||||||||||||||||||||||
U.S. government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
States, municipals and political subdivisions | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other government-related securities | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Corporate bonds | — | 1 | — | — | — | 1 | — | — | — | 113 | — | 115 | 10 | ||||||||||||||||||||||||||||
Total fixed maturity securities - trading | 28,343 | 3,451 | — | (905 | ) | — | 48,256 | (6,516 | ) | — | — | 113 | 1,435 | 74,177 | 2,555 | ||||||||||||||||||||||||||
Total fixed maturity securities | 777,728 | 3,790 | 23,197 | (905 | ) | (24,214 | ) | 72,558 | (44,754 | ) | — | — | 27,923 | 1,279 | 836,602 | 2,555 | |||||||||||||||||||||||||
Equity securities | 70,080 | 8 | 661 | — | (1,097 | ) | 4 | (4,295 | ) | — | — | — | — | 65,361 | — | ||||||||||||||||||||||||||
Other long-term investments(1) | 19,103 | 33,951 | — | (7,495 | ) | — | — | — | — | — | — | — | 45,559 | 26,456 | |||||||||||||||||||||||||||
Short-term investments | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Total investments | 866,911 | 37,749 | 23,858 | (8,400 | ) | (25,311 | ) | 72,562 | (49,049 | ) | — | — | 27,923 | 1,279 | 947,522 | 29,011 | |||||||||||||||||||||||||
Total assets measured at fair value on a recurring basis | $ | 866,911 | $ | 37,749 | $ | 23,858 | $ | (8,400 | ) | $ | (25,311 | ) | $ | 72,562 | $ | (49,049 | ) | $ | — | $ | — | $ | 27,923 | $ | 1,279 | $ | 947,522 | $ | 29,011 | ||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Annuity account balances(2) | $ | 136,462 | $ | — | $ | — | $ | (9,983 | ) | $ | — | $ | — | $ | — | $ | 645 | $ | 12,521 | $ | — | $ | — | $ | 134,569 | $ | — | ||||||||||||||
Other liabilities(1) | 437,613 | 67,565 | — | (248,302 | ) | — | — | — | — | — | — | — | 618,350 | (180,737 | ) | ||||||||||||||||||||||||||
Total liabilities measured at fair value on a recurring basis | $ | 574,075 | $ | 67,565 | $ | — | $ | (258,285 | ) | $ | — | $ | — | $ | — | $ | 645 | $ | 12,521 | $ | — | $ | — | $ | 752,919 | $ | (180,737 | ) | |||||||||||||
(1)Represents certain freestanding and embedded derivatives. | |||||||||||||||||||||||||||||||||||||||||
(2)Represents liabilities related to fixed indexed annuities. | |||||||||||||||||||||||||||||||||||||||||
Schedule of the carrying amounts and estimated fair value of the Company's financial instruments | ' | ||||||||||||||||||||||||||||||||||||||||
As of | |||||||||||||||||||||||||||||||||||||||||
September 30, 2013 | December 31, 2012 | ||||||||||||||||||||||||||||||||||||||||
Fair Value | Carrying | Carrying | |||||||||||||||||||||||||||||||||||||||
Level | Amounts | Fair Values | Amounts | Fair Values | |||||||||||||||||||||||||||||||||||||
(Dollars In Thousands) | |||||||||||||||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||||||||||||
Mortgage loans on real estate | 3 | $ | 4,794,924 | $ | 5,287,854 | $ | 4,948,625 | $ | 5,723,579 | ||||||||||||||||||||||||||||||||
Policy loans | 3 | 856,333 | 856,333 | 865,391 | 865,391 | ||||||||||||||||||||||||||||||||||||
Fixed maturities, held-to-maturity(1) | 3 | 350,000 | 341,797 | 300,000 | 319,163 | ||||||||||||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||||||||||
Stable value product account balances | 3 | $ | 2,531,262 | $ | 2,535,865 | $ | 2,510,559 | $ | 2,534,094 | ||||||||||||||||||||||||||||||||
Annuity account balances | 3 | 10,431,938 | 10,074,996 | 10,658,463 | 10,525,702 | ||||||||||||||||||||||||||||||||||||
Debt: | |||||||||||||||||||||||||||||||||||||||||
Non-recourse funding obligations(2) | 3 | $ | 1,491,900 | $ | 1,392,932 | $ | 1,446,900 | $ | 1,357,290 | ||||||||||||||||||||||||||||||||
Except as noted below, fair values were estimated using quoted market prices. | |||||||||||||||||||||||||||||||||||||||||
(1) Security purchased from unconsolidated subsidiary, Red Mountain LLC. | |||||||||||||||||||||||||||||||||||||||||
(2) Of this carrying amount $350 million, fair value of $325.1 million, as of September 30, 2013, and $300 million, fair value of $297.6 million, as of December 31, 2012, relates to non-recourse funding obligations issued by Golden Gate V. |
DERIVATIVE_FINANCIAL_INSTRUMEN1
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | ' | |||||||||||||
Schedule of realized investment gains (losses) - derivative financial instruments | ' | |||||||||||||
Realized investment gains (losses) - derivative financial instruments | ||||||||||||||
For The | For The | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
(Dollars In Thousands) | ||||||||||||||
Derivatives related to variable and FIA annuity contracts: | ||||||||||||||
Interest rate futures - VA | $ | (2,255 | ) | $ | (3,371 | ) | $ | (26,393 | ) | $ | 32,419 | |||
Equity futures - VA | (12,568 | ) | (17,324 | ) | (39,829 | ) | (42,643 | ) | ||||||
Currency futures - VA | (6,531 | ) | (3,078 | ) | 1,440 | (2,298 | ) | |||||||
Volatility futures - VA | — | — | — | (132 | ) | |||||||||
Variance swaps - VA | (1,347 | ) | (5,840 | ) | (9,566 | ) | (6,660 | ) | ||||||
Equity options - VA | (29,094 | ) | (9,184 | ) | (65,631 | ) | (29,903 | ) | ||||||
Interest rate swaptions - VA | 1,725 | (3,019 | ) | (738 | ) | 2,293 | ||||||||
Interest rate swaps - VA | (19,224 | ) | 6,361 | (125,502 | ) | 10,187 | ||||||||
Embedded derivative - GMWB | 40,379 | 2,921 | 146,693 | (32,369 | ) | |||||||||
Funds withheld derivative | 32,207 | — | 42,045 | — | ||||||||||
Total derivatives related to variable annuity contracts | 3,292 | (32,534 | ) | (77,481 | ) | (69,106 | ) | |||||||
Embedded derivative - Modco reinsurance treaties | 30,074 | (101,999 | ) | 191,847 | (139,972 | ) | ||||||||
Embedded derivative - FIA | (104 | ) | — | (145 | ) | — | ||||||||
Interest rate swaps | 72 | 199 | 2,984 | (680 | ) | |||||||||
Interest rate caps | — | (143 | ) | — | (2,658 | ) | ||||||||
Derivatives with PLC(1) | (1,159 | ) | 17,559 | (14,689 | ) | 18,059 | ||||||||
Other derivatives | 37 | 255 | (106 | ) | 17 | |||||||||
Total realized gains (losses) - derivatives | $ | 32,212 | $ | (116,663 | ) | $ | 102,410 | $ | (194,340 | ) | ||||
(1) These derivatives include the Interest, YRT premium support, and portfolio maintenance agreements between certain of the Company’s subsidiaries and PLC. | ||||||||||||||
Schedule of realized investment gains (losses) - all other investments | ' | |||||||||||||
Realized investment gains (losses) - all other investments | ||||||||||||||
For The | For The | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
(Dollars In Thousands) | ||||||||||||||
Modco trading portfolio(1) | $ | (25,960 | ) | $ | 104,865 | $ | (167,982 | ) | $ | 179,027 | ||||
(1)The Company elected to include the use of alternate disclosures for trading activities. | ||||||||||||||
Schedule of gain (loss) on derivatives in cash flow hedging relationship | ' | |||||||||||||
Gain (Loss) on Derivatives in Cash Flow Relationship | ||||||||||||||
Amount and Location of | ||||||||||||||
Amount of Gains (Losses) | Gains (Losses) | |||||||||||||
Deferred in | Reclassified from | Amount and Location of | ||||||||||||
Accumulated Other | Accumulated Other | (Losses) Recognized in | ||||||||||||
Comprehensive Income | Comprehensive Income | Income (Loss) on | ||||||||||||
(Loss) on Derivatives | (Loss) into Income (Loss) | Derivatives | ||||||||||||
(Effective Portion) | (Effective Portion) | (Ineffective Portion) | ||||||||||||
Benefits and settlement | Realized investment | |||||||||||||
expenses | gains (losses) | |||||||||||||
(Dollars In Thousands) | ||||||||||||||
For The Three Months Ended September 30, 2013 | ||||||||||||||
Inflation | $ | 22 | $ | (572 | ) | $ | (62 | ) | ||||||
Total | $ | 22 | $ | (572 | ) | $ | (62 | ) | ||||||
For The Nine Months Ended September 30, 2013 | ||||||||||||||
Inflation | $ | (157 | ) | $ | (1,649 | ) | $ | (253 | ) | |||||
Total | $ | (157 | ) | $ | (1,649 | ) | $ | (253 | ) | |||||
Gain (Loss) on Derivatives in Cash Flow Relationship | ||||||||||||||
Amount and Location of | ||||||||||||||
Amount of Gains (Losses) | Gains (Losses) | |||||||||||||
Deferred in | Reclassified from | Amount and Location of | ||||||||||||
Accumulated Other | Accumulated Other | (Losses) Recognized in | ||||||||||||
Comprehensive Income | Comprehensive Income | Income (Loss) on | ||||||||||||
(Loss) on Derivatives | (Loss) into Income (Loss) | Derivatives | ||||||||||||
(Effective Portion) | (Effective Portion) | (Ineffective Portion) | ||||||||||||
Benefits and settlement | Realized investment | |||||||||||||
expenses | gains (losses) | |||||||||||||
(Dollars In Thousands) | ||||||||||||||
For The Three Months Ended September 30, 2012 | ||||||||||||||
Interest rate | $ | (1 | ) | $ | (549 | ) | $ | — | ||||||
Inflation | 2,938 | (552 | ) | 221 | ||||||||||
Total | $ | 2,937 | $ | (1,101 | ) | $ | 221 | |||||||
For The Nine Months Ended September 30, 2012 | ||||||||||||||
Interest rate | $ | (77 | ) | $ | (2,261 | ) | $ | — | ||||||
Inflation | 4,146 | (485 | ) | (2 | ) | |||||||||
Total | $ | 4,069 | $ | (2,746 | ) | $ | (2 | ) | ||||||
Notional amounts and fair values of derivative financial instruments | ' | |||||||||||||
As of | ||||||||||||||
September 30, 2013 | December 31, 2012 | |||||||||||||
Notional | Fair | Notional | Fair | |||||||||||
Amount | Value | Amount | Value | |||||||||||
(Dollars In Thousands) | ||||||||||||||
Other long-term investments | ||||||||||||||
Cash flow hedges: | ||||||||||||||
Inflation | $ | — | $ | — | $ | — | $ | — | ||||||
Derivatives not designated as hedging instruments: | ||||||||||||||
Interest rate swaps | 200,000 | 2,035 | 355,000 | 6,532 | ||||||||||
Variance swaps | — | — | 500 | 406 | ||||||||||
Derivatives with PLC(1) | 1,508,964 | 2,376 | 1,404,750 | 17,064 | ||||||||||
Embedded derivative - Modco reinsurance treaties | 45,314 | 802 | 30,244 | 1,330 | ||||||||||
Embedded derivative — GMWB | 1,692,535 | 79,827 | 1,640,075 | 30,261 | ||||||||||
Interest rate futures | 111,534 | 1,106 | — | — | ||||||||||
Equity futures | 47,994 | 937 | 147,581 | 595 | ||||||||||
Currency futures | — | — | 15,944 | 784 | ||||||||||
Interest rate caps | — | — | 3,000,000 | — | ||||||||||
Equity options | 1,467,720 | 80,754 | 573,493 | 61,833 | ||||||||||
Interest rate swaptions | 625,000 | 27,978 | 400,000 | 11,370 | ||||||||||
Other | 262 | 357 | 224 | 253 | ||||||||||
$ | 5,699,323 | $ | 196,172 | $ | 7,567,811 | $ | 130,428 | |||||||
Other liabilities | ||||||||||||||
Cash flow hedges: | ||||||||||||||
Inflation | $ | 182,965 | $ | 3,806 | $ | 182,965 | $ | 5,027 | ||||||
Derivatives not designated as hedging instruments: | ||||||||||||||
Interest rate swaps | 1,500,000 | 132,592 | 400,000 | 10,025 | ||||||||||
Variance swaps | — | — | 2,675 | 12,198 | ||||||||||
Embedded derivative - Modco reinsurance treaties | 2,598,832 | 219,532 | 2,655,134 | 411,907 | ||||||||||
Funds withheld derivative | 1,178,524 | 49,045 | — | — | ||||||||||
Embedded derivative - GMWB | 114,940 | 1,992 | 5,253,961 | 199,530 | ||||||||||
Embedded derivative - FIA | 104,951 | 9,199 | — | — | ||||||||||
Interest rate futures | 175,681 | 531 | 893,476 | 13,970 | ||||||||||
Equity futures | 94,457 | 1,484 | 152,364 | 3,316 | ||||||||||
Currency futures | 126,389 | 3,350 | 131,979 | 1,901 | ||||||||||
Equity options | 144,408 | 5,939 | — | — | ||||||||||
Other- FIA volatility futures | 35 | — | — | — | ||||||||||
$ | 6,221,182 | $ | 427,470 | $ | 9,672,554 | $ | 657,874 | |||||||
(1) These derivatives include the Interest, YRT premium support, and portfolio maintenance agreements between certain of the Company’s subsidiaries and PLC. |
OFFSETTING_OF_ASSETS_AND_LIABI1
OFFSETTING OF ASSETS AND LIABILITIES (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2013 | ||||||||||||||||||||
OFFSETTING OF ASSETS AND LIABILITIES | ' | |||||||||||||||||||
Schedule of derivative assets | ' | |||||||||||||||||||
The tables below present the derivative instruments by assets and liabilities for the Company as of September 30, 2013. | ||||||||||||||||||||
Net Amounts | ||||||||||||||||||||
Gross | of Assets | Gross Amounts Not Offset | ||||||||||||||||||
Amounts | Presented in | in the Statement of | ||||||||||||||||||
Gross | Offset in the | the | Financial Position | |||||||||||||||||
Amounts of | Statement of | Statement of | Cash | |||||||||||||||||
Recognized | Financial | Financial | Financial | Collateral | ||||||||||||||||
Assets | Position | Position | Instruments | Received | Net Amount | |||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Offsetting of Derivative Assets | ||||||||||||||||||||
Derivatives: | ||||||||||||||||||||
Free-Standing derivatives | $ | 112,810 | $ | — | $ | 112,810 | $ | 44,189 | $ | 6,000 | $ | 62,621 | ||||||||
Embedded derivative - Modco reinsurance treaties | 802 | — | 802 | — | — | 802 | ||||||||||||||
Embedded derivative - GMWB | 79,827 | — | 79,827 | — | — | 79,827 | ||||||||||||||
Total derivatives, subject to a master netting arrangement or similar arrangement | 193,439 | — | 193,439 | 44,189 | 6,000 | 143,250 | ||||||||||||||
Total derivatives, not subject to a master netting arrangement or similar arrangement | 2,733 | — | 2,733 | — | — | 2,733 | ||||||||||||||
Total derivatives | 196,172 | — | 196,172 | 44,189 | 6,000 | 145,983 | ||||||||||||||
Total Assets | $ | 196,172 | $ | — | $ | 196,172 | $ | 44,189 | $ | 6,000 | $ | 145,983 | ||||||||
The tables below present the derivative instruments by assets and liabilities for the Company as of December 31, 2012. | ||||||||||||||||||||
Net Amounts | ||||||||||||||||||||
Gross | of Assets | Gross Amounts Not Offset | ||||||||||||||||||
Amounts | Presented in | in the Statement of | ||||||||||||||||||
Gross | Offset in the | the | Financial Position | |||||||||||||||||
Amounts of | Statement of | Statement of | Cash | |||||||||||||||||
Recognized | Financial | Financial | Financial | Collateral | ||||||||||||||||
Assets | Position | Position | Instruments | Received | Net Amount | |||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Offsetting of Derivative Assets | ||||||||||||||||||||
Derivatives: | ||||||||||||||||||||
Free-Standing derivatives | $ | 81,520 | $ | — | $ | 81,520 | $ | 21,565 | $ | 11,280 | $ | 48,675 | ||||||||
Embedded derivative - Modco reinsurance treaties | 1,330 | — | 1,330 | — | — | 1,330 | ||||||||||||||
Embedded derivative - GMWB | 30,261 | — | 30,261 | — | — | 30,261 | ||||||||||||||
Total derivatives, subject to a master netting arrangement or similar arrangement | 113,111 | — | 113,111 | 21,565 | 11,280 | 80,266 | ||||||||||||||
Total derivatives, not subject to a master netting arrangement or similar arrangement | 17,317 | — | 17,317 | — | — | 17,317 | ||||||||||||||
Total derivatives | 130,428 | — | 130,428 | 21,565 | 11,280 | 97,583 | ||||||||||||||
Total Assets | $ | 130,428 | $ | — | $ | 130,428 | $ | 21,565 | $ | 11,280 | $ | 97,583 | ||||||||
Schedule of derivative liabilities | ' | |||||||||||||||||||
The tables below present the derivative instruments by assets and liabilities for the Company as of September 30, 2013. | ||||||||||||||||||||
Net Amounts | ||||||||||||||||||||
Gross | of Liabilities | Gross Amounts Not Offset | ||||||||||||||||||
Amounts | Presented in | in the Statement of | ||||||||||||||||||
Gross | Offset in the | the | Financial Position | |||||||||||||||||
Amounts of | Statement of | Statement of | Cash | |||||||||||||||||
Recognized | Financial | Financial | Financial | Collateral | ||||||||||||||||
Liabilities | Position | Position | Instruments | Paid | Net Amount | |||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Offsetting of Derivative Liabilities | ||||||||||||||||||||
Derivatives: | ||||||||||||||||||||
Free-Standing derivatives | $ | 147,702 | $ | — | $ | 147,702 | $ | 44,189 | $ | 72,813 | $ | 30,700 | ||||||||
Embedded derivative - Modco reinsurance treaties | 219,532 | — | 219,532 | — | — | 219,532 | ||||||||||||||
Funds withheld derivative | 49,045 | 49,045 | 49,045 | |||||||||||||||||
Embedded derivative - GMWB | 1,992 | — | 1,992 | — | — | 1,992 | ||||||||||||||
Embedded derivative - FIA | 9,199 | — | 9,199 | — | — | 9,199 | ||||||||||||||
Total derivatives, subject to a master netting arrangement or similar arrangement | 427,470 | — | 427,470 | 44,189 | 72,813 | 310,468 | ||||||||||||||
Total derivatives, not subject to a master netting arrangement or similar arrangement | — | — | — | — | — | — | ||||||||||||||
Total derivatives | 427,470 | — | 427,470 | 44,189 | 72,813 | 310,468 | ||||||||||||||
Repurchase agreements(1) | 100,000 | — | 100,000 | — | — | 100,000 | ||||||||||||||
Total Liabilities | $ | 527,470 | $ | — | $ | 527,470 | $ | 44,189 | $ | 72,813 | $ | 410,468 | ||||||||
(1) Borrowings under repurchase agreements are for a term less than 90 days. | ||||||||||||||||||||
The tables below present the derivative instruments by assets and liabilities for the Company as of December 31, 2012. | ||||||||||||||||||||
Net Amounts | ||||||||||||||||||||
Gross | of Liabilities | Gross Amounts Not Offset | ||||||||||||||||||
Amounts | Presented in | in the Statement of | ||||||||||||||||||
Gross | Offset in the | the | Financial Position | |||||||||||||||||
Amounts of | Statement of | Statement of | Cash | |||||||||||||||||
Recognized | Financial | Financial | Financial | Collateral | ||||||||||||||||
Liabilities | Position | Position | Instruments | Paid | Net Amount | |||||||||||||||
(Dollars In Thousands) | ||||||||||||||||||||
Offsetting of Derivative Liabilities | ||||||||||||||||||||
Derivatives: | ||||||||||||||||||||
Free-Standing derivatives | $ | 46,437 | $ | — | $ | 46,437 | $ | 21,565 | $ | 20,373 | $ | 4,499 | ||||||||
Embedded derivative - Modco reinsurance treaties | 411,907 | — | 411,907 | — | — | 411,907 | ||||||||||||||
Embedded derivative - GMWB | 199,530 | — | 199,530 | — | — | 199,530 | ||||||||||||||
Total derivatives, subject to a master netting arrangement or similar arrangement | 657,874 | — | 657,874 | 21,565 | 20,373 | 615,936 | ||||||||||||||
Total derivatives, not subject to a master netting arrangement or similar arrangement | — | — | — | — | — | — | ||||||||||||||
Total derivatives | 657,874 | — | 657,874 | 21,565 | 20,373 | 615,936 | ||||||||||||||
Repurchase agreements(1) | 150,000 | — | 150,000 | — | — | 150,000 | ||||||||||||||
Total Liabilities | $ | 807,874 | $ | — | $ | 807,874 | $ | 21,565 | $ | 20,373 | $ | 765,936 | ||||||||
(1) Borrowings under repurchase agreements are for a term less than 90 days. |
OPERATING_SEGMENTS_Tables
OPERATING SEGMENTS (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2013 | ||||||||||||||
OPERATING SEGMENTS | ' | |||||||||||||
Summary of financial information for the Company's segments | ' | |||||||||||||
For The | For The | |||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
(Dollars In Thousands) | ||||||||||||||
Revenues | ||||||||||||||
Life Marketing | $ | 346,294 | $ | 313,170 | $ | 1,002,522 | $ | 938,920 | ||||||
Acquisitions | 240,067 | 251,550 | 752,247 | 812,355 | ||||||||||
Annuities | 170,065 | 140,563 | 435,480 | 460,822 | ||||||||||
Stable Value Products | 25,207 | 26,933 | 91,735 | 96,374 | ||||||||||
Asset Protection | 76,157 | 75,217 | 223,709 | 222,984 | ||||||||||
Corporate and Other | 22,804 | 56,763 | 76,525 | 101,535 | ||||||||||
Total revenues | $ | 880,594 | $ | 864,196 | $ | 2,582,218 | $ | 2,632,990 | ||||||
Segment Operating Income (Loss) | ||||||||||||||
Life Marketing | $ | 28,158 | $ | 27,885 | $ | 75,505 | $ | 87,678 | ||||||
Acquisitions | 29,429 | 46,155 | 93,241 | 128,869 | ||||||||||
Annuities | 43,825 | 9,041 | 120,260 | 72,864 | ||||||||||
Stable Value Products | 19,206 | 13,050 | 59,514 | 41,654 | ||||||||||
Asset Protection | 5,365 | 2,825 | 15,347 | 10,171 | ||||||||||
Corporate and Other | (17,856 | ) | (5,968 | ) | (45,793 | ) | (959 | ) | ||||||
Total segment operating income | 108,127 | 92,988 | 318,074 | 340,277 | ||||||||||
Realized investment (losses) gains - investments(1) | (31,968 | ) | 120,723 | (140,299 | ) | 193,649 | ||||||||
Realized investment (losses) gains - derivatives | 37,196 | (107,022 | ) | 124,321 | (169,104 | ) | ||||||||
Income tax expense | (37,107 | ) | (35,778 | ) | (98,966 | ) | (116,428 | ) | ||||||
Net Income | $ | 76,248 | $ | 70,911 | $ | 203,130 | $ | 248,394 | ||||||
Investment gains (losses)(2) | $ | (27,949 | ) | $ | 113,977 | $ | (151,006 | ) | $ | 185,301 | ||||
Less: amortization related to DAC/VOBA and benefits settlement expenses | 4,019 | (6,746 | ) | (10,707 | ) | (8,348 | ) | |||||||
Realized investment gains (losses) in investments | $ | (31,968 | ) | $ | 120,723 | $ | (140,299 | ) | $ | 193,649 | ||||
Derivative gains (losses)(3) | $ | 32,212 | $ | (116,663 | ) | $ | 102,410 | $ | (194,340 | ) | ||||
Less: VA GMWB economic cost | (4,984 | ) | (9,641 | ) | (21,911 | ) | (25,236 | ) | ||||||
Realized investment gains (losses) - derivatives | $ | 37,196 | $ | (107,022 | ) | $ | 124,321 | $ | (169,104 | ) | ||||
(1) Includes credit related other-than-temporary impairments of $8.7 million and $17.3 million for the three and nine months ended September 30, 2013, respectively, as compared to $8.5 million and $40.5 million for the three and nine months ended September 30, 2012, respectively. | ||||||||||||||
(2) Includes realized investment gains (losses) before related amortization. | ||||||||||||||
(3)Includes realized gains (losses) on derivatives before the VA GMWB economic cost. | ||||||||||||||
Operating Segment Assets | ||||||||||||||
As of September 30, 2013 | ||||||||||||||
(Dollars In Thousands) | ||||||||||||||
Life | Stable Value | |||||||||||||
Marketing | Acquisitions | Annuities | Products | |||||||||||
Investments and other assets | $ | 12,913,177 | $ | 11,196,504 | $ | 19,372,420 | $ | 2,530,150 | ||||||
Deferred policy acquisition costs and value of business acquired | 2,030,605 | 597,284 | 526,780 | 1,112 | ||||||||||
Goodwill | — | 33,291 | — | — | ||||||||||
Total assets | $ | 14,943,782 | $ | 11,827,079 | $ | 19,899,200 | $ | 2,531,262 | ||||||
Asset | Corporate | Total | ||||||||||||
Protection | and Other | Adjustments | Consolidated | |||||||||||
Investments and other assets | $ | 775,563 | $ | 7,888,528 | $ | 17,278 | $ | 54,693,620 | ||||||
Deferred policy acquisition costs and value of business acquired | 50,883 | 708 | — | 3,207,372 | ||||||||||
Goodwill | 48,158 | — | — | 81,449 | ||||||||||
Total assets | $ | 874,604 | $ | 7,889,236 | $ | 17,278 | $ | 57,982,441 | ||||||
Operating Segment Assets | ||||||||||||||
As of December 31, 2012 | ||||||||||||||
(Dollars In Thousands) | ||||||||||||||
Life | Stable Value | |||||||||||||
Marketing | Acquisitions | Annuities | Products | |||||||||||
Investments and other assets | $ | 12,171,384 | $ | 11,312,550 | $ | 17,649,488 | $ | 2,509,160 | ||||||
Deferred policy acquisition costs and value of business acquired | 2,001,708 | 679,746 | 491,184 | 1,399 | ||||||||||
Goodwill | — | 35,615 | — | — | ||||||||||
Total assets | $ | 14,173,092 | $ | 12,027,911 | $ | 18,140,672 | $ | 2,510,559 | ||||||
Asset | Corporate | Total | ||||||||||||
Protection | and Other | Adjustments | Consolidated | |||||||||||
Investments and other assets | $ | 740,153 | $ | 9,446,057 | $ | 19,662 | $ | 53,848,454 | ||||||
Deferred policy acquisition costs and value of business acquired | 50,253 | 1,066 | — | 3,225,356 | ||||||||||
Goodwill | 48,158 | — | — | 83,773 | ||||||||||
Total assets | $ | 838,564 | $ | 9,447,123 | $ | 19,662 | $ | 57,157,583 |
INVESTMENT_OPERATIONS_Details
INVESTMENT OPERATIONS (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Net realized gains (losses) for all other investments | ' | ' | ' | ' |
Fixed maturities | $10,546,000 | $22,889,000 | $42,136,000 | $58,984,000 |
Equity securities | ' | -241,000 | 2,367,000 | -93,000 |
Impairments on fixed maturity securities | -7,421,000 | -8,499,000 | -13,918,000 | -40,537,000 |
Impairments on equity securities | -1,260,000 | ' | -3,347,000 | ' |
Modco trading portfolio | -25,960,000 | 104,865,000 | -167,982,000 | 179,027,000 |
Other investments | -3,854,000 | -5,037,000 | -10,262,000 | -12,080,000 |
Total realized gains (losses) - investments | -27,949,000 | 113,977,000 | -151,006,000 | 185,301,000 |
Gross realized gains on investments available-for-sale (fixed maturities, equity securities, and short-term investments) | 11,700,000 | 23,600,000 | 48,500,000 | 63,000,000 |
Gross realized losses | 9,600,000 | 9,300,000 | 20,600,000 | 44,400,000 |
Impairment losses on investments available-for-sale | 8,500,000 | 8,300,000 | 16,700,000 | 40,200,000 |
Fair value (proceeds) of securities in an unrealized gain position sold | 332,100,000 | 424,600,000 | 1,100,000,000 | 1,300,000,000 |
Gain realized on the sale of securities in an unrealized gain position | 11,700,000 | 23,600,000 | 48,500,000 | 63,000,000 |
Fair value (proceeds) of securities sold in an unrealized loss position | 7,000,000 | 14,300,000 | 64,200,000 | 31,700,000 |
Loss realized on the sale of securities in an unrealized loss position | $1,100,000 | $900,000 | $4,000,000 | $4,100,000 |
INVESTMENT_OPERATIONS_Details_
INVESTMENT OPERATIONS (Details 2) (USD $) | 9 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 |
Amortized cost and fair value of the Company's investments classified as available-for-sale | ' | ' |
Amortized Cost | $24,755,000 | $24,104,126 |
Gross Unrealized Gains | 1,796,695 | 3,251,213 |
Gross Unrealized Losses | -521,392 | -140,657 |
Fair Value | 26,030,303 | 27,214,682 |
Total OTTI Recognized in OCI | -2,182 | -6,135 |
Amortized cost and fair value of the Company's investments classified as held-to-maturity | ' | ' |
Fair Value | 341,797 | 319,163 |
Trading securities | 2,900,000 | ' |
Amortized Cost, Available-for-sale | ' | ' |
Due in one year or less | 554,916 | ' |
Due after one year through five years | 3,227,348 | ' |
Due after five years through ten years | 7,548,558 | ' |
Due after ten years | 12,890,835 | ' |
Total | 24,221,657 | ' |
Fair Value, Available-for-sale | ' | ' |
Due in one year or less | 569,362 | ' |
Due after one year through five years | 3,508,934 | ' |
Due after five years through ten years | 7,870,781 | ' |
Due after ten years | 13,572,754 | ' |
Total | 25,521,831 | ' |
Amortized Cost, Held-to-maturity | ' | ' |
Due after ten years | 350,000 | ' |
Total | 350,000 | 300,000 |
Fair Value, Held-to-maturity | ' | ' |
Due after ten years | 341,797 | ' |
Fair Value | 341,797 | 319,163 |
Fixed maturities: | ' | ' |
Amortized cost and fair value of the Company's investments classified as available-for-sale | ' | ' |
Amortized Cost | 24,221,657 | 23,654,002 |
Gross Unrealized Gains | 1,791,787 | 3,239,332 |
Gross Unrealized Losses | -491,613 | -130,664 |
Fair Value | 25,521,831 | 26,762,670 |
Total OTTI Recognized in OCI | -2,288 | -6,135 |
Amortized cost and fair value of the Company's investments classified as held-to-maturity | ' | ' |
Amortized Cost | 350,000 | 300,000 |
Gross Unrealized Gains | ' | 19,163 |
Gross Unrealized Losses | -8,203 | ' |
Fair Value | 341,797 | 319,163 |
Trading securities | 2,800,000 | 3,000,000 |
Fair Value, Held-to-maturity | ' | ' |
Fair Value | 341,797 | 319,163 |
Residential mortgage-backed securities | ' | ' |
Amortized cost and fair value of the Company's investments classified as available-for-sale | ' | ' |
Amortized Cost | 1,438,269 | 1,766,260 |
Gross Unrealized Gains | 48,049 | 92,417 |
Gross Unrealized Losses | -22,291 | -19,347 |
Fair Value | 1,464,027 | 1,839,330 |
Total OTTI Recognized in OCI | -914 | -406 |
Commercial mortgage-backed securities | ' | ' |
Amortized cost and fair value of the Company's investments classified as available-for-sale | ' | ' |
Amortized Cost | 898,377 | 797,844 |
Gross Unrealized Gains | 30,287 | 72,577 |
Gross Unrealized Losses | -17,057 | -598 |
Fair Value | 911,607 | 869,823 |
Other asset-backed securities | ' | ' |
Amortized cost and fair value of the Company's investments classified as available-for-sale | ' | ' |
Amortized Cost | 928,367 | 1,023,649 |
Gross Unrealized Gains | 15,532 | 12,788 |
Gross Unrealized Losses | -66,735 | -61,424 |
Fair Value | 877,164 | 975,013 |
Total OTTI Recognized in OCI | -66 | -241 |
U.S. government-related securities | ' | ' |
Amortized cost and fair value of the Company's investments classified as available-for-sale | ' | ' |
Amortized Cost | 1,204,908 | 1,097,501 |
Gross Unrealized Gains | 38,525 | 71,536 |
Gross Unrealized Losses | -29,997 | -591 |
Fair Value | 1,213,436 | 1,168,446 |
Other government-related securities | ' | ' |
Amortized cost and fair value of the Company's investments classified as available-for-sale | ' | ' |
Amortized Cost | 38,406 | 93,565 |
Gross Unrealized Gains | 2,722 | 7,258 |
Gross Unrealized Losses | ' | -45 |
Fair Value | 41,128 | 100,778 |
States, municipals, and political subdivisions | ' | ' |
Amortized cost and fair value of the Company's investments classified as available-for-sale | ' | ' |
Amortized Cost | 1,191,682 | 1,188,019 |
Gross Unrealized Gains | 114,898 | 255,898 |
Gross Unrealized Losses | -6,259 | -264 |
Fair Value | 1,300,321 | 1,443,653 |
Corporate bonds | ' | ' |
Amortized cost and fair value of the Company's investments classified as available-for-sale | ' | ' |
Amortized Cost | 18,521,648 | 17,687,164 |
Gross Unrealized Gains | 1,541,774 | 2,726,858 |
Gross Unrealized Losses | -349,274 | -48,395 |
Fair Value | 19,714,148 | 20,365,627 |
Total OTTI Recognized in OCI | -1,308 | -5,488 |
Other | ' | ' |
Amortized cost and fair value of the Company's investments classified as held-to-maturity | ' | ' |
Amortized Cost | 350,000 | 300,000 |
Gross Unrealized Gains | ' | 19,163 |
Gross Unrealized Losses | -8,203 | ' |
Fair Value | 341,797 | 319,163 |
Fair Value, Held-to-maturity | ' | ' |
Fair Value | 341,797 | 319,163 |
Equity securities | ' | ' |
Amortized cost and fair value of the Company's investments classified as available-for-sale | ' | ' |
Amortized Cost | 424,658 | 352,272 |
Gross Unrealized Gains | 4,908 | 11,881 |
Gross Unrealized Losses | -29,779 | -9,993 |
Fair Value | 399,787 | 354,160 |
Total OTTI Recognized in OCI | 106 | ' |
Amortized cost and fair value of the Company's investments classified as held-to-maturity | ' | ' |
Trading securities | 20,700 | 19,600 |
Short-term investments | ' | ' |
Amortized cost and fair value of the Company's investments classified as available-for-sale | ' | ' |
Amortized Cost | 108,685 | 97,852 |
Fair Value | 108,685 | 97,852 |
Amortized cost and fair value of the Company's investments classified as held-to-maturity | ' | ' |
Trading securities | $106,400 | $118,900 |
INVESTMENT_OPERATIONS_Details_1
INVESTMENT OPERATIONS (Details 3) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
INVESTMENT OPERATIONS | ' | ' | ' | ' |
Other-than-temporary impairments of investments recorded | $6,635,000 | $3,402,000 | $9,764,000 | $51,083,000 |
Other-than-temporary impairments of investments recorded in earnings | 8,681,000 | 8,499,000 | 17,265,000 | 40,537,000 |
Non-credit gains recorded in other comprehensive income (loss) | -2,046,000 | -5,097,000 | -7,501,000 | 10,546,000 |
Credit losses reclassified in earnings | ' | ' | ' | 7,000,000 |
Non-credit losses | ' | ' | ' | 1,900,000 |
Fixed maturities | ' | ' | ' | ' |
INVESTMENT OPERATIONS | ' | ' | ' | ' |
Other-than-temporary impairments of investments recorded | 5,400,000 | 3,400,000 | 6,400,000 | 51,100,000 |
Other-than-temporary impairments related to fixed maturities or equity securities that the entity intended to sell or expected to be required to sell | 0 | 100,000 | 0 | 100,000 |
Credit losses on fixed maturities | ' | ' | ' | ' |
Beginning balance | 51,814,000 | 100,894,000 | 121,237,000 | 69,476,000 |
Additions for newly impaired securities | 1,663,000 | ' | 3,278,000 | 19,307,000 |
Additions for previously impaired securities | 4,840,000 | 6,866,000 | 7,894,000 | 18,977,000 |
Reductions for previously impaired securities due to a change in expected cash flows | -6,537,000 | ' | -73,392,000 | ' |
Reductions for previously impaired securities that were sold in the current period | ' | ' | -7,237,000 | ' |
Ending balance | 51,780,000 | 107,760,000 | 51,780,000 | 107,760,000 |
Equity securities | ' | ' | ' | ' |
INVESTMENT OPERATIONS | ' | ' | ' | ' |
Other-than-temporary impairments of investments recorded | 1,300,000 | 0 | 3,400,000 | 0 |
Other-than-temporary impairments related to fixed maturities or equity securities that the entity intended to sell or expected to be required to sell | $0 | $100,000 | $0 | $100,000 |
INVESTMENT_OPERATIONS_Details_2
INVESTMENT OPERATIONS (Details 4) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 |
Below investment grade | Fixed maturities | Fixed maturities | Fixed maturities | Fixed maturities | Fixed maturities | Residential mortgage-backed securities | Residential mortgage-backed securities | Commercial mortgage-backed securities | Commercial mortgage-backed securities | Other asset-backed securities | Other asset-backed securities | U.S. government-related securities | U.S. government-related securities | Other government-related securities | Other government-related securities | States, municipals, and political subdivisions | States, municipals, and political subdivisions | Corporate bonds | Corporate bonds | Equity securities | Equity securities | Equity securities | Equity securities | Equity securities | |||
Fair Value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Less Than 12 Months | $5,983,885,000 | $1,574,080,000 | ' | ' | ' | ' | ' | ' | $247,085,000 | $100,412,000 | $379,783,000 | $50,506,000 | $129,567,000 | $479,223,000 | $601,537,000 | $106,806,000 | ' | $14,955,000 | $81,281,000 | $11,526,000 | $4,289,625,000 | $775,593,000 | $255,007,000 | ' | $255,007,000 | ' | $35,059,000 |
12 Months or More | 832,262,000 | 793,440,000 | ' | ' | ' | ' | ' | ' | 67,362,000 | 166,000,000 | 6,656,000 | ' | 532,205,000 | 242,558,000 | 14,847,000 | ' | ' | ' | 315,000 | ' | 189,197,000 | 363,128,000 | 21,680,000 | ' | 21,680,000 | ' | 21,754,000 |
Total | 6,816,147,000 | 2,367,520,000 | ' | ' | ' | ' | ' | ' | 314,447,000 | 266,412,000 | 386,439,000 | 50,506,000 | 661,772,000 | 721,781,000 | 616,384,000 | 106,806,000 | ' | 14,955,000 | 81,596,000 | 11,526,000 | 4,478,822,000 | 1,138,721,000 | 276,687,000 | ' | 276,687,000 | ' | 56,813,000 |
Unrealized Loss | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Less Than 12 Months | -415,807,000 | -68,035,000 | ' | ' | ' | ' | ' | ' | -13,653,000 | -9,578,000 | -16,807,000 | -598,000 | -6,567,000 | -28,179,000 | -29,179,000 | -591,000 | ' | -45,000 | -6,059,000 | -264,000 | -322,229,000 | -23,630,000 | -21,313,000 | ' | -21,313,000 | ' | -5,150,000 |
12 Months or More | -105,585,000 | -72,622,000 | ' | ' | ' | ' | ' | ' | -8,638,000 | -9,769,000 | -250,000 | ' | -60,168,000 | -33,245,000 | -818,000 | ' | ' | ' | -200,000 | ' | -27,045,000 | -24,765,000 | -8,466,000 | ' | -8,466,000 | ' | -4,843,000 |
Total | -521,392,000 | -140,657,000 | ' | ' | ' | ' | ' | ' | -22,291,000 | -19,347,000 | -17,057,000 | -598,000 | -66,735,000 | -61,424,000 | -29,997,000 | -591,000 | ' | -45,000 | -6,259,000 | -264,000 | -349,274,000 | -48,395,000 | -29,779,000 | ' | -29,779,000 | ' | -9,993,000 |
Percentage of underlying collateral including student-loan backed auction rate securities guaranteed by the Federal Family Education Loan Program ("FFELP"), minimum | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 97.00% | 97.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Available-for-sale securities, fair value | 26,030,303,000 | 27,214,682,000 | 1,500,000,000 | 25,521,831,000 | ' | 25,521,831,000 | ' | 26,762,670,000 | 1,464,027,000 | 1,839,330,000 | 911,607,000 | 869,823,000 | 877,164,000 | 975,013,000 | 1,213,436,000 | 1,168,446,000 | 41,128,000 | 100,778,000 | 1,300,321,000 | 1,443,653,000 | 19,714,148,000 | 20,365,627,000 | 399,787,000 | ' | 399,787,000 | ' | 354,160,000 |
Available-for-sale securities, amortized cost | 24,755,000,000 | 24,104,126,000 | 1,500,000,000 | 24,221,657,000 | ' | 24,221,657,000 | ' | 23,654,002,000 | 1,438,269,000 | 1,766,260,000 | 898,377,000 | 797,844,000 | 928,367,000 | 1,023,649,000 | 1,204,908,000 | 1,097,501,000 | 38,406,000 | 93,565,000 | 1,191,682,000 | 1,188,019,000 | 18,521,648,000 | 17,687,164,000 | 424,658,000 | ' | 424,658,000 | ' | 352,272,000 |
Securities in trading portfolio | 2,900,000,000 | ' | 330,000,000 | 2,800,000,000 | ' | 2,800,000,000 | ' | 3,000,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20,700,000 | ' | 20,700,000 | ' | 19,600,000 |
Securities not publicly traded | ' | ' | 437,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Change in unrealized gains (losses), net of income tax | ' | ' | ' | ($155,839,000) | $436,690,000 | ($1,175,521,000) | $796,549,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ($12,791,000) | $4,531,000 | ($17,393,000) | $8,226,000 | ' |
INVESTMENT_OPERATIONS_Details_3
INVESTMENT OPERATIONS (Details 5) (Red Mountain, USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Red Mountain | ' |
Variable Interest Entities | ' |
Ownership interest through an affiliate (as a percent) | 100.00% |
Investment to which risk of loss related to the VIE is limited | $10,000 |
MORTGAGE_LOANS_Details
MORTGAGE LOANS (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Sep. 30, 2013 | Dec. 31, 2012 | |
item | item | ||
Mortgage loans | ' | ' | ' |
Mortgage loan holdings | $4,794,924,000 | $4,794,924,000 | $4,948,625,000 |
Amount that would become due in 2013, if loans are called at their next call dates | 66,400,000 | 66,400,000 | ' |
Amount that would become due in 2014 through 2018, if loans are called at their next call dates | 1,200,000,000 | 1,200,000,000 | ' |
Amount that would become due in 2019 through 2023, if loans are called at their next call dates | 575,000,000 | 575,000,000 | ' |
Amount that would become due after 2023, if loans are called at their next call dates | 174,400,000 | 174,400,000 | ' |
Allowance for loan and credit losses | 8,000,000 | 8,000,000 | 2,900,000 |
Change in the allowance for credit losses | ' | ' | ' |
Ending balance | 8,000,000 | 8,000,000 | 2,900,000 |
Commercial mortgage loans | ' | ' | ' |
Mortgage loans | ' | ' | ' |
Mortgage loan holdings | 4,800,000,000 | 4,800,000,000 | ' |
Allowance for loan and credit losses | 7,970,000 | 7,970,000 | 2,875,000 |
Mortgage loans having participation feature | 714,500,000 | 714,500,000 | 817,300,000 |
Income recognized on participating mortgage loans | 3,700,000 | 12,900,000 | ' |
Nonperforming mortgage loans, foreclosed properties and restructured loans pursuant to pooling and servicing agreement | 16,400,000 | 16,400,000 | ' |
Nonperforming mortgage loans, foreclosed properties and restructured loans to invested assets (as a percent) | 0.05% | 0.05% | ' |
Number of mortgage loans accounted for as troubled debt restructurings | 2 | ' | ' |
Principal balance of loan | 3,200,000 | 3,200,000 | ' |
Reserves related to restructuring | 0 | 0 | ' |
Number of loan categories | ' | 2 | ' |
Nonperforming or restructured loans not subject to a pooling and servicing agreement | 10,700,000 | 10,700,000 | ' |
Number of nonperforming loans not subject to a pooling and servicing agreement which have been restructured | ' | 2 | ' |
Loans subject to a pooling and servicing agreement which are nonperforming | 5,700,000 | 5,700,000 | ' |
Number of nonperforming loans subject to a pooling and servicing agreement which have been restructured | ' | 0 | ' |
Change in the allowance for credit losses | ' | ' | ' |
Beginning balance | ' | 2,875,000 | 4,975,000 |
Charge offs | ' | -2,643,000 | -8,340,000 |
Recoveries | ' | -374,000 | -628,000 |
Provision | ' | 8,112,000 | 6,868,000 |
Ending balance | $7,970,000 | $7,970,000 | $2,875,000 |
Commercial mortgage loans | Minimum | ' | ' | ' |
Mortgage loans | ' | ' | ' |
Period for exercise of call options or interest rate reset options | ' | '3 years | ' |
Commercial mortgage loans | Maximum | ' | ' | ' |
Mortgage loans | ' | ' | ' |
Period for exercise of call options or interest rate reset options | ' | '10 years | ' |
Loan-to-value ratio with participating interest (as a percent) | 85.00% | 85.00% | ' |
MORTGAGE_LOANS_Details_2
MORTGAGE LOANS (Details 2) (Commercial mortgage loans, USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 |
item | |
Commercial mortgage loans | ' |
Delinquent loans | ' |
Past due period at which to cease carrying accrued interest on delinquent loans | '90 days |
Past due period at which to initiate foreclosure proceedings | '90 days |
30-59 Days Delinquent | $20,531 |
Greater than 90 Days Delinquent | 9,318 |
Total Delinquent | $29,849 |
Number of loans, 30-59 Days Delinquent | 7 |
Number of loans, Greater than 90 Days Delinquent | 3 |
Number of loans, Total Delinquent | 10 |
MORTGAGE_LOANS_Details_3
MORTGAGE LOANS (Details 3) (Commercial mortgage loans, USD $) | 9 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Dec. 31, 2012 |
Commercial mortgage loans | ' | ' |
With no related allowance recorded | ' | ' |
Recorded Investment | $2,243 | $13,044 |
Unpaid Principal Balance | 3,021 | 14,419 |
Average Recorded Investment | 2,243 | 2,609 |
Interest Income Recognized | 42 | 53 |
Cash Basis Interest Income | 32 | 69 |
With an allowance recorded | ' | ' |
Recorded Investment | 37,485 | 13,927 |
Unpaid Principal Balance | 37,482 | 13,927 |
Related Allowance | 7,970 | 2,875 |
Average Recorded Investment | 5,355 | 3,482 |
Interest Income Recognized | 499 | 154 |
Cash Basis Interest Income | $478 | $154 |
GOODWILL_Details
GOODWILL (Details) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
GOODWILL | ' | ' |
Decrease in goodwill balance | $2,300,000 | ' |
Aggregate goodwill balance | 81,449,000 | 83,773,000 |
Goodwill impairment | ' | $0 |
DEBT_AND_OTHER_OBLIGATIONS_Det
DEBT AND OTHER OBLIGATIONS (Details) (USD $) | 9 Months Ended | 12 Months Ended | 9 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Oct. 10, 2012 | Oct. 10, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Aug. 07, 2012 | Apr. 23, 2010 | Sep. 30, 2013 | Dec. 10, 2010 | |
Credit facility | 2012 Credit Facility | 2012 Credit Facility | 2012 Credit Facility | Golden Gate Captive Insurance Company (Golden Gate) | Golden Gate Captive Insurance Company (Golden Gate) | Golden Gate Captive Insurance Company (Golden Gate) | Golden Gate Captive Insurance Company (Golden Gate) | Golden Gate Captive Insurance Company (Golden Gate) | Golden Gate II Captive Insurance Company (Golden Gate II) | PLC | Golden Gate V and Red Mountain | Red Mountain | Red Mountain | Golden Gate V | Golden Gate III Vermont Captive Insurance Company (Golden Gate III) | Golden Gate III Vermont Captive Insurance Company (Golden Gate III) | Golden Gate III Vermont Captive Insurance Company (Golden Gate III) | Golden Gate IV Vermont Captive Insurance Company (Golden Gate IV) | Golden Gate IV Vermont Captive Insurance Company (Golden Gate IV) | ||||
Administrative agent's prime rate | Federal funds rate | LIBOR One-Month Rate | Surplus Notes | Series A1 Surplus Notes | Series A2 Surplus Notes | Series A3 Surplus Notes | 2012 Credit Facility | item | |||||||||||||||
item | |||||||||||||||||||||||
DEBT AND OTHER OBLIGATIONS | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit, maximum borrowing capacity | ' | ' | ' | $750,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit, amount outstanding | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 350,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Base of floating rate interest payments | ' | ' | ' | ' | 'Administrative Agent's prime rate | 'Federal Funds rate | 'one-month LIBOR | ' | ' | ' | ' | ' | ' | 'LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate added to the base rate (as a percent) | ' | ' | ' | ' | ' | 0.50% | 1.00% | ' | ' | ' | ' | ' | ' | 1.20% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Line of credit, maximum borrowing capacity to be granted upon entity's request | ' | ' | ' | 1,000,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of series of Surplus Notes | ' | ' | ' | ' | ' | ' | ' | ' | 3 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding Surplus Notes | ' | ' | ' | ' | ' | ' | ' | ' | 800,000,000 | 400,000,000 | 100,000,000 | 300,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate on Surplus Notes (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7.38% | 8.00% | 8.45% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding non-recourse funding obligations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 575,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Non-recourse funding obligations held by external parties | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 269,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Non-recourse funding obligations held by nonconsolidated affiliates | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 72,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Non-recourse funding obligations held by consolidated subsidiaries of the Company | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 233,100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Transaction period of financing for reserves related to a block of universal life insurance policies with secondary guarantees | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '20 years | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum amount to be financed for reserves related to a block of universal life insurance policies with secondary guarantees | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 945,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Initial principal amount of note for deposit to a reinsurance trust | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 275,000,000 | ' | ' | ' | ' | ' | ' | ' |
Maximum principal amount of note for deposit to a reinsurance trust | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 945,000,000 | ' | ' | ' | ' | ' | ' | ' |
Credit enhancement period for Red Mountain note | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '20 years | ' | ' | ' | ' | ' | ' | ' |
Principal balance of note | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 350,000,000 | ' | ' | ' | ' | ' | ' |
Future scheduled capital contributions to prefund credit enhancements fees amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 144,300,000 | ' | ' | ' | ' | ' |
Payments expected to be required under the agreements | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | ' | ' | ' | 0 | 0 | ' | ' | 0 | ' |
Amount of collateralized support agreement obligations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum principal amount of non-recourse funding obligation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 945,000,000 | ' | ' | ' | ' | ' |
Non-recourse funding obligations | 1,491,900,000 | ' | 1,446,900,000 | ' | ' | ' | ' | 800,000,000 | ' | ' | ' | ' | 341,900,000 | ' | ' | ' | ' | 350,000,000 | ' | ' | ' | ' | ' |
Year-to-date weighted-average interest rate of non-recourse funding obligations (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.12% | ' | ' | ' | ' | 6.25% | ' | ' | ' | ' | ' |
Repurchase of outstanding non-recourse funding obligations | 5,000,000 | 91,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Pre-tax gain on repurchase of debt | 1,300,000 | 29,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum LOC borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 710,000,000 | 710,000,000 | 505,000,000 | 690,000,000 | 270,000,000 |
Maximum stated amount up to which LOC may be increased prior to amendment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 610,000,000 | ' | ' | ' |
Maximum stated amount up to which LOC may be increased | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 720,000,000 | 720,000,000 | ' | 790,000,000 | ' |
Letter of credit term | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '13 years 6 months | ' | ' | '12 years | ' |
Future scheduled capital contributions amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 149,800,000 | ' | ' | ' | ' |
Number of installments for payment of capital contributions amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3 | ' | ' | ' | ' |
Repurchase Program Borrowings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Term of repurchase borrowings | '90 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of securities pledged under the repurchase program | 109,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Repurchase obligation | 100,000,000 | ' | 150,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Average borrowing rate (as a percent) | 0.11% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum outstanding balance | 645,100,000 | ' | 425,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Average daily balance | 417,500,000 | ' | 266,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Average daily borrowing rate (as a percent) | 0.11% | ' | 0.14% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding balance related to repurchase program borrowings | ' | ' | $150,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2013 |
item | |
Commitment and contingency | ' |
Estimated income tax payment if IRS prevails on every issue identified in audit | $24.30 |
Number of auditors from whom notice has been received | 2 |
Targeted multi-state examination | ' |
Commitment and contingency | ' |
Administrative and/or examination fees which the insurance regulators could demand, minimum | 0 |
Administrative and/or examination fees which the insurance regulators could demand, maximum | $3.50 |
STOCKBASED_COMPENSATION_Detail
STOCK-BASED COMPENSATION (Details) (USD $) | 9 Months Ended |
In Millions, except Share data, unless otherwise specified | Sep. 30, 2013 |
item | |
Performance awards | ' |
Stock-based compensation | ' |
Number of awards earned | 0 |
PLC | Performance awards | ' |
Stock-based compensation | ' |
Performance shares award issued | 298,500 |
Estimated fair value of performance shares issued | 9.3 |
Period over which ROE is calculated | '3 years |
Minimum percentage of the company's ROE to earn awards under 2013 performance awards | 10.00% |
Minimum percentage of Company's ROE to earn maximum awards under 2012 performance awards | 11.50% |
PLC | Restricted stock units | ' |
Stock-based compensation | ' |
Performance shares award issued | 163,850 |
Estimated fair value of performance shares issued | 5.4 |
Vesting percentage | 50.00% |
PLC | SARs | ' |
Stock-based compensation | ' |
Exercisable period of grants from grant date | '5 years |
Beginning of annual installments from date of grant | '1 year |
Expiration period from date of grant | '10 years |
Weighted-Average Base Price per share | ' |
Balance at the beginning of the period (in dollars per share) | 22.15 |
SARs exercised / forfeited (in dollars per share) | 18.02 |
Balance at the end of the period (in dollars per share) | 23.13 |
No. of SARs | ' |
Balance at the beginning of the period (in shares) | 1,641,167 |
SARs exercised / forfeited (in shares) | -315,616 |
Balance at the end of the period (in shares) | 1,325,551 |
SARs granted (in shares) | 0 |
PLC | SARs | Minimum | ' |
Stock-based compensation | ' |
Number of annual installments to exercise stock appreciation rights | 3 |
PLC | SARs | Maximum | ' |
Stock-based compensation | ' |
Number of annual installments to exercise stock appreciation rights | 4 |
EMPLOYEE_BENEFIT_PLANS_Details
EMPLOYEE BENEFIT PLANS (Details) (PLC, USD $) | 3 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Oct. 31, 2013 | Sep. 30, 2013 | |
2012 plan year | 2013 plan year | 2013 plan year | |||||
EMPLOYEE BENEFIT PLANS | ' | ' | ' | ' | ' | ' | ' |
Service cost - benefits earned during the period | $2,708,000 | $2,561,000 | $8,124,000 | $7,683,000 | ' | ' | ' |
Interest cost on projected benefit obligation | 2,553,000 | 2,604,000 | 7,659,000 | 7,812,000 | ' | ' | ' |
Expected return on plan assets | -2,759,000 | -2,673,000 | -8,277,000 | -8,019,000 | ' | ' | ' |
Amortization of prior service cost/(credit) | -95,000 | -95,000 | -285,000 | -285,000 | ' | ' | ' |
Amortization of actuarial losses | 2,729,000 | 2,175,000 | 8,187,000 | 6,525,000 | ' | ' | ' |
Total benefit cost | 5,136,000 | 4,572,000 | 15,408,000 | 13,716,000 | ' | ' | ' |
Contribution made by the company to its defined benefit pension plan | ' | ' | ' | ' | $2,000,000 | $2,300,000 | $4,600,000 |
Adjusted funding target percentage to be maintained, minimum | ' | ' | ' | ' | ' | ' | 80.00% |
Age of eligibility for prescription drug benefit | ' | ' | '65 years | ' | ' | ' | ' |
ACCUMULATED_OTHER_COMPREHENSIV2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Changes in Accumulated Other Comprehensive Income (Loss) by Component | ' | ' | ' | ' |
Beginning Balance | ' | ' | $1,811,124 | ' |
Other comprehensive income (loss) before reclassifications | ' | ' | -1,191,281 | ' |
Other comprehensive income relating to other-than-temporary impaired investments for which a portion has been recognized in earnings | -2,865 | 23,789 | 2,570 | 29,240 |
Amounts reclassified from accumulated other comprehensive income (loss) | ' | ' | -16,633 | ' |
Net current-period other comprehensive income (loss) | ' | ' | -1,205,344 | ' |
Ending Balance | 605,780 | ' | 605,780 | ' |
Unrealized Gains and Losses on Investments | ' | ' | ' | ' |
Changes in Accumulated Other Comprehensive Income (Loss) by Component | ' | ' | ' | ' |
Beginning Balance | ' | ' | 1,814,620 | ' |
Other comprehensive income (loss) before reclassifications | ' | ' | -1,191,178 | ' |
Other comprehensive income relating to other-than-temporary impaired investments for which a portion has been recognized in earnings | ' | ' | 2,570 | ' |
Amounts reclassified from accumulated other comprehensive income (loss) | ' | ' | -17,705 | ' |
Net current-period other comprehensive income (loss) | ' | ' | -1,206,313 | ' |
Ending Balance | 608,307 | ' | 608,307 | ' |
Accumulated Gain and Loss Derivatives | ' | ' | ' | ' |
Changes in Accumulated Other Comprehensive Income (Loss) by Component | ' | ' | ' | ' |
Beginning Balance | ' | ' | -3,496 | ' |
Other comprehensive income (loss) before reclassifications | ' | ' | -103 | ' |
Amounts reclassified from accumulated other comprehensive income (loss) | ' | ' | 1,072 | ' |
Net current-period other comprehensive income (loss) | ' | ' | 969 | ' |
Ending Balance | ($2,527) | ' | ($2,527) | ' |
ACCUMULATED_OTHER_COMPREHENSIV3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | ' | ' | ' | ' |
Benefits and settlement expenses, net of reinsurance ceded | ($622,910) | ($627,993) | ($1,759,780) | ($1,780,416) |
Realized investment gains (losses): All other investments | -19,268 | 122,476 | -133,741 | 225,838 |
Net impairment losses recognized in earnings | -8,681 | -8,499 | -17,265 | -40,537 |
Income before income tax | 113,355 | 106,689 | 302,096 | 364,822 |
Tax (expense) or benefit | -37,107 | -35,778 | -98,966 | -116,428 |
Gains and losses on derivative instruments | Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | ' | ' | ' | ' |
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | ' | ' | ' | ' |
Benefits and settlement expenses, net of reinsurance ceded | -572 | ' | -1,649 | ' |
Income before income tax | -572 | ' | -1,649 | ' |
Tax (expense) or benefit | 200 | ' | 577 | ' |
Net of tax | -372 | ' | -1,072 | ' |
Unrealized gains and losses on available-for-sale securities | Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | ' | ' | ' | ' |
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | ' | ' | ' | ' |
Realized investment gains (losses): All other investments | 10,546 | ' | 44,503 | ' |
Net impairment losses recognized in earnings | -8,681 | ' | -17,265 | ' |
Income before income tax | 1,865 | ' | 27,238 | ' |
Tax (expense) or benefit | -653 | ' | -9,533 | ' |
Net of tax | $1,212 | ' | $17,705 | ' |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
INCOME TAXES | ' | ' | ' | ' |
Estimated period to conclude appeals process for protesting certain unfavorable adjustments in IRS audit | ' | ' | '12 months | ' |
Decrease in total unrecognized tax benefits due to unfavorable adjustments to the entity's 2003 through 2007 reported taxable incomes | ' | ' | $16 | ' |
Effective income tax rates (as a percent) | 32.70% | 33.50% | 32.80% | 31.90% |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Dec. 31, 2011 | Mar. 31, 2013 |
In Thousands, unless otherwise specified | Shades Creek | ||||
Assets | ' | ' | ' | ' | ' |
Other long-term investments | $411,726 | $378,821 | ' | ' | $34,093 |
Short-term investments | 215,116 | 216,787 | ' | ' | 745 |
Total investments | 35,363,536 | 36,859,834 | ' | ' | 34,838 |
Cash | 229,747 | 269,582 | 79,566 | 169,775 | 44,963 |
Accounts and premiums receivable | 75,893 | 67,891 | ' | ' | 16,036 |
Deferred policy acquisition cost | ' | ' | ' | ' | 123,847 |
Other assets | 430,079 | 343,925 | ' | ' | 48,953 |
Total assets | 57,982,441 | 57,157,583 | ' | ' | 268,637 |
Liabilities | ' | ' | ' | ' | ' |
Future policy benefits and claims | 22,029,075 | 21,626,065 | ' | ' | 1,626 |
Other liabilities | 911,641 | 1,210,579 | ' | ' | 178,321 |
Deferred income taxes | 1,234,930 | 1,783,713 | ' | ' | 2,459 |
Total liabilities | 53,383,673 | 51,470,370 | ' | ' | 182,406 |
Total equity | 4,598,768 | 5,687,213 | ' | ' | 86,231 |
Total liabilities and shareowner's equity | $57,982,441 | $57,157,583 | ' | ' | $268,637 |
FAIR_VALUE_OF_FINANCIAL_INSTRU2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Assets: | ' | ' |
Available-for-sale securities | $26,030,303 | $27,214,682 |
Trading securities | 2,900,000 | ' |
Total fixed maturity securities | 28,304,610 | 29,769,978 |
Equity securities | 420,505 | 373,715 |
Other long-term investments | 196,172 | 130,428 |
Short-term investments | 215,116 | 216,787 |
Assets related to separate accounts | ' | ' |
Variable annuity | 11,921,925 | 9,601,417 |
Variable universal life | 663,380 | 562,817 |
Liabilities: | ' | ' |
Other liabilities | 427,470 | 657,874 |
Fixed maturities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 25,521,831 | 26,762,670 |
Trading securities | 2,800,000 | 3,000,000 |
Residential mortgage-backed securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 1,464,027 | 1,839,330 |
Commercial mortgage-backed securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 911,607 | 869,823 |
Other asset-backed securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 877,164 | 975,013 |
U.S. government-related securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 1,213,436 | 1,168,446 |
States, municipals, and political subdivisions | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 1,300,321 | 1,443,653 |
Other government-related securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 41,128 | 100,778 |
Corporate bonds | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 19,714,148 | 20,365,627 |
Measured at fair value on a recurring basis | Level 1 | ' | ' |
Assets: | ' | ' |
Total fixed maturity securities | 1,262,408 | 1,214,899 |
Equity securities | 311,637 | 273,072 |
Other long-term investments | 58,567 | 23,639 |
Short-term investments | 212,816 | 214,295 |
Total investments | 1,845,428 | 1,725,905 |
Cash | 229,747 | 269,582 |
Assets related to separate accounts | ' | ' |
Variable annuity | 11,921,925 | 9,601,417 |
Variable universal life | 663,380 | 562,817 |
Total assets | 14,660,480 | 12,159,721 |
Liabilities: | ' | ' |
Other liabilities | 11,304 | 19,187 |
Total liabilities | 11,304 | 19,187 |
Measured at fair value on a recurring basis | Level 1 | Fixed maturities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 1,063,691 | 910,195 |
Trading securities | 198,717 | 304,704 |
Measured at fair value on a recurring basis | Level 1 | U.S. government-related securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 1,063,584 | 909,988 |
Trading securities | 198,717 | 304,704 |
Measured at fair value on a recurring basis | Level 1 | Corporate bonds | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 107 | 207 |
Measured at fair value on a recurring basis | Level 2 | ' | ' |
Assets: | ' | ' |
Total fixed maturity securities | 26,125,571 | 27,696,104 |
Equity securities | 43,341 | 35,116 |
Other long-term investments | 54,600 | 58,134 |
Short-term investments | 2,300 | 2,492 |
Total investments | 26,225,812 | 27,791,846 |
Assets related to separate accounts | ' | ' |
Total assets | 26,225,812 | 27,791,846 |
Liabilities: | ' | ' |
Other liabilities | 185,443 | 27,250 |
Total liabilities | 185,443 | 27,250 |
Measured at fair value on a recurring basis | Level 2 | Fixed maturities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 23,717,568 | 25,064,150 |
Trading securities | 2,408,003 | 2,631,954 |
Measured at fair value on a recurring basis | Level 2 | Residential mortgage-backed securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 1,463,989 | 1,839,326 |
Trading securities | 308,356 | 357,803 |
Measured at fair value on a recurring basis | Level 2 | Commercial mortgage-backed securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 911,607 | 869,823 |
Trading securities | 169,046 | 171,073 |
Measured at fair value on a recurring basis | Level 2 | Other asset-backed securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 328,393 | 378,870 |
Trading securities | 90,726 | 87,395 |
Measured at fair value on a recurring basis | Level 2 | U.S. government-related securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 149,852 | 258,458 |
Trading securities | 5,147 | 1,169 |
Measured at fair value on a recurring basis | Level 2 | States, municipals, and political subdivisions | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 1,296,046 | 1,439,378 |
Trading securities | 262,036 | 278,898 |
Measured at fair value on a recurring basis | Level 2 | Other government-related securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 41,128 | 80,767 |
Trading securities | 57,525 | 63,444 |
Measured at fair value on a recurring basis | Level 2 | Corporate bonds | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 19,526,553 | 20,197,528 |
Trading securities | 1,515,167 | 1,672,172 |
Measured at fair value on a recurring basis | Level 3 | ' | ' |
Assets: | ' | ' |
Total fixed maturity securities | 916,631 | 858,975 |
Equity securities | 65,527 | 65,527 |
Other long-term investments | 83,005 | 48,655 |
Total investments | 1,065,163 | 973,157 |
Assets related to separate accounts | ' | ' |
Total assets | 1,065,163 | 973,157 |
Liabilities: | ' | ' |
Annuity account balances | 110,590 | 129,468 |
Other liabilities | 230,723 | 611,437 |
Total liabilities | 341,313 | 740,905 |
Measured at fair value on a recurring basis | Level 3 | Fixed maturities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 740,572 | 788,325 |
Trading securities | 176,059 | 70,650 |
Measured at fair value on a recurring basis | Level 3 | Residential mortgage-backed securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 38 | 4 |
Measured at fair value on a recurring basis | Level 3 | Other asset-backed securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 548,771 | 596,143 |
Trading securities | 170,967 | 70,535 |
Measured at fair value on a recurring basis | Level 3 | States, municipals, and political subdivisions | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 4,275 | 4,275 |
Measured at fair value on a recurring basis | Level 3 | Other government-related securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | ' | 20,011 |
Measured at fair value on a recurring basis | Level 3 | Corporate bonds | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 187,488 | 167,892 |
Trading securities | 5,092 | 115 |
Measured at fair value on a recurring basis | Total | ' | ' |
Assets: | ' | ' |
Total fixed maturity securities | 28,304,610 | 29,769,978 |
Equity securities | 420,505 | 373,715 |
Other long-term investments | 196,172 | 130,428 |
Short-term investments | 215,116 | 216,787 |
Total investments | 29,136,403 | 30,490,908 |
Cash | 229,747 | 269,582 |
Assets related to separate accounts | ' | ' |
Variable annuity | 11,921,925 | 9,601,417 |
Variable universal life | 663,380 | 562,817 |
Total assets | 41,951,455 | 40,924,724 |
Liabilities: | ' | ' |
Annuity account balances | 110,590 | 129,468 |
Other liabilities | 427,470 | 657,874 |
Total liabilities | 538,060 | 787,342 |
Measured at fair value on a recurring basis | Total | Fixed maturities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 25,521,831 | 26,762,670 |
Trading securities | 2,782,779 | 3,007,308 |
Measured at fair value on a recurring basis | Total | Residential mortgage-backed securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 1,464,027 | 1,839,330 |
Trading securities | 308,356 | 357,803 |
Measured at fair value on a recurring basis | Total | Commercial mortgage-backed securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 911,607 | 869,823 |
Trading securities | 169,046 | 171,073 |
Measured at fair value on a recurring basis | Total | Other asset-backed securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 877,164 | 975,013 |
Trading securities | 261,693 | 157,930 |
Measured at fair value on a recurring basis | Total | U.S. government-related securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 1,213,436 | 1,168,446 |
Trading securities | 203,864 | 305,873 |
Measured at fair value on a recurring basis | Total | States, municipals, and political subdivisions | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 1,300,321 | 1,443,653 |
Trading securities | 262,036 | 278,898 |
Measured at fair value on a recurring basis | Total | Other government-related securities | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 41,128 | 100,778 |
Trading securities | 57,525 | 63,444 |
Measured at fair value on a recurring basis | Total | Corporate bonds | ' | ' |
Assets: | ' | ' |
Available-for-sale securities | 19,714,148 | 20,365,627 |
Trading securities | $1,520,259 | $1,672,287 |
FAIR_VALUE_OF_FINANCIAL_INSTRU3
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | |
item | ||
Determination of fair values | ' | ' |
Number of primary sources of information used for determining fair value | 1 | ' |
Total number of primary sources of information available for determining fair value | 3 | ' |
Minimum percentage of the Company's fixed maturity securities priced by third party pricing services | 90.00% | ' |
Number of independent non-binding broker quotes obtained per security | 1 | ' |
Percentage of derivatives excluding embedded derivatives that were priced using exchange prices or independent broker quotations | 72.60% | ' |
Policy liabilities (net of policy loans) | $2,600,000,000 | ' |
Fair value of the trading securities | 2,900,000,000 | ' |
Other long-term investments | 196,172,000 | 130,428,000 |
Fair value, derivative liability | 427,470,000 | 657,874,000 |
Annuity account balances | ' | ' |
Fixed indexed annuities, discount rate for one month (as a percent) | 0.36% | ' |
Fixed indexed annuities, discount rate for five years (as a percent) | 2.44% | ' |
Fixed indexed annuities, discount rate for thirty years (as a percent) | 4.97% | ' |
Interest support, YRT premium support and portfolio maintenance agreement | ' | ' |
Determination of fair values | ' | ' |
Other long-term investments | 2,400,000 | ' |
Golden Gate II Captive Insurance Company (Golden Gate II) | Interest Support Agreement | ' | ' |
Determination of fair values | ' | ' |
Other long-term investments | 0 | ' |
Golden Gate II Captive Insurance Company (Golden Gate II) | YRT premium support agreement | ' | ' |
Determination of fair values | ' | ' |
Other long-term investments | 2,000,000 | ' |
Golden Gate V and West Coast Life | Portfolio maintenance agreements | ' | ' |
Determination of fair values | ' | ' |
Other long-term investments | 400,000 | ' |
Level 3 | Available-for-sale securities | ' | ' |
Determination of fair values | ' | ' |
Carrying amount | 548,800,000 | ' |
Level 3 | Trading Securities | ' | ' |
Determination of fair values | ' | ' |
Carrying amount | 171,000,000 | ' |
Percentage of underlying collateral of student-loan backed auction rate securities guaranteed by the Federal Family Education Loan Program ("FFELP"), minimum | 97.00% | ' |
Asset-Backed Securities | Level 2 | ' | ' |
Determination of fair values | ' | ' |
Carrying amount | 3,300,000,000 | ' |
Asset-Backed Securities | Level 3 | ' | ' |
Determination of fair values | ' | ' |
Carrying amount | 719,800,000 | ' |
Corporate bonds, U.S. Government-related securities, States, municipals, and political subdivisions, and Other government related securities | Level 2 | ' | ' |
Determination of fair values | ' | ' |
Carrying amount | 22,900,000,000 | ' |
Corporate bonds, U.S. Government-related securities, States, municipals, and political subdivisions, and Other government related securities | Level 3 | ' | ' |
Determination of fair values | ' | ' |
Carrying amount | 196,900,000 | ' |
Equity securities | ' | ' |
Determination of fair values | ' | ' |
Fair value of the trading securities | 20,700,000 | 19,600,000 |
Equity securities | Level 2 and Level 3 | ' | ' |
Determination of fair values | ' | ' |
Carrying amount | 108,900,000 | ' |
FHLB stock | 64,600,000 | ' |
Equity securities | Level 3 | ' | ' |
Determination of fair values | ' | ' |
FHLB stock | 65,500,000 | 65,500,000 |
Embedded derivative - GMWB | Level 3 | Low end of range | ' | ' |
Determination of fair values | ' | ' |
Mortality (as a percent) | 49.00% | ' |
Embedded derivative - GMWB | Level 3 | High end of range | ' | ' |
Determination of fair values | ' | ' |
Mortality (as a percent) | 80.00% | ' |
Funds withheld derivative | Level 2 | ' | ' |
Determination of fair values | ' | ' |
Fair value, derivative liability | $49,000,000 | ' |
FAIR_VALUE_OF_FINANCIAL_INSTRU4
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 3) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2013 | Dec. 31, 2012 | |
Unobservable Input | ' | ' |
Fixed maturities, held-to-maturity | $350,000,000 | $300,000,000 |
Level 3 | ' | ' |
Unobservable Input | ' | ' |
Financial instruments with book value approximating to fair value | 69,800,000 | 69,800,000 |
Level 3 | Equity securities | ' | ' |
Unobservable Input | ' | ' |
FHLB stock | 65,500,000 | 65,500,000 |
Level 3 | Other fixed maturity securities | ' | ' |
Unobservable Input | ' | ' |
Fixed maturities, held-to-maturity | 4,300,000 | 4,300,000 |
Level 3 | Embedded derivatives - GMWB | ' | ' |
Valuation of Level 3 Financial Instruments | ' | ' |
Fair Value of Liabilities | ' | 169,041,000 |
Level 3 | Embedded derivatives - GMWB | Actuarial cash flow model | Low end of range | ' | ' |
Unobservable Input | ' | ' |
Lapse (as a percent) | ' | 0.00% |
Utilization (as a percent) | ' | 93.00% |
Nonperformance risk (as a percent) | ' | 0.09% |
Level 3 | Embedded derivatives - GMWB | Actuarial cash flow model | High end of range | ' | ' |
Unobservable Input | ' | ' |
Lapse (as a percent) | ' | 24.00% |
Utilization (as a percent) | ' | 100.00% |
Nonperformance risk (as a percent) | ' | 1.34% |
Level 3 | Embedded derivatives - GMWB | Actuarial cash flow model | Weighted Average | ' | ' |
Unobservable Input | ' | ' |
Mortality (as a percent) | ' | 57.00% |
Level 3 | Annuity account balances | ' | ' |
Valuation of Level 3 Financial Instruments | ' | ' |
Fair Value of Liabilities | 110,590,000 | 129,468,000 |
Level 3 | Annuity account balances | Actuarial cash flow model | Low end of range | ' | ' |
Unobservable Input | ' | ' |
Mortality (as a percent) | 49.00% | ' |
Lapse (as a percent) | 2.20% | 2.20% |
Nonperformance risk (as a percent) | 0.19% | 0.09% |
Expenses per policy | 88,000 | 88,000 |
Return on assets (as a percent) | 1.50% | 1.50% |
Level 3 | Annuity account balances | Actuarial cash flow model | High end of range | ' | ' |
Unobservable Input | ' | ' |
Mortality (as a percent) | 80.00% | ' |
Lapse (as a percent) | 33.00% | 45.00% |
Nonperformance risk (as a percent) | 1.31% | 1.34% |
Expenses per policy | 102,000 | 108,000 |
Return on assets (as a percent) | 1.85% | 1.85% |
Level 3 | Annuity account balances | Actuarial cash flow model | Weighted Average | ' | ' |
Unobservable Input | ' | ' |
Mortality (as a percent) | ' | 57.00% |
Asset earned rate (as a percent) | 5.37% | 5.81% |
Withdrawal rate (as a percent) | 2.20% | 2.20% |
Level 3 | Embedded derivative - FIA | ' | ' |
Valuation of Level 3 Financial Instruments | ' | ' |
Fair Value of Liabilities | 9,199,000 | ' |
Level 3 | Embedded derivative - FIA | Actuarial cash flow model | Low end of range | ' | ' |
Unobservable Input | ' | ' |
Mortality (as a percent) | 49.00% | ' |
Lapse (as a percent) | 2.50% | ' |
Nonperformance risk (as a percent) | 0.19% | ' |
Expenses per policy | 83,000 | ' |
Withdrawal rate (as a percent) | 1.10% | ' |
Level 3 | Embedded derivative - FIA | Actuarial cash flow model | High end of range | ' | ' |
Unobservable Input | ' | ' |
Mortality (as a percent) | 80.00% | ' |
Lapse (as a percent) | 40.00% | ' |
Nonperformance risk (as a percent) | 1.31% | ' |
Expenses per policy | 97,000 | ' |
Withdrawal rate (as a percent) | 4.50% | ' |
Level 3 | Other asset-backed securities | ' | ' |
Valuation of Level 3 Financial Instruments | ' | ' |
Fair Value of Assets | 548,771,000 | 596,143,000 |
Unobservable Input | ' | ' |
Financial instruments that are valued using broker quotes | 171,000,000 | 70,500,000 |
Level 3 | Other asset-backed securities | Discounted cash flow | Low end of range | ' | ' |
Unobservable Input | ' | ' |
Liquidity premium (as a percent) | 0.69% | 0.72% |
Paydown rate (as a percent) | 8.37% | 8.51% |
Level 3 | Other asset-backed securities | Discounted cash flow | High end of range | ' | ' |
Unobservable Input | ' | ' |
Liquidity premium (as a percent) | 1.32% | 1.68% |
Paydown rate (as a percent) | 17.50% | 18.10% |
Level 3 | Other asset-backed securities | Discounted cash flow | Weighted Average | ' | ' |
Unobservable Input | ' | ' |
Liquidity premium (as a percent) | 0.80% | 1.29% |
Paydown rate (as a percent) | 12.45% | 11.40% |
Level 3 | Other government-related securities | ' | ' |
Valuation of Level 3 Financial Instruments | ' | ' |
Fair Value of Assets | ' | 20,011,000 |
Level 3 | Other government-related securities | Discounted cash flow | Weighted Average | ' | ' |
Unobservable Input | ' | ' |
Spread over treasury (as a percent) | ' | 0.30% |
Level 3 | Corporate bonds | ' | ' |
Valuation of Level 3 Financial Instruments | ' | ' |
Fair Value of Assets | 192,580,000 | 168,007,000 |
Level 3 | Corporate bonds | Discounted cash flow | Low end of range | ' | ' |
Unobservable Input | ' | ' |
Spread over treasury (as a percent) | 0.32% | 0.92% |
Level 3 | Corporate bonds | Discounted cash flow | High end of range | ' | ' |
Unobservable Input | ' | ' |
Spread over treasury (as a percent) | 6.75% | 7.75% |
Level 3 | Corporate bonds | Discounted cash flow | Weighted Average | ' | ' |
Unobservable Input | ' | ' |
Spread over treasury (as a percent) | 2.89% | 3.34% |
Level 3 | Embedded derivative - GMWB | ' | ' |
Valuation of Level 3 Financial Instruments | ' | ' |
Fair Value of Assets | $77,835,000 | ' |
Level 3 | Embedded derivative - GMWB | Actuarial cash flow model | Low end of range | ' | ' |
Unobservable Input | ' | ' |
Mortality (as a percent) | 49.00% | ' |
Lapse (as a percent) | 0.00% | ' |
Utilization (as a percent) | 97.00% | ' |
Nonperformance risk (as a percent) | 0.19% | ' |
Level 3 | Embedded derivative - GMWB | Actuarial cash flow model | High end of range | ' | ' |
Unobservable Input | ' | ' |
Mortality (as a percent) | 80.00% | ' |
Lapse (as a percent) | 24.00% | ' |
Utilization (as a percent) | 103.00% | ' |
Nonperformance risk (as a percent) | 1.31% | ' |
FAIR_VALUE_OF_FINANCIAL_INSTRU5
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 4) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||||||||||||||||||||||||||||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Jun. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Annuity account balances | Annuity account balances | Annuity account balances | Annuity account balances | Other liabilities | Other liabilities | Other liabilities | Other liabilities | Total investments | Total investments | Total investments | Total investments | Total fixed maturity securities | Total fixed maturity securities | Total fixed maturity securities | Total fixed maturity securities | Total fixed maturity securities | Total fixed maturity securities | Total fixed maturity securities | Total fixed maturity securities | Total fixed maturity securities | Total fixed maturity securities | Total fixed maturity securities | Total fixed maturity securities | Residential mortgage-backed securities | Residential mortgage-backed securities | Residential mortgage-backed securities | Residential mortgage-backed securities | Residential mortgage-backed securities | Residential mortgage-backed securities | Other asset-backed securities | Other asset-backed securities | Other asset-backed securities | Other asset-backed securities | Other asset-backed securities | Other asset-backed securities | Other asset-backed securities | Other asset-backed securities | U.S. government-related securities | States, municipals, and political subdivisions | States, municipals, and political subdivisions | States, municipals, and political subdivisions | States, municipals, and political subdivisions | States, municipals, and political subdivisions | States, municipals, and political subdivisions | States, municipals, and political subdivisions | Other government-related securities | Other government-related securities | Other government-related securities | Other government-related securities | Corporate bonds | Corporate bonds | Corporate bonds | Corporate bonds | Corporate bonds | Corporate bonds | Corporate bonds | Corporate bonds | Equity securities | Equity securities | Equity securities | Equity securities | Equity securities | Other long-term investments | Other long-term investments | Other long-term investments | Other long-term investments | |||||
Available-for-sale securities | Available-for-sale securities | Available-for-sale securities | Available-for-sale securities | Trading Securities | Trading Securities | Trading Securities | Trading Securities | Available-for-sale securities | Available-for-sale securities | Available-for-sale securities | Available-for-sale securities | Trading Securities | Trading Securities | Available-for-sale securities | Available-for-sale securities | Available-for-sale securities | Available-for-sale securities | Trading Securities | Trading Securities | Trading Securities | Trading Securities | Available-for-sale securities | Available-for-sale securities | Available-for-sale securities | Available-for-sale securities | Available-for-sale securities | Available-for-sale securities | Trading Securities | Trading Securities | Available-for-sale securities | Available-for-sale securities | Available-for-sale securities | Available-for-sale securities | Available-for-sale securities | Available-for-sale securities | Available-for-sale securities | Available-for-sale securities | Trading Securities | Trading Securities | Trading Securities | Trading Securities | ||||||||||||||||||||||||||||||
Assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Beginning Balance | $1,102,018,000 | $941,368,000 | $973,157,000 | $866,911,000 | ' | ' | ' | ' | ' | ' | ' | ' | $1,102,018,000 | $941,368,000 | $973,157,000 | $866,911,000 | $988,653,000 | $846,258,000 | $858,975,000 | $777,728,000 | $809,628,000 | $781,085,000 | $788,325,000 | $749,385,000 | $179,025,000 | $65,173,000 | $70,650,000 | $28,343,000 | $14,062,000 | $4,000 | $7,000 | $4,000 | $1,582,000 | ' | $576,396,000 | $584,641,000 | $596,143,000 | $614,813,000 | $168,851,000 | $65,059,000 | $70,535,000 | $28,343,000 | $15,000,000 | ' | $4,275,000 | $4,275,000 | $4,275,000 | $4,275,000 | $3,500,000 | ' | $20,000,000 | $20,020,000 | $20,011,000 | ' | $194,895,000 | $172,145,000 | $167,892,000 | $119,565,000 | $5,092,000 | $114,000 | $115,000 | ' | $69,795,000 | $70,080,000 | $65,527,000 | $65,527,000 | $65,527,000 | $47,838,000 | $25,315,000 | $48,655,000 | $19,103,000 |
Total Realized and Unrealized Gains Included in Earnings | 40,084,000 | 23,304,000 | 92,257,000 | 37,749,000 | ' | ' | ' | ' | ' | ' | ' | ' | 40,084,000 | 23,304,000 | 92,257,000 | 37,749,000 | 3,167,000 | 3,018,000 | 8,081,000 | 3,790,000 | ' | 45,000 | 116,000 | 339,000 | 3,167,000 | 2,973,000 | 7,965,000 | 3,451,000 | ' | ' | ' | ' | -1,000 | ' | ' | 45,000 | ' | 339,000 | 3,167,000 | 2,972,000 | 7,964,000 | 3,450,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 116,000 | ' | ' | 1,000 | 1,000 | 1,000 | 8,000 | 8,000 | ' | ' | ' | 36,917,000 | 20,278,000 | 84,176,000 | 33,951,000 |
Total Realized and Unrealized Gains Included in Other Comprehensive Income | 1,275,000 | 16,811,000 | 32,060,000 | 23,858,000 | ' | ' | ' | ' | ' | ' | ' | ' | 1,275,000 | 16,811,000 | 32,060,000 | 23,858,000 | 3,025,000 | 16,811,000 | 47,793,000 | 23,197,000 | 3,025,000 | 16,811,000 | 47,793,000 | 23,197,000 | ' | ' | ' | ' | 1,310,000 | 1,310,000 | ' | ' | ' | ' | 52,000 | 11,462,000 | 43,808,000 | 15,981,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000 | ' | 2,000 | 18,000 | 1,662,000 | 5,349,000 | 2,673,000 | 7,198,000 | ' | ' | ' | ' | ' | 661,000 | ' | ' | ' | -1,750,000 | ' | -15,733,000 | ' |
Total Realized and Unrealized Losses Included in Earnings | -1,208,000 | -182,000 | -4,100,000 | -8,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | -1,208,000 | -182,000 | -4,100,000 | -8,400,000 | -1,208,000 | -148,000 | -4,100,000 | -905,000 | ' | ' | ' | ' | -1,208,000 | -148,000 | -4,100,000 | -905,000 | ' | ' | ' | ' | ' | -1,000 | ' | ' | ' | ' | -1,080,000 | -148,000 | -3,949,000 | -905,000 | ' | ' | ' | ' | ' | ' | -123,000 | -123,000 | ' | ' | ' | ' | ' | ' | ' | ' | -4,000 | ' | -27,000 | ' | ' | ' | ' | ' | ' | ' | -34,000 | ' | -7,495,000 |
Total Realized and Unrealized Losses Included in Other Comprehensive Income | -30,482,000 | -1,536,000 | -68,416,000 | -25,311,000 | ' | ' | ' | ' | ' | ' | ' | ' | -30,482,000 | -1,536,000 | -68,416,000 | -25,311,000 | -30,482,000 | -1,389,000 | -68,416,000 | -24,214,000 | -30,482,000 | -1,389,000 | -68,416,000 | -24,214,000 | ' | ' | ' | ' | ' | -337,000 | ' | ' | ' | ' | -26,969,000 | -1,157,000 | -54,517,000 | -22,055,000 | ' | ' | ' | ' | -1,000 | ' | ' | ' | ' | ' | ' | ' | ' | -11,000 | -3,000 | -27,000 | -3,513,000 | -221,000 | -13,559,000 | -2,131,000 | ' | ' | ' | ' | -147,000 | -1,097,000 | ' | ' | ' | ' | ' | ' | ' |
Purchases | 39,165,000 | 7,208,000 | 195,863,000 | 72,562,000 | ' | ' | ' | ' | ' | ' | ' | ' | 39,165,000 | 7,208,000 | 195,863,000 | 72,562,000 | 39,165,000 | 7,208,000 | 195,863,000 | 72,558,000 | 22,771,000 | ' | 68,557,000 | 24,302,000 | 16,394,000 | 7,208,000 | 127,306,000 | 48,256,000 | ' | 14,349,000 | ' | ' | ' | 1,582,000 | 11,769,000 | ' | 24,931,000 | ' | 16,394,000 | 7,208,000 | 122,224,000 | 48,255,000 | ' | 4,275,000 | ' | ' | ' | ' | ' | 3,500,000 | ' | ' | ' | 20,023,000 | 11,002,000 | ' | 29,277,000 | 4,000 | ' | ' | ' | 1,000 | ' | 4,000 | ' | ' | ' | ' | ' | ' | ' |
Sales | -62,295,000 | -13,027,000 | -170,658,000 | -49,049,000 | ' | ' | ' | ' | ' | ' | ' | ' | -62,295,000 | -13,027,000 | -170,658,000 | -49,049,000 | -62,295,000 | -8,732,000 | -170,658,000 | -44,754,000 | -45,655,000 | -7,290,000 | -141,225,000 | -38,238,000 | -16,640,000 | -1,442,000 | -29,433,000 | -6,516,000 | -12,000 | -12,000 | -3,000 | ' | -72,000 | -72,000 | -12,085,000 | -5,200,000 | -62,471,000 | -19,050,000 | -16,568,000 | -1,442,000 | -29,344,000 | -6,516,000 | -15,000,000 | ' | ' | ' | ' | ' | ' | ' | -20,000,000 | ' | -20,000,000 | ' | -13,558,000 | -2,090,000 | -58,742,000 | -4,185,000 | ' | ' | -17,000 | ' | -4,295,000 | -4,295,000 | ' | ' | ' | ' | ' | ' | ' |
Transfers in and/or out of Level 3 | -23,589,000 | -26,802,000 | 47,237,000 | 27,923,000 | ' | ' | ' | ' | ' | ' | ' | ' | -23,589,000 | -26,802,000 | 47,237,000 | 27,923,000 | -23,589,000 | -26,802,000 | 47,237,000 | 27,923,000 | -18,718,000 | -26,802,000 | 44,885,000 | 27,810,000 | -4,871,000 | ' | 2,352,000 | 113,000 | -15,333,000 | -15,287,000 | ' | ' | -1,494,000 | -1,494,000 | ' | ' | 1,227,000 | ' | ' | ' | 2,210,000 | ' | ' | ' | ' | ' | ' | ' | -3,377,000 | -3,377,000 | ' | ' | ' | ' | -3,385,000 | -26,802,000 | 58,945,000 | 27,810,000 | ' | ' | 5,013,000 | 113,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other | 195,000 | 378,000 | -32,237,000 | 1,279,000 | ' | ' | ' | ' | ' | ' | ' | ' | 195,000 | 378,000 | -32,237,000 | 1,279,000 | 195,000 | 378,000 | 1,856,000 | 1,279,000 | 3,000 | -35,000 | 537,000 | -156,000 | 192,000 | 413,000 | 1,319,000 | 1,435,000 | 11,000 | 11,000 | ' | ' | -15,000 | -15,000 | -392,000 | -153,000 | -350,000 | -390,000 | 203,000 | 413,000 | 1,327,000 | 1,435,000 | 1,000 | ' | ' | ' | ' | ' | ' | ' | -1,000 | -4,000 | -10,000 | -9,000 | 385,000 | 122,000 | 886,000 | 242,000 | 4,000 | ' | 7,000 | ' | ' | ' | ' | ' | ' | ' | ' | -34,093,000 | ' |
Ending Balance | 1,065,163,000 | 947,522,000 | 1,065,163,000 | 947,522,000 | ' | ' | ' | ' | ' | ' | ' | ' | 1,065,163,000 | 947,522,000 | 1,065,163,000 | 947,522,000 | 916,631,000 | 836,602,000 | 916,631,000 | 836,602,000 | 740,572,000 | 762,425,000 | 740,572,000 | 762,425,000 | 176,059,000 | 74,177,000 | 176,059,000 | 74,177,000 | 38,000 | 38,000 | 4,000 | 4,000 | ' | ' | 548,771,000 | 589,638,000 | 548,771,000 | 589,638,000 | 170,967,000 | 74,062,000 | 170,967,000 | 74,062,000 | ' | 4,275,000 | 4,275,000 | 4,275,000 | 4,275,000 | 4,275,000 | ' | ' | ' | 20,005,000 | ' | 20,005,000 | 187,488,000 | 148,503,000 | 187,488,000 | 148,503,000 | 5,092,000 | 115,000 | 5,092,000 | 115,000 | 65,361,000 | 65,361,000 | 65,527,000 | 65,527,000 | 65,527,000 | 83,005,000 | 45,559,000 | 83,005,000 | 45,559,000 |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 36,759,000 | 23,069,000 | 73,253,000 | 29,011,000 | ' | ' | ' | ' | ' | ' | ' | ' | 36,759,000 | 23,069,000 | 73,253,000 | 29,011,000 | 1,592,000 | 2,825,000 | 4,810,000 | 2,555,000 | ' | ' | ' | ' | 1,592,000 | 2,825,000 | 4,810,000 | 2,555,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,596,000 | 2,823,000 | 4,814,000 | 2,545,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -4,000 | 2,000 | -4,000 | 10,000 | ' | ' | ' | ' | ' | 35,167,000 | 20,244,000 | 68,443,000 | 26,456,000 |
Liabilities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Beginning Balance | 371,390,000 | 651,184,000 | 740,905,000 | 574,075,000 | 114,614,000 | 134,597,000 | 129,468,000 | 136,462,000 | 256,776,000 | 516,587,000 | 611,437,000 | 437,613,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total Realized and Unrealized Gains Included in Earnings | 39,109,000 | 11,016,000 | 277,319,000 | 67,565,000 | ' | ' | ' | ' | 39,109,000 | 11,016,000 | 277,319,000 | 67,565,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total Realized and Unrealized Gains Included in Other Comprehensive Income | -15,528,000 | ' | -37,269,000 | ' | -2,472,000 | ' | -6,159,000 | ' | -13,056,000 | ' | -31,110,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total Realized and Unrealized Losses Included in Earnings | ' | -118,545,000 | ' | -258,285,000 | ' | -5,766,000 | ' | -9,983,000 | ' | -112,779,000 | ' | -248,302,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Issuances | 46,000 | 217,000 | 247,000 | 645,000 | 46,000 | 217,000 | 247,000 | 645,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Settlements | 6,542,000 | 6,011,000 | 25,284,000 | 12,521,000 | 6,542,000 | 6,011,000 | -25,284,000 | 12,521,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other | ' | ' | 134,505,000 | ' | ' | ' | ' | ' | ' | ' | 134,505,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Ending Balance | 341,313,000 | 752,919,000 | 341,313,000 | 752,919,000 | 110,590,000 | 134,569,000 | 110,590,000 | 134,569,000 | 230,723,000 | 618,350,000 | 230,723,000 | 618,350,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total Gains (losses) included in Earnings related to Instruments still held at the Reporting Date | 26,053,000 | -101,763,000 | 246,209,000 | -180,737,000 | ' | ' | ' | ' | 26,053,000 | -101,763,000 | 246,209,000 | -180,737,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Transfers | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Securities transferred into Level 3 | 1,300,000 | 0 | 72,100,000 | 54,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Securities transferred out of Level 3 | 24,900,000 | 26,800,000 | 24,900,000 | 26,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Securities transferred from Level 2 to Level 1 | 0 | 0 | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Securities transferred out of Level 1 | $0 | $0 | $0 | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
FAIR_VALUE_OF_FINANCIAL_INSTRU6
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 5) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Assets: | ' | ' |
Mortgage loans on real estate | $4,794,924 | $4,948,625 |
Policy loans | 856,333 | 865,391 |
Fixed maturities, held-to-maturity | 350,000 | 300,000 |
Liabilities: | ' | ' |
Stable value product account balances | 2,531,262 | 2,510,559 |
Annuity account balances | 10,431,938 | 10,658,463 |
Debt | ' | ' |
Non-recourse funding obligations | 1,491,900 | 1,446,900 |
Golden Gate V | ' | ' |
Debt | ' | ' |
Non-recourse funding obligations | 350,000 | ' |
Carrying Amounts | ' | ' |
Assets: | ' | ' |
Mortgage loans on real estate | 4,794,924 | 4,948,625 |
Policy loans | 856,333 | 865,391 |
Fixed maturities, held-to-maturity | 350,000 | 300,000 |
Liabilities: | ' | ' |
Stable value product account balances | 2,531,262 | 2,510,559 |
Annuity account balances | 10,431,938 | 10,658,463 |
Debt | ' | ' |
Non-recourse funding obligations | 1,491,900 | 1,446,900 |
Carrying Amounts | Golden Gate V | ' | ' |
Debt | ' | ' |
Non-recourse funding obligations | 350,000 | 300,000 |
Fair Values | Golden Gate V | ' | ' |
Debt | ' | ' |
Non-recourse funding obligations | 325,100 | 297,600 |
Fair Values | Level 3 | ' | ' |
Assets: | ' | ' |
Mortgage loans on real estate | 5,287,854 | 5,723,579 |
Policy loans | 856,333 | 865,391 |
Fixed maturities, held-to-maturity | 341,797 | 319,163 |
Liabilities: | ' | ' |
Stable value product account balances | 2,535,865 | 2,534,094 |
Annuity account balances | 10,074,996 | 10,525,702 |
Debt | ' | ' |
Non-recourse funding obligations | $1,392,932 | $1,357,290 |
DERIVATIVE_FINANCIAL_INSTRUMEN2
DERIVATIVE FINANCIAL INSTRUMENTS (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Oct. 31, 2012 |
item | ||||||
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Number of portfolio maintenance agreements | ' | ' | ' | ' | ' | 2 |
Realized investment gains (losses) - derivatives, gross | $32,212 | ($116,663) | $102,410 | ($194,340) | ' | ' |
Notional Amount, Other long-term investments | 5,699,323 | ' | 5,699,323 | ' | 7,567,811 | ' |
Fair Value, Other long-term investments | 196,172 | ' | 196,172 | ' | 130,428 | ' |
Notional Amount, Other liabilities | 6,221,182 | ' | 6,221,182 | ' | 9,672,554 | ' |
Fair Value, Other liabilities | 427,470 | ' | 427,470 | ' | 657,874 | ' |
PLC | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Number of portfolio maintenance agreements | 2 | ' | 2 | ' | ' | ' |
Derivatives not designated as hedging instruments | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Realized investment gains (losses) - derivatives related to variable and FIA annuity contracts, gross | 3,292 | -32,534 | -77,481 | -69,106 | ' | ' |
Realized investment gains (losses) - derivatives, gross | 32,212 | -116,663 | 102,410 | -194,340 | ' | ' |
Derivatives not designated as hedging instruments | PLC | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Notional Amount, Other long-term investments | 1,508,964 | ' | 1,508,964 | ' | 1,404,750 | ' |
Fair Value, Other long-term investments | 2,376 | ' | 2,376 | ' | 17,064 | ' |
Derivatives not designated as hedging instruments | Interest rate futures | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Realized investment gains (losses) - derivatives related to variable and FIA annuity contracts, gross | -2,255 | -3,371 | -26,393 | 32,419 | ' | ' |
Notional Amount, Other long-term investments | 111,534 | ' | 111,534 | ' | ' | ' |
Fair Value, Other long-term investments | 1,106 | ' | 1,106 | ' | ' | ' |
Notional Amount, Other liabilities | 175,681 | ' | 175,681 | ' | 893,476 | ' |
Fair Value, Other liabilities | 531 | ' | 531 | ' | 13,970 | ' |
Derivatives not designated as hedging instruments | Equity futures | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Realized investment gains (losses) - derivatives related to variable and FIA annuity contracts, gross | -12,568 | -17,324 | -39,829 | -42,643 | ' | ' |
Notional Amount, Other long-term investments | 47,994 | ' | 47,994 | ' | 147,581 | ' |
Fair Value, Other long-term investments | 937 | ' | 937 | ' | 595 | ' |
Notional Amount, Other liabilities | 94,457 | ' | 94,457 | ' | 152,364 | ' |
Fair Value, Other liabilities | 1,484 | ' | 1,484 | ' | 3,316 | ' |
Derivatives not designated as hedging instruments | Currency future | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Realized investment gains (losses) - derivatives related to variable and FIA annuity contracts, gross | -6,531 | -3,078 | 1,440 | -2,298 | ' | ' |
Notional Amount, Other long-term investments | ' | ' | ' | ' | 15,944 | ' |
Fair Value, Other long-term investments | ' | ' | ' | ' | 784 | ' |
Notional Amount, Other liabilities | 126,389 | ' | 126,389 | ' | 131,979 | ' |
Fair Value, Other liabilities | 3,350 | ' | 3,350 | ' | 1,901 | ' |
Derivatives not designated as hedging instruments | Volatility futures | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Positions held | 0 | ' | 0 | ' | ' | ' |
Realized investment gains (losses) - derivatives related to variable and FIA annuity contracts, gross | ' | ' | ' | -132 | ' | ' |
Derivatives not designated as hedging instruments | Variance swaps | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Realized investment gains (losses) - derivatives related to variable and FIA annuity contracts, gross | -1,347 | -5,840 | -9,566 | -6,660 | ' | ' |
Notional Amount, Other long-term investments | ' | ' | ' | ' | 500 | ' |
Fair Value, Other long-term investments | ' | ' | ' | ' | 406 | ' |
Notional Amount, Other liabilities | ' | ' | ' | ' | 2,675 | ' |
Fair Value, Other liabilities | ' | ' | ' | ' | 12,198 | ' |
Derivatives not designated as hedging instruments | Equity options | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Realized investment gains (losses) - derivatives related to variable and FIA annuity contracts, gross | -29,094 | -9,184 | -65,631 | -29,903 | ' | ' |
Notional Amount, Other long-term investments | 1,467,720 | ' | 1,467,720 | ' | 573,493 | ' |
Fair Value, Other long-term investments | 80,754 | ' | 80,754 | ' | 61,833 | ' |
Notional Amount, Other liabilities | 144,408 | ' | 144,408 | ' | ' | ' |
Fair Value, Other liabilities | 5,939 | ' | 5,939 | ' | ' | ' |
Derivatives not designated as hedging instruments | Interest rate swaptions | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Realized investment gains (losses) - derivatives related to variable and FIA annuity contracts, gross | 1,725 | -3,019 | -738 | 2,293 | ' | ' |
Notional Amount, Other long-term investments | 625,000 | ' | 625,000 | ' | 400,000 | ' |
Fair Value, Other long-term investments | 27,978 | ' | 27,978 | ' | 11,370 | ' |
Derivatives not designated as hedging instruments | Interest rate swaps | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Realized investment gains (losses) - derivatives related to variable and FIA annuity contracts, gross | -19,224 | 6,361 | -125,502 | 10,187 | ' | ' |
Realized investment gains (losses) - derivatives, gross | 72 | 199 | 2,984 | -680 | ' | ' |
Notional Amount, Other long-term investments | 200,000 | ' | 200,000 | ' | 355,000 | ' |
Fair Value, Other long-term investments | 2,035 | ' | 2,035 | ' | 6,532 | ' |
Notional Amount, Other liabilities | 1,500,000 | ' | 1,500,000 | ' | 400,000 | ' |
Fair Value, Other liabilities | 132,592 | ' | 132,592 | ' | 10,025 | ' |
Derivatives not designated as hedging instruments | Embedded derivative - GMWB | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Realized investment gains (losses) - derivatives related to variable and FIA annuity contracts, gross | 40,379 | 2,921 | 146,693 | -32,369 | ' | ' |
Notional Amount, Other long-term investments | 1,692,535 | ' | 1,692,535 | ' | 1,640,075 | ' |
Fair Value, Other long-term investments | 79,827 | ' | 79,827 | ' | 30,261 | ' |
Notional Amount, Other liabilities | 114,940 | ' | 114,940 | ' | 5,253,961 | ' |
Fair Value, Other liabilities | 1,992 | ' | 1,992 | ' | 199,530 | ' |
Derivatives not designated as hedging instruments | Funds withheld derivative | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Realized investment gains (losses) - derivatives related to variable and FIA annuity contracts, gross | 32,207 | ' | 42,045 | ' | ' | ' |
Notional Amount, Other liabilities | 1,178,524 | ' | 1,178,524 | ' | ' | ' |
Fair Value, Other liabilities | 49,045 | ' | 49,045 | ' | ' | ' |
Derivatives not designated as hedging instruments | Embedded derivative - Modco reinsurance treaties | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Realized investment gains (losses) - derivatives, gross | 30,074 | -101,999 | 191,847 | -139,972 | ' | ' |
Notional Amount, Other long-term investments | 45,314 | ' | 45,314 | ' | 30,244 | ' |
Fair Value, Other long-term investments | 802 | ' | 802 | ' | 1,330 | ' |
Notional Amount, Other liabilities | 2,598,832 | ' | 2,598,832 | ' | 2,655,134 | ' |
Fair Value, Other liabilities | 219,532 | ' | 219,532 | ' | 411,907 | ' |
Derivatives not designated as hedging instruments | Embedded derivative - FIA | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Realized investment gains (losses) - derivatives, gross | -104 | ' | -145 | ' | ' | ' |
Notional Amount, Other liabilities | 104,951 | ' | 104,951 | ' | ' | ' |
Fair Value, Other liabilities | 9,199 | ' | 9,199 | ' | ' | ' |
Derivatives not designated as hedging instruments | Interest rate caps | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Realized investment gains (losses) - derivatives, gross | ' | -143 | ' | -2,658 | ' | ' |
Notional Amount, Other long-term investments | ' | ' | ' | ' | 3,000,000 | ' |
Derivatives not designated as hedging instruments | Derivatives with PLC | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Realized investment gains (losses) - derivatives, gross | -1,159 | 17,559 | -14,689 | 18,059 | ' | ' |
Derivatives not designated as hedging instruments | Other | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Realized investment gains (losses) - derivatives, gross | 37 | 255 | -106 | 17 | ' | ' |
Notional Amount, Other long-term investments | 262 | ' | 262 | ' | 224 | ' |
Fair Value, Other long-term investments | 357 | ' | 357 | ' | 253 | ' |
Derivatives not designated as hedging instruments | Other- FIA volatility futures | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Notional Amount, Other liabilities | 35 | ' | 35 | ' | ' | ' |
Cash flow hedges | Inflation | ' | ' | ' | ' | ' | ' |
Notional amount and fair value of the entity's derivative financial instruments | ' | ' | ' | ' | ' | ' |
Notional Amount, Other liabilities | 182,965 | ' | 182,965 | ' | 182,965 | ' |
Fair Value, Other liabilities | $3,806 | ' | $3,806 | ' | $5,027 | ' |
DERIVATIVE_FINANCIAL_INSTRUMEN3
DERIVATIVE FINANCIAL INSTRUMENTS (Details 2) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Cash flow hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | |||
Interest rate | Interest rate | Inflation | Inflation | Inflation | Inflation | |||||||
Gain (Loss) on Derivatives in Cash Flow Hedging Relationship | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of Gains (Losses) Deferred in Accumulated Other Comprehensive Income (Loss) on Derivatives (Effective Portion) | ' | ' | $22,000 | $2,937,000 | ($157,000) | $4,069,000 | ($1,000) | ($77,000) | $22,000 | $2,938,000 | ($157,000) | $4,146,000 |
Amount and Location of Gains (Losses) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Loss) (Effective Portion) | ' | ' | -572,000 | -1,101,000 | -1,649,000 | -2,746,000 | -549,000 | -2,261,000 | -572,000 | -552,000 | -1,649,000 | -485,000 |
Amount and Location of (Losses) Recognized in Income (Loss) on Derivatives (Ineffective Portion) | ' | ' | -62,000 | 221,000 | -253,000 | -2,000 | ' | ' | -62,000 | 221,000 | -253,000 | -2,000 |
Expected reclassification out of accumulated other comprehensive income (loss) into earnings during the next twelve months | ' | ' | ' | ' | 2,300,000 | ' | ' | ' | ' | ' | ' | ' |
Cash posted as collateral related to derivative transactions | 81,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Securities posted as collateral related to derivative transactions | 52,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash received as collateral related to derivative transactions | $6,000,000 | $11,280,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
DERIVATIVE_FINANCIAL_INSTRUMEN4
DERIVATIVE FINANCIAL INSTRUMENTS (Details 3) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Realized investment gains (losses) - all other investments | ' | ' | ' | ' |
Modco trading portfolio | ($25,960) | $104,865 | ($167,982) | $179,027 |
OFFSETTING_OF_ASSETS_AND_LIABI2
OFFSETTING OF ASSETS AND LIABILITIES (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ' | ' |
Gross Amounts of Recognized Assets | $193,439 | $113,111 |
Net Amounts of Assets Presented in the Statement of Financial Position | 193,439 | 113,111 |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 44,189 | 21,565 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 6,000 | 11,280 |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 143,250 | 80,266 |
Total derivatives, not subject to a master netting arrangement or similar arrangement | ' | ' |
Total derivatives, not subject to a master netting arrangement or similar arrangement | 2,733 | 17,317 |
Total derivatives | ' | ' |
Gross Amounts of Recognized Assets | 196,172 | 130,428 |
Net Amounts of Assets Presented in the Statement of Financial Position | 196,172 | 130,428 |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 44,189 | 21,565 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 6,000 | 11,280 |
Total derivatives, Net Amount | 145,983 | 97,583 |
Free-Standing derivatives | ' | ' |
Total derivatives, subject to a master netting arrangement or similar arrangement | ' | ' |
Gross Amounts of Recognized Assets | 112,810 | 81,520 |
Net Amounts of Assets Presented in the Statement of Financial Position | 112,810 | 81,520 |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 44,189 | 21,565 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received | 6,000 | 11,280 |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 62,621 | 48,675 |
Embedded derivative - Modco reinsurance treaties | ' | ' |
Total derivatives, subject to a master netting arrangement or similar arrangement | ' | ' |
Gross Amounts of Recognized Assets | 802 | 1,330 |
Net Amounts of Assets Presented in the Statement of Financial Position | 802 | 1,330 |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 802 | 1,330 |
Embedded derivative - GMWB | ' | ' |
Total derivatives, subject to a master netting arrangement or similar arrangement | ' | ' |
Gross Amounts of Recognized Assets | 79,827 | 30,261 |
Net Amounts of Assets Presented in the Statement of Financial Position | 79,827 | 30,261 |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | $79,827 | $30,261 |
OFFSETTING_OF_ASSETS_AND_LIABI3
OFFSETTING OF ASSETS AND LIABILITIES (Details 2) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Total derivatives, subject to a master netting arrangement or similar arrangement | ' | ' |
Gross Amounts of Recognized Liabilities | $427,470 | $657,874 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 427,470 | 657,874 |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 44,189 | 21,565 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 72,813 | 20,373 |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 310,468 | 615,936 |
Total derivatives | ' | ' |
Gross Amounts of Recognized Liabilities | 427,470 | 657,874 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 427,470 | 657,874 |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 44,189 | 21,565 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 72,813 | 20,373 |
Total derivatives, Net Amount | 310,468 | 615,936 |
Repurchase agreements | ' | ' |
Repurchase agreements | 100,000 | 150,000 |
Total Liabilities | ' | ' |
Gross Amounts of Recognized Liabilities | 527,470 | 807,874 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 527,470 | 807,874 |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 44,189 | 21,565 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 72,813 | 20,373 |
Net Amount | 410,468 | 765,936 |
Free-Standing derivatives | ' | ' |
Total derivatives, subject to a master netting arrangement or similar arrangement | ' | ' |
Gross Amounts of Recognized Liabilities | 147,702 | 46,437 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 147,702 | 46,437 |
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments | 44,189 | 21,565 |
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Paid | 72,813 | 20,373 |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 30,700 | 4,499 |
Embedded derivative - Modco reinsurance treaties | ' | ' |
Total derivatives, subject to a master netting arrangement or similar arrangement | ' | ' |
Gross Amounts of Recognized Liabilities | 219,532 | 411,907 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 219,532 | 411,907 |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 219,532 | 411,907 |
Funds withheld derivative | ' | ' |
Total derivatives, subject to a master netting arrangement or similar arrangement | ' | ' |
Gross Amounts of Recognized Liabilities | 49,045 | ' |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 49,045 | ' |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 49,045 | ' |
Embedded derivative - GMWB | ' | ' |
Total derivatives, subject to a master netting arrangement or similar arrangement | ' | ' |
Gross Amounts of Recognized Liabilities | 1,992 | 199,530 |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 1,992 | 199,530 |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | 1,992 | 199,530 |
Embedded derivative - FIA | ' | ' |
Total derivatives, subject to a master netting arrangement or similar arrangement | ' | ' |
Gross Amounts of Recognized Liabilities | 9,199 | ' |
Net Amounts of Liabilities Presented in the Statement of Financial Position | 9,199 | ' |
Total derivatives, subject to a master netting arrangement or similar arrangement, Net Amount | $9,199 | ' |
OPERATING_SEGMENTS_Details
OPERATING SEGMENTS (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 |
Summarized financial information for the company's segments | ' | ' | ' | ' | ' |
Revenues | $880,594 | $864,196 | $2,582,218 | $2,632,990 | ' |
Realized investment (losses) gains - investments | -31,968 | 120,723 | -140,299 | 193,649 | ' |
Realized investment (losses) gains - derivatives | 37,196 | -107,022 | 124,321 | -169,104 | ' |
Income tax expense | -37,107 | -35,778 | -98,966 | -116,428 | ' |
Net income | 76,248 | 70,911 | 203,130 | 248,394 | ' |
Realized gain (losses) on investments | ' | ' | ' | ' | ' |
Investment gains (losses) | -27,949 | 113,977 | -151,006 | 185,301 | ' |
Less: amortization related to DAC/VOBA and benefits settlement expenses | 4,019 | -6,746 | -10,707 | -8,348 | ' |
Realized investment gains (losses) in investments | -31,968 | 120,723 | -140,299 | 193,649 | ' |
Realized gain (losses) on derivatives | ' | ' | ' | ' | ' |
Derivative gains (losses) | 32,212 | -116,663 | 102,410 | -194,340 | ' |
Less: VA GMWB economic cost | -4,984 | -9,641 | -21,911 | -25,236 | ' |
Realized investment gains (losses) - derivatives | 37,196 | -107,022 | 124,321 | -169,104 | ' |
Other-than-temporary impairments | 8,681 | 8,499 | 17,265 | 40,537 | ' |
Operating Segment Assets | ' | ' | ' | ' | ' |
Investments and other assets | 54,693,620 | ' | 54,693,620 | ' | 53,848,454 |
Deferred policy acquisition costs and value of business acquired | 3,207,372 | ' | 3,207,372 | ' | 3,225,356 |
Goodwill | 81,449 | ' | 81,449 | ' | 83,773 |
Total assets | 57,982,441 | ' | 57,982,441 | ' | 57,157,583 |
Life Marketing | ' | ' | ' | ' | ' |
Summarized financial information for the company's segments | ' | ' | ' | ' | ' |
Revenues | 346,294 | 313,170 | 1,002,522 | 938,920 | ' |
Acquisitions | ' | ' | ' | ' | ' |
Summarized financial information for the company's segments | ' | ' | ' | ' | ' |
Revenues | 240,067 | 251,550 | 752,247 | 812,355 | ' |
Annuities | ' | ' | ' | ' | ' |
Summarized financial information for the company's segments | ' | ' | ' | ' | ' |
Revenues | 170,065 | 140,563 | 435,480 | 460,822 | ' |
Stable Value Products | ' | ' | ' | ' | ' |
Summarized financial information for the company's segments | ' | ' | ' | ' | ' |
Revenues | 25,207 | 26,933 | 91,735 | 96,374 | ' |
Asset Protection | ' | ' | ' | ' | ' |
Summarized financial information for the company's segments | ' | ' | ' | ' | ' |
Revenues | 76,157 | 75,217 | 223,709 | 222,984 | ' |
Corporate and Other | ' | ' | ' | ' | ' |
Summarized financial information for the company's segments | ' | ' | ' | ' | ' |
Revenues | 22,804 | 56,763 | 76,525 | 101,535 | ' |
Operating | ' | ' | ' | ' | ' |
Summarized financial information for the company's segments | ' | ' | ' | ' | ' |
Segment Operating Income (Loss) | 108,127 | 92,988 | 318,074 | 340,277 | ' |
Operating | Life Marketing | ' | ' | ' | ' | ' |
Summarized financial information for the company's segments | ' | ' | ' | ' | ' |
Segment Operating Income (Loss) | 28,158 | 27,885 | 75,505 | 87,678 | ' |
Operating Segment Assets | ' | ' | ' | ' | ' |
Investments and other assets | 12,913,177 | ' | 12,913,177 | ' | 12,171,384 |
Deferred policy acquisition costs and value of business acquired | 2,030,605 | ' | 2,030,605 | ' | 2,001,708 |
Total assets | 14,943,782 | ' | 14,943,782 | ' | 14,173,092 |
Operating | Acquisitions | ' | ' | ' | ' | ' |
Summarized financial information for the company's segments | ' | ' | ' | ' | ' |
Segment Operating Income (Loss) | 29,429 | 46,155 | 93,241 | 128,869 | ' |
Operating Segment Assets | ' | ' | ' | ' | ' |
Investments and other assets | 11,196,504 | ' | 11,196,504 | ' | 11,312,550 |
Deferred policy acquisition costs and value of business acquired | 597,284 | ' | 597,284 | ' | 679,746 |
Goodwill | 33,291 | ' | 33,291 | ' | 35,615 |
Total assets | 11,827,079 | ' | 11,827,079 | ' | 12,027,911 |
Operating | Annuities | ' | ' | ' | ' | ' |
Summarized financial information for the company's segments | ' | ' | ' | ' | ' |
Segment Operating Income (Loss) | 43,825 | 9,041 | 120,260 | 72,864 | ' |
Operating Segment Assets | ' | ' | ' | ' | ' |
Investments and other assets | 19,372,420 | ' | 19,372,420 | ' | 17,649,488 |
Deferred policy acquisition costs and value of business acquired | 526,780 | ' | 526,780 | ' | 491,184 |
Total assets | 19,899,200 | ' | 19,899,200 | ' | 18,140,672 |
Operating | Stable Value Products | ' | ' | ' | ' | ' |
Summarized financial information for the company's segments | ' | ' | ' | ' | ' |
Segment Operating Income (Loss) | 19,206 | 13,050 | 59,514 | 41,654 | ' |
Operating Segment Assets | ' | ' | ' | ' | ' |
Investments and other assets | 2,530,150 | ' | 2,530,150 | ' | 2,509,160 |
Deferred policy acquisition costs and value of business acquired | 1,112 | ' | 1,112 | ' | 1,399 |
Total assets | 2,531,262 | ' | 2,531,262 | ' | 2,510,559 |
Operating | Asset Protection | ' | ' | ' | ' | ' |
Summarized financial information for the company's segments | ' | ' | ' | ' | ' |
Segment Operating Income (Loss) | 5,365 | 2,825 | 15,347 | 10,171 | ' |
Operating Segment Assets | ' | ' | ' | ' | ' |
Investments and other assets | 775,563 | ' | 775,563 | ' | 740,153 |
Deferred policy acquisition costs and value of business acquired | 50,883 | ' | 50,883 | ' | 50,253 |
Goodwill | 48,158 | ' | 48,158 | ' | 48,158 |
Total assets | 874,604 | ' | 874,604 | ' | 838,564 |
Operating | Corporate and Other | ' | ' | ' | ' | ' |
Summarized financial information for the company's segments | ' | ' | ' | ' | ' |
Segment Operating Income (Loss) | -17,856 | -5,968 | -45,793 | -959 | ' |
Operating Segment Assets | ' | ' | ' | ' | ' |
Investments and other assets | 7,888,528 | ' | 7,888,528 | ' | 9,446,057 |
Deferred policy acquisition costs and value of business acquired | 708 | ' | 708 | ' | 1,066 |
Total assets | 7,889,236 | ' | 7,889,236 | ' | 9,447,123 |
Adjustments | ' | ' | ' | ' | ' |
Operating Segment Assets | ' | ' | ' | ' | ' |
Investments and other assets | 17,278 | ' | 17,278 | ' | 19,662 |
Total assets | $17,278 | ' | $17,278 | ' | $19,662 |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) (MONY, Subsequent events, USD $) | 0 Months Ended |
In Millions, unless otherwise specified | Oct. 02, 2013 |
MONY | Subsequent events | ' |
SUBSEQUENT EVENTS | ' |
Percentage of indemnity reinsurance | 100.00% |
Aggregate purchase price | $686 |
Ceding commission on reinsurance | $370 |