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Deferred Policy Acquisition Costs
 12 Months Ended
Dec. 31, 2012
Deferred Policy Acquisition Costs [Abstract]  
Deferred Policy Acquisition Costs

Note 8 DEFERRED POLICY ACQUISITION COSTS

The following reflects the amounts of policy acquisition costs deferred and amortized (dollars in thousands):

As of December 31, 2012 2011
Deferred policy acquisition costs:     
 Assumed$ 3,677,804 $ 3,605,611
 Retroceded  (58,530)   (61,686)
  Net$ 3,619,274 $ 3,543,925

Years ended December 31, 2012 2011 2010
Balance, beginning of year$ 3,543,925 $ 3,314,715 $ 3,355,275
Capitalized        
 Assumed  1,081,599   947,014   885,450
 Retroceded  (11,814)   (13,411)   (13,838)
Amortized (including interest):        
 Assumed  (975,844)   (820,084)   (831,979)
 Allocated to change in value of embedded derivatives  (42,183)   114,877   (108,515)
 Retroceded  14,970   14,084   12,390
Attributed to unrealized investment gains (losses)  (14,938)   (7,448)   (15,671)
Foreign currency changes  23,559   (5,822)   31,603
Balance, end of year$ 3,619,274 $ 3,543,925 $ 3,314,715

Some reinsurance agreements involve reimbursing the ceding company for allowances and commissions in excess of first-year premiums. These amounts represent acquisition costs and are capitalized to the extent deemed recoverable from the future premiums and amortized against future profits of the business. This type of agreement presents a risk to the extent that the business lapses faster than originally anticipated, resulting in future profits being insufficient to recover the Company's investment.