INVESTMENTS

Fixed Maturity and Equity Securities Available-for-Sale

The following tables provide information relating to investments in fixed maturity and equity securities by sector as of December 31, 2014 and 2013 (dollars in thousands):



December 31, 2014:	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value		% of Total		Other-than- temporary impairments in AOCI
Available-for-sale:
Corporate securities	$	14,010,604	$	965,523	$	90,544	$	14,885,583	58.4	%	$	—
Canadian and Canadian provincial governments	2,668,852		1,196,420		7		3,865,265		15.2		—
Residential mortgage-backed securities	991,867		52,640		6,611		1,037,896		4.1		(300		)
Asset-backed securities	1,059,660		20,301		10,375		1,069,586		4.2		354
Commercial mortgage-backed securities	1,453,657		87,593		8,659		1,532,591		6.0		(1,609		)
U.S. government and agencies	501,352		25,014		515		525,851		2.0		—
State and political subdivisions	378,457		51,117		3,498		426,076		1.7		—
Other foreign government, supranational and foreign government-sponsored enterprises	2,041,148		110,065		13,089		2,138,124		8.4		—
Total fixed maturity securities	$	23,105,597	$	2,508,673	$	133,298	$	25,480,972	100.0	%	$	(1,555	)
Non-redeemable preferred stock	$	93,540	$	7,350	$	1,527	$	99,363	78.3	%
Other equity securities	26,994		597		94		27,497		21.7
Total equity securities	$	120,534	$	7,947	$	1,621	$	126,860	100.0	%



December 31, 2013:	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value		% of Total		Other-than- temporary impairments in AOCI
Available-for-sale:
Corporate securities	$	11,697,394	$	616,147	$	202,786	$	12,110,755	56.4	%	$	—
Canadian and Canadian provincial governments	2,728,111		669,762		16,848		3,381,025		15.7		—
Residential mortgage-backed securities	970,434		38,126		18,917		989,643		4.6		(300		)
Asset-backed securities	891,751		18,893		15,812		894,832		4.2		(2,259		)
Commercial mortgage-backed securities	1,314,782		91,651		17,487		1,388,946		6.5		(1,609		)
U.S. government and agencies	489,631		16,468		4,748		501,351		2.3		—
State and political subdivisions	313,252		21,907		14,339		320,820		1.5		—
Other foreign government, supranational and foreign government-sponsored enterprises	1,865,379		45,347		23,962		1,886,764		8.8		—
Total fixed maturity securities	$	20,270,734	$	1,518,301	$	314,899	$	21,474,136	100.0	%	$	(4,168	)
Non-redeemable preferred stock	$	81,993	$	5,342	$	5,481	$	81,854	20.2	%
Other equity securities	327,479		618		4,220		323,877		79.8
Total equity securities	$	409,472	$	5,960	$	9,701	$	405,731	100.0	%

The Company enters into various collateral arrangements that require both the pledging and acceptance of fixed maturity securities as collateral with derivative and reinsurance counterparties. Pledged fixed maturity securities are included in fixed maturity securities, available-for-sale in the consolidated balance sheets. Fixed maturity securities received as collateral are held in separate custodial accounts and are not recorded on the Company’s consolidated balance sheets. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge collateral it receives; however, as of December 31, 2014 and 2013, none of the collateral received had been sold or re-pledged. The Company also holds securities in trust to satisfy collateral requirements under certain third-party reinsurance treaties. The following table includes fixed maturity securities pledged and received as collateral, and assets in trust held to satisfy collateral requirements under certain third-party reinsurance treaties as of December 31, 2014 and 2013 (dollars in thousands):



	2014				2013
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Fixed maturity securities pledged as collateral	$	127,229	$	134,863	$	57,241	$	57,963
Fixed maturity securities received as collateral	n/a		117,227		n/a		94,143
Securities held in trust	10,197,489		10,922,947		7,842,893		8,125,402

The Company monitors its concentrations of financial instruments on an ongoing basis, and mitigates credit risk by maintaining a diversified investment portfolio which limits exposure to any one issuer. The Company’s exposure to concentrations of credit risk of single issuers greater than 10% of the Company’s stockholders’ equity as of December 31, 2014 and 2013 is as follows (dollars in thousands).



	2014				2013
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Fixed maturity securities guaranteed or issued by:
Canadian province of Ontario	$	979,908	$	1,359,339	$	1,023,427	$	1,222,296
Canadian province of Quebec	1,006,315		1,599,673		1,041,462		1,389,138

The amortized cost and estimated fair value of fixed maturity securities available-for-sale at December 31, 2014 are shown by contractual maturity in the table below (dollars in thousands). Actual maturities can differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Asset and mortgage-backed securities are shown separately in the table below, as they are not due at a single maturity date.



	Amortized Cost		Estimated Fair Value
Available-for-sale:
Due in one year or less	$	556,034	$	561,396
Due after one year through five years	4,354,866		4,580,388
Due after five years through ten years	7,587,194		7,965,907
Due after ten years	7,102,319		8,733,208
Asset and mortgage-backed securities	3,505,184		3,640,073
Total	$	23,105,597	$	25,480,972

Corporate Fixed Maturity Securities

The tables below show the major industry types of the Company’s corporate fixed maturity holdings as of December 31, 2014 and 2013 (dollars in thousands):



December 31, 2014:	Amortized Cost		Estimated Fair Value		% of Total
Finance	$	4,789,568	$	5,066,408	34.0	%
Industrial	7,639,330		8,086,067		54.3
Utility	1,581,706		1,733,108		11.7
Total	$	14,010,604	$	14,885,583	100.0	%
December 31, 2013:	Amortized Cost		Estimated Fair Value		% of Total
Finance	$	3,838,716	$	3,983,623	32.9	%
Industrial	6,607,100		6,824,063		56.3
Utility	1,240,353		1,292,305		10.7
Other	11,225		10,764		0.1
Total	$	11,697,394	$	12,110,755	100.0	%

Other-Than-Temporary Impairments—Fixed Maturity and Equity Securities

As discussed in Note 2 – “Summary of Significant Accounting Policies,” a portion of certain other-than-temporary impairment (“OTTI”) losses on fixed maturity securities is recognized in AOCI. For these securities the net amount recognized in the consolidated statements of income (“credit loss impairments”) represents the difference between the amortized cost of the security and the net present value of its projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. Any remaining difference between the fair value and amortized cost is recognized in AOCI. The following table sets forth the amount of pre-tax credit loss impairments on fixed maturity securities held by the Company as of the dates indicated, for which a portion of the OTTI loss was recognized in AOCI, and the corresponding changes in such amounts (dollars in thousands):



	2014			2013			2012
Balance, beginning of period	$	11,696		$	16,675		$	63,947
Initial impairments - credit loss OTTI recognized on securities not previously impaired	—			—			1,962
Additional impairments - credit loss OTTI recognized on securities previously impaired	—			134			10,186
Credit loss OTTI previously recognized on securities impaired to fair value during the period	—			(1,449		)	(22,290		)
Credit loss previously recognized on securities which matured, paid down, prepaid or were sold during the period	(4,412		)	(3,664		)	(37,130		)
Balance, end of period	$	7,284		$	11,696		$	16,675

Purchased Credit Impaired Fixed Maturity Securities Available-for-Sale

Securities acquired with evidence of credit quality deterioration since origination and for which it is probable at the acquisition date that the Company will be unable to collect all contractually required payments are classified as purchased credit impaired securities. For each security, the excess of the cash flows expected to be collected as of the acquisition date over its acquisition date fair value is referred to as the accretable yield and is recognized as net investment income on an effective yield basis. At the date of acquisition, the timing and amount of the cash flows expected to be collected was determined based on a best estimate using key assumptions, such as interest rates, default rates and prepayment speeds. If subsequently, based on current information and events, it is probable that there is a significant increase in cash flows previously expected to be collected or if actual cash flows are significantly greater than cash flows previously expected to be collected, the accretable yield is adjusted prospectively. The excess of the contractually required payments (including interest) as of the acquisition date over the cash flows expected to be collected as of the acquisition date is referred to as the nonaccretable difference, and this amount is not expected to be realized as net investment income. Decreases in cash flows expected to be collected can result in OTTI.

The following tables present information on the Company’s purchased credit impaired securities, which are included in fixed maturity securities available-for-sale as of December 31, 2014 and 2013 (dollars in thousands):



	2014		2013
Outstanding principal and interest balance⁽¹⁾	$	226,121	$	192,644
Carrying value, including accrued interest⁽²⁾	$	185,842	$	148,822


(1)	Represents the contractually required payments which is the sum of contractual principal, whether or not currently due, and accrued interest.


(2)	Estimated fair value plus accrued interest.

The following table presents information about purchased credit impaired investments acquired during the periods ended December 31, 2014 and 2013, as of the acquisition dates (dollars in thousands).



	2014		2013
Contractually required payments (including interest)	$	96,617	$	161,975
Cash flows expected to be collected⁽¹⁾	$	76,551	$	130,578
Fair value of investments acquired	$	53,950	$	87,643


(1)	Represents undiscounted principal and interest cash flow expectations at the date of acquisition.

The following table presents activity for the accretable yield on purchased credit impaired securities for the years ended December 31, 2014 and 2013 (dollars in thousands):



	2014			2013
Balance, beginning of period	$	69,469		$	39,239
Investments purchased	22,601			42,935
Accretion	(9,339		)	(7,755		)
Disposals	(379		)	(3,564		)
Reclassification from nonaccretable difference	(15,181		)	(1,386		)
Balance, end of period	$	67,171		$	69,469

Unrealized Losses for Fixed Maturity and Equity Securities Available-for-Sale

The following table presents the total gross unrealized losses for the 932 and 1,396 fixed maturity and equity securities at December 31, 2014 and 2013, respectively, where the estimated fair value had declined and remained below amortized cost by the indicated amount (dollars in thousands):



	2014				2013
	Gross Unrealized Losses		% of Total		Gross Unrealized Losses		% of Total
Less than 20%	$	111,965	83.0	%	$	296,731	91.4	%
20% or more for less than six months	13,698		10.1		6,444		2.0
20% or more for six months or greater	9,256		6.9		21,425		6.6
Total	$	134,919	100.0	%	$	324,600	100.0	%

The Company’s determination of whether a decline in value is other-than-temporary includes analysis of the underlying credit and the extent and duration of a decline in value. The Company’s credit analysis of an investment includes determining whether the issuer is current on its contractual payments, evaluating whether it is probable that the Company will be able to collect all amounts due according to the contractual terms of the security and analyzing the overall ability of the Company to recover the amortized cost of the investment. In the Company’s impairment review process, the duration and severity of an unrealized loss position for equity securities are given greater weight and consideration given the lack of contractual cash flows or deferability features.

The following tables present the estimated fair values and gross unrealized losses, including other-than-temporary impairment losses reported in AOCI, for 932 and 1,396 fixed maturity and equity securities that have estimated fair values below amortized cost as of December 31, 2014 and 2013, respectively (dollars in thousands). These investments are presented by class and grade of security, as well as the length of time the related fair value has remained below amortized cost.



	Less than 12 months				12 months or greater				Total
December 31, 2014:	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
Investment grade securities:
Corporate securities	$	1,225,767	$	27,784	$	614,294	$	30,040	$	1,840,061	$	57,824
Canadian and Canadian provincial governments	—		—		1,235		7		1,235		7
Residential mortgage-backed securities	78,864		846		135,414		5,247		214,278		6,093
Asset-backed securities	332,785		4,021		109,411		4,289		442,196		8,310
Commercial mortgage-backed securities	78,632		564		28,375		2,461		107,007		3,025
U.S. government and agencies	81,317		89		32,959		426		114,276		515
State and political subdivisions	13,780		17		18,998		3,438		32,778		3,455
Other foreign government, supranational and foreign government-sponsored enterprises	156,725		7,007		76,111		2,946		232,836		9,953
Total investment grade securities	1,967,870		40,328		1,016,797		48,854		2,984,667		89,182
Non-investment grade securities:
Corporate securities	415,886		29,316		32,567		3,404		448,453		32,720
Residential mortgage-backed securities	22,836		293		6,284		225		29,120		518
Asset-backed securities	12,448		274		7,108		1,791		19,556		2,065
Commercial mortgage-backed securities	3,288		249		5,580		5,385		8,868		5,634
State and political subdivisions	964		43		—		—		964		43
Other foreign government, supranational and foreign government-sponsored enterprises	13,986		3,136		—		—		13,986		3,136
Total non-investment grade securities	469,408		33,311		51,539		10,805		520,947		44,116
Total fixed maturity securities	$	2,437,278	$	73,639	$	1,068,336	$	59,659	$	3,505,614	$	133,298
Non-redeemable preferred stock	$	11,619	$	235	$	19,100	$	1,292	$	30,719	$	1,527
Other equity securities	—		—		3,545		94		3,545		94
Total equity securities	$	11,619	$	235	$	22,645	$	1,386	$	34,264	$	1,621



	Less than 12 months				12 months or greater				Total
December 31, 2013:	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
Investment grade securities:
Corporate securities	$	3,141,179	$	148,895	$	301,303	$	40,548	$	3,442,482	$	189,443
Canadian and Canadian provincial governments	188,491		14,419		12,029		2,429		200,520		16,848
Residential mortgage-backed securities	283,967		15,900		23,068		1,688		307,035		17,588
Asset-backed securities	255,656		4,916		56,668		4,983		312,324		9,899
Commercial mortgage-backed securities	219,110		3,725		20,068		5,745		239,178		9,470
U.S. government and agencies	133,697		4,469		4,406		279		138,103		4,748
State and political subdivisions	120,193		9,723		15,202		4,616		135,395		14,339
Other foreign government, supranational and foreign government-sponsored enterprises	665,313		21,075		36,212		2,847		701,525		23,922
Total investment grade securities	5,007,606		223,122		468,956		63,135		5,476,562		286,257
Non-investment grade securities:
Corporate securities	283,603		9,451		38,256		3,892		321,859		13,343
Residential mortgage-backed securities	62,146		1,075		3,945		254		66,091		1,329
Asset-backed securities	28,670		415		32,392		5,498		61,062		5,913
Commercial mortgage-backed securities	15,762		81		10,980		7,936		26,742		8,017
Other foreign government, supranational and foreign government-sponsored enterprises	9,403		40		—		—		9,403		40
Total non-investment grade securities	399,584		11,062		85,573		17,580		485,157		28,642
Total fixed maturity securities	$	5,407,190	$	234,184	$	554,529	$	80,715	$	5,961,719	$	314,899
Non-redeemable preferred stock	$	51,386	$	5,479	$	1	$	2	$	51,387	$	5,481
Other equity securities	218,834		1,748		32,550		2,472		251,384		4,220
Total equity securities	$	270,220	$	7,227	$	32,551	$	2,474	$	302,771	$	9,701

The Company neither has an intention to sell nor does it expect to be required to sell the securities outlined in the table above, as of the dates indicated. However, unforeseen facts and circumstances may cause the Company to sell fixed maturity and equity securities in the ordinary course of managing its portfolio to meet certain diversification, credit quality and liquidity guidelines.

Unrealized losses decreased on investment-grade securities as a result of decreases in interest rates during 2014. Increases in unrealized losses during 2014 on non-investment grade securities are principally related to decreases in value on high-yield energy and emerging market corporate securities.

Investment Income, Net of Related Expenses

Major categories of investment income, net of related expenses consist of the following (dollars in thousands):



	2014			2013			2012
Fixed maturity securities available-for-sale	$	1,052,715		$	966,759		$	868,682
Mortgage loans on real estate	148,417			121,476			96,901
Policy loans	55,248			57,099			62,855
Funds withheld at interest	447,364			545,550			393,586
Short-term investments	2,118			2,236			4,173
Other invested assets	70,149			58,771			49,199
Investment income	1,776,011			1,751,891			1,475,396
Investment expense	(62,320		)	(52,026		)	(39,190		)
Investment income, net of related expenses	$	1,713,691		$	1,699,865		$	1,436,206

Investment Related Gains (Losses), Net

Investment related gains (losses), net, consist of the following (dollars in thousands):



	2014			2013			2012
Fixed maturity and equity securities available for sale:
Other-than-temporary impairment losses on fixed maturity securities recognized in earnings	$	(7,766	)	$	(12,901	)	$	(23,526	)
Impairment losses on equity securities	—			—			(3,025		)
Gain on investment activity	65,435			82,744			145,268
Loss on investment activity	(31,295		)	(60,575		)	(27,474		)
Other impairment losses and change in mortgage loan provision	(5,315		)	(6,933		)	(16,602		)
Derivatives and other, net	165,134			61,655			179,495
Total investment related gains (losses), net	$	186,193		$	63,990		$	254,136

The volatility in derivatives and other is primarily due to changes in the fair value of embedded derivative liabilities associated with modified coinsurance and funds withheld treaties and guaranteed minimum benefit riders.

At December 31, 2014 and 2013 the Company held non-income producing securities with amortized costs of $42.7 million and $38.5 million, and estimated fair values of $52.8 million and $47.6 million, respectively. Generally, securities are non-income producing when principal or interest is not paid primarily as a result of bankruptcies or credit defaults, but also include securities where amortization has been discontinued. During 2014, 2013 and 2012 the Company sold fixed maturity and equity securities with fair values of $1,016.5 million, $1,104.0 million, and $828.0 million, which were below amortized cost, at gross realized losses of $31.3 million, $60.6 million and $27.5 million, respectively. The Company generally does not engage in short-term buying and selling of securities.

Securities Borrowing and Other

The Company participates in a securities borrowing program whereby securities, which are not reflected on the Company’s consolidated balance sheets, are borrowed from a third party. The borrowed securities are used to provide collateral under an affiliated reinsurance transaction. The Company is required to maintain a minimum of 100% of the fair value of the borrowed securities as collateral, which consists of rights to reinsurance treaty cash flows.

The Company also participates in a repurchase program in which securities, reflected as investments on the Company’s consolidated balance sheets, are pledged to a third party. In return, the Company receives cash from the third party, which is reflected as a payable to the third party, included in other liabilities on the consolidated balance sheets. The Company is required to maintain a minimum collateral balance with a fair value of 105% of the cash received. The gross balance of the repurchase agreement payable was $101.4 million. This was fully collateralized by securities with a fair value of $107.2 million, which were not offset by the payable, resulting in a net exposure of $5.8 million as of December 31, 2014.

Additionally, the Company participates in a repurchase/reverse repurchase program in which securities, reflected as investments on the Company’s consolidated balance sheets, are pledged to a third party. In return, the Company receives securities from the third party with an estimated fair value equal to a minimum of 100% of the securities pledged. The securities received are not reflected on the Company’s consolidated balance sheets.

The following table includes the amount of borrowed securities, repurchased securities pledged and repurchased/reverse repurchased securities pledged and received as of December 31, 2014 and 2013 (dollars in thousands).



	2014				2013
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Borrowed securities	$	201,050	$	212,946	$	93,000	$	93,000
Repurchase program securities pledged	92,446		107,158		—		—
Repurchase program/reverse repurchase program:
Securities pledged	298,466		314,160		300,350		310,781
Securities received	n/a		338,929		n/a		344,169

Mortgage Loans on Real Estate

Mortgage loans represented approximately 7.4% and 7.7% of the Company’s invested assets as of December 31, 2014 and 2013, respectively. The Company makes mortgage loans on income producing properties that are geographically diversified throughout the U.S. with the largest concentration being in California, which represented 18.7% and 23.3% of mortgage loans on real estate as of December 31, 2014 and 2013, respectively. Loan-to-value ratios at the time of loan approval are 75% or less. The distribution of mortgage loans, gross of valuation allowances, by property type is as follows as of December 31, 2014 and 2013 (dollars in thousands):



	2014				2013
	Recorded Investment		Percentage of Total		Recorded Investment		Percentage of Total
Property type:
Office building	$	851,749	31.3	%	$	917,284	36.7	%
Retail	802,466		29.6		748,731		30.0
Industrial	466,583		17.2		439,890		17.6
Apartment	376,430		13.8		289,394		11.6
Other commercial	221,481		8.1		101,487		4.1
Total	$	2,718,709	100.0	%	$	2,496,786	100.0	%

The maturities of the mortgage loans, gross of valuation allowances, as of December 31, 2014 and 2013 are as follows (dollars in thousands):



	2014		2013
Due within five years	$	860,362	$	987,109
Due after five years through ten years	1,165,530		984,289
Due after ten years	692,817		525,388
Total	$	2,718,709	$	2,496,786

Information regarding the Company’s credit quality indicators, as determined by the Company's internal evaluation methodology for its recorded investment in mortgage loans, gross of valuation allowances, as of December 31, 2014 and 2013 are as follows (dollars in thousands):



Internal credit quality grade:	2014		2013
High investment grade	$	1,326,199	$	1,437,244
Investment grade	1,235,046		827,993
Average	118,152		155,914
Watch list	22,285		49,404
In or near default	17,027		26,231
Total	$	2,718,709	$	2,496,786

None of the payments due to the Company on its recorded investment in mortgage loans were delinquent as of December 31, 2014 and 2013.

The following table presents the recorded investment in mortgage loans, by method of measuring impairment, and the related valuation allowances, as of December 31, 2014 and 2013 (dollars in thousands):



	2014		2013
Mortgage loans:
Individually measured for impairment	$	17,027	$	37,841
Collectively measured for impairment	2,701,682		2,458,945
Mortgage loans, gross of valuation allowances	2,718,709		2,496,786
Valuation allowances:
Individually measured for impairment	816		3,211
Collectively measured for impairment	5,655		6,895
Total valuation allowances	6,471		10,106
Mortgage loans, net of valuation allowances	$	2,712,238	$	2,486,680

Information regarding the Company’s loan valuation allowances for mortgage loans as of December 31, 2014, 2013 and 2012 are as follows (dollars in thousands):



	2014			2013			2012
Balance, beginning of period	$	10,106		$	11,580		$	11,793
Charge-offs, net of recoveries	(2,731		)	(3,431		)	(6,474		)
Provision	(904		)	1,957			6,261
Balance, end of period	$	6,471		$	10,106		$	11,580

Information regarding the portion of the Company’s mortgage loans that were impaired as of December 31, 2014 and 2013 is as follows (dollars in thousands):



	Unpaid Principal Balance		Recorded Investment		Related Allowance		Carrying Value
December 31, 2014:
Impaired mortgage loans with no valuation allowance recorded	$	7,314	$	6,711	$	—	$	6,711
Impaired mortgage loans with valuation allowance recorded	10,279		10,316		816		9,500
Total impaired mortgage loans	$	17,593	$	17,027	$	816	$	16,211
December 31, 2013:
Impaired mortgage loans with no valuation allowance recorded	$	21,698	$	21,100	$	—	$	21,100
Impaired mortgage loans with valuation allowance recorded	16,772		16,741		3,211		13,530
Total impaired mortgage loans	$	38,470	$	37,841	$	3,211	$	34,630

The Company’s average investment balance of impaired mortgage loans and the related interest income are reflected in the table below for the years ended December 31, 2014, 2013 and 2012 (dollars in thousands):



	2014				2013				2012
	Average Investment⁽¹⁾		Interest Income		Average Investment⁽¹⁾		Interest Income		Average Investment⁽¹⁾		Interest Income
Impaired mortgage loans with no valuation allowance recorded	$	13,227	$	647	$	15,023	$	852	$	15,549	$	1,244
Impaired mortgage loans with valuation allowance recorded	13,827		637		22,818		951		34,434		425
Total	$	27,054	$	1,284	$	37,841	$	1,803	$	49,983	$	1,669


(1)	Average recorded investment represents the average loan balances as of the beginning of period and all subsequent quarterly end of period balances.

The Company did not acquire any impaired mortgage loans during the years ended December 31, 2014 and 2013. The Company had no mortgage loans that were on a nonaccrual status at December 31, 2014 and 2013.

Policy Loans

Policy loans comprised approximately 3.5% and 3.8% of the Company’s invested assets as of December 31, 2014 and 2013, respectively, substantially all of which are associated with one client. These policy loans present no credit risk because the amount of the loan cannot exceed the obligation due to the ceding company upon the death of the insured or surrender of the underlying policy. The provisions of the treaties in force and the underlying policies determine the policy loan interest rates. As policy loans represent premature distributions of policy liabilities, they have the effect of reducing future disintermediation risk. In addition, the Company earns a spread between the interest rate earned on policy loans and the interest rate credited to corresponding liabilities.

Funds Withheld at Interest

Funds withheld at interest comprised approximately 16.1% and 17.8% of the Company’s invested assets as of December 31, 2014 and 2013, respectively. Of the $5.9 billion funds withheld at interest balance, net of embedded derivatives, as of December 31, 2014, $4.2 billion of the balance is associated with one client. For reinsurance agreements written on a modified coinsurance basis and certain agreements written on a coinsurance funds withheld basis, assets equal to the net statutory reserves are withheld and legally owned and managed by the ceding company and are reflected as funds withheld at interest on the Company’s consolidated balance sheets. In the event of a ceding company’s insolvency, the Company would need to assert a claim on the assets supporting its reserve liabilities. However, the risk of loss to the Company is mitigated by its ability to offset amounts it owes the ceding company for claims or allowances with amounts owed to the Company from the ceding company.

Other Invested Assets

Other invested assets include equity securities, limited partnership interests, joint ventures (other than operating joint ventures), structured loans, derivative contracts, FVO contractholder-directed unit-linked investments, Federal Home Loan Bank of Des Moines ("FHLB") common stock (included in other), real estate held-for-investment (included in other) and equity release mortgages (included in other). The fair value option was elected for contractholder-directed investments supporting unit-linked variable annuity type liabilities which do not qualify for presentation and reporting as separate accounts. Other invested assets represented approximately 3.3% and 4.1% of the Company’s invested assets as of December 31, 2014 and 2013, respectively. Carrying values of these assets as of December 31, 2014 and 2013 are as follows (dollars in thousands):



	2014		2013
Equity securities	$	126,860	$	405,731
Limited partnerships and real estate joint ventures	446,604		411,456
Structured loans	164,309		223,549
Derivatives	216,966		75,227
FVO contractholder-directed unit-linked investments	140,344		138,892
Other	103,236		70,105
Total other invested assets	$	1,198,319	$	1,324,960