Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Accounting Policy for Fixed Indexed Annuities

Accounting Policy for Fixed Indexed Annuities

In 2014, the Company began offering fixed indexed annuity (“FIA”) products with interest crediting strategies linked to the Standard & Poor’s 500 Index and the Dow Jones Industrial Average. The Company purchases call options on the applicable indices as an investment to provide the income needed to fund the annual index credits on the indexed products. These products are 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 Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 815 “Derivatives and Hedging”. The Company elected to not use hedge accounting for derivative transactions related to the FIA products. As a result, the Company records the purchased call options and the embedded derivative related to the provision of a contingent return at fair value, with changes in fair value reported in the Consolidated Statements of Operations. More information regarding the determination of fair value of the FIA embedded derivative and purchased call options, the only derivative instruments utilized by the Company, is included in “Note 3 — Fair Value of Financial Instruments”.

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) represents the accumulated change in shareholders’ equity from transactions and other events and circumstances from non-shareholder sources. For the Company, accumulated other comprehensive income (loss) includes the after-tax change in net unrealized gains and losses on fixed maturities and equity securities and the after-tax change in net funded status of pension and other postretirement benefit obligations as shown in the Consolidated Statements of Changes in Shareholders’ Equity. The following tables reconcile these components.

	Unrealized Gains
	and Losses on
	Fixed Maturities
	and Equity		Defined
	Securities (1)(2)		Benefit Plans (1)		Total (1)

Beginning balance, July 1, 2014	$	281,555	$	(11,776)	$	269,779
Other comprehensive income (loss) before reclassifications		(9,265)		-		(9,265)
Amounts reclassified from accumulated other comprehensive income (loss)		(2,283)		-		(2,283)
Net current period other comprehensive income (loss)		(11,548)		-		(11,548)
Ending balance, September 30, 2014	$	270,007	$	(11,776)	$	258,231

Beginning balance, January 1, 2014	$	133,990	$	(11,776)	$	122,214
Other comprehensive income (loss) before reclassifications		141,641		-		141,641
Amounts reclassified from accumulated other comprehensive income (loss)		(5,624)		-		(5,624)
Net current period other comprehensive income (loss)		136,017		-		136,017
Ending balance, September 30, 2014	$	270,007	$	(11,776)	$	258,231

(1)	All amounts are net of tax.

(2)

The pretax amounts reclassified from accumulated other comprehensive income (loss), $3,512 and $8,652, are included in net realized investment gains and losses and the related tax expenses, $1,229 and $3,028, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2014, respectively.

	Unrealized Gains
	and Losses on
	Fixed Maturities
	and Equity		Defined
	Securities (1)(2)		Benefit Plans (1)		Total (1)

Beginning balance, July 1, 2013	$	196,847	$	(15,311)	$	181,536
Other comprehensive income (loss) before reclassifications		(37,211)		-		(37,211)
Amounts reclassified from accumulated other comprehensive income (loss)		915		-		915
Net current period other comprehensive income (loss)		(36,296)		-		(36,296)
Ending balance, September 30, 2013	$	160,551	$	(15,311)	$	145,240

Beginning balance, January 1, 2013	$	382,400	$	(15,311)	$	367,089
Other comprehensive income (loss) before reclassifications		(208,283)		-		(208,283)
Amounts reclassified from accumulated other comprehensive income (loss)		(13,566)		-		(13,566)
Net current period other comprehensive income (loss)		(221,849)		-		(221,849)
Ending balance, September 30, 2013	$	160,551	$	(15,311)	$	145,240

(1)

All amounts are net of tax.

(2)

The pretax amounts reclassified from accumulated other comprehensive income (loss), $(1,407) and $20,872, are included in net realized investment gains and losses and the related tax expenses (benefits), $(492) and $7,306, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2013, respectively.

Comparative information for elements that are not required to be reclassified in their entirety to net income in the same reporting period is located in “Note 2 — Investments — Unrealized Gains and Losses on Fixed Maturities and Equity Securities”.