Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2015

Summary of Company's fair value hierarchy measured at recurring basis

The following table presents the Company’s fair value hierarchy for those assets and liabilities measured and carried at fair value on a recurring basis. At June 30, 2015, these Level 3 invested assets comprised 2.5% of the Company’s total investment portfolio fair value.

					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
June 30, 2015
Financial Assets
Investments
Fixed maturities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities	$	526,426	$	526,426	$	-	$	526,426	$	-
Other, including
U.S. Treasury securities		602,587		602,587		16,251		586,336		-
Municipal bonds		1,648,449		1,648,449		-		1,618,780		29,669
Foreign government bonds		66,690		66,690		-		66,690		-
Corporate bonds		2,642,268		2,642,268		10,207		2,559,337		72,724
Other mortgage-backed securities		1,410,638		1,410,638		-		1,325,938		84,700
Total fixed maturities		6,897,058		6,897,058		26,458		6,683,507		187,093
Equity securities		99,318		99,318		85,543		13,769		6
Short-term investments		117,779		117,779		117,779		-		-
Other investments		11,946		11,946		-		11,946		-
Totals		7,126,101		7,126,101		229,780		6,709,222		187,099
Separate Account
(variable annuity) assets (1)		1,905,298		1,905,298		1,905,298		-		-
Financial Liabilities
Other policyholder funds,
embedded derivatives		26,719		26,719		-		-		26,719

December 31, 2014
Financial Assets
Investments
Fixed maturities
U.S. Government and federally
sponsored agency obligations:
Mortgage-backed securities	$	535,726	$	535,726	$	-	$	535,726	$	-
Other, including
U.S. Treasury securities		538,199		538,199		17,857		520,342		-
Municipal bonds		1,647,822		1,647,822		-		1,634,194		13,628
Foreign government bonds		59,536		59,536		-		59,536		-
Corporate bonds		2,834,749		2,834,749		10,524		2,749,508		74,717
Other mortgage-backed securities		1,277,058		1,277,058		-		1,194,109		82,949
Total fixed maturities		6,893,090		6,893,090		28,381		6,693,415		171,294
Equity securities		110,655		110,655		92,140		18,509		6
Short-term investments		142,039		142,039		142,039		-		-
Other investments		12,458		12,458		-		12,458		-
Totals		7,158,242		7,158,242		262,560		6,724,382		171,300
Separate Account
(variable annuity) assets (1)		1,813,557		1,813,557		1,813,557		-		-
Financial Liabilities
Other policyholder funds,
embedded derivatives		20,049		20,049		-		-		20,049

(1)	Separate Account (variable annuity) liabilities are set equal to Separate Account (variable annuity) assets.

Table for reconciliations for all Level 3 assets measured at fair value on a recurring basis

The Company did not have any transfers between Levels 1 and 2 during the six months ended June 30, 2015. The following tables present reconciliations for the periods indicated for all Level 3 assets and liabilities measured at fair value on a recurring basis.

													Financial
	Financial Assets												Liabilities(1)
	Municipal Bonds		Corporate Bonds		Other Mortgage- Backed Securities		Total Fixed Maturities		Equity Securities		Total

Beginning balance, April 1, 2015	$	13,885	$	72,278	$	72,594	$	158,757	$	6	$	158,763	$	22,040
Transfers into Level 3 (2)		16,326		3,834		14,719		34,879		-		34,879		-
Transfers out of Level 3 (2)		-		(1,350)		-		(1,350)		-		(1,350)		-
Total gains or losses
Net realized gains (losses)
included in net income		-		-		-		-		-		-		(28)
Net unrealized gains (losses)
included in other
comprehensive income		(485)		(1,436)		(438)		(2,359)		-		(2,359)		-
Purchases		-		-		-		-		-		-		-
Issuances		-		-		-		-		-		-		4,948
Sales		-		(476)		-		(476)		-		(476)		-
Settlements		-		-		-		-		-		-		-
Paydowns, maturities
and distributions		(57)		(126)		(2,175)		(2,358)		-		(2,358)		(241)
Ending balance, June 30, 2015	$	29,669	$	72,724	$	84,700	$	187,093	$	6	$	187,099	$	26,719

Beginning balance, January 1, 2015	$	13,628	$	74,717	$	82,949	$	171,294	$	6	$	171,300	$	20,049
Transfers into Level 3 (2)		16,326		5,729		15,180		37,235		-		37,235		-
Transfers out of Level 3 (2)		-		(1,350)		(9,664)		(11,014)		-		(11,014)		-
Total gains or losses
Net realized gains (losses)
included in net income		-		-		-		-		-		-		(467)
Net unrealized gains (losses)
included in other
comprehensive income		(105)		(1,084)		(435)		(1,624)		-		(1,624)		-
Purchases		-		-		-		-		-		-		-
Issuances		-		-		-		-		-		-		7,912
Sales		-		(476)		-		(476)		-		(476)		-
Settlements		-		-		-		-		-		-		-
Paydowns, maturities
and distributions		(180)		(4,812)		(3,330)		(8,322)		-		(8,322)		(775)
Ending balance, June 30, 2015	$	29,669	$	72,724	$	84,700	$	187,093	$	6	$	187,099	$	26,719

(1)	Represents embedded derivatives, all related to the Company’s fixed indexed annuity (“FIA”) products, reported in Other Policyholder Funds in the Company’s Consolidated Balance Sheets.

(2)

Transfers into and out of Level 3 during the three and six months ended June 30, 2015 and 2014 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined.

													Financial
	Financial Assets												Liabilities(1)
	Municipal Bonds		Corporate Bonds		Other Mortgage- Backed Securities		Total Fixed Maturities		Equity Securities		Total

Beginning balance April 1, 2014	$	12,779	$	60,204	$	52,551	$	125,534	$	6	$	125,540	$	2,747
Transfers into Level 3 (2)		-		12,452		-		12,452		-		12,452		-
Transfers out of Level 3 (2)		-		-		-		-		-		-		-
Total gains or losses
Net realized gains (losses)
included in net income		-		-		(26)		(26)		-		(26)		57
Net unrealized gains (losses)
included in other
comprehensive income		337		1,546		108		1,991		-		1,991		-
Purchases		-		-		-		-		-		-		-
Issuances		-		-		-		-		-		-		4,121
Sales		-		-		-		-		-		-		-
Settlements		-		-		-		-		-		-		-
Paydowns, maturities
and distributions		(62)		(276)		(111)		(449)		-		(449)		(10)
Ending balance, June 30, 2014	$	13,054	$	73,926	$	52,522	$	139,502	$	6	$	139,508	$	6,915

Beginning balance, January 1, 2014	$	2,694	$	60,826	$	46,009	$	109,529	$	6	$	109,535	$	-
Transfers into Level 3 (2)		10,056		12,452		7,109		29,617		-		29,617		-
Transfers out of Level 3 (2)		-		-		(519)		(519)		-		(519)		-
Total gains or losses
Net realized gains (losses)
included in net income		-		-		(26)		(26)		-		(26)		69
Net unrealized gains (losses)
included in other
comprehensive income		434		2,560		292		3,286		-		3,286		-
Purchases		-		-		-		-		-		-		-
Issuances		-		-		-		-		-		-		6,856
Sales		-		-		-		-		-		-		-
Settlements		-		-		-		-		-		-		-
Paydowns, maturities
and distributions		(130)		(1,912)		(343)		(2,385)		-		(2,385)		(10)
Ending balance, June 30, 2014	$	13,054	$	73,926	$	52,522	$	139,502	$	6	$	139,508	$	6,915

(1)	Represents embedded derivatives, all related to the Company’s FIA products, reported in Other Policyholder Funds in the Company’s Consolidated Balance Sheets.

(2)

Transfers into and out of Level 3 during the three and six months ended June 30, 2014 were attributable to changes in the availability of observable market information for individual fixed maturity securities. The Company’s policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined.

Carrying value, fair value and fair value hierarchy of financial assets and financial liabilities

The following table presents the carrying value, fair value and fair value hierarchy of these financial assets and financial liabilities.

					Fair Value Measurements at
	Carrying		Fair		Reporting Date Using
	Amount		Value		Level 1		Level 2		Level 3
June 30, 2015
Financial Assets
Investments
Other investments	$	146,988	$	151,416	$	-	$	-	$	151,416
Financial Liabilities
Fixed annuity contract liabilities		3,928,353		3,841,621		-		-		3,841,621
Policyholder account balances on
interest-sensitive life contracts		77,067		81,095		-		-		81,095
Other policyholder funds		582,570		582,570		-		500,081		82,489
Short-term debt		113,000		113,000		-		113,000		-
Long-term debt		124,969		129,750		129,750		-		-

December 31, 2014
Financial Assets
Investments
Other investments	$	145,409	$	149,792	$	-	$	-	$	149,792
Financial Liabilities
Fixed annuity contract liabilities		3,774,457		3,691,123		-		-		3,691,123
Policyholder account balances on
interest-sensitive life contracts		77,415		81,461		-		-		81,461
Other policyholder funds		586,689		586,689		-		500,080		86,609
Short-term debt		38,000		38,000		-		38,000		-
Long-term debt		199,939		209,495		209,495		-		-