Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2016

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, 2016, these Level 3 invested assets comprised 2.7% 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, 2016
Financial Assets
Investments
Fixed maturities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities		$	510,304		$	510,304		$	-		$	506,474	$	3,830
Other, including
U.S. Treasury securities			548,512			548,512			13,985			534,527		-
Municipal bonds			1,745,764			1,745,764			-			1,698,117		47,647
Foreign government bonds			79,094			79,094			-			79,094		-
Corporate bonds			2,887,186			2,887,186			8,873			2,804,905		73,408
Other mortgage-backed securities			1,710,852			1,710,852			-			1,618,101		92,751
Total fixed maturities			7,481,712			7,481,712			22,858			7,241,218		217,636
Equity securities			123,163			123,163			109,339			13,818		6
Short-term investments			153,328			153,328			152,830			498		-
Other investments			15,825			15,825			-			15,825		-
Totals			7,774,028			7,774,028			285,027			7,271,359		217,642
Financial Liabilities
Investment contract and life policy reserves, embedded derivatives			50			50			-			50		-
Other policyholder funds, embedded derivatives			47,706			47,706			-			-		47,706

December 31, 2015
Financial Assets
Investments
Fixed maturities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities		$	504,414		$	504,414		$	-		$	504,414	$	-
Other, including
U.S. Treasury securities			546,111			546,111			14,258			531,853		-
Municipal bonds			1,708,943			1,708,943			-			1,678,564		30,379
Foreign government bonds			73,617			73,617			-			73,617		-
Corporate bonds			2,779,415			2,779,415			10,195			2,701,645		67,575
Other mortgage-backed securities			1,478,840			1,478,840			-			1,403,374		75,466
Total fixed maturities			7,091,340			7,091,340			24,453			6,893,467		173,420
Equity securities			99,797			99,797			86,088			13,703		6
Short-term investments			174,152			174,152			169,764			4,388		-
Other investments			14,001			14,001			-			14,001		-
Totals			7,379,290			7,379,290			280,305			6,925,559		173,426
Financial Liabilities
Investment contract and life policy reserves, embedded derivatives			14			14			-			14		-
Other policyholder funds, embedded derivatives			39,021			39,021			-			-		39,021

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, 2016. The following table presents 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				Mortgage- Backed Securities(2)				Total Fixed Maturities				Equity Securities			Total

Beginning balance, April 1, 2016		$	46,493			$	70,071			$	83,821			$	200,385			$	6		$	200,391			$	42,085
Transfers into Level 3 (3)			-				5,017				12,984				18,001				-			18,001				-
Transfers out of Level 3 (3)			-				-				-				-				-			-				-
Total gains or losses
Net realized gains (losses) included in net income related to financial assets			-				(657	)			-				(657	)			-			(657	)			-
Net realized (gains) losses included in net income related to financial liabilities			-				-				-				-				-			-				1,324
Net unrealized gains (losses) included in other comprehensive income			1,297				1,393				229				2,919				-			2,919				-
Purchases			-				-				-				-				-			-				-
Issuances			-				-				-				-				-			-				4,993
Sales			-				-				-				-				-			-				-
Settlements			-				-				-				-				-			-				-
Paydowns, maturities and distributions			(143	)			(2,416	)			(453	)			(3,012	)			-			(3,012	)			(696	)
Ending balance, June 30, 2016		$	47,647			$	73,408			$	96,581			$	217,636			$	6		$	217,642			$	47,706

Beginning balance, January 1, 2016		$	30,379			$	67,575			$	75,466			$	173,420			$	6		$	173,426			$	39,021
Transfers into Level 3 (3)			14,751				11,076				24,626				50,453				-			50,453				-
Transfers out of Level 3 (3)			-				-				-				-				-			-				-
Total gains or losses
Net realized gains (losses) included in net income related to financial assets			-				(657	)			-				(657	)			-			(657	)			-
Net realized (gains) losses included in net income related to financial liabilities			-				-				-				-				-			-				1,998
Net unrealized gains (losses) included in other comprehensive income			2,781				1,781				222				4,784				-			4,784				-
Purchases			-				-				-				-				-			-				-
Issuances			-				-				-				-				-			-				8,484
Sales			-				-				-				-				-			-				-
Settlements			-				-				-				-				-			-				-
Paydowns, maturities and distributions			(264	)			(6,367	)			(3,733	)			(10,364	)			-			(10,364	)			(1,797	)
Ending balance, June 30, 2016		$	47,647			$	73,408			$	96,581			$	217,636			$	6		$	217,642			$	47,706

(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)

Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities.

(3)

Transfers into and out of Level 3 during the three and six months ended June 30, 2016 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, 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 related to financial assets			-				-				-				-				-			-				-
Net realized (gains) losses included in net income related to financial liabilities			-				-				-				-				-			-				(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 related to financial assets			-				-				-				-				-			-				-
Net realized (gains) losses included in net income related to financial liabilities			-				-				-				-				-			-				(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 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 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.

Summary of fair value assets and liabilities measured on nonrecurring basis

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, 2016
Financial Assets
Investments
Other investments		$	149,784		$	154,287		$	-		$	-		$	154,287
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts			4,204,207			4,078,236			-			-			4,078,236
Investment contract and life policy reserves, account values on life contracts			78,194			82,109			-			-			82,109
Other policyholder funds			651,008			651,008			-			575,233			75,775
Long-term debt			247,083			262,723			262,723			-			-

December 31, 2015
Financial Assets
Investments
Other investments		$	148,759		$	153,228		$	-		$	-		$	153,228
Financial Liabilities
Investment contract and life policy reserves, fixed annuity contracts			4,072,102			4,049,840			-			-			4,049,840
Investment contract and life policy reserves, account values on life contracts			77,429			81,360			-			-			81,360
Other policyholder funds			653,631			653,631			-			575,104			78,527
Long-term debt			246,975			252,700			252,700			-			-