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Fair Values of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Carrying Amounts and Fair Values of Financial Instruments

The following sets forth a comparison of the carrying amounts and fair values of our financial instruments:

	December 31,
	2013								2012
	Carrying Amount				Fair Value				Carrying Amount				Fair Value
	(Dollars in thousands)
Assets
Fixed maturity securities:
Available for sale	$	26,610,447			$	26,610,447			$	24,172,136			$	24,172,136
Held for investment	76,255				60,840				76,088				61,521
Equity securities, available for sale	7,778				7,778				53,422				53,422
Mortgage loans on real estate	2,581,082				2,615,410				2,623,940				2,848,235
Derivative instruments	856,050				856,050				415,258				415,258
Other investments	192,198				193,343				163,193				163,517
Cash and cash equivalents	897,529				897,529				1,268,545				1,268,545
Coinsurance deposits	2,999,618				2,669,432				2,910,701				2,563,356
Interest rate caps	6,103				6,103				3,247				3,247
Interest rate swap	712				712				—				—
2015 notes hedges	107,041				107,041				43,105				43,105
Counterparty collateral	315,824				315,824				63,012				63,012
Liabilities
Policy benefit reserves	35,453,166				29,670,827				31,452,496				26,264,831
Single premium immediate annuity (SPIA) benefit reserves	417,625				430,835				455,167				469,768
Notes payable	549,958				699,435				309,869				379,070
Subordinated debentures	246,050				234,959				245,869				218,283
2015 notes embedded conversion derivative	107,041				107,041				43,105				43,105
Interest rate swap	—				—				4,261				4,261

Assets and Liabilities Measured on a Recurring Basis by Fair Value Hierarchy

Our assets and liabilities which are measured at fair value on a recurring basis as of December 31, 2013 and 2012 are presented below based on the fair value hierarchy levels:

	Total Fair Value				Quoted Prices in Active Markets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
December 31, 2013
Assets
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	42,925			$	4,805			$	38,120			$	—
United States Government sponsored agencies	1,194,289				—				1,194,289				—
United States municipalities, states and territories	3,306,743				—				3,306,743				—
Foreign government obligations	91,557				—				91,557				—
Corporate securities	17,233,037				20				17,233,017				—
Residential mortgage backed securities	1,971,960				—				1,970,584				1,376
Commercial mortgage backed securities	1,735,460				—				1,735,460				—
Other asset backed securities	1,034,476				359				1,034,117				—
Equity securities, available for sale: finance, insurance and real estate	7,778				—				7,778				—
Derivative instruments	856,050				—				856,050				—
Cash and cash equivalents	897,529				897,529				—				—
Interest rate caps	6,103				—				6,103				—
Interest rate swap	712				—				712				—
2015 notes hedges	107,041				—				107,041				—
Counterparty collateral	315,824				—				315,824				—
	$	28,801,484			$	902,713			$	27,897,395			$	1,376
Liabilities
2015 notes embedded conversion derivative	$	107,041			$	—			$	107,041			$	—
Fixed index annuities—embedded derivatives	4,406,163				—				—				4,406,163
	$	4,513,204			$	—			$	107,041			$	4,406,163
December 31, 2012
Assets
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	5,154			$	5,154			$	—			$	—
United States Government sponsored agencies	1,772,025				—				1,772,025				—
United States municipalities, states and territories	3,578,323				—				3,578,323				—
Foreign government obligations	105,259				—				105,259				—
Corporate securities	14,466,772				33,131				14,433,641				—
Residential mortgage backed securities	2,888,113				—				2,886,301				1,812
Commercial mortgage backed securities	357,982				—				357,982				—
Other asset backed securities	998,508				378				998,130				—
Equity securities, available for sale: finance, insurance and real estate	53,422				36,928				16,494				—
Derivative instruments	415,258				—				415,258				—
Cash and cash equivalents	1,268,545				1,268,545				—				—
Interest rate caps	3,247				—				3,247				—
2015 notes hedges	43,105				—				43,105				—
	$	25,955,713			$	1,344,136			$	24,609,765			$	1,812
Liabilities
2015 notes embedded conversion derivative	$	43,105			$	—			$	43,105			$	—
Interest rate swap	4,261				—				4,261				—
Fixed index annuities—embedded derivatives	3,337,556				—				—				3,337,556
	$	3,384,922			$	—			$	47,366			$	3,337,556

Assets Measured at Fair Value on Recurring Basis, Level 3 Reconciliation

	Year Ended December 31,
	2013				2012
	(Dollars in thousands)
Available for sale securities
Beginning balance	$	1,812			$	2,098
Principal returned	(864		)		(300		)
Accretion of discount	152				67
Total gains (losses) (unrealized/realized):
Included in other comprehensive income (loss)	276				250
Included in operations	—				(303		)
Ending balance	$	1,376			$	1,812

Liabilities Measured at Fair Value on Recurring Basis, Level 3 Reconciliation

	Year Ended December 31,
	2013				2012
	(Dollars in thousands)
Fixed index annuities—embedded derivatives
Beginning balance	$	3,337,556			$	2,530,496
Premiums less benefits	1,485,109				765,942
Change in unrealized losses (gains), net	(416,502		)		41,118
Ending balance	$	4,406,163			$	3,337,556

X

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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