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Investments (Tables)
 12 Months Ended
Dec. 31, 2013
Investments [Abstract]  
Schedule of Fixed Maturity and Equity Securites
At December 31, 2013 and 2012, the amortized cost and fair value of fixed maturity securities and equity securities were as follows:
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
 
(Dollars in thousands)
December 31, 2013
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Available for sale:
 
 
 
 
 
 
 
United States Government full faith and credit
$
44,852

 
$
367

 
$
(2,294
)
 
$
42,925

United States Government sponsored agencies
1,313,776

 
1,875

 
(121,362
)
 
1,194,289

United States municipalities, states and territories
3,181,032

 
164,785

 
(39,074
)
 
3,306,743

Foreign government obligations
86,112

 
8,907

 
(3,462
)
 
91,557

Corporate securities
17,142,118

 
606,948

 
(516,029
)
 
17,233,037

Residential mortgage backed securities
1,895,913

 
119,230

 
(43,183
)
 
1,971,960

Commercial mortgage backed securities
1,821,988

 
3,287

 
(89,815
)
 
1,735,460

Other asset backed securities
1,041,939

 
23,300

 
(30,763
)
 
1,034,476

 
$
26,527,730

 
$
928,699

 
$
(845,982
)
 
$
26,610,447

Held for investment:
 
 
 
 
 
 
 
Corporate security
$
76,255

 
$
—

 
$
(15,415
)
 
$
60,840

 


 


 


 


Equity securities, available for sale:
 
 
 
 
 
 
 
Finance, insurance and real estate
$
7,503

 
$
275

 
$
—

 
$
7,778

 
 
 
 
 
 
 
 
December 31, 2012
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
Available for sale:
 
 
 
 
 
 
 
United States Government full faith and credit
$
4,590

 
$
564

 
$
—

 
$
5,154

United States Government sponsored agencies
1,763,789

 
11,704

 
(3,468
)
 
1,772,025

United States municipalities, states and territories
3,116,678

 
461,770

 
(125
)
 
3,578,323

Foreign government obligations
86,099

 
19,160

 
—

 
105,259

Corporate securities
12,930,173

 
1,568,223

 
(31,624
)
 
14,466,772

Residential mortgage backed securities
2,743,537

 
172,304

 
(27,728
)
 
2,888,113

Commercial mortgage backed securities
354,870

 
5,095

 
(1,983
)
 
357,982

Other asset backed securities
957,291

 
44,190

 
(2,973
)
 
998,508

 
$
21,957,027

 
$
2,283,010

 
$
(67,901
)
 
$
24,172,136

Held for investment:
 
 
 
 
 
 
 
Corporate security
$
76,088

 
$
—

 
$
(14,567
)
 
$
61,521

 


 


 


 


Equity securities, available for sale:
 
 
 
 
 
 
 
Finance, insurance and real estate
$
44,598

 
$
10,227

 
$
(1,403
)
 
$
53,422
Schedule of Fixed Maturity Securities by Contractual Maturity Date
The amortized cost and fair value of fixed maturity securities at December 31, 2013, by contractual maturity are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. All of our mortgage and other asset backed securities provide for periodic payments throughout their lives and are shown below as separate lines.
 
Available for sale
 
Held for investment
 
Amortized
Cost
 
Fair Value
 
Amortized
Cost
 
Fair Value
 
(Dollars in thousands)
Due in one year or less
$
75,295

 
$
76,482

 
$
—

 
$
—

Due after one year through five years
851,732

 
953,159

 
—

 
—

Due after five years through ten years
7,828,092

 
7,720,501

 
—

 
—

Due after ten years through twenty years
6,494,544

 
6,472,508

 
—

 
—

Due after twenty years
6,518,227

 
6,645,901

 
76,255

 
60,840

 
21,767,890

 
21,868,551

 
76,255

 
60,840

Residential mortgage backed securities
1,895,913

 
1,971,960

 
—

 
—

Commercial mortgage backed securities
1,821,988

 
1,735,460

 
—

 
—

Other asset backed securities
1,041,939

 
1,034,476

 
—

 
—

 
$
26,527,730

 
$
26,610,447

 
$
76,255

 
$
60,840
Schedule of Components of Net Unrealized Gains on Availabe For Sale Fixed Maturity and Equity Securities Reported as Separate Component of Stockholders' Equity
Net unrealized gains on available for sale fixed maturity securities and equity securities reported as a separate component of stockholders' equity were comprised of the following:
 
December 31,
 
2013
 
2012
 
(Dollars in thousands)
Net unrealized gains on available for sale fixed maturity securities and equity securities
$
82,992

 
$
2,223,933

Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements
(46,588
)
 
(1,201,974
)
Deferred income tax valuation allowance reversal
22,534

 
22,534

Deferred income tax benefit
(12,742
)
 
(357,686
)
Net unrealized gains reported as accumulated other comprehensive income
$
46,196

 
$
686,807
Schedule of Credit Quality of Fixed Maturity Security Portfolio by NAIC Designation
The following table summarizes the credit quality, as determined by NAIC designation, of our fixed maturity portfolio as of the dates indicated:
 
 
December 31,
 
 
2013
 
2012
NAIC
Designation
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
 
(Dollars in thousands)
1
 
$
16,394,654

 
$
16,531,250

 
$
13,737,381

 
$
15,250,560

2
 
9,630,251

 
9,598,399

 
7,838,186

 
8,533,121

3
 
502,822

 
474,165

 
398,294

 
387,222

4
 
74,493

 
66,078

 
53,879

 
56,151

5
 
—

 
—

 
—

 
—

6
 
1,765

 
1,395

 
5,375

 
6,603

 
 
$
26,603,985

 
$
26,671,287

 
$
22,033,115

 
$
24,233,657
Schedule of Gross Unrealized Losses on Investments, By Category and Length of Time
The following table shows our investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities (consisting of 1,047 and 198 securities, respectively) have been in a continuous unrealized loss position, at December 31, 2013 and 2012:
 
Less than 12 months
 
12 months or more
 
Total
 
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
 
(Dollars in thousands)
December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
Available for sale:
 
 
 
 
 
 
 
 
 
 
 
United States Government full faith and credit
$
32,969

 
$
(2,294
)
 
$
—

 
$
—

 
$
32,969

 
$
(2,294
)
United States Government sponsored agencies
692,320

 
(88,671
)
 
467,309

 
(32,691
)
 
1,159,629

 
(121,362
)
United States municipalities, states and territories
614,056

 
(39,074
)
 
—

 
—

 
614,056

 
(39,074
)
Foreign government obligations
26,298

 
(3,462
)
 
—

 
—

 
26,298

 
(3,462
)
Corporate securities:
 
 
 
 
 
 
 
 
 
 
 
Finance, insurance and real estate
1,690,846

 
(92,426
)
 
153,037

 
(12,873
)
 
1,843,883

 
(105,299
)
Manufacturing, construction and mining
3,370,775

 
(191,245
)
 
93,608

 
(16,088
)
 
3,464,383

 
(207,333
)
Utilities and related sectors
1,829,868

 
(102,758
)
 
83,550

 
(11,547
)
 
1,913,418

 
(114,305
)
Wholesale/retail trade
428,407

 
(25,189
)
 
17,687

 
(1,992
)
 
446,094

 
(27,181
)
Services, media and other
834,699

 
(51,508
)
 
107,242

 
(10,403
)
 
941,941

 
(61,911
)
Residential mortgage backed securities
309,599

 
(41,080
)
 
31,739

 
(2,103
)
 
341,338

 
(43,183
)
Commercial mortgage backed securities
1,450,143

 
(83,814
)
 
51,099

 
(6,001
)
 
1,501,242

 
(89,815
)
Other asset backed securities
356,018

 
(20,426
)
 
92,372

 
(10,337
)
 
448,390

 
(30,763
)
 
$
11,635,998

 
$
(741,947
)
 
$
1,097,643

 
$
(104,035
)
 
$
12,733,641

 
$
(845,982
)
Held for investment:
 
 
 
 
 
 
 
 
 
 
 
Corporate security:
 
 
 
 
 
 
 
 
 
 
 
Insurance
$
—

 
$
—

 
$
60,840

 
$
(15,415
)
 
$
60,840

 
$
(15,415
)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2012
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities:
 
 
 
 
 
 
 
 
 
 
 
Available for sale:
 
 
 
 
 
 
 
 
 
 
 
United States Government sponsored agencies
973,728

 
(3,468
)
 
—

 
—

 
973,728

 
(3,468
)
United States municipalities, states and territories
$
24,393

 
$
(125
)
 
$
—

 
$
—

 
$
24,393

 
$
(125
)
Corporate securities:
 
 
 
 
 
 
 
 
 
 
 
Finance, insurance and real estate
177,962

 
(4,126
)
 
85,709

 
(8,438
)
 
263,671

 
(12,564
)
Manufacturing, construction and mining
426,120

 
(4,303
)
 
21,975

 
(1,281
)
 
448,095

 
(5,584
)
Utilities and related sectors
221,044

 
(5,187
)
 
39,224

 
(4,212
)
 
260,268

 
(9,399
)
Wholesale/retail trade
101,790

 
(784
)
 
10,250

 
(208
)
 
112,040

 
(992
)
Services, media and other
264,421

 
(3,085
)
 
—

 
—

 
264,421

 
(3,085
)
Residential mortgage backed securities
220,622

 
(8,679
)
 
260,226

 
(19,049
)
 
480,848

 
(27,728
)
Commercial mortgage backed securities
161,582

 
(1,983
)
 
—

 
—

 
161,582

 
(1,983
)
Other asset backed securities
145,238

 
(2,242
)
 
26,131

 
(731
)
 
171,369

 
(2,973
)
 
$
2,716,900

 
$
(33,982
)
 
$
443,515

 
$
(33,919
)
 
$
3,160,415

 
$
(67,901
)
Held for investment:
 
 
 
 
 
 
 
 
 
 
 
Corporate security:
 
 
 
 
 
 
 
 
 
 
 
Insurance
$
—

 
$
—

 
$
61,521

 
$
(14,567
)
 
$
61,521

 
$
(14,567
)
 
 
 
 
 
 
 
 
 
 
 
 
Equity security, available for sale:
 
 
 
 
 
 
 
 
 
 
 
Services
$
—

 
$
—

 
$
8,722

 
$
(1,403
)
 
$
8,722

 
$
(1,403
)
Schedule of Changes in Net Unrealized Gains/Losses on Investments
Changes in net unrealized gains/losses on investments for the years ended December 31, 2013, 2012 and 2011 are as follows:
 
Year Ended December 31,
 
2013
 
2012
 
2011
 
(Dollars in thousands)
Fixed maturity securities held for investment carried at amortized cost
$
(848
)
 
$
(14,783
)
 
$
40,668

Investments carried at fair value:
 
 
 
 
 
Fixed maturity securities, available for sale
$
(2,132,392
)
 
$
731,279

 
$
1,275,061

Equity securities, available for sale
(8,549
)
 
4,417

 
(369
)
 
(2,140,941
)
 
735,696

 
1,274,692

Adjustment for effect on other balance sheet accounts:
 
 
 
 
 
Deferred policy acquisition costs and deferred sales inducements
1,155,386

 
(382,498
)
 
(697,140
)
Deferred income tax asset/liability
344,944

 
(123,620
)
 
(202,143
)
 
1,500,330

 
(506,118
)
 
(899,283
)
Change in net unrealized gains/losses on investments carried at fair value
$
(640,611
)
 
$
229,578

 
$
375,409
Components of Net Investment Income
Components of net investment income are as follows:
 
Year Ended December 31,
 
2013
 
2012
 
2011
 
(Dollars in thousands)
Fixed maturity securities
$
1,229,486

 
$
1,112,296

 
$
1,048,376

Equity securities
1,586

 
3,090

 
3,315

Mortgage loans on real estate
159,769

 
176,354

 
172,731

Cash and cash equivalents
775

 
2,243

 
554

Other
5,711

 
6,348

 
4,020

 
1,397,327

 
1,300,331

 
1,228,996

Less investment expenses
(13,400
)
 
(13,408
)
 
(10,216
)
Net investment income
$
1,383,927

 
$
1,286,923

 
$
1,218,780
Net Realized Gains (Losses) on Investments
Net realized gains (losses) on investments, excluding net OTTI losses are as follows:
 
Year Ended December 31,
 
2013
 
2012
 
2011
 
(Dollars in thousands)
Available for sale fixed maturity securities:
 
 
 
 
 
Gross realized gains
$
39,079

 
$
10,906

 
$
12,614

Gross realized losses
(6,170
)
 
(562
)
 
(1,423
)
 
32,909

 
10,344

 
11,191

Equity securities:
 
 
 
 
 
Gross realized gains
9,571

 
562

 
966

 
 
 
 
 
 
Other investments:
 
 
 
 
 
Gain on sale of real estate
2,144

 
5,149

 
377

Loss on sale of real estate
(1,317
)
 
—

 
—

Impairment losses on real estate
(1,195
)
 
(5,677
)
 
(405
)
 
(368
)
 
(528
)
 
(28
)
Mortgage loans on real estate:
 
 
 
 
 
Increase in allowance for credit losses
(5,621
)
 
(16,832
)
 
(30,770
)
Recovery of specific allowance
4,070

 
—

 
—

 
(1,551
)
 
(16,832
)
 
(30,770
)
 
$
40,561

 
$
(6,454
)
 
$
(18,641
)
Non-Income Producing Investments
The following table summarizes the carrying value of our fixed maturity securities, mortgage loans on real estate and real estate owned that have been non-income producing for 12 consecutive months:
 
December 31,
 
2013
 
2012
 
(Dollars in thousands)
Fixed maturity securities, available for sale
$
20

 
4,691

Mortgage loans on real estate
3,511

 
2,783

Real estate owned
—

 
1,270

 
$
3,531

 
$
8,744
Significant Assumptions Used to Determine the Credit Loss Component of Other Than Temporary Impairment on Residential Mortgage Backed Securities
The following table presents the range of significant assumptions used to determine the credit loss component of other than temporary impairments we have recognized on residential mortgage backed securities for the years ended December 31, 2013 and 2012, which are all senior level tranches within the structure of the securities:
 
 
 
 
Discount Rate
 
Default Rate
 
Loss Severity
Sector
 
Vintage
 
Min
 
Max
 
Min
 
Max
 
Min
 
Max
Year ended December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prime
 
2003
 
5.1
%
 
5.1
%
 
2
%
 
2
%
 
30
%
 
30
%
 
 
2005
 
6.5
%
 
7.7
%
 
8
%
 
18
%
 
50
%
 
65
%
 
 
2006
 
5.8
%
 
6.9
%
 
9
%
 
16
%
 
45
%
 
50
%
 
 
2007
 
6.2
%
 
6.7
%
 
11
%
 
25
%
 
40
%
 
60
%
 
 
2008
 
6.6
%
 
6.6
%
 
16
%
 
16
%
 
45
%
 
45
%
 
 
2009
 
6.8
%
 
6.8
%
 
17
%
 
17
%
 
60
%
 
60
%
Alt-A
 
2005
 
5.6
%
 
8.7
%
 
13
%
 
81
%
 
2
%
 
65
%
 
 
2007
 
6.2
%
 
6.9
%
 
38
%
 
52
%
 
60
%
 
65
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prime
 
2005
 
6.5
%
 
7.7
%
 
8
%
 
19
%
 
40
%
 
50
%
 
 
2006
 
5.8
%
 
7.6
%
 
9
%
 
19
%
 
40
%
 
55
%
 
 
2007
 
6.1
%
 
7.3
%
 
11
%
 
38
%
 
40
%
 
60
%
Alt-A
 
2004
 
5.8
%
 
5.8
%
 
11
%
 
11
%
 
60
%
 
60
%
 
 
2005
 
5.6
%
 
8.7
%
 
12
%
 
38
%
 
5
%
 
55
%
 
 
2006
 
6.0
%
 
6.0
%
 
32
%
 
46
%
 
55
%
 
60
%
 
 
2007
 
6.2
%
 
7.0
%
 
31
%
 
55
%
 
55
%
 
65
%
Other Than Temporary Impairment by Asset Type
The following table summarizes other than temporary impairments by asset type:
 
Number
of Securities
 
Total
OTTI Losses
 
Portion of
OTTI Losses
Recognized from
Other
Comprehensive
Income
 
Net OTTI
Losses
Recognized
in Operations
 
(Dollars in thousands)
Year ended December 31, 2013
 
 
 
 
 
 
 
Fixed maturity securities, available for sale:
 
 
 
 
 
 
 
United States Government sponsored agencies
2

 
$
(2,775
)
 
$
—

 
$
(2,775
)
Corporate securities:
 
 
 
 
 
 
 
Industrial
1

 
(1,761
)
 
—

 
(1,761
)
Residential mortgage backed securities
6

 
—

 
(1,270
)
 
(1,270
)
Equity security, available for sale:
 
 
 
 
 
 
 
Industrial
1

 
(428
)
 
—

 
(428
)
 
10

 
$
(4,964
)
 
$
(1,270
)
 
$
(6,234
)
 
 
 
 
 
 
 
 
Year ended December 31, 2012
 
 
 
 
 
 
 
Fixed maturity securities, available for sale:
 
 
 
 
 
 
 
Corporate securities:
 
 
 
 
 
 
 
Finance
1

 
$
(1,765
)
 
$
—

 
$
(1,765
)
Retail
1

 
(622
)
 
—

 
(622
)
Residential mortgage backed securities
39

 
(3,024
)
 
(9,521
)
 
(12,545
)
 
41

 
$
(5,411
)
 
$
(9,521
)
 
$
(14,932
)
 
 
 
 
 
 
 
 
Year ended December 31, 2011
 
 
 
 
 
 
 
Fixed maturity securities, available for sale:
 
 
 
 
 
 
 
Residential mortgage backed securities
66

 
$
(19,420
)
 
$
(13,796
)
 
$
(33,216
)
Equity security, available for sale:
 
 
 
 
 
 
 
Finance
1

 
(760
)
 
—

 
(760
)
 
67

 
$
(20,180
)
 
$
(13,796
)
 
$
(33,976
)
Other Than Temporary Impairment, Credit Losses Recognized in Earnings
The cumulative portion of other than temporary impairments determined to be credit losses which have been recognized in operations for debt securities are summarized as follows:
 
Year Ended December 31,
 
2013
 
2012
 
(Dollars in thousands)
Cumulative credit loss at beginning of year
$
(134,027
)
 
$
(119,095
)
Credit losses on securities for which OTTI has not previously been recognized
(4,536
)
 
(12,365
)
Additional credit losses on securities for which OTTI has previously been recognized
(1,270
)
 
(2,567
)
Accumulated losses on securities that were disposed of during the period
13,873

 
—

Cumulative credit loss at end of year
$
(125,960
)
 
$
(134,027
)
Schedule of Other Than Temporary Impairment Losses, Investments
The following table summarizes the cumulative noncredit portion of OTTI and the change in fair value since recognition of OTTI, both of which were recognized in other comprehensive income, by major type of security, for securities that are part of our investment portfolio at December 31, 2013 and 2012:
 

Amortized Cost
 
OTTI Recognized in Other Comprehensive Income
 
Change in Fair Value Since OTTI was Recognized
 

Fair Value
 
(Dollars in thousands)
December 31, 2013
 
 
 
 
 
 
 
Fixed maturity securities, available for sale:
 
 
 
 
 
 
 
Corporate securities
$
—

 
$
—

 
$
20

 
$
20

Residential mortgage backed securities
679,265

 
(176,334
)
 
216,061

 
718,992

 
$
679,265

 
$
(176,334
)
 
$
216,081

 
$
719,012

December 31, 2012
 
 
 
 
 
 
 
Fixed maturity securities, available for sale:
 
 
 
 
 
 
 
Corporate securities
$
10,599

 
$
(2,151
)
 
$
5,676

 
$
14,124

Residential mortgage backed securities
855,915

 
(177,604
)
 
171,514

 
849,825

Equity securities, available for sale:
 
 
 
 
 
 
 
Finance, insurance and real estate
9,976

 
—

 
9,668

 
19,644

 
$
876,490

 
$
(179,755
)
 
$
186,858

 
$
883,593