Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2013

Carrying Value and Estimated Fair Value of Financial Instruments

A summary of the carrying value and estimated fair value of our financial instruments at September 30, 2013 and December 31, 2012 is as follows:



	September 30, 2013				December 31, 2012
	Fair Value		Carrying Value		Fair Value		Carrying Value
Assets
Investments
Fixed maturities:
Held-to-maturity securities	$	1,120	$	1,102	$	1,681	$	1,655
Available-for-sale securities	2,769,082		2,769,082		2,808,078		2,808,078
Trading securities	9,977		9,977		13,353		13,353
Equity securities:
Available-for-sale securities	208,538		208,538		177,127		177,127
Trading securities	2,464		2,464		2,018		2,018
Mortgage loans	4,278		4,477		5,037		4,633
Policy loans	6,361		6,361		6,671		6,671
Other long-term investments	34,876		34,876		30,028		30,028
Short-term investments	800		800		800		800
Cash and cash equivalents	86,691		86,691		107,466		107,466
Accrued investment income	29,064		29,064		30,375		30,375
Liabilities
Policy reserves
Annuity (accumulations) ⁽¹⁾	$	965,177	$	935,869	$	1,043,866	$	983,579
Annuity (benefit payments)	137,358		93,695		139,213		93,701

(1) Annuity accumulations represent deferred annuity contracts that are currently earning interest.

Financial Instruments Measured at Fair Value on Recurring Basis

The following tables present the categorization for our financial instruments measured at fair value on a recurring basis in our Consolidated Balance Sheets at September 30, 2013 and December 31, 2012:



			Fair Value Measurements
Description	September 30, 2013		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities
Bonds
U.S. Treasury	$	36,347	$	—	$	36,347	$	—
U.S. government agency	213,558		—		213,558		—
States, municipalities and political subdivisions	726,960		—		726,172		788
Foreign bonds	180,848		—		180,848		—
Public utilities	232,547		—		232,547		—
Corporate bonds
Energy	158,859		—		158,859		—
Industrials	246,874		—		243,778		3,096
Consumer goods and services	179,662		—		178,171		1,491
Health care	97,926		—		97,926		—
Technology, media and telecommunications	130,737		—		130,737		—
Financial services	249,477		—		237,113		12,364
Mortgage-backed securities	23,680		—		23,680		—
Collateralized mortgage obligations	287,085		—		287,085		—
Asset-backed securities	4,185		—		1,979		2,206
Redeemable preferred stocks	337		337		—		—
Total Available-for-Sale Fixed Maturities	$	2,769,082	$	337	$	2,748,800	$	19,945
Equity securities
Common stocks
Public utilities	$	15,733	$	15,733	$	—	$	—
Energy	13,246		13,246		—		—
Industrials	40,990		40,969		21		—
Consumer goods and services	19,737		19,737		—		—
Health care	21,687		21,687		—		—
Technology, media and telecommunications	12,369		12,369		—		—
Financial services	80,031		76,161		61		3,809
Nonredeemable preferred stocks	4,745		1,715		3,030		—
Total Available-for-Sale Equity Securities	$	208,538	$	201,617	$	3,112	$	3,809
Total Available-for-Sale Securities	$	2,977,620	$	201,954	$	2,751,912	$	23,754
TRADING
Bonds
Foreign bonds	$	1,262	$	—	$	1,262	$	—
Corporate bonds
Industrials	1,213		—		1,213		—
Consumer goods and services	111		—		111		—



Health care	969		—		969		—
Technology, media and telecommunications	2,595		—		2,595		—
Financial services	1,572		—		1,572		—
Redeemable preferred stocks	2,255		2,255		—		—
Equity securities
Energy	556		556		—		—
Health care	315		315		—		—
Nonredeemable preferred stocks	1,593		1,593		—		—
Total Trading Securities	$	12,441	$	4,719	$	7,722	$	—
Short-Term Investments	$	800	$	800	$	—	$	—
Money Market Accounts	$	26,652	$	26,652	$	—	$	—
Total Assets Measured at Fair Value	$	3,017,513	$	234,125	$	2,759,634	$	23,754



			Fair Value Measurements
Description	December 31, 2012		Level 1		Level 2		Level 3
AVAILABLE-FOR-SALE
Fixed maturities
Bonds
U.S. Treasury	$	38,821	$	—	$	38,821	$	—
U.S. government agency	45,928		—		45,928		—
States, municipalities and political subdivisions	794,505		—		793,755		750
Foreign bonds	219,160		—		218,602		558
Public utilities	247,726		—		247,726		—
Corporate bonds
Energy	179,731		—		179,731		—
Industrials	293,663		—		290,766		2,897
Consumer goods and services	202,975		—		201,633		1,342
Health care	122,685		—		122,685		—
Technology, media and telecommunications	130,371		—		130,371		—
Financial services	283,860		—		271,991		11,869
Mortgage-backed securities	28,807		—		28,807		—
Collateralized mortgage obligations	214,584		—		214,584		—
Asset-backed securities	4,886		—		2,398		2,488
Redeemable preferred stocks	376		376		—		—
Total Available-for-Sale Fixed Maturities	$	2,808,078	$	376	$	2,787,798	$	19,904
Equity securities
Common stocks
Public utilities	$	14,416	$	14,416	$	—	$	—
Energy	11,997		11,997		—		—
Industrials	32,684		32,658		26		—
Consumer goods and services	18,879		18,879		—		—
Health care	18,081		18,081		—		—
Technology, media and telecommunications	10,427		10,427		—		—
Financial services	68,492		64,800		56		3,636
Nonredeemable preferred stocks	2,151		1,906		245		—
Total Available-for-Sale Equity Securities	$	177,127	$	173,164	$	327	$	3,636
Total Available-for-Sale Securities	$	2,985,205	$	173,540	$	2,788,125	$	23,540
TRADING
Bonds
Foreign bonds	$	1,379	$	—	$	1,379	$	—
Corporate bonds
Industrials	1,299		—		1,299		—
Consumer goods and services	1,532		—		1,532		—
Health care	1,824		—		1,824		—
Technology, media and telecommunications	2,250		—		2,250		—



Financial services	1,486		—		1,486		—
Redeemable preferred stocks	3,583		3,583		—		—
Equity securities - health care	303		303		—		—
Nonredeemable preferred stocks	1,715		1,715		—		—
Total Trading Securities	$	15,371	$	5,601	$	9,770	$	—
Short-Term Investments	$	800	$	800	$	—	$	—
Money Market Accounts	$	45,613	$	45,613	$	—	$	—
Total Assets Measured at Fair Value	$	3,046,989	$	225,554	$	2,797,895	$	23,540

Changes in Fair Value of Level 3 Securities

The following table provides a summary of the changes in fair value of our Level 3 securities for the three-month period ended September 30, 2013:



	States, municipalities and political subdivisions		Foreign bonds		Corporate bonds			Asset-backed securities			Equities		Total
Balance at June 30, 2013	$	788	$	—	$	17,746		$	2,311		$	3,809	$	24,654
Realized gains ⁽¹⁾	—		—		—			18			—		18
Unrealized losses⁽¹⁾	—		—		(533		)	(20		)	—		(553		)
Purchases	—		—		105			—			—		105
Disposals	—		—		(367		)	(103		)	—		(470		)
Balance at September 30, 2013	$	788	$	—	$	16,951		$	2,206		$	3,809	$	23,754

(1) Realized gains are recorded as a component of earnings whereas unrealized losses are recorded as a component of comprehensive income.

The following table provides a summary of the changes in fair value of our Level 3 securities for the nine-month period ended September 30, 2013:



	States, municipalities and political subdivisions			Foreign bonds			Corporate bonds			Asset-backed securities			Equities		Total
Balance at December 31, 2012	$	750		$	558		$	16,108		$	2,488		$	3,636	$	23,540
Realized gains ⁽¹⁾	—			35			—			18			—		53
Unrealized gains⁽¹⁾	103			13			1,554			—			—		1,670
Purchases	—			—			105			—			173		278
Disposals	(65		)	(606		)	(816		)	(300		)	—		(1,787		)
Balance at September 30, 2013	$	788		$	—		$	16,951		$	2,206		$	3,809	$	23,754

(1) Realized gains are recorded as a component of earnings, whereas unrealized gains are recorded as a component of comprehensive income.

- 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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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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