10-Q

FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number : 001-31911

American Equity Investment Life Holding Company

(Exact name of registrant as specified in its charter)

Iowa	42-1447959
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
6000 Westown Parkway West Des Moines, Iowa	50266
(Address of principal executive offices)	(Zip Code)
Registrant's telephone number, including area code	(515) 221-0002
	(Telephone)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $1	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $1

Indicate by check mark whether the registrant (1) has filed all documents and reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes o No x

APPLICABLE TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Shares of common stock outstanding at July 31, 2013: 64,710,572

TABLE OF CONTENTS

	Page
PART I — FINANCIAL INFORMATION
Item 1: Financial Statements:	2
Consolidated Balance Sheets	2
Consolidated Statements of Operations	3
Consolidated Statements of Comprehensive Income	4
Consolidated Statements of Changes in Stockholders’ Equity	5
Consolidated Statements of Cash Flows	6
Notes to Consolidated Financial Statements	8
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3: Quantitative and Qualitative Disclosures about Market Risk	49
Item 4: Controls and Procedures	50
PART II — OTHER INFORMATION
Item 1: Legal Proceedings	50
Item 1A: Risk Factors	52
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 6: Exhibits	52
Signatures	53

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

	June 30, 2013			December 31, 2012
	(Unaudited)
Assets
Investments:
Fixed maturity securities:
Available for sale, at fair value (amortized cost: 2013 - $24,789,087; 2012 - $21,957,027)	$	25,545,642		$	24,172,136
Held for investment, at amortized cost (fair value: 2013 - $61,250; 2012 - $61,521)	76,170			76,088
Equity securities, available for sale, at fair value (cost: 2013 - $8,915; 2012 - $44,598)	9,790			53,422
Mortgage loans on real estate	2,583,703			2,623,940
Derivative instruments	629,135			415,258
Other investments	208,635			196,366
Total investments	29,053,075			27,537,210
Cash and cash equivalents	746,889			1,268,545
Coinsurance deposits	2,944,726			2,910,701
Accrued investment income	287,692			261,833
Deferred policy acquisition costs	2,147,252			1,709,799
Deferred sales inducements	1,646,164			1,292,341
Deferred income taxes	153,701			—
Income taxes recoverable	1,645			—
Other assets	307,406			153,049
Total assets	$	37,288,550		$	35,133,478
Liabilities and Stockholders' Equity
Liabilities:
Policy benefit reserves	$	33,635,600		$	31,773,988
Other policy funds and contract claims	440,217			455,752
Notes payable	303,126			309,869
Subordinated debentures	245,958			245,869
Amounts due under repurchase agreements	160,436			—
Deferred income taxes	—			49,303
Income taxes payable	—			4,756
Other liabilities	1,061,137			573,704
Total liabilities	35,846,474			33,413,241
Stockholders' equity:
Preferred stock, par value $1 per share, 2,000,000 shares authorized,   2013 and 2012 - no shares issued and outstanding	—			—
Common stock, par value $1 per share, 200,000,000 shares authorized; issued and outstanding:    2013 - 63,500,933 shares (excluding 4,877,735 treasury shares);    2012 - 61,750,601 shares (excluding 5,127,379 treasury shares)	63,501			61,751
Additional paid-in capital	512,613			496,715
Unallocated common stock held by ESOP; 2013 - 186,485 shares; 2012 - 239,799 shares	(2,009		)	(2,583		)
Accumulated other comprehensive income	244,280			686,807
Retained earnings	623,691			477,547
Total stockholders' equity	1,442,076			1,720,237
Total liabilities and stockholders' equity	$	37,288,550		$	35,133,478

See accompanying notes to unaudited consolidated financial statements.

2

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Revenues:
Traditional life insurance premiums	$	2,913		$	3,248		$	5,611		$	6,470
Annuity product charges	23,511			21,908			44,992			41,301
Net investment income	336,143			320,259			665,833			647,169
Change in fair value of derivatives	64,040			(150,847		)	438,002			108,314
Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses	15,689			(611		)	26,274			(6,687		)
OTTI losses on investments:
Total OTTI losses	(2,775		)	(375		)	(4,964		)	(2,156		)
Portion of OTTI losses recognized from other comprehensive income	—			(603		)	(1,048		)	(1,703		)
Net OTTI losses recognized in operations	(2,775		)	(978		)	(6,012		)	(3,859		)
Loss on extinguishment of debt	(589		)	—			(589		)	—
Total revenues	438,932			192,979			1,174,111			792,708
Benefits and expenses:
Insurance policy benefits and change in future policy benefits	2,106			2,250			3,841			4,367
Interest sensitive and index product benefits	336,025			142,733			561,834			281,856
Amortization of deferred sales inducements	120,536			25,940			149,367			42,650
Change in fair value of embedded derivatives	(408,409		)	(80,989		)	(45,137		)	278,077
Interest expense on notes payable	6,780			7,072			14,028			14,067
Interest expense on subordinated debentures	3,018			3,563			6,027			7,149
Amortization of deferred policy acquisition costs	169,270			44,848			215,500			79,132
Other operating costs and expenses	24,851			18,902			44,371			40,615
Total benefits and expenses	254,177			164,319			949,831			747,913
Income before income taxes	184,755			28,660			224,280			44,795
Income tax expense	64,642			9,901			78,136			15,565
Net income	$	120,113		$	18,759		$	146,144		$	29,230
Earnings per common share	$	1.87		$	0.31		$	2.29		$	0.49
Earnings per common share - assuming dilution	$	1.71		$	0.30		$	2.09		$	0.46
Weighted average common shares outstanding (in thousands):
Earnings per common share	64,254			59,943			63,787			59,822
Earnings per common share - assuming dilution	70,382			64,254			69,882			64,230

See accompanying notes to unaudited consolidated financial statements.

3

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Net income	$	120,113		$	18,759		$	146,144		$	29,230
Other comprehensive income (loss):
Change in net unrealized investment gains/losses (1)	(634,688		)	263,366			(669,871		)	188,391
Noncredit component of OTTI losses (1)	—			(99		)	347			290
Reclassification of unrealized investment gains/losses to net income (1)	(7,439		)	—			(11,286		)	—
Other comprehensive income (loss) before income tax	(642,127		)	263,267			(680,810		)	188,681
Income tax effect related to other comprehensive income	224,744			(92,142		)	238,283			(66,038		)
Other comprehensive income (loss)	(417,383		)	171,125			(442,527		)	122,643
Comprehensive income (loss)	$	(297,270	)	$	189,884		$	(296,383	)	$	151,873

(1) Net of related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs.

See accompanying notes to unaudited consolidated financial statements.

4

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Dollars in thousands, except per share data)

(Unaudited)

	Common Stock		Additional Paid-in Capital		Unallocated Common Stock Held by ESOP			Accumulated Other Comprehensive Income			Retained Earnings		Total Stockholders' Equity
Balance at December 31, 2012	$	61,751	$	496,715	$	(2,583	)	$	686,807		$	477,547	$	1,720,237
Net income for period	—		—		—			—			146,144		146,144
Other comprehensive loss	—		—		—			(442,527		)	—		(442,527		)
Allocation of 53,314 shares of common stock by ESOP, including excess income tax benefits	—		134		574			—			—		708
Share-based compensation, including excess income tax benefits	—		3,193		—			—			—		3,193
Issuance of 1,533,603 shares of common stock under compensation plans, including excess income tax benefits	1,533		11,024		—			—			—		12,557
Extinguishment of convertible senior notes, net of tax, including 216,729 shares of common stock issued upon conversion	217		1,547										1,764
Balance at June 30, 2013	$	63,501	$	512,613	$	(2,009	)	$	244,280		$	623,691	$	1,442,076
Balance at December 31, 2011	$	57,837	$	468,281	$	(3,620	)	$	457,229		$	428,952	$	1,408,679
Net income for period	—		—		—			—			29,230		29,230
Other comprehensive income	—		—		—			122,643			—		122,643
Conversion of $12,554 of subordinated debentures	1,550		10,291		—			—			—		11,841
Allocation of 41,323 shares of common stock by ESOP, including excess income tax benefits	—		22		445			—			—		467
Share-based compensation, including excess income tax benefits	—		3,719		—			—			—		3,719
Issuance of 822,390 shares of common stock under compensation plans, including excess income tax benefits	822		250		—			—			—		1,072
Balance at June 30, 2012	$	60,209	$	482,563	$	(3,175	)	$	579,872		$	458,182	$	1,577,651

See accompanying notes to unaudited consolidated financial statements.

5

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Six Months Ended June 30,
	2013			2012
Operating activities
Net income	$	146,144		$	29,230
Adjustments to reconcile net income to net cash provided by operating activities:
Interest sensitive and index product benefits	561,834			281,856
Amortization of deferred sales inducements	149,367			42,650
Annuity product charges	(44,992		)	(41,301		)
Change in fair value of embedded derivatives	(45,137		)	278,077
Change in traditional life and accident and health insurance reserves	(1,066		)	12,652
Policy acquisition costs deferred	(205,519		)	(186,573		)
Amortization of deferred policy acquisition costs	215,500			79,132
Provision for depreciation and other amortization	9,356			9,150
Amortization of discounts and premiums on investments	9,546			(64,020		)
Realized gains/losses on investments and net OTTI losses recognized in operations	(20,262		)	10,546
Change in fair value of derivatives	(438,002		)	(108,314		)
Deferred income taxes	38,781			(14,249		)
Share-based compensation	3,011			3,024
Change in accrued investment income	(25,859		)	(15,707		)
Change in income taxes payable	(8,483		)	(3,493		)
Change in other assets	(296		)	(10,077		)
Change in other policy funds and contract claims	(15,535		)	33,548
Change in collateral held for derivatives	164,269			175,549
Change in other liabilities	475			(11,421		)
Other	(1,868		)	164
Net cash provided by operating activities	491,264			500,423
Investing activities
Sales, maturities, or repayments of investments:
Fixed maturity securities - available for sale	2,292,959			1,423,179
Fixed maturity securities - held for investment	—			1,688,329
Equity securities - available for sale	44,829			5,605
Mortgage loans on real estate	266,539			219,423
Derivative instruments	409,050			110,201
Other investments	11,737			10,362
Acquisition of investments:
Fixed maturity securities - available for sale	(4,962,314		)	(3,542,142		)
Mortgage loans on real estate	(228,735		)	(152,648		)
Derivative instruments	(190,997		)	(184,709		)
Other investments	(19,594		)	(83,811		)
Purchases of property, furniture and equipment	(288		)	(273		)
Net cash used in investing activities	(2,376,814		)	(506,484		)

6

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS(Continued)

(Dollars in thousands)

(Unaudited)

	Six Months Ended June 30,
	2013			2012
Financing activities
Receipts credited to annuity policyholder account balances	$	2,033,484		$	1,808,845
Coinsurance deposits	15,960			(28,630		)
Return of annuity policyholder account balances	(829,047		)	(760,423		)
Financing fees incurred and deferred	(1,153		)	—
Proceeds from notes payable	15,000			—
Repayment of notes payable	(28,243		)	—
Proceeds from amounts due under repurchase agreements	160,436			—
Excess tax benefits realized from share-based compensation plans	380			693
Proceeds from issuance of common stock	12,284			1,062
Change in checks in excess of cash balance	(15,207		)	(12,608		)
Net cash provided by financing activities	1,363,894			1,008,939
Increase (decrease) in cash and cash equivalents	(521,656		)	1,002,878
Cash and cash equivalents at beginning of period	1,268,545			404,952
Cash and cash equivalents at end of period	$	746,889		$	1,407,830
Supplemental disclosures of cash flow information
Cash paid during period for:
Interest expense	$	12,595		$	14,308
Income taxes	47,700			32,650
Non-cash operating activity:
Deferral of sales inducements	164,931			143,248
Non-cash investing activity:
Real estate acquired in satisfaction of mortgage loans	844			11,985
Non-cash financing activities:
Conversion of subordinated debentures	—			12,554
Common stock issued in extinguishment of debt	3,367			—

See accompanying notes to unaudited consolidated financial statements.

7

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2013

(Unaudited)

1. Significant Accounting Policies

Consolidation and Basis of Presentation

The accompanying consolidated financial statements of American Equity Investment Life Holding Company (“we”, “us” or “our”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by GAAP for complete financial statements. The consolidated financial statements reflect all adjustments, consisting only of normal recurring items, which are necessary to present fairly our financial position and results of operations on a basis consistent with the prior audited consolidated financial statements. Operating results for the three and six month periods ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ended December 31, 2013. All significant intercompany accounts and transactions have been eliminated. The preparation of financial statements requires the use of management estimates. For further information related to a description of areas of judgment and estimates and other information necessary to understand our financial position and results of operations, refer to the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2012.

As previously reported in the notes to consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012, we identified certain classification errors related to amounts reported in the financing activities section of our consolidated statements of cash flows. Consistent with that presentation, we have revised the consolidated statement of cash flows for the six months ended June 30, 2012 resulting in decreases of $87.9 million to receipts credited to annuity and single premium universal life policyholder account balances and return of annuity policyholder account balances. These revisions had no net impact on net cash provided by financing activities, and no impact on our consolidated balance sheets, statements of operations, statements of comprehensive income or statements of changes in stockholders' equity.

Adopted Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board ("FASB") issued an accounting standards update ("ASU") that expands the disclosure requirements related to other comprehensive income (loss). A reporting entity is now required to provide information about the amounts reclassified out of accumulated other comprehensive income (loss) by component. In addition, a reporting entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. This ASU became effective for interim and annual periods beginning after December 15, 2012. We adopted this ASU on January 1, 2013.

New Accounting Pronouncements

There are currently no accounting standards updates with effective dates after June 30, 2013 that will significantly affect our consolidated financial statements.

8

2. Fair Values of Financial Instruments

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

	June 30, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in thousands)
Assets
Fixed maturity securities:
Available for sale	$	25,545,642	$	25,545,642	$	24,172,136	$	24,172,136
Held for investment	76,170		61,250		76,088		61,521
Equity securities, available for sale	9,790		9,790		53,422		53,422
Mortgage loans on real estate	2,583,703		2,808,973		2,623,940		2,848,235
Derivative instruments	629,135		629,135		415,258		415,258
Other investments	182,026		182,219		163,193		163,517
Cash and cash equivalents	746,889		746,889		1,268,545		1,268,545
Coinsurance deposits	2,944,726		2,724,853		2,910,701		2,678,232
Interest rate caps	5,565		5,565		3,247		3,247
Interest rate swap	274		274		—		—
2015 notes hedges	71,400		71,400		43,105		43,105
Liabilities
Policy benefit reserves	33,304,622		27,895,416		31,452,496		26,264,831
Single premium immediate annuity (SPIA) benefit reserves	439,591		453,496		455,167		469,768
Notes payable	303,126		481,406		309,869		422,175
Subordinated debentures	245,958		229,623		245,869		218,283
2015 notes embedded derivatives	71,400		71,400		43,105		43,105
Interest rate swap	—		—		4,261		4,261

Fair value is the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The objective of a fair value measurement is to determine that price for each financial instrument at each measurement date. We meet this objective using various methods of valuation that include market, income and cost approaches.

We categorize our financial instruments into three levels of fair value hierarchy based on the priority of inputs used in determining fair value. The hierarchy defines the highest priority inputs (Level 1) as quoted prices in active markets for identical assets or liabilities. The lowest priority inputs (Level 3) are our own assumptions about what a market participant would use in determining fair value such as estimated future cash flows. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. We categorize financial assets and liabilities recorded at fair value in the consolidated balance sheets as follows:

Level 1— Quoted prices are available in active markets for identical financial instruments as of the reporting date. We do not adjust the quoted price for these financial instruments, even in situations where we hold a large position and a sale could reasonably impact the quoted price.

Level 2— Quoted prices in active markets for similar financial instruments, quoted prices for identical or similar financial instruments in markets that are not active; and models and other valuation methodologies using inputs other than quoted prices that are observable.

Level 3— Models and other valuation methodologies using significant inputs that are unobservable for financial instruments and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in Level 3 are securities for which no market activity or data exists and for which we used discounted expected future cash flows with our own assumptions about what a market participant would use in determining fair value.

Transfers of securities among the levels occur at times and depend on the type of inputs used to determine fair value of each security. There were no transfers between levels during the six months ended June 30, 2013.

9

Our assets and liabilities which are measured at fair value on a recurring basis as of June 30, 2013 and December 31, 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)
June 30, 2013
Assets
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	4,938	$	4,938	$	—	$	—
United States Government sponsored agencies	1,199,847		—		1,199,847		—
United States municipalities, states and territories	3,543,158		—		3,543,158		—
Foreign government obligations	92,811		—		92,811		—
Corporate securities	15,999,327		8,924		15,990,403		—
Residential mortgage backed securities	2,488,057		—		2,486,516		1,541
Commercial mortgage backed securities	1,222,689		—		1,222,689		—
Other asset backed securities	994,815		378		994,437		—
Equity securities, available for sale: finance, insurance and real estate	9,790		2,020		7,770		—
Derivative instruments	629,135		—		629,135		—
Cash and cash equivalents	746,889		746,889		—		—
Interest rate caps	5,565		—		5,565		—
Interest rate swap	274		—		274		—
2015 notes hedges	71,400		—		71,400		—
	$	27,008,695	$	763,149	$	26,244,005	$	1,541
Liabilities
2015 notes embedded derivatives	$	71,400	$	—	$	71,400	$	—
Fixed index annuities - embedded derivatives	3,747,052		—		—		3,747,052
	$	3,818,452	$	—	$	71,400	$	3,747,052
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 derivatives	$	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

10

The following methods and assumptions were used in estimating the fair values of financial instruments during the periods presented in these consolidated financial statements.

Fixed maturity securities and equity securities

The fair values of fixed maturity securities and equity securities in an active and orderly market are determined by utilizing independent pricing services. The independent pricing services incorporate a variety of observable market data in their valuation techniques, including:

• reported trading prices,

• benchmark yields,

• broker-dealer quotes,

• benchmark securities,

• bids and offers,

• credit ratings,

• relative credit information, and

• other reference data.

The independent pricing services also take into account perceived market movements and sector news, as well as a security's terms and conditions, including any features specific to that issue that may influence risk and marketability. Depending on the security, the priority of the use of observable market inputs may change as some observable market inputs may not be relevant or additional inputs may be necessary.

The independent pricing services provide quoted market prices when available. Quoted prices are not always available due to market inactivity. When quoted market prices are not available, the third parties use yield data and other factors relating to instruments or securities with similar characteristics to determine fair value for securities that are not actively traded. We generally obtain one value from our primary external pricing service. In situations where a price is not available from this service, we may obtain further quotes or prices from additional parties as needed. In addition, for our callable United States Government sponsored agencies, we obtain two broker quotes and take the average of the two broker prices received. Market indices of similar rated asset class spreads are considered for valuations and broker indications of similar securities are compared. Inputs used by the broker include market information, such as yield data and other factors relating to instruments or securities with similar characteristics. Valuations and quotes obtained from third party commercial pricing services are non-binding and do not represent quotes on which one may execute the disposition of the assets.

We validate external valuations at least quarterly through a combination of procedures that include the evaluation of methodologies used by the pricing services, analytical reviews and performance analysis of the prices against trends, and maintenance of a securities watch list. Additionally, as needed we utilize discounted cash flow models or perform independent valuations on a case-by-case basis using inputs and assumptions similar to those used by the pricing services. Although we do identify differences from time to time as a result of these validation procedures, we did not make any significant adjustments as of June 30, 2013 and December 31, 2012.

Mortgage loans on real estate

Mortgage loans on real estate are not measured at fair value on a recurring basis. The fair values of mortgage loans on real estate are calculated using discounted expected cash flows using current competitive market interest rates currently being offered for similar loans. The fair values of impaired mortgage loans on real estate that we have considered to be collateral dependent are based on the fair value of the real estate collateral (based on appraised values) less estimated costs to sell. The inputs utilized to determine fair value of all mortgage loans are unobservable market data (competitive market interest rates and appraised property values); therefore, fair value of mortgage loans falls into Level 3 in the fair value hierarchy.

Derivative instruments

The fair values of derivative instruments, primarily call options, are based upon the amount of cash that we will receive to settle each derivative instrument on the reporting date. These amounts are determined by our investment team using industry accepted valuation models and are adjusted for the nonperformance risk of each counterparty net of any collateral held. Inputs include market volatility and risk free interest rates and are used in income valuation techniques in arriving at a fair value for each option contract. The nonperformance risk for each counterparty is based upon its credit default swap rate. We have no performance obligations related to the call options purchased to fund our fixed index annuity policy liabilities.

Other investments

None of the financial instruments included in other investments are measured at fair value on a recurring basis. Financial instruments included in other investments are policy loans, equity method investments and company owned life insurance (COLI). We have not attempted to determine the fair values associated with our policy loans, as we believe any differences between carrying value and the fair values afforded these instruments are immaterial to our consolidated financial position and, accordingly, the cost to provide such disclosure does not justify the benefit to be derived. The fair values of our equity method investments qualify as Level 3 fair values and were determined by calculating the present value of future cash flows discounted by a risk free rate, a risk spread and a liquidity discount. The risk spread and liquidity discount are rates determined by our investment professionals and are unobservable market inputs. The fair value of our COLI approximates the cash surrender value of the policies and falls within Level 2 of the fair value hierarchy.

11

Cash and cash equivalents

Amounts reported in the consolidated balance sheets for these instruments are reported at their historical cost which approximates fair value due to the nature of the assets assigned to this category.

Interest rate swap and caps

The fair values of our pay fixed/receive variable interest rate swap and interest rate caps are obtained from third parties and are determined by discounting expected future cash flows using projected LIBOR rates for the term of the swap and caps.

2015 notes hedges

The fair value of these call options is determined by a third party who applies market observable data such as our common stock price, its dividend yield and its volatility, as well as the time to expiration of the call options to determine a fair value of the buy side of these options.

Policy benefit reserves, coinsurance deposits and SPIA benefit reserves

The fair values of the liabilities under contracts not involving significant mortality or morbidity risks (principally deferred annuities), are stated at the cost we would incur to extinguish the liability (i.e., the cash surrender value) as these contracts are generally issued without an annuitization date. The coinsurance deposits related to the annuity benefit reserves have fair values determined in a similar fashion. For period-certain annuity benefit contracts, the fair value is determined by discounting the benefits at the interest rates currently in effect for newly purchased immediate annuity contracts. We are not required to and have not estimated the fair value of the liabilities under contracts that involve significant mortality or morbidity risks, as these liabilities fall within the definition of insurance contracts that are exceptions from financial instruments that require disclosures of fair value. Policy benefit reserves, coinsurance deposits and SPIA benefit reserves are not measured at fair value on a recurring basis. All of the fair values presented within these categories fall within Level 3 of the fair value hierarchy as most of the inputs are unobservable market data.

Notes payable

The fair value of the convertible senior notes is based upon pricing matrices developed by a third party pricing service when quoted market prices are not available and are categorized as Level 2 within the fair value hierarchy. Notes payable are not remeasured at fair value on a recurring basis.

Subordinated debentures

Fair values for subordinated debentures are estimated using discounted cash flow calculations based principally on observable inputs including our incremental borrowing rates, which reflect our credit rating, for similar types of borrowings with maturities consistent with those remaining for the debt being valued. These fair values are categorized as Level 2 within the fair value hierarchy. Subordinated debentures are not measured at fair value on a recurring basis.

2015 notes embedded derivatives

The fair value of this embedded derivative is determined by pricing the call options that hedge this potential liability. The terms of the conversion premium are identical to the 2015 notes hedges and the method of determining fair value of the call options is based upon observable market data.

Fixed index annuities - embedded derivatives

We estimate the fair value of the embedded derivative component of our fixed index annuity policy benefit reserves at each valuation date by (i) projecting policy contract values and minimum guaranteed contract values over the expected lives of the contracts and (ii) discounting the excess of the projected contract value amounts at the applicable risk free interest rates adjusted for our nonperformance risk related to those liabilities. The projections of policy contract values are based on our best estimate assumptions for future policy growth and future policy decrements. Our best estimate assumptions for future policy growth include assumptions for the expected index credit on the next policy anniversary date which are derived from the fair values of the underlying call options purchased to fund such index credits and the expected costs of annual call options we will purchase in the future to fund index credits beyond the next policy anniversary. The projections of minimum guaranteed contract values include the same best estimate assumptions for policy decrements as were used to project policy contract values.

12

The following tables provide a reconciliation of the beginning and ending balances for our Level 3 assets and liabilities, which are measured at fair value on a recurring basis using significant unobservable inputs for the three and six months endedJune 30, 2013 and 2012:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Available for sale securities
Beginning balance	$	1,724		$	2,027		$	1,812		$	2,098
Principal returned	(193		)	(52		)	(561		)	(93		)
Accretion of discount	5			21			134			47
Total gains (losses) (realized/unrealized):
Included in other comprehensive income (loss)	5			81			156			183
Included in operations	—			(72		)	—			(230		)
Ending balance	$	1,541		$	2,005		$	1,541		$	2,005

The Level 3 assets included in the table above are not material to our financial position, results of operations or cash flows, and it is management's opinion that the sensitivity of the inputs used in determining the fair value of these assets is not material as well.

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Fixed index annuities - embedded derivatives
Beginning balance	$	3,848,902		$	2,921,037		$	3,337,556		$	2,530,496
Premiums less benefits	425,671			105,279			672,393			189,505
Change in unrealized gains, net	(527,521		)	(111,368		)	(262,897		)	194,947
Ending balance	$	3,747,052		$	2,914,948		$	3,747,052		$	2,914,948

Change in unrealized gains, net for each period in our embedded derivatives are included in change in fair value of embedded derivatives in the unaudited consolidated statements of operations.

Certain derivatives embedded in our fixed index annuity contracts are our most significant financial instrument measured at fair value that are categorized as Level 3 in the fair value hierarchy. The contractual obligations for future annual index credits within our fixed index annuity contracts are treated as a "series of embedded derivatives" over the expected life of the applicable contracts. We estimate the fair value of these embedded derivatives at each valuation date by the method described above under fixed index annuities - embedded derivatives. The projections of minimum guaranteed contract values include the same best estimate assumptions for policy decrements as were used to project policy contract values.

The most sensitive assumption in determining policy liabilities for fixed index annuities is the rates used to discount the excess projected contract values. As indicated above, the discount rate reflects our nonperformance risk. If the discount rates used to discount the excess projected contract values at June 30, 2013, were to increase by 100 basis points, the fair value of the embedded derivatives would decrease by $240.7 million recorded through operations as a decrease in the change in fair value of embedded derivatives and there would be a corresponding decrease of $147.2 million to our combined balance for deferred policy acquisition costs and deferred sales inducements recorded through operations as an increase in amortization of deferred policy acquisition costs and deferred sales inducements. A decrease by 100 basis points in the discount rate used to discount the excess projected contract values would increase the fair value of the embedded derivatives by $267.5 million recorded through operations as an increase in the change in fair value of embedded derivatives and increase our combined balance for deferred policy acquisition costs and deferred sales inducements by $161.1 million recorded through operations as a decrease in amortization of deferred policy acquisition costs and deferred sales inducements.

13

3. Investments

At June 30, 2013 and December 31, 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)
June 30, 2013
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	4,607	$	367	$	(36	)	$	4,938
United States Government sponsored agencies	1,241,898		4,796		(46,847		)	1,199,847
United States municipalities, states and territories	3,299,732		268,127		(24,701		)	3,543,158
Foreign government obligations	86,106		9,230		(2,525		)	92,811
Corporate securities	15,527,755		808,241		(336,669		)	15,999,327
Residential mortgage backed securities	2,337,399		167,051		(16,393		)	2,488,057
Commercial mortgage backed securities	1,304,028		1,714		(83,053		)	1,222,689
Other asset backed securities	987,562		27,416		(20,163		)	994,815
	$	24,789,087	$	1,286,942	$	(530,387	)	$	25,545,642
Held for investment:
Corporate security	$	76,170	$	—	$	(14,920	)	$	61,250
Equity securities, available for sale:
Finance, insurance, and real estate	$	8,915	$	875	$	—		$	9,790
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

During the six months endedJune 30, 2013 and 2012, we received $1.0 billion and $2.8 billion, respectively, in redemption proceeds related to calls of our callable United States Government sponsored agency securities and public and private corporate bonds, of which $1.7 billionfor the six months endedJune 30, 2012, were classified as held for investment. The proceeds from these redemptions that have been reinvested have primarily been in United States government sponsored agencies, corporate securities, commercial mortgage backed securities and other asset backed securities. At June 30, 2013, 30% of our fixed income securities have call features of which 5% ($1.3 billion) will become subject to call redemption during the next twelve months and $500.6 million of which are U.S. Government agency securities with a book yield of 0.75%. The $500.6 million of U.S. Government securities were expected to be called in July. However, with the increase in interest rates during June, these securities were not called and are currently yielding 3.75%. These securities are callable quarterly and a modest decline in interest rates from current levels could result in the calls being exercised on the next call date in October of 2013.

14

The amortized cost and fair value of fixed maturity securities at June 30, 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	$	113,074	$	116,889	$	—	$	—
Due after one year through five years	840,609		941,104		—		—
Due after five years through ten years	6,802,325		6,819,438		—		—
Due after ten years through twenty years	5,829,419		6,033,288		—		—
Due after twenty years	6,574,671		6,929,362		76,170		61,250
	20,160,098		20,840,081		76,170		61,250
Residential mortgage backed securities	2,337,399		2,488,057		—		—
Commercial mortgage backed securities	1,304,028		1,222,689		—		—
Other asset backed securities	987,562		994,815		—		—
	$	24,789,087	$	25,545,642	$	76,170	$	61,250

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:

	June 30, 2013			December 31, 2012
	(Dollars in thousands)
Net unrealized gains on available for sale fixed maturity securities and equity securities	$	757,430		$	2,223,933
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements	(416,281		)	(1,201,974		)
Deferred income tax valuation allowance reversal	22,534			22,534
Deferred income tax benefit	(119,403		)	(357,686		)
Net unrealized gains reported as accumulated other comprehensive income	$	244,280		$	686,807

The National Association of Insurance Commissioners (“NAIC”) assigns designations to fixed maturity securities. These designations range from Class 1 (highest quality) to Class 6 (lowest quality). In general, securities are assigned a designation based upon the ratings they are given by the Nationally Recognized Statistical Rating Organizations (“NRSRO’s”). The NAIC designations are utilized by insurers in preparing their annual statutory statements. NAIC Class 1 and 2 designations are considered “investment grade” while NAIC Class 3 through 6 designations are considered “non-investment grade.” Based on the NAIC designations, we had 98% of our fixed maturity portfolio rated investment grade at June 30, 2013 and December 31, 2012.

The following table summarizes the credit quality, as determined by NAIC designation, of our fixed maturity portfolio as of the dates indicated:

	June 30, 2013				December 31, 2012
NAIC Designation	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
1	$	15,440,564	$	16,049,276	$	13,737,381	$	15,250,560
2	8,878,184		9,028,631		7,838,186		8,533,121
3	475,652		457,918		398,294		387,222
4	68,807		69,502		53,879		56,151
5	—		—		—		—
6	2,050		1,565		5,375		6,603
	$	24,865,257	$	25,606,892	$	22,033,115	$	24,233,657

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The following tables show our investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities (consisting of 803 and 198 securities, respectively) have been in a continuous unrealized loss position, at June 30, 2013 and December 31, 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)
June 30, 2013
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	984	$	(36	)	$	—	$	—		$	984	$	(36	)
United States Government sponsored agencies	1,126,107		(46,847		)	—		—			1,126,107		(46,847		)
United States municipalities, states and territories	407,748		(24,701		)	—		—			407,748		(24,701		)
Foreign government obligations	27,269		(2,525		)	—		—			27,269		(2,525		)
Corporate securities:
Finance, insurance and real estate	1,295,619		(67,115		)	84,262		(7,814		)	1,379,881		(74,929		)
Manufacturing, construction and mining	2,631,633		(135,270		)	12,079		(1,797		)	2,643,712		(137,067		)
Utilities and related sectors	1,334,828		(64,359		)	29,728		(3,728		)	1,364,556		(68,087		)
Wholesale/retail trade	301,898		(17,027		)	—		—			301,898		(17,027		)
Services, media and other	747,156		(39,559		)	—		—			747,156		(39,559		)
Residential mortgage backed securities	293,301		(13,905		)	58,100		(2,488		)	351,401		(16,393		)
Commercial mortgage backed securities	1,064,758		(83,053		)	—		—			1,064,758		(83,053		)
Other asset backed securities	426,195		(16,816		)	22,823		(3,347		)	449,018		(20,163		)
	$	9,657,496	$	(511,213	)	$	206,992	$	(19,174	)	$	9,864,488	$	(530,387	)
Held for investment:
Corporate security:
Insurance	$	—	$	—		$	61,250	$	(14,920	)	$	61,250	$	(14,920	)
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	)

The following is a description of the factors causing the temporary unrealized losses by investment category as of June 30, 2013:

United States Government sponsored agencies: These securities are relatively long in duration; however, they are callable in less than 12 months making the value of such securities sensitive to changes in market interest rates. The timing of when some of these securities were purchased gave rise to unrealized losses at June 30, 2013.

United States municipalities, states and territories: These securities are relatively long in duration and their fair values are sensitive to changes in market interest rates. The timing of the purchase of these securities have resulted in unrealized losses at this point in time.

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Foreign government obligations: The unrealized losses on these securities are due to wider spreads on the announcement of increased capital expenditures with resulting higher leverage and greater supply.

Corporate securities: The unrealized losses in these securities are due partially to the timing of purchases in 2012 and 2013. These securities carry yields less than those available at June 30, 2013 as the result of rising interest rates in the first half of 2013. In addition, a small number of securities have seen their credit spreads remain wide due to issuer or industry specific news while some financial and industrial sector credit spreads remain wide due to continued economic uncertainty and concerns of economic instability.

Residential mortgage backed securities: At June 30, 2013, we had no exposure to sub-prime residential mortgage backed securities. All of our residential mortgage backed securities are pools of first-lien residential mortgage loans. Substantially all of the securities that we own are in the most senior tranche of the securitization in which they are structured and are not subordinated to any other tranche. Our "Alt-A" residential mortgage backed securities are comprised of 36 securities with a total amortized cost basis of $341.4 million and a fair value of $372.5 million. Despite recent improvements in the capital markets, the fair values of RMBS with weaker borrower characteristics continue at prices below amortized cost. These RMBS prices will likely remain below our cost basis until the housing market is able to absorb current and future foreclosures.

Commercial mortgage backed securities: The unrealized losses in these securities are due partially to the timing of purchases in 2012 and 2013. A number of purchases made in the middle of the fourth quarter 2012 were at yields lower than what could be executed at the end of this quarter due to the increase in the treasury yield since the time of purchase. Yield spreads for commercial mortgage backed securities have narrowed but remain attractive.

Other asset backed securities: The unrealized losses in these securities are predominantly assigned to financial sector capital trust securities which have longer maturity dates and have declined in price due to prolonged stress in the financial sector. Only one security in an unrealized loss position is rated below investment grade.

Approximately 95% and 75% of the unrealized losses on fixed maturity securities shown in the above table for June 30, 2013 and December 31, 2012, respectively, are on securities that are rated investment grade, defined as being the highest two NAIC designations. All of the securities with unrealized losses are current with respect to the payment of principal and interest.

Changes in net unrealized gains on investments for the three and six months endedJune 30, 2013 and 2012 are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
							(Dollars in thousands)
Fixed maturity securities held for investment carried at amortized cost	$	(964	)	$	1,690		$	(353	)	$	11,879
Investments carried at fair value:
Fixed maturity securities, available for sale	$	(1,339,484	)	$	603,462		$	(1,458,554	)	$	388,374
Equity securities, available for sale	(10,168		)	(787		)	(7,949		)	3,637
	(1,349,652		)	602,675			(1,466,503		)	392,011
Adjustment for effect on other balance sheet accounts:
Deferred policy acquisition costs and deferred sales inducements	707,525			(339,408		)	785,693			(203,330		)
Deferred income tax asset/liability	224,744			(92,142		)	238,283			(66,038		)
	932,269			(431,550		)	1,023,976			(269,368		)
Change in net unrealized gains on investments carried at fair value	$	(417,383	)	$	171,125		$	(442,527	)	$	122,643

Proceeds from sales of available for sale securities for the six months endedJune 30, 2013 and 2012 were $820.2 million and $165.2 million, respectively. Scheduled principal repayments, calls and tenders for available for sale securities for the six months endedJune 30, 2013 and 2012 were $1.6 billion and $1.4 billion, respectively.

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Realized gains and losses on sales are determined on the basis of specific identification of investments based on the trade date. Net realized gains (losses) on investments, excluding net OTTI losses for the three and six months endedJune 30, 2013 and 2012 are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Available for sale fixed maturity securities:
Gross realized gains	$	7,628		$	4,030		$	20,643		$	5,048
Gross realized losses	(823		)	(59		)	(3,010		)	(355		)
	6,805			3,971			17,633			4,693
Equity securities:
Gross realized gains	9,571			—			9,571			562
Other investments:
Gain on sale of real estate	715			1,450			1,304			2,895
Loss on sale of real estate	—			—			(466		)	—
Impairment losses on real estate	(145		)	(1,669		)	(145		)	(2,643		)
	570			(219		)	693			252
Mortgage loans on real estate:
Increase in allowance for credit losses	(1,257		)	(4,363		)	(1,623		)	(12,194		)
	$	15,689		$	(611	)	$	26,274		$	(6,687	)

We review and analyze all investments on an ongoing basis for changes in market interest rates and credit deterioration. This review process includes analyzing our ability to recover the amortized cost basis of each investment that has a fair value that is materially lower than its amortized cost and requires a high degree of management judgment and involves uncertainty. The evaluation of securities for other than temporary impairments is a quantitative and qualitative process, which is subject to risks and uncertainties.

We have a policy and process in place to identify securities that could potentially have impairments that are other than temporary. This process involves monitoring market events and other items that could impact issuers. The evaluation includes but is not limited to such factors as:

• the length of time and the extent to which the fair value has been less than amortized cost or cost;

• whether the issuer is current on all payments and all contractual payments have been made as agreed;

• the remaining payment terms and the financial condition and near-term prospects of the issuer;

• the lack of ability to refinance due to liquidity problems in the credit market;

• the fair value of any underlying collateral;

• the existence of any credit protection available;

• our intent to sell and whether it is more likely than not we would be required to sell prior to recovery for debt securities;

• our assessment in the case of equity securities including perpetual preferred stocks with credit deterioration that the security cannot recover to cost in a reasonable period of time;

• our intent and ability to retain equity securities for a period of time sufficient to allow for recovery;

• consideration of rating agency actions; and

• changes in estimated cash flows of mortgage and asset backed securities.

We determine whether other than temporary impairment losses should be recognized for debt and equity securities by assessing all facts and circumstances surrounding each security. Where the decline in market value of debt securities is attributable to changes in market interest rates or to factors such as market volatility, liquidity and spread widening, and we anticipate recovery of all contractual or expected cash flows, we do not consider these investments to be other than temporarily impaired because we do not intend to sell these investments and it is not more likely than not we will be required to sell these investments before a recovery of amortized cost, which may be maturity. For equity securities, we recognize an impairment charge in the period in which we do not have the intent and ability to hold the securities until recovery of cost or we determine that the security will not recover to book value within a reasonable period of time. We determine what constitutes a reasonable period of time on a security-by-security basis by considering all the evidence available to us, including the magnitude of any unrealized loss and its duration. In any event, this period does not exceed 18 months from the date of impairment for perpetual preferred securities for which there is evidence of deterioration in credit of the issuer and common equity securities. For perpetual preferred securities absent evidence of a deterioration in credit of the issuer we apply an impairment model, including an anticipated recovery period, similar to a debt security.

Other than temporary impairment losses on equity securities are recognized in operations. If we intend to sell a debt security or if it is more likely than not that we will be required to sell a debt security before recovery of its amortized cost basis, other than temporary impairment has occurred and the difference between amortized cost and fair value will be recognized as a loss in operations.

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If we do not intend to sell and it is not more likely than not we will be required to sell the debt security but also do not expect to recover the entire amortized cost basis of the security, an impairment loss would be recognized in operations in the amount of the expected credit loss. We determine the amount of expected credit loss by calculating the present value of the cash flows expected to be collected discounted at each security's acquisition yield based on our consideration of whether the security was of high credit quality at the time of acquisition. The difference between the present value of expected future cash flows and the amortized cost basis of the security is the amount of credit loss recognized in operations. The remaining amount of the other than temporary impairment is recognized in other comprehensive income.

The determination of the credit loss component of a mortgage backed security is based on a number of factors. The primary consideration in this evaluation process is the issuer's ability to meet current and future interest and principal payments as contractually stated at time of purchase. Our review of these securities includes an analysis of the cash flow modeling under various default scenarios considering independent third party benchmarks, the seniority of the specific tranche within the structure of the security, the composition of the collateral and the actual default, loss severity and prepayment experience exhibited. With the input of third party assumptions for default projections, loss severity and prepayment expectations, we evaluate the cash flow projections to determine whether the security is performing in accordance with its contractual obligation.

We utilize the models from a leading structured product software specialist serving institutional investors. These models incorporate each security's seniority and cash flow structure. In circumstances where the analysis implies a potential for principal loss at some point in the future, we use the "best estimate" cash flow projection discounted at the security's effective yield at acquisition to determine the amount of our potential credit loss associated with this security. The discounted expected future cash flows equates to our expected recovery value. Any shortfall of the expected recovery when compared to the amortized cost of the security will be recorded as the credit loss component of other than temporary impairment.

The cash flow modeling is performed on a security-by-security basis and incorporates actual cash flows on the residential mortgage backed securities through the current period, as well as the projection of remaining cash flows using a number of assumptions including default rates, prepayment rates and loss severity rates. The default curves we use are tailored to the Prime or Alt-A residential mortgage backed securities that we own, which assume lower default rates and loss severity for Prime securities versus Alt-A securities. These default curves are scaled higher or lower depending on factors such as current underlying mortgage loan performance, rating agency loss projections, loan to value ratios, geographic diversity, as well as other appropriate considerations.

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 six months endedJune 30, 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
Six months ended June 30, 2013
Prime	2003	5.1	%	5.1	%	2	%	2	%	30	%	30	%
	2005	6.5	%	7.7	%	8	%	17	%	50	%	50	%
	2006	6.0	%	6.9	%	9	%	16	%	50	%	50	%
	2007	6.5	%	6.7	%	12	%	25	%	40	%	60	%
	2008	6.6	%	6.6	%	16	%	16	%	45	%	45	%
Alt-A	2005	5.6	%	8.7	%	15	%	25	%	5	%	65	%
	2007	6.2	%	6.9	%	38	%	52	%	60	%	65	%
Six months ended June 30, 2012
Prime	2005	6.5	%	7.7	%	9	%	13	%	50	%	50	%
	2006	5.8	%	7.4	%	9	%	19	%	40	%	55	%
	2007	6.2	%	7.3	%	11	%	38	%	40	%	60	%
Alt-A	2005	5.6	%	7.7	%	12	%	27	%	5	%	50	%
	2006	6.0	%	6.0	%	32	%	46	%	55	%	60	%
	2007	6.2	%	7.0	%	31	%	55	%	55	%	60	%

The determination of the credit loss component of a corporate bond (including redeemable preferred stocks) is based on the underlying financial performance of the issuer and their ability to meet their contractual obligations. Considerations in our evaluation include, but are not limited to, credit rating changes, financial statement and ratio analysis, changes in management, significant changes in credit spreads, breaches of financial covenants and a review of the economic outlook for the industry and markets in which they trade. In circumstances where an issuer appears unlikely to meet its future obligation, or the security's price decline is deemed other than temporary, an estimate of credit loss is determined. Credit loss is calculated using default probabilities as derived from the credit default swaps markets in conjunction with recovery rates derived from independent third party analysis or a best estimate of credit loss. This credit loss rate is then incorporated into a present value calculation based on an expected principal loss in the future discounted at the yield at the date of purchase and compared to amortized cost to determine the amount of credit loss associated with the security.

In addition, for debt securities which we do not intend to sell and it is not more likely than not we will be required to sell, but our intent changes due to changes or events that could not have been reasonably anticipated, an other than temporary impairment charge is recognized. Once an

19

impairment charge has been recorded, we then continue to review the other than temporarily impaired securities for appropriate valuation on an ongoing basis. Unrealized losses may be recognized in future periods through a charge to earnings, should we later conclude that the decline in fair value below amortized cost is other than temporary pursuant to our accounting policy described above. The use of different methodologies and assumptions to determine the fair value of investments and the timing and amount of impairments may have a material effect on the amounts presented in our consolidated financial statements.

The following table summarizes other than temporary impairments for the three and six months endedJune 30, 2013 and 2012, 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)
Three months ended June 30, 2013
Fixed maturity securities, available for sale:
United States Government sponsored agencies	2	$	(2,775	)	$	—		$	(2,775	)
Three months ended June 30, 2012
Fixed maturity securities, available for sale:
Residential mortgage backed securities	7	$	(375	)	$	(603	)	$	(978	)
Six months ended June 30, 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	5	—			(1,048		)	(1,048		)
Equity security, available for sale:
Industrial	1	(428		)	—			(428		)
	9	$	(4,964	)	$	(1,048	)	$	(6,012	)
Six months ended June 30, 2012
Fixed maturity securities, available for sale:
Residential mortgage backed securities	22	$	(2,156	)	$	(1,703	)	$	(3,859	)

Other than temporary impairments during the three and six months endedJune 30, 2013 on United States Government sponsored agencies were recognized as we had the intent to sell these securities as of June 30, 2013. The other than temporary impairments were determined based on the market values of the underlying securities at June 30, 2013.

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:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Cumulative credit loss at beginning of period	$	(129,813	)	$	(121,976	)	$	(134,027	)	$	(119,095	)
Credit losses on securities for which OTTI has not previously been recognized	(2,775		)	(47		)	(4,536		)	(47		)
Additional credit losses on securities for which OTTI has previously been recognized	—			(931		)	(1,048		)	(3,812		)
Accumulated losses on securities that were disposed of during the period	4,075			—			11,098			—
Cumulative credit loss at end of period	$	(128,513	)	$	(122,954	)	$	(128,513	)	$	(122,954	)

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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 June 30, 2013 and December 31, 2012:

	Amortized Cost		OTTI Recognized in Other Comprehensive Income			Change in Fair Value Since OTTI was Recognized		Fair Value
	(Dollars in thousands)
June 30, 2013
Fixed maturity securities, available for sale:
Corporate securities	$	—	$	—		$	24	$	24
Residential mortgage backed securities	764,746		(176,557		)	236,236		824,425
Equity securities, available for sale:
Finance, insurance and real estate and services	1,415		—			605		2,020
	$	766,161	$	(176,557	)	$	236,865	$	826,469
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

4. Mortgage Loans on Real Estate

Our mortgage loan portfolio, summarized in the following table, totaled $2.6 billion at June 30, 2013 and December 31, 2012, with commitments outstanding of $93.8 million at June 30, 2013.

	June 30, 2013			December 31, 2012
	(Dollars in thousands)
Principal outstanding	$	2,616,179		$	2,658,883
Loan loss allowance	(31,676		)	(34,234		)
Deferred prepayment fees	(800		)	(709		)
Carrying value	$	2,583,703		$	2,623,940

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The portfolio consists of commercial mortgage loans collateralized by the related properties and diversified as to property type, location and loan size. Our mortgage lending policies establish limits on the amount that can be loaned to one borrower and other criteria to attempt to reduce the risk of default. The mortgage loan portfolio is summarized by geographic region and property type as follows:

	June 30, 2013				December 31, 2012
	Principal Outstanding		Percent		Principal Outstanding		Percent
	(Dollars in thousands)
Geographic distribution
East	$	760,025	29.1	%	$	732,762	27.5	%
Middle Atlantic	147,167		5.6	%	155,094		5.8	%
Mountain	359,436		13.7	%	387,599		14.6	%
New England	23,131		0.9	%	26,385		1.0	%
Pacific	322,519		12.3	%	320,982		12.1	%
South Atlantic	459,052		17.6	%	458,802		17.3	%
West North Central	369,363		14.1	%	370,168		13.9	%
West South Central	175,486		6.7	%	207,091		7.8	%
	$	2,616,179	100.0	%	$	2,658,883	100.0	%
Property type distribution
Office	$	643,747	24.6	%	$	666,467	25.1	%
Medical Office	137,746		5.3	%	136,764		5.1	%
Retail	680,618		26.0	%	677,951		25.5	%
Industrial/Warehouse	666,935		25.5	%	692,637		26.1	%
Hotel	83,363		3.2	%	94,045		3.5	%
Apartment	233,609		8.9	%	219,335		8.2	%
Mixed use/other	170,161		6.5	%	171,684		6.5	%
	$	2,616,179	100.0	%	$	2,658,883	100.0	%

We evaluate our mortgage loan portfolio for the establishment of a loan loss reserve by specific identification of impaired loans and the measurement of an estimated loss for each individual loan identified. A mortgage loan is impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. If we determine that the value of any specific mortgage loan is impaired, the carrying amount of the mortgage loan will be reduced to its fair value, based upon the present value of expected future cash flows from the loan discounted at the loan's effective interest rate, or the fair value of the underlying collateral less estimated costs to sell. In addition, we analyze the mortgage loan portfolio for the need of a general loan allowance for probable losses on all other loans. The amount of the general loan allowance is based upon management's evaluation of the collectability of the loan portfolio, historical loss experience, delinquencies, credit concentrations, underwriting standards and national and local economic conditions.

Our financing receivables currently consist of one portfolio segment which is our commercial mortgage loan portfolio. These are mortgage loans with collateral consisting of commercial real estate and borrowers consisting mostly of limited liability partnerships or limited liability corporations.

We have a population of mortgage loans that we have been carrying with workout terms (e.g. interest only periods, period of suspended payments, etc.) and a population of mortgage loans that have been in a delinquent status (i.e. more than 60 days past due). It is from this population that we have been recognizing some impairment loss due to nonpayment and, in some cases, eventual satisfaction of the loan by taking ownership of the collateral real estate. In most cases the fair value of the collateral less estimated costs to sell such collateral has been less than the outstanding principal amount of the mortgage loan.

Our general loan loss allowance for the period ended June 30, 2012 was calculated utilizing a group of loans which had a debt service coverage ratio (DSCR) of less than 1.0. The DSCR is calculated by dividing the net operating income of the mortgaged property by the contractual principal and interest payment due for the corresponding period. We developed the loss rates to apply to this group of loans by dividing the specific impairment loss for the most recent 4 quarters by the principal outstanding of the loans with a DSCR of less than 1.0.

Currently, we rate the mortgage loans in our portfolio based on factors such as historical operating performance, loan to value ratio and economic outlook, among others. We calculate a loss factor to apply to each rating based on historical losses we have recognized in our mortgage loan portfolio. We apply the loss factors to the total principal outstanding within each rating category to determine an appropriate estimate of general loan loss allowance at June 30, 2013. We began this process in the third quarter of 2012.

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The following tables present a rollforward of our specific and general valuation allowances for mortgage loans on real estate:

	Three Months Ended June 30, 2013						Three Months Ended June 30, 2012
	Specific Allowance			General Allowance			Specific Allowance			General Allowance
	(Dollars in thousands)
Beginning allowance balance	$	(22,631	)	$	(10,400	)	$	(29,595	)	$	(10,300	)
Charge-offs	2,612			—			7,613			—
Recoveries	—			—			—			—
Provision for credit losses	(1,157		)	(100		)	(3,463		)	(900		)
Ending allowance balance	$	(21,176	)	$	(10,500	)	$	(25,445	)	$	(11,200	)

	Six Months Ended June 30, 2013						Six Months Ended June 30, 2012
	Specific Allowance			General Allowance			Specific Allowance			General Allowance
	(Dollars in thousands)
Beginning allowance balance	$	(23,134	)	$	(11,100	)	$	(23,664	)	$	(9,300	)
Charge-offs	4,181			—			8,513			—
Recoveries	—			—			—			—
Provision for credit losses	(2,223		)	600			(10,294		)	(1,900		)
Ending allowance balance	$	(21,176	)	$	(10,500	)	$	(25,445	)	$	(11,200	)

The specific allowance is a total of credit loss allowances on loans which are individually evaluated for impairment. The general allowance is the group of loans discussed above which are collectively evaluated for impairment. The following table presents the total outstanding principal of loans evaluated for impairment by basis of impairment method:

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Individually evaluated for impairment	$	46,707	$	53,110
Collectively evaluated for impairment	2,569,472		2,605,773
Total loans evaluated for impairment	$	2,616,179	$	2,658,883

The amount of charge-offs include the amount of allowance that has been established for loans that were satisfied by taking ownership of the collateral. When the property is taken it is recorded at its fair value as a component of other investments and the mortgage loan is recorded as fully paid, with any allowance for credit loss that has been established charged off. Fair value of the real estate is determined by third party appraisal. There could be other situations that develop where we have established a larger specific loan loss allowance than is needed based on increases in the fair value of collateral supporting collateral dependent loans, or improvements in the financial position of a borrower so that a loan would become reliant on cash flows from debt service instead of dependent upon sale of the collateral. Charge-offs of the allowance would be recognized in those situations as well. We define collateral dependent loans as those mortgage loans for which we will depend on the value of the collateral real estate to satisfy the outstanding principal of the loan.

During the second quarter of 2013, no mortgage loans were satisfied by taking ownership of any real estate serving as collateral and during the six months ended June 30, 2013, one mortgage loan was satisfied by taking ownership of the real estate serving as collateral compared to four and six mortgage loans for the same periods in 2012. The following table summarizes the activity in the real estate owned which was obtained in satisfaction of mortgage loans on real estate:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Real estate owned at beginning of period	$	28,764		$	35,824		$	33,172		$	36,821
Real estate acquired in satisfaction of mortgage loans	—			8,683			844			11,985
Additions	480			117			480			117
Sales	(2,333		)	(4,283		)	(7,413		)	(7,366		)
Impairments	(145		)	(1,669		)	(145		)	(2,643		)
Depreciation	(157		)	(282		)	(329		)	(524		)
Real estate owned at end of period	$	26,609		$	38,390		$	26,609		$	38,390

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We analyze credit risk of our mortgage loans by analyzing all available evidence on loans that are delinquent and loans that are in a workout period.

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Credit Exposure--By Payment Activity
Performing	$	2,572,527	$	2,597,440
In workout	28,326		26,723
Collateral dependent	15,326		34,720
	$	2,616,179	$	2,658,883

Mortgage loans are considered delinquent when they become 60 days past due. When loans become 90 days past due, become collateral dependent or enter a period with no debt service payments required we place them on non-accrual status and discontinue recognizing interest income. If payments are received on a delinquent loan, interest income is recognized to the extent it would have been recognized if normal principal and interest would have been received timely. If payments are received to bring a delinquent loan back to current we will resume accruing interest income on that loan. Outstanding principal of loans in a non-accrual status at June 30, 2013 and December 31, 2012 totaled $15.3 million and $34.7 million, respectively.

All of our commercial mortgage loans depend on the cash flow of the borrower to be at a sufficient level to service the principal and interest payments as they come due. In general, cash inflows of the borrowers are generated by collecting monthly rent from tenants occupying space within the borrowers' properties. Our borrowers face collateral risks such as tenants going out of business, tenants struggling to make rent payments as they become due, and tenants canceling leases and moving to other locations. We have a number of loans where the real estate is occupied by a single tenant. Our borrowers sometimes face both a reduction in cash flow on their mortgage property as well as a reduction in the fair value of the real estate collateral. If borrowers are unable to replace lost rent revenue and increases in the fair value of their property do not materialize we could potentially incur more losses than what we have allowed for in our specific and general loan loss allowances.

Aging of financing receivables is summarized in the following table, with loans in a "workout" period as of the reporting date considered current if payments are current in accordance with agreed upon terms:

	30 - 59 Days		60 - 89 Days		90 Days and Over		Total Past Due		Current		Collateral Dependent Receivables		Total Financing Receivables
	(Dollars in thousands)
Commercial Mortgage Loans
June 30, 2013	$	—	$	—	$	—	$	—	$	2,600,853	$	15,326	$	2,616,179
December 31, 2012	$	—	$	—	$	—	$	—	$	2,624,163	$	34,720	$	2,658,883

Financing receivables summarized in the following table represent all loans that we are either not currently collecting or those we feel it is probable we will not collect all amounts due according to the contractual terms of the loan agreements (all loans that we have worked with the borrower to alleviate short-term cash flow issues, loans delinquent for more than 60 days at the reporting date, loans we have determined to be collateral dependent and loans that we have recorded specific impairments on that we feel may continue to have performance issues).

	Recorded Investment		Unpaid Principal Balance		Related Allowance			Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
June 30, 2013
Mortgage loans with an allowance	$	25,531	$	46,707	$	(21,176	)	$	27,923	$	885
Mortgage loans with no related allowance	18,699		18,699		—			18,760		531
	$	44,230	$	65,406	$	(21,176	)	$	46,683	$	1,416
December 31, 2012
Mortgage loans with an allowance	$	29,976	$	53,110	$	(23,134	)	$	37,480	$	1,946
Mortgage loans with no related allowance	27,765		27,765		—			27,696		1,664
	$	57,741	$	80,875	$	(23,134	)	$	65,176	$	3,610

The loans that are categorized as "in workout" consist of loans that we have agreed to lower or no mortgage payments for a period of time while the borrowers address cash flow and/or operational issues. The key features of these workouts have been determined on a loan-by-loan basis. Most of these loans are in a period of low cash flow due to tenants vacating their space or tenants requesting rent relief during difficult economic periods. Generally, we have allowed the borrower a six month interest only period and in some cases a twelve month period of interest only. Interest only workout loans are expected to return to their regular debt service payments after the interest only period. Interest only loans that are not fully amortizing will have a larger balance at their balloon date than originally contracted. Fully amortizing loans that are in interest only periods will have larger debt service payments for their remaining term due to lost principal payments during the interest only period. In

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limited circumstances we have allowed borrowers to pay the principal portion of their loan payment into an escrow account that can be used for capital and tenant improvements for a period of not more than twelve months. In these situations new loan amortization schedules are calculated based on the principal not collected during this twelve month workout period and larger payments are collected for the remaining term of each loan. In all cases, original interest rate and maturity date have not been modified and we have not forgiven any principal amounts.

A Troubled Debt Restructuring ("TDR") is a situation where we have granted a concession to a borrower for economic or legal reasons related to the borrower's financial difficulties that we would not otherwise consider. A mortgage loan that has been granted new terms, including workout terms as described previously, would be considered a TDR if it meets conditions that would indicate a borrower is experiencing financial difficulty and the new terms constitute a concession on our part. We analyze all loans where we have agreed to workout terms and all loans that we have refinanced to determine if they meet the definition of a TDR. We consider the following factors in determining whether or not a borrower is experiencing financial difficulty:

• borrower is in default,

• borrower has declared bankruptcy,

• there is growing concern about the borrower's ability to continue as a going concern,

• borrower has insufficient cash flows to service debt,

• borrower's inability to obtain funds from other sources, and

• there is a breach of financial covenants by the borrower.

If the borrower is determined to be in financial difficulty, we consider the following conditions to determine if the borrower was granted a concession:

• assets used to satisfy debt are less than our recorded investment,

• interest rate is modified,

• maturity date extension at an interest rate less than market rate,

• capitalization of interest,

• delaying principal and/or interest for a period of three months or more, and

• partial forgiveness of the balance or charge-off.

Mortgage loan workouts, refinances or restructures that are classified as TDRs are individually evaluated and measured for impairment. A summary of mortgage loans on commercial real estate with outstanding principal at June 30, 2013 and December 31, 2012 that we determined to be TDRs are as follows:

Geographic Region	Number of TDRs	Principal Balance Outstanding		Specific Loan Loss Allowance			Net Carrying Amount
		(Dollars in thousands)
June 30, 2013
East	1	$	3,712	$	(949	)	$	2,763
Mountain	8	23,019		(1,172		)	21,847
South Atlantic	7	17,249		(5,898		)	11,351
East North Central	2	3,697		(1,029		)	2,668
West North Central	1	1,938		—			1,938
West South Central	1	1,458		(255		)	1,203
	20	$	51,073	$	(9,303	)	$	41,770
December 31, 2012
East	1	$	4,208	$	(1,425	)	$	2,783
Mountain	10	28,786		(1,702		)	27,084
South Atlantic	9	23,358		(5,047		)	18,311
East North Central	1	2,232		(467		)	1,765
West North Central	3	9,466		(2,328		)	7,138
	24	$	68,050	$	(10,969	)	$	57,081

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5. Derivative Instruments

We recognize all derivative instruments as assets or liabilities in the consolidated balance sheets at fair value. None of our derivatives qualify for hedge accounting, thus, any change in the fair value of the derivatives is recognized immediately in the consolidated statements of operations. The fair value of our derivative instruments, including derivative instruments embedded in fixed index annuity contracts, presented in the consolidated balance sheets are as follows:

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Assets
Derivative instruments
Call options	$	629,135	$	415,258
Other assets
2015 notes hedges	71,400		43,105
Interest rate caps	5,565		3,247
Interest rate swap	274		—
	$	706,374	$	461,610
Liabilities
Policy benefit reserves - annuity products
Fixed index annuities - embedded derivatives	$	3,747,052	$	3,337,556
Other liabilities
2015 notes embedded derivatives	71,400		43,105
Interest rate swap	—		4,261
	$	3,818,452	$	3,384,922

The changes in fair value of derivatives included in the unaudited consolidated statements of operations are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Change in fair value of derivatives:
Call options	$	58,200		$	(122,241	)	$	402,854		$	119,279
2015 notes hedges	197			(24,163		)	28,295			(7,412		)
Interest rate swap	3,802			(4,038		)	4,535			(3,148		)
Interest rate caps	1,841			(405		)	2,318			(405		)
	$	64,040		$	(150,847	)	$	438,002		$	108,314
Change in fair value of embedded derivatives:
2015 notes embedded derivatives	$	197		$	(24,163	)	$	28,295		$	(7,412	)
Fixed index annuities	(408,606		)	(56,826		)	(73,432		)	285,489
	$	(408,409	)	$	(80,989	)	$	(45,137	)	$	278,077

We have fixed index annuity products that guarantee the return of principal to the policyholder and credit interest based on a percentage of the gain in a specified market index. When fixed index annuity deposits are received, a portion of the deposit is used to purchase derivatives consisting of call options on the applicable market indices to fund the index credits due to fixed index annuity policyholders. Substantially all such call options are one year options purchased to match the funding requirements of the underlying policies. The call options are marked to fair value with the change in fair value included as a component of revenues. The change in fair value of derivatives includes the gains or losses recognized at the expiration of the option term or upon early termination and the changes in fair value for open positions. On the respective anniversary dates of the index policies, the index used to compute the annual index credit is reset and we purchase new one-year call options to fund the next annual index credit. We manage the cost of these purchases through the terms of our fixed index annuities, which permit us to change caps, participation rates, and/or asset fees, subject to guaranteed minimums on each policy's anniversary date. By adjusting caps, participation rates, or asset fees, we can generally manage option costs except in cases where the contractual features would prevent further modifications.

Our strategy attempts to mitigate any potential risk of loss under these agreements through a regular monitoring process which evaluates the program's effectiveness. We do not purchase call options that would require payment or collateral to another institution and our call options do not contain counterparty credit-risk-related contingent features. We are exposed to risk of loss in the event of nonperformance by the counterparties and, accordingly, we purchase our option contracts from multiple counterparties and evaluate the creditworthiness of all counterparties prior to purchase of the contracts. All of these options have been purchased from nationally recognized financial institutions with a Standard and Poor's

26

credit rating of A- or higher at the time of purchase and the maximum credit exposure to any single counterparty is subject to concentration limits. We also have credit support agreements that allow us to request the counterparty to provide collateral to us when the fair value of our exposure to the counterparty exceeds specified amounts.

The notional amount and fair value of our call options by counterparty and each counterparty's current credit rating are as follows:

			June 30, 2013				December 31, 2012
Counterparty	Credit Rating (S&P)	Credit Rating (Moody's)	Notional Amount		Fair Value		Notional Amount		Fair Value
			(Dollars in thousands)
Bank of America	A	A3	$	1,075,595	$	39,162	$	568,786	$	16,533
Barclays	A	A2	3,617,125		131,476		3,463,777		103,929
BNP Paribas	A+	A2	1,895,967		68,448		2,207,097		60,301
Citibank, N.A.	A	A3	1,501,845		64,812		2,878,588		67,592
Credit Suisse	A	A1	2,922,641		78,855		936,625		21,518
Deutsche Bank	A	A2	874,245		42,587		886,688		20,787
HSBC	AA-	A1	301,678		14,010		295,520		6,539
J.P. Morgan	A+	Aa3	643,078		20,635		735,016		21,940
Morgan Stanley	A-	Baa1	1,961,040		70,329		1,590,505		40,113
Wells Fargo	AA-	Aa3	2,374,518		98,821		2,060,903		56,006
			$	17,167,732	$	629,135	$	15,623,505	$	415,258

As of June 30, 2013 and December 31, 2012, we held $572.2 million and $328.7 million, respectively, of cash and cash equivalents and other securities from counterparties for derivative collateral, which is included in other liabilities on our consolidated balance sheets. This derivative collateral limits the maximum amount of economic loss due to credit risk that we would incur if parties to the call options failed completely to perform according to the terms of the contracts to $78.4 million and $93.7 million at June 30, 2013 and December 31, 2012, respectively.

The future annual index credits on our fixed index annuities are treated as a "series of embedded derivatives" over the expected life of the applicable contract. We do not purchase call options to fund the index liabilities which may arise after the next policy anniversary date. We must value both the call options and the related forward embedded options in the policies at fair value.

We entered into an interest rate swap and interest rate caps to manage interest rate risk associated with the floating rate component on certain of our subordinated debentures. See note 10 in our Annual Report on Form 10-K for the year ended December 31, 2012 for more information on our subordinated debentures. The terms of the interest rate swap provide that we pay a fixed rate of interest and receive a floating rate of interest. The terms of the interest rate caps limit the three month London Interbank Offered Rate to 2.50%. The interest rate swap and caps are not effective hedges under accounting guidance for derivative instruments and hedging activities. Therefore, we record the interest rate swap and caps at fair value and any net cash payments received or paid are included in the change in fair value of derivatives in the unaudited consolidated statements of operations.

Details regarding the interest rate swap are as follows:

	Notional			Pay			June 30, 2013		December 31, 2012
Maturity Date	Amount		Receive Rate	Rate		Counterparty	Fair Value		Fair Value
							(Dollars in thousands)
March 15, 2021	$	85,500	*LIBOR	2.415	%	SunTrust	$	274	$	(4,261	)

___________________________________

* - three month London Interbank Offered Rate

Details regarding the interest rate caps are as follows:

	Notional			Cap			June 30, 2013		December 31, 2012
Maturity Date	Amount		Floating Rate	Rate		Counterparty	Fair Value		Fair Value
							(Dollars in thousands)
July 7, 2021	$	40,000	*LIBOR	2.50	%	SunTrust	$	2,804	$	1,634
July 8, 2021	12,000		*LIBOR	2.50	%	SunTrust	841		490
July 29, 2021	27,000		*LIBOR	2.50	%	SunTrust	1,920		1,123
	$	79,000					$	5,565	$	3,247

___________________________________

* - three month London Interbank Offered Rate

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The interest rate swap has a forward starting date beginning in March 2014 and converts floating rates to fixed rates for seven years. The interest rate caps have a forward starting date beginning in July 2014 and cap our interest rates for seven years. As of June 30, 2013, we held $6.4 million of cash and cash equivalents from the counterparty for derivative collateral related to the swap and caps, which is included in other liabilities on our consolidated balance sheets.

6. Notes Payable

The convertible senior notes included in notes payable are accounted for separately as a liability component and an equity component in the consolidated balance sheets. The liability component and equity component are as follows:

	June 30, 2013						December 31, 2012
	September 2015 Notes			December 2029 Notes			September 2015 Notes			December 2029 Notes			December 2024 Notes
	(Dollars in thousands)
Notes payable:
Principal amount of liability component	$	200,000		$	115,839		$	200,000		$	115,839		$	28,243
Unamortized discount	(18,285		)	(9,428		)	(21,944		)	(12,269		)	—
Net carrying amount of liability component	$	181,715		$	106,411		$	178,056		$	103,570		$	28,243
Additional paid-in capital:
Carrying amount of equity component				$	15,586					$	15,586		$	22,637
Amount by which the if-converted value exceeds principal	$	54,179		$	77,831		$	—		$	30,382		$	—

The discount is being amortized over the expected lives of the notes, which is December 15, 2014 for the 2029 notes and September 15, 2015 for the 2015 notes. The effective interest rates during the discount amortization periods are 8.9% and 11.9% on the 2015 notes and the 2029 notes, respectively. The interest cost recognized in operations for the convertible notes, inclusive of the coupon and amortization of the discount and debt issue costs, was $6.8 million and $14.0 million for the three and six months ended June 30, 2013, respectively, and $7.1 million and $14.1 million for the same periods in 2012.

We are required to include the dilutive effect of the 2029 notes in our diluted earnings per share calculation. Because these notes include a mandatory cash settlement feature for the principal amount, incremental dilutive shares will only exist when the fair value of our common stock at the end of the reporting period exceeds the conversion price per share of $9.57. At June 30, 2013 and 2012, the conversion premium of the 2029 notes was dilutive and the effect has been included in diluted earnings per share for the three and six months ended June 30, 2013 and 2012. The 2015 notes and the 2015 notes hedges are excluded from the dilutive effect in our diluted earnings per share calculation as they are currently to be settled only in cash. The 2015 warrants could have a dilutive effect on our earnings per share to the extent that the price of our common stock exceeds the strike price of the 2015 warrants.

On March 25, 2013, notice of mandatory redemption was issued for our 2024 notes. $25.8 million principal amount of the convertible notes exercised their conversion rights prior to the April 30, 2013 mandatory redemption date. The holders of these notes received the principal amount of their notes in cash and the conversion premium in shares of our common stock, for which 216,729 shares were issued. The balance of the convertible notes ($2.5 million principal amount) was redeemed for cash.

In 2011, we entered into a three year $160 million revolving line of credit agreement with seven banks. The interest rate is floating at a rate based on our election that will be equal to the alternate base rate (as defined in the credit agreement) plus the applicable margin or the adjusted LIBOR rate (as defined in the credit agreement) plus the applicable margin. We also pay a commitment fee on the available unused portion of the credit facility. The applicable margin and commitment fee rate are based on our credit rating and can change throughout the period of the credit facility. Based upon our current credit rating, the applicable margin is 2.00% for alternate base rate borrowings and 3.00% for adjusted LIBOR rate borrowings and the commitment fee is 0.50%. Under this agreement, we are required to maintain a minimum risk-based capital ratio at American Equity Life, a maximum ratio of debt to total capital, a minimum cash coverage ratio, and a minimum level of statutory surplus at American Equity Life. At June 30, 2013, $15.0 million was outstanding. No amount was outstanding at December 31, 2012.

As part of our investment strategy, we enter into securities repurchase agreements (short-term collateralized borrowings). The maximum amount borrowed during the six months ended June 30, 2013 was $160.4 million. We had no borrowings under repurchase agreements during the six months ended June 30, 2012. When we do borrow cash on these repurchase agreements, we pledge collateral in the form of debt securities with fair values approximately equal to the amount due and we use the cash to purchase debt securities ahead of the time we collect the cash from selling annuity policies to avoid a lag between the investment of funds and the obligation to credit interest to policyholders. We earn investment income on the securities purchased with these borrowings at a rate in excess of the cost of these borrowings. Such borrowings averaged $10.0 million and $5.0 million for the three and six months ended June 30, 2013, respectively. The weighted average interest rate on amounts due under repurchase agreements was 0.32% for both the three and six months ended June 30, 2013.

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7. Commitments and Contingencies

We are occasionally involved in litigation, both as a defendant and as a plaintiff. In addition, state regulatory bodies, such as state insurance departments, the SEC, FINRA, the Department of Labor, and other regulatory bodies regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, the Employee Retirement Income Security Act of 1974, as amended, and laws governing the activities of broker-dealers.

In accordance with applicable accounting guidelines, we establish an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. As a litigation or regulatory matter is developing we, in conjunction with outside counsel, evaluate on an ongoing basis whether the matter presents a loss contingency that meets conditions indicating the need for accrual and/or disclosure, and if not the matter will continue to be monitored for further developments. If and when the loss contingency related to litigation or regulatory matters is deemed to be both probable and estimable, we will establish an accrued liability with respect to that matter and will continue to monitor the matter for further developments that may affect the amount of the accrued liability. We recorded an estimated litigation liability of $17.5 million during the third quarter of 2012 based on developments in the mediation of the matter discussed below.

In recent years, companies in the life insurance and annuity business have faced litigation, including class action lawsuits, alleging improper product design, improper sales practices and similar claims. We are currently a defendant in a purported class action, McCormack, et al. v. American Equity Investment Life Insurance Company, et al., in the United States District Court for the Central District of California, Western Division and Anagnostis v. American Equity, et al., coordinated in the Central District, entitled, In Re: American Equity Annuity Practices and Sales Litigation (complaint filed September 7, 2005) (the "Los Angeles Case"), involving allegations of improper sales practices and similar claims as described below.

The Los Angeles Case is a consolidated action involving several lawsuits filed by individuals, and the individuals are seeking class action status for a national class of purchasers of annuities issued by us; however, no class has yet been certified. The named plaintiffs in this consolidated case are Bernard McCormack, Gust Anagnostis by and through Gary S. Anagnostis and Robert C. Anagnostis, Regina Bush by and through Sharon Schipiour, Lenice Mathews by and through Mary Ann Maclean and George Miller. The allegations generally attack the suitability of sales of deferred annuity products to persons over the age of 65. The plaintiffs seek rescission and injunctive relief including restitution and disgorgement of profits on behalf of all class members under California Business & Professions Code section 17200 et seq. and Racketeer Influenced and Corrupt Organizations Act; compensatory damages for breach of fiduciary duty and aiding and abetting of breach of fiduciary duty; unjust enrichment and constructive trust; and other pecuniary damages under California Civil Code section 1750 and California Welfare & Institutions Codes section 15600 et seq. On July 30, 2013, the parties entered into a settlement agreement and stipulated to certification of the case as a class action for settlement purposes only. Based upon the terms of the settlement agreement, the $17.5 million litigation liability referred to above represents our best estimate of probable loss with respect to this litigation; however, the settlement is contingent upon court approval which has not yet been granted. Additionally, other factors could potentially result in a change in this estimate as further developments take place. In particular, part of the settlement involves a claims process for individual class members, and it is difficult to predict the amount of the liabilities that will ultimately result from that process. In light of the inherent uncertainties involved in the pending purported class action lawsuit, there can be no assurance that such litigation, or any other pending or future litigation, will not have a material adverse effect on our business, financial condition, or results of operations.

In addition to our commitments to fund mortgage loans, we have unfunded commitments at June 30, 2013 to private equity limited partnerships of $31.5 million and to secured bank loans of $29.3 million.

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8. Earnings Per Share

The following table sets forth the computation of earnings per common share and earnings per common share - assuming dilution:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(Dollars in thousands, except per share data)
Numerator:
Net income - numerator for earnings per common share	$	120,113	$	18,759	$	146,144	$	29,230
Interest on convertible subordinated debentures (net of income tax benefit)	—		257		—		515
Numerator for earnings per common share - assuming dilution	$	120,113	$	19,016	$	146,144	$	29,745
Denominator:
Weighted average common shares outstanding (1)	64,254,387		59,943,337		63,786,577		59,821,937
Effect of dilutive securities:
Convertible subordinated debentures	—		2,637,176		—		2,678,508
Convertible senior notes	5,009,622		1,158,686		5,082,208		1,158,686
Stock options and deferred compensation agreements	1,118,056		514,429		1,013,455		570,525
Denominator for earnings per common share - assuming dilution	70,382,065		64,253,628		69,882,240		64,229,656
Earnings per common share	$	1.87	$	0.31	$	2.29	$	0.49
Earnings per common share - assuming dilution	$	1.71	$	0.30	$	2.09	$	0.46

_____________________________

(1) Weighted average common shares outstanding include shares vested under the NMO Deferred Compensation Plan and exclude unallocated shares held by the ESOP.

Options to purchase shares of our common stock that were outstanding during the respective periods indicated but were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the common shares are as follows:

Period	Number of Shares	Range of Exercise Prices
		Minimum	Maximum
Three months ended June 30, 2013	—	$—	$—
Six months ended June 30, 2013	—	$—	$—
Three months ended June 30, 2012	1,502,900	$11.88	$14.34
Six months ended June 30, 2012	1,502,900	$11.88	$14.34

9. Subsequent Event

On July 16, 2013, we issued $400 million aggregate principal amount of senior unsecured notes due 2021 which will bear interest at 6.625% per year and will mature on July 15, 2021. We intend to use the net proceeds (i) to pay the cash consideration required to purchase our 5.25% Contingent Convertible Senior Notes due 2029 (the “2029 Notes”) tendered in connection with an offer to exchange  any and all of our outstanding 2029 Notes for cash and newly issued shares of common stock if we commence such an offer, depending on market conditions and other factors, including the payment of any applicable accrued and unpaid interest on our 2029 Notes, (ii) to pay the cash consideration required to purchase our 3.5% Convertible Senior Notes due 2015 (the “2015 Notes”) tendered in connection with an offer to exchange any and all of our outstanding 2015 Notes for cash and newly issued shares of common stock if we commence such an offer, depending on market conditions and other factors, including the payment of any applicable accrued and unpaid interest on our 2015 Notes, (iii) to repay all amounts outstanding under our existing revolving credit facility (we repaid all amounts outstanding on July 17, 2013) and (iv) to pay related fees and expenses.   Any proceeds we are unable to use in the manner described above, due to market conditions or otherwise, or any excess proceeds after those uses  may be used to tender for, redeem or repurchase any of the 2029 Notes or 2015 Notes that remain outstanding and/or for general corporate purposes.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's discussion and analysis reviews our unaudited consolidated financial position at June 30, 2013, and the unaudited consolidated results of operations for the three and six month periods ended June 30, 2013 and 2012, and where appropriate, factors that may affect future financial performance. This analysis should be read in conjunction with our unaudited consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q, and the audited consolidated financial statements, notes thereto and selected consolidated financial data appearing in our Annual Report on Form 10-K for the year ended December 31, 2012.

Cautionary Statement Regarding Forward-Looking Information

All statements, trend analyses and other information contained in this report and elsewhere (such as in filings by us with the Securities and Exchange Commission ("SEC"), press releases, presentations by us or our management or oral statements) relative to markets for our products and trends in our operations or financial results, as well as other statements including words such as "anticipate", "believe", "plan", "estimate", "expect", "intend", and other similar expressions, constitute forward-looking statements. We caution that these statements may and often do vary from actual results and the differences between these statements and actual results can be material. Accordingly, we cannot assure you that actual results will not differ materially from those expressed or implied by the forward-looking statements. Factors that could contribute to these differences include, among other things:

• general economic conditions and other factors, including prevailing interest rate levels and stock and credit market performance which may affect (among other things) our ability to sell our products, our ability to access capital resources and the costs associated therewith, the fair value of our investments, which could result in impairments and other than temporary impairments, and certain liabilities, and the lapse rate and profitability of policies;

• customer response to new products and marketing initiatives;

• changes in Federal income tax laws and regulations which may affect the relative income tax advantages of our products;

• increasing competition in the sale of annuities;

• regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) bank sales and underwriting of insurance products and regulation of the sale, underwriting and pricing of products; and

• the risk factors or uncertainties listed from time to time in our filings with the SEC.

For a detailed discussion of these and other factors that might affect our performance, see Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2012.

Overview

We specialize in the sale of individual annuities (primarily deferred annuities) and, to a lesser extent, we also sell life insurance policies. Under U.S. generally accepted accounting principles ("GAAP"), premium collections for deferred annuities are reported as deposit liabilities instead of as revenues. Similarly, cash payments to policyholders are reported as decreases in the liabilities for policyholder account balances and not as expenses. Sources of revenues for products accounted for as deposit liabilities are net investment income, surrender and other charges deducted from the account balances of policyholders, net realized gains (losses) on investments and changes in fair value of derivatives. Components of expenses for products accounted for as deposit liabilities are interest sensitive and index product benefits (primarily interest credited to account balances), changes in fair value of embedded derivatives, amortization of deferred sales inducements and deferred policy acquisition costs, other operating costs and expenses and income taxes.

Our business model contemplates continued growth in invested assets and operating income while maintaining a high quality investment portfolio that will not experience significant losses from impairments of invested assets. Growth in invested assets is predicated on a continuation of our high sales achievements of the last four years while at the same time maintaining a high level of retention of the funds received. The economic and personal investing environments continue to be conducive for high sales levels as retirees and others look to put their money in instruments that will protect their principal and provide them with consistent cash flow sources in their retirement years. We are committed to maintaining a high quality investment portfolio with limited exposure to below investment grade securities and other riskier assets.

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Annuity deposits by product type collected during the three and six months ended June 30, 2013 and 2012, were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
Product Type	2013		2012		2013		2012
	(Dollars in thousands)
Fixed index annuities:
Index strategies	$	764,437	$	533,633	$	1,369,078	$	1,021,760
Fixed strategy	285,416		281,206		528,545		570,560
	1,049,853		814,839		1,897,623		1,592,320
Fixed rate annuities:
Single-year rate guaranteed	20,404		21,141		40,314		55,628
Multi-year rate guaranteed	48,291		39,232		95,547		160,897
Single premium immediate annuities	16,824		42,137		31,804		87,949
	85,519		102,510		167,665		304,474
Total before coinsurance ceded	1,135,372		917,349		2,065,288		1,896,794
Coinsurance ceded	44,572		32,668		87,179		131,447
Net after coinsurance ceded	$	1,090,800	$	884,681	$	1,978,109	$	1,765,347

Annuity deposits before coinsurance ceded increased 24% during the second quarter of 2013 and 9% during the six months ended June 30, 2013 compared to the same periods in 2012. We attribute the continuing significant sales of our products to factors including the highly competitive rates of our products, our continued strong relationships with our national marketing organizations and field force of licensed, independent insurance agents, the increased attractiveness of safe money products in volatile markets, lower interest rates on competing products such as bank certificates of deposit and product enhancements including a new generation of guaranteed income withdrawal benefit riders. The extent to which this trend will be sustained in future periods is uncertain.

Earnings from products accounted for as deposit liabilities are primarily generated from the excess of net investment income earned over the interest credited or the cost of providing index credits to the policyholder, or the "investment spread." Our investment spread is summarized as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2013	2012	2013	2012
Average yield on invested assets	4.94%	5.34%	4.98%	5.47%
Aggregate cost of money	2.24%	2.64%	2.28%	2.66%
Aggregate investment spread	2.70%	2.70%	2.70%	2.81%
Impact of:
Investment yield - additional prepayment income	0.05%	0.03%	0.06%	0.05%
Cost of money benefit of over (under) hedging	0.06%	(0.01)%	0.04%	—%

Our investment spread for the three and six months ended June 30, 2013 and 2012 has been impacted by shortfalls in investment income from excess liquidity resulting from a lag in the reinvestment of proceeds of government agency bonds called for redemption. The callable government agency securities have been a cornerstone of our investment portfolio since our formation. Through the years they have provided very acceptable yields that met our spread requirements without any risk-based capital charges. We have been through several cycles of calls on these securities and each time we have reinvested a portion of the call redemption proceeds into new callable government agency securities. This kept cash balances low but perpetuated the call risk. However, in the current interest rate environment, we have been reluctant to reinvest the call redemption proceeds in government agency securities and only purchased $948.9 million in 2012 compared to $4.3 billion in calls. Consequently, we have been managing excess cash and other short-term investments throughout 2012 and into the second quarter of 2013. We ended the second quarter of 2013 with $815.9 million in excess cash and other short-term investments compared to $1.3 billion at the end of the first quarter of 2013 and $2.2 billion at the end of 2012. We expect to be in a fully invested position by the end of the third quarter of 2013. See Results of Operations - Net investment income for additional information regarding our excess liquidity.

The cost of money for fixed index annuities and average crediting rates for fixed rate annuities are computed based upon policyholder account balances and do not include the impact of amortization of deferred sales inducements. See Critical Accounting Policies - Deferred Policy Acquisition Costs and Deferred Sales Inducements included in Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2012. With respect to our fixed index annuities, the cost of money includes the average crediting rate on amounts allocated to the fixed rate strategy, expenses we incur to fund the annual index credits and where applicable, minimum guaranteed interest credited. Proceeds received upon expiration or early termination of call options purchased to fund annual index credits are recorded as part of the change in fair value of derivatives, and are largely offset by an expense for interest credited to annuity policyholder account balances. See Critical Accounting Policies - Policy Liabilities for Fixed Index Annuities and Financial Condition - Derivative Instruments included in Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2012.

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As reported in previous filings, in response to the continuing low interest rate environment, we have been reducing policyholder crediting rates for new annuities and existing annuities since the fourth quarter of 2011. Spread results for the 2013 and 2012 periods reflect the benefit from these reductions; however, the reductions in cost of money were offset by lower yields available on investments including those purchased with reinvestment of proceeds from bonds called for redemption. We expect to continue to manage policyholder crediting rates with the objective of restoring our investment spread to our 3.00% target. We have approximately 0.60% of room to reduce rates before we would reach minimum guaranteed rates on our entire book of business.

Our profitability depends in large part upon the amount of assets under our management, investment spreads we earn on our policyholder account balances, our ability to manage our investment portfolio to maximize returns and minimize risks such as interest rate changes and defaults or impairment of investments, our ability to manage interest rates credited to policyholders and costs of the options purchased to fund the annual index credits on our fixed index annuities, our ability to manage the costs of acquiring new business (principally commissions to agents and bonuses credited to policyholders) and our ability to manage our operating expenses.

Results of Operations for the Three and Six Months Ended June 30, 2013 and 2012

Net income, in general, has been positively impacted by the growth in the volume of business in force and the investment spread earned on this business. The average amount of annuity liabilities outstanding (net of annuity liabilities ceded under coinsurance agreements) increased 14% to $29.0 billion during second quarter of 2013 and increased 13% to $28.5 billion for the six months ended June 30, 2013 compared to $25.5 billion and $25.2 billion for the same periods in 2012. Our investment spread measured in dollars was $168.0 million during the second quarter of 2013 and $329.1 million for the six months ended June 30, 2013 compared to $146.6 million and $301.5 million during the same periods in 2012. As previously mentioned, our investment spread has been negatively impacted by both the extended low interest rate environment and our excess liquidity due to calls of our United States government agency securities (see Net investment income). In addition, net income for the three and six months ended June 30, 2013 has been positively impacted by decreases in the change in fair value of embedded derivatives due to an increase in the discount rate used to estimate our liability for policy growth (see Change in fair value of embedded derivatives).

Operating income (a non-GAAP financial measure) increased 11% to $30.3 million in the second quarter of 2013 and increased 12% to $63.7 million compared to $27.4 million and $57.1 million for the same periods in 2012.

In addition to net income, we have consistently utilized operating income, a non-GAAP financial measure commonly used in the life insurance industry, as an economic measure to evaluate our financial performance. Operating income equals net income adjusted to eliminate the impact of net realized gains (losses) on investments including net other than temporary impairment ("OTTI") losses recognized in operations, fair value changes in derivatives and embedded derivatives, losses on extinguishment of debt and changes in litigation reserves. Because these items fluctuate from year to year in a manner unrelated to core operations, we believe measures excluding their impact are useful in analyzing operating trends. We believe the combined presentation and evaluation of operating income together with net income provides information that may enhance an investor's understanding of our underlying results and profitability.

Operating income is not a substitute for net income determined in accordance with GAAP. The adjustments made to derive operating income are important to understanding our overall results from operations and, if evaluated without proper context, operating income possesses material limitations. As an example, we could produce a low level of net income in a given period, despite strong operating performance, if in that period we experience significant net realized losses from our investment portfolio. We could also produce a high level of net income in a given period, despite poor operating performance, if in that period we generate significant net realized gains from our investment portfolio. As an example of another limitation of operating income, it does not include the decrease in cash flows expected to be collected as a result of credit loss OTTI. Therefore, our management and board of directors also separately review net realized investment gains (losses) and analyses of our net investment income, including impacts related to OTTI write-downs, in connection with their review of our investment portfolio. In addition, our management and board of directors examine net income as part of their review of our overall financial results.

The adjustments made to net income to arrive at operating income for the three and six months ended June 30, 2013 and 2012 are set forth in the table that follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2013			2012		2013			2012
	(Dollars in thousands)
Reconciliation of net income to operating income:
Net income	$	120,113		$	18,759	$	146,144		$	29,230
Net realized (gains) losses and net OTTI losses on investments, net of offsets	(3,574		)	861		(6,378		)	4,408
Net effect of derivatives and embedded derivatives, net of offsets	(84,653		)	7,736		(74,416		)	23,478
Extinguishment of debt, net of income taxes	345			—		345			—
Litigation reserve, net of offsets	(1,969		)	—		(1,969		)	—
Operating income	$	30,262		$	27,356	$	63,726		$	57,116

33

Net realized gains/losses on investments and net impairment losses recognized in operations fluctuate from period to period based upon changes in the interest rate and economic environment and the timing of the sale of investments or the recognition of other than temporary impairments. The amounts disclosed in the reconciliation above are net of related adjustments in amortization of deferred sales inducements and deferred policy acquisition costs and income taxes.

Amounts attributable to the fair value accounting for fixed index annuity derivatives and embedded derivatives fluctuate from year to year based upon changes in the fair values of call options purchased to fund the annual index credits for fixed index annuities and changes in the interest rates used to discount the embedded derivative liability. The amounts disclosed in the reconciliation above are net of related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs and income taxes. The significant changes in the impact from the item disclosed in the reconciliation above relate primarily to a change in the discount rate used to estimate our embedded derivative liabilities which increased during the three and six months ended June 30, 2013 as a result of an increase in the general level of interest rates during the second quarter of 2013.

Annuity product charges (surrender charges assessed against policy withdrawals and fees deducted from policyholder account balances for lifetime income benefit riders) increased7% to $23.5 million in the second quarter of 2013 and increased 9% to $45.0 million for the six months ended June 30, 2013 compared to $21.9 millionand$41.3 million for the same periods in 2012. The components of annuity product charges are set forth in the table that follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Surrender charges	$	11,292		$	12,135		$	22,794		$	23,797
Lifetime income benefit riders (LIBR) fees	12,219			9,773			22,198			17,504
	$	23,511		$	21,908		$	44,992		$	41,301
Withdrawals from annuity policies subject to surrender charges	$	81,305		$	88,012		$	159,310		$	177,790
Average surrender charge collected on withdrawals subject to surrender charges	13.9		%	13.8		%	14.3		%	13.4		%
Fund values on policies subject to LIBR fees	$	2,423,891		$	1,999,310		$	4,311,461		$	3,508,994
Weighted average per policy LIBR fee	0.50		%	0.49		%	0.52		%	0.50		%

The increases in annuity product charges were primarily attributable to increases in fees assessed for lifetime income benefit riders due to a larger volume of business in force subject to the fee. See Interest sensitive and index product benefits below for corresponding expense recognized on lifetime income benefit riders. Decreases in surrender charges were primarily attributable to reductions in withdrawals subject to a surrender charge. The lower amount of withdrawals was influenced by the continuing low interest rate environment.

Net investment income increased 5% to $336.1 million in the second quarter of 2013 and 3% to $665.8 million for the six months ended June 30, 2013 compared to $320.3 millionand$647.2 million for the same periods in 2012. This increase was principally attributable to the growth in our annuity business and a corresponding increase in our invested assets. Average invested assets excluding derivative instruments (on an amortized cost basis) increased 14% to $27.3 billion for the second quarter of 2013 and 13% to $26.8 billion for the six months ended June 30, 2013 compared to $24.0 billion and $23.7 billion for the same periods in 2012. The average yield earned on average invested assets was4.94% for the second quarter of 2013 and 4.98% for the six months ended June 30, 2013 compared to 5.34% and 5.47% for the same periods in 2012.

The decrease in yield earned on average invested assets was attributable to lower yields on investments purchased in 2012 and the six months ended June 30, 2013. In addition, net investment income and average yield were negatively impacted by a lag in reinvestment of proceeds from bonds called for redemption during the periods into new assets causing excess liquidity held in low yielding cash and other short-term investments. The average balance held in cash and short-term investments was $1.7 billion and $1.8 billion for the three and six months ended June 30, 2013 compared to $1.4 billion and $1.1 billion for the same periods in 2012, respectively. We ended the second quarter of 2013 with $815.9 million in excess cash and other short-term investments. The average yield on our cash and short-term investments for the three and six months ended June 30, 2013 was 0.47% and 0.40% compared to 0.14% and 0.13% for the same periods in 2012, respectively. Additionally, net investment income and average yield was positively impacted by prepayment and fee income received resulting in additional net investment income of $3.1 million and $8.0 million for the three and six months ended June 30, 2013 compared to $1.8 million and $5.6 million for the same periods in 2012, respectively.

Change in fair value of derivatives (principally call options purchased to fund annual index credits on fixed index annuities) is affected by the performance of the indices upon which our options are based and the aggregate cost of options purchased. The components of change in fair value of derivatives are as follows:

34

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013		2012
	(Dollars in thousands)
Call options:
Gain (loss) on option expiration	$	150,874		$	(49,147	)	$	209,700	$	(75,300	)
Change in unrealized gain/loss	(92,674		)	(73,094		)	193,154		194,579
2015 notes hedges	197			(24,163		)	28,295		(7,412		)
Interest rate swaps	3,802			(4,038		)	4,535		(3,148		)
Interest rate caps	1,841			(405		)	2,318		(405		)
	$	64,040		$	(150,847	)	$	438,002	$	108,314

The differences between the change in fair value of derivatives between periods for call options are primarily due to the performance of the indices upon which our call options are based. A substantial portion of our call options are based upon the S&P 500 Index with the remainder based upon other equity and bond market indices. The range of index appreciation (after applicable caps, participation rates and asset fees) for options expiring during the three and six months ended June 30, 2013 and 2012 is as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2013	2012	2013	2012
S&P 500 Index
Point-to-point strategy	1.5% - 11.5%	0.0% - 6.8%	1.5% - 11.5%	0.0% - 7.0%
Monthly average strategy	0.0% - 11.7%	0.0% - 18.1%	0.0% - 11.7%	0.0% - 18.1%
Monthly point-to-point strategy	0.0% - 19.0%	0.0% - 0.2%	0.0% - 19.0%	0.0% -3.3%
Fixed income (bond index) strategies	0.0% - 8.0%	4.0% - 10.0%	0.0% - 8.0%	4.0% - 10.0%

The change in fair value of derivatives is also influenced by the aggregate costs of options purchased. The aggregate cost of options has increased primarily due to an increased amount of fixed index annuities in force. The aggregate cost of options is also influenced by the amount of policyholder funds allocated to the various indices and market volatility which affects option pricing. See Critical Accounting Policies - Policy Liabilities for Fixed Index Annuities included in Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2012.

Concurrently with the issuance of the 2015 notes, we entered into hedge transactions (the “2015 notes hedges”) to provide the cash needed to meet our cash obligations in excess of the principal amount of the 2015 notes upon conversion of the 2015 notes. The fair value of the 2015 notes hedges changes based upon changes in the price of our common stock, interest rates, stock price volatility, dividend yield and the time to expiration of the 2015 notes hedges. Similarly, the fair value of the conversion option obligation to the holders of the 2015 notes changes based upon these same factors and the conversion option obligation is accounted for as an embedded derivative liability with changes in fair value reported in the Change in fair value of embedded derivatives. The amount for the change in fair value of the 2015 notes hedges equals the amount for the change in the related embedded derivative liabilities and there is an offsetting expense in the change in fair value of embedded derivatives. See Note 9 to our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2012 for a discussion of the 2015 notes hedges.

35

Net realized gains (losses) on investments, excluding OTTI losses include gains and losses on the sale of securities and impairment losses on mortgage loans on real estate which fluctuate from year to year due to changes in the interest rate and economic environment and the timing of the sale of investments, as well as gains (losses) recognized on real estate owned due to any sales and impairments on long-lived assets. The components of net realized gains (losses) on investments are set forth in the table that follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Available for sale fixed maturity securities:
Gross realized gains	$	7,628		$	4,030		$	20,643		$	5,048
Gross realized losses	(823		)	(59		)	(3,010		)	(355		)
	6,805			3,971			17,633			4,693
Equity securities:
Gross realized gains	9,571			—			9,571			562
Other investments:
Gain on sale of real estate	715			1,450			1,304			2,895
Loss on sale of real estate	—			—			(466		)	—
Impairment losses on real estate	(145		)	(1,669		)	(145		)	(2,643		)
	570			(219		)	693			252
Mortgage loans on real estate:
Increase in allowance for credit losses	(1,257		)	(4,363		)	(1,623		)	(12,194		)
	$	15,689		$	(611	)	$	26,274		$	(6,687	)

See Financial Condition - Investments for additional discussion of allowance for credit losses on mortgage loans on real estate.

Net OTTI losses recognized in operations increased to $2.8 million in the second quarter of 2013 and $6.0 million for the six months ended June 30, 2013 compared to $1.0 million and $3.9 million for the same periods in 2012. See Financial Condition - Investments and note 3 to our consolidated financial statements for additional discussion of write downs of securities for other than temporary impairments.

Interest sensitive and index product benefitsincreased to $336.0 million in the second quarter of 2013 and to $561.8 million for the six months ended June 30, 2013 compared to $142.7 millionand$281.9 million for the same periods in 2012. The components of interest credited to account balances are summarized as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(Dollars in thousands)
Index credits on index policies	$	241,801	$	50,682	$	377,142	$	101,340
Interest credited (including changes in minimum guaranteed interest for fixed index annuities)	81,600		81,949		161,218		162,461
Living income benefit rider	12,624		10,102		23,474		18,055
	$	336,025	$	142,733	$	561,834	$	281,856

The amount of index credits were attributable to changes in the appreciation of the underlying indices (see discussion above under Change in fair value of derivatives) and the amount of funds allocated by policyholders to the respective index options. Total proceeds received upon expiration of the call options purchased to fund the annual index credits were $244.8 million and $380.0 million for the three and six months ended June 30, 2013, compared to $50.0 million and $100.9 million for the same periods in 2012. The decrease in interest credited was due to a decrease in the average rate credited to the annuity liabilities outstanding receiving a fixed rate of interest. The average amount of annuity liabilities outstanding (net of annuity liabilities ceded under coinsurance agreements) increased 14% to $29.0 billion during second quarter of 2013 and increased 13% to $28.5 billion for the six months ended June 30, 2013 compared to $25.5 billion and $25.2 billion for the same periods in 2012. The increases in benefits recognized for living income benefit rider were due to increases in the number of policies with lifetime income benefit riders and correlates to the increase in fees discussed in Annuity product charges.

Amortization of deferred sales inducements increased 365%to $120.5 million in the second quarter of 2013 and 250% to $149.4 million for the six months ended June 30, 2013 compared to $25.9 million and $42.7 million for the same periods in 2012. In general, amortization of deferred sales inducements has been increasing each period due to growth in our annuity business and the deferral of sales inducements incurred with respect to sales of premium bonus annuity products. Bonus products represented 97% of our net annuity deposits during the three and six months ended June 30, 2013 compared to 97% during the same periods in 2012. The anticipated increase in amortization from these factors has

36

been affected by amortization associated with fair value accounting for derivatives and embedded derivatives utilized in our fixed index annuity business, amortization associated with net realized gains (losses) on investments and net OTTI losses recognized in operations. Fair value accounting for derivatives and embedded derivatives utilized in our fixed index annuity business creates differences in the recognition of revenues and expenses from derivative instruments including the embedded derivative liabilities in our fixed index annuity contracts. The change in fair value of the embedded derivatives will not correspond to the change in fair value of the derivatives (purchased call options) because the purchased call options are one-year options while the options valued in the fair value of embedded derivatives cover the expected lives of the contracts which typically exceeds ten years. Amortization of deferred sales inducements is summarized as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2013		2012			2013		2012
	(Dollars in thousands)
Amortization of deferred sales inducements before gross profit adjustments	$	37,953	$	33,141		$	74,231	$	66,609
Gross profit adjustments:
Fair value accounting for derivatives and embedded derivatives	79,558		(7,217		)	70,787		(22,637		)
Net realized gains (losses) on investments and net OTTI losses    recognized in operations	3,025		16			4,349		(1,322		)
Amortization of deferred sales inducements after gross profit adjustments	$	120,536	$	25,940		$	149,367	$	42,650

Change in fair value of embedded derivatives primarily relates to fixed index annuity embedded derivatives and resulted from (i) changes in the expected index credits on the next policy anniversary dates, which are related to the change in fair value of the call options acquired to fund these index credits discussed above in change in fair value of derivatives; (ii) changes in discount rates used in estimating our liability for policy growth; and (iii) the growth in the host component of the policy liability. See Critical Accounting Policies - Policy Liabilities for Fixed Index Annuities included in Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2012. The primary reasons for the decrease in the change in fair value of the fixed index annuity embedded derivatives during the three and six months ended June 30, 2013 was an increase in the discount rate used in estimating our liability for policy growth and decreases in the expected index credits that resulted from decreases in the fair value of the call options acquired to fund these index credits. The discount rates used in estimating our liability for policy growth increased as a result of the increase in the general level of interest rates during the second quarter of 2013. The changes for the three and six months ended June 30, 2013 also include increases of $0.2 million and $28.3 million, respectively, compared to decreases of $24.2 million and$7.4 millionfor the same periods in2012, respectively, in the fair value of the 2015 notes embedded conversion derivative. As discussed previously, these amounts were offset by comparable increases in the fair value of the 2015 notes hedges.

Interest expense on subordinated debentures decreased 15% to $3.0 million in the second quarter of 2013 and 16% to $6.0 million for the six months ended June 30, 2013 compared to $3.6 million and $7.1 million for the same periods in 2012. The decrease is primarily attributable to the redemption of $22 million principal amount of our 8% Convertible Junior Subordinated Debentures in July 2012. $169.6 million principal amount of the subordinated debentures has floating rates of interest based upon the three month London Interbank Offered Rate plus an applicable margin. See Financial Condition - Liabilities included in Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2012.

Amortization of deferred policy acquisition costs increased 277% to $169.3 million in the second quarter of 2013 and 172% to $215.5 million for the six months ended June 30, 2013 compared to $44.8 million and $79.1 million for the same periods in 2012. In general, amortization of deferred policy acquisition costs has been increasing each period due to the growth in our annuity business and the deferral of policy acquisition costs incurred with respect to sales of annuity products. The anticipated increase in amortization from these factors has been affected by amortization associated with fair value accounting for derivatives and embedded derivatives utilized in our fixed index annuity business, amortization associated with net realized losses on investments and net OTTI losses recognized in operations. As discussed above, fair value accounting for derivatives and embedded derivatives utilized in our fixed index annuity business creates differences in the recognition of revenues and expenses from derivative instruments including the embedded derivative liabilities in our fixed index annuity contracts.

Amortization of deferred policy acquisition costs is summarized as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2013		2012			2013		2012
	(Dollars in thousands)
Amortization of deferred policy acquisition costs before gross profit adjustments	$	57,701	$	54,457		$	113,631	$	110,096
Gross profit adjustments:
Fair value accounting for derivatives and embedded derivatives	107,174		(9,342		)	95,705		(28,585		)
Net realized gains (losses) on investments and net OTTI losses    recognized in operations	4,395		(267		)	6,164		(2,379		)
Amortization of deferred policy acquisition costs after gross profit adjustments	$	169,270	$	44,848		$	215,500	$	79,132

37

Other operating costs and expenses increased 31% to $24.9 million in the second quarter of 2013 and 9% to $44.4 million for the six months ended June 30, 2013 compared to $18.9 million and $40.6 million for the same periods in 2012. The increase for both the three and six month periods ended June 30, 2013 was primarily due to $8.5 million of guaranty fund assessments related to the insolvency of Executive Life Insurance Company of New York which was offset by a $3.2 million decrease in a litigation reserve associated with a previous lawsuit settlement that represents undistributed settlement awards due to contractholders and beneficiaries that could not be located or did not come forward to claim such awards during the agreed upon time period, which expired during the second quarter of 2013.

Income tax expense increased to $64.6 million in the second quarter of 2013 and to $78.1 million for the six months ended June 30, 2013 compared to $9.9 millionand $15.6 million for the same periods in 2012. The change in income tax expense was primarily due to changes in income before income taxes. Income tax expense and the resulting effective tax rate are based upon two components of income before income taxes ("pretax income") that are taxed at different tax rates. Life insurance income is generally taxed at an effective rate of approximately 35.6% reflecting the absence of state income taxes for substantially all of the states that the life insurance subsidiaries do business in. The income for the parent company and other non-life insurance subsidiaries is generally taxed at an effective tax rate of 41.5% reflecting the combined federal / state income tax rates. The effective tax rates resulting from the combination of the income tax provisions for the life / non-life sources of income (loss) vary from period to period based primarily on the relative size of pretax income (loss) from the two sources. The effective tax rate for the three and six months ended June 30, 2013 was 35.0% and 34.8%, respectively, and 34.5% and 34.7%for the same periods in2012, respectively.

Financial Condition

Investments

Our investment strategy is to maintain a predominantly investment grade fixed income portfolio, provide adequate liquidity to meet our cash obligations to policyholders and others and maximize current income and total investment return through active investment management. Consistent with this strategy, our investments principally consist of fixed maturity securities and mortgage loans on real estate.

Insurance statutes regulate the type of investments that our life subsidiaries are permitted to make and limit the amount of funds that may be used for any one type of investment. In light of these statutes and regulations and our business and investment strategy, we generally seek to invest in United States government and government-sponsored agency securities, corporate securities and United States municipalities, states and territories securities rated investment grade by established nationally recognized statistical rating organizations ("NRSRO's") or in securities of comparable investment quality, if not rated, and commercial mortgage loans on real estate.

The composition of our investment portfolio is summarized as follows:

	June 30, 2013				December 31, 2012
	Carrying Amount		Percent		Carrying Amount		Percent
	(Dollars in thousands)
Fixed maturity securities:
United States Government full faith and credit	$	4,938	—	%	$	5,154	—	%
United States Government sponsored agencies	1,199,847		4.1	%	1,772,025		6.5	%
United States municipalities, states and territories	3,543,158		12.2	%	3,578,323		13.0	%
Foreign government obligations	92,811		0.3	%	105,259		0.4	%
Corporate securities	16,075,497		55.3	%	14,542,860		52.8	%
Residential mortgage backed securities	2,488,057		8.6	%	2,888,113		10.5	%
Commercial mortgage backed securities	1,222,689		4.2	%	357,982		1.3	%
Other asset backed securities	994,815		3.5	%	998,508		3.6	%
Total fixed maturity securities	25,621,812		88.2	%	24,248,224		88.1	%
Equity securities	9,790		—	%	53,422		0.2	%
Mortgage loans on real estate	2,583,703		8.9	%	2,623,940		9.5	%
Derivative instruments	629,135		2.2	%	415,258		1.5	%
Other investments	208,635		0.7	%	196,366		0.7	%
	$	29,053,075	100.0	%	$	27,537,210	100.0	%

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Fixed Maturity Securities

Our fixed maturity security portfolio is managed to minimize risks such as interest rate changes and defaults or impairments while earning a sufficient and stable return on our investments. Historically, we have had a high percentage of our fixed maturity securities in U.S. Government sponsored agency securities (for the most part Federal Home Loan Mortgage Corporation and Federal National Mortgage Association). While U.S. Government sponsored agency securities are of high credit quality, the call features have resulted in our excess cash position. These calls resulted from the low interest rate and tight agency spread environment. Since 2007, when we had almost 80% of our fixed maturity portfolio invested in callable agencies, we have reallocated a significant portion of our fixed maturities from the callable agency securities to other highly rated, long-term securities. The largest portion of our fixed maturity securities are now in investment grade (NAIC designation 1 or 2) publicly traded or privately placed corporate securities. We have also built a portfolio of residential mortgage backed securities ("RMBS") that provide our investment portfolio a source of regular cash flow and higher yielding assets than our agency securities. In addition, we have acquired a portfolio of taxable bonds issued by municipalities, states and territories of the United States that provide us with attractive yields while being consistent with our credit risk parameters. Beginning in 2012, we have increased our position in other asset backed securities as well as establishing a position in commercial mortgage backed securities.

A summary of our fixed maturity securities by NRSRO ratings is as follows:

	June 30, 2013				December 31, 2012
Rating Agency Rating	Carrying Amount		Percent of Fixed Maturity Securities		Carrying Amount		Percent of Fixed Maturity Securities
	(Dollars in thousands)
Aaa/Aa/A	$	15,432,442	60.2	%	$	14,613,775	60.3	%
Baa	8,676,435		33.9	%	8,190,220		33.8	%
Total investment grade	24,108,877		94.1	%	22,803,995		94.1	%
Ba	471,089		1.8	%	365,102		1.5	%
B	107,823		0.4	%	79,789		0.3	%
Caa and lower	760,254		3.0	%	862,650		3.5	%
In or near default	173,769		0.7	%	136,688		0.6	%
Total below investment grade	1,512,935		5.9	%	1,444,229		5.9	%
	$	25,621,812	100.0	%	$	24,248,224	100.0	%

The NAIC's Securities Valuation Office ("SVO") is responsible for the day-to-day credit quality assessment and valuation of securities owned by state regulated insurance companies. Insurance companies report ownership of securities to the SVO when such securities are eligible for regulatory filings. The SVO conducts credit analysis on these securities for the purpose of assigning an NAIC designation and/or unit price. Typically, if a security has been rated by an NRSRO, the SVO utilizes that rating and assigns an NAIC designation based upon the following system:

NAIC Designation	NRSRO Equivalent Rating
1	Aaa/Aa/A
2	Baa
3	Ba
4	B
5	Caa and lower
6	In or near default

Since 2009, the NAIC has utilized a process to assess non-agency RMBS that does not rely on NRSRO ratings. The NAIC retained the services of PIMCO Advisory to model each non-agency RMBS owned by U.S. insurers at year-end 2012 and 2011. PIMCO Advisory has provided 5 prices for each security for life insurance companies to utilize in determining the NAIC designation for each RMBS based on each insurer's statutory book value price. This process is used to determine the level of RBC requirements for non-agency RMBS. In 2010, the NAIC retained the services of BlackRock Solutions to model each non-agency CMBS to determined the level of RBC requirements for non-agency CMBS in a manner similar to that utilized by PIMCO Advisory for RMBS.

39

A summary of our fixed maturity securities by NAIC designation is as follows:

	June 30, 2013								December 31, 2012
NAIC Designation	Amortized Cost		Fair Value		Carrying Amount		Percent of Total Carrying Amount		Amortized Cost		Fair Value		Carrying Amount		Percent of Total Carrying Amount
	(Dollars in thousands)								(Dollars in thousands)
1	$	15,440,564	$	16,049,276	$	16,049,276	62.7	%	$	13,737,381	$	15,250,560	$	15,250,560	62.9	%
2	8,878,184		9,028,631		9,028,631		35.2	%	7,838,186		8,533,121		8,533,121		35.2	%
3	475,652		457,918		472,838		1.8	%	398,294		387,222		401,789		1.7	%
4	68,807		69,502		69,502		0.3	%	53,879		56,151		56,151		0.2	%
5	—		—		—		—	%	—		—		—		—	%
6	2,050		1,565		1,565		—	%	5,375		6,603		6,603		—	%
	$	24,865,257	$	25,606,892	$	25,621,812	100.0	%	$	22,033,115	$	24,233,657	$	24,248,224	100.0	%

A summary of our RMBS by collateral type and split by NAIC designation, as well as a separate summary of securities for which we have recognized OTTI and those which we have not recognized any OTTI is as follows as of June 30, 2013:

Collateral Type	Principal Amount		Amortized Cost		Fair Value
	(Dollars in thousands)
OTTI has not been recognized
Government agency	$	943,971	$	887,172	$	932,517
Prime	683,014		648,610		693,299
Alt-A	36,427		36,872		37,816
	$	1,663,412	$	1,572,654	$	1,663,632
OTTI has been recognized
Prime	$	531,924	$	460,258	$	489,691
Alt-A	385,961		304,487		334,734
	$	917,885	$	764,745	$	824,425
Total by collateral type
Government agency	$	943,971	$	887,172	$	932,517
Prime	1,214,938		1,108,868		1,182,990
Alt-A	422,388		341,359		372,550
	$	2,581,297	$	2,337,399	$	2,488,057
Total by NAIC designation
1	$	2,185,965	$	1,984,119	$	2,116,730
2	305,145		274,662		287,908
3	57,961		50,979		54,389
4	29,110		25,589		27,489
6	3,116		2,050		1,541
	$	2,581,297	$	2,337,399	$	2,488,057

The amortized cost and fair value of fixed maturity securities at June 30, 2013, by contractual maturity, are presented in Note 3 to our consolidated financial statements in this form 10-Q, which is incorporated by reference in this Item 2.

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Unrealized Losses

The amortized cost and fair value of fixed maturity securities and equity securities that were in an unrealized loss position were as follows:

	Number of Securities	Amortized Cost		Unrealized Losses			Fair Value
		(Dollars in thousands)
June 30, 2013
Fixed maturity securities, available for sale:
United States Government full faith and credit	2	$	1,020	$	(36	)	$	984
United States Government sponsored agencies	13	1,172,954		(46,847		)	1,126,107
United States municipalities, states and territories	102	432,449		(24,701		)	407,748
Foreign government obligations	3	29,794		(2,525		)	27,269
Corporate securities:
Finance, insurance and real estate	95	1,454,810		(74,929		)	1,379,881
Manufacturing, construction and mining	196	2,780,779		(137,067		)	2,643,712
Utilities and related sectors	124	1,432,643		(68,087		)	1,364,556
Wholesale/retail trade	30	318,925		(17,027		)	301,898
Services, media and other	61	786,715		(39,559		)	747,156
Residential mortgage backed securities	48	367,794		(16,393		)	351,401
Commercial mortgage backed securities	98	1,147,811		(83,053		)	1,064,758
Other asset backed securities	30	469,181		(20,163		)	449,018
	802	$	10,394,875	$	(530,387	)	$	9,864,488
Fixed maturity securities, held for investment:
Corporate security:
Insurance	1	$	76,170	$	(14,920	)	$	61,250
December 31, 2012
Fixed maturity securities, available for sale:
United States Government sponsored agencies	6	$	977,196	$	(3,468	)	$	973,728
United States municipalities, states and territories	8	24,518		(125		)	24,393
Corporate securities:
Finance, insurance and real estate	19	276,235		(12,564		)	263,671
Manufacturing, construction and mining	34	453,679		(5,584		)	448,095
Utilities and related sectors	20	269,667		(9,399		)	260,268
Wholesale/retail trade	11	113,032		(992		)	112,040
Services, media and other	19	267,506		(3,085		)	264,421
Residential mortgage backed securities	56	508,576		(27,728		)	480,848
Commercial mortgage backed securities	12	163,565		(1,983		)	161,582
Other asset backed securities	11	174,342		(2,973		)	171,369
	196	$	3,228,316	$	(67,901	)	$	3,160,415
Fixed maturity securities, held for investment:
Corporate security:
Insurance	1	$	76,088	$	(14,567	)	$	61,521
Equity securities, available for sale:
Finance, insurance and real estate	1	$	10,125	$	(1,403	)	$	8,722

Unrealized losses increased $461.4 million from $83.9 million at December 31, 2012 to $545.3 million at June 30, 2013. Unrealized losses primarily increased due to a rise in ten-year treasury yields during the six months ended June 30, 2013.

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The following table sets forth the composition by credit quality (NAIC designation) of fixed maturity securities with gross unrealized losses:

NAIC Designation	Carrying Value of Securities with Gross Unrealized Losses		Percent of Total		Gross Unrealized Losses			Percent of Total
	(Dollars in thousands)
June 30, 2013
1	$	5,623,683	56.6	%	$	(304,980	)	55.9	%
2	4,024,112		40.5	%	(212,677		)	39.0	%
3	259,939		2.6	%	(25,217		)	4.6	%
4	31,383		0.3	%	(1,924		)	0.4	%
5	—		—	%	—			—	%
6	1,541		—	%	(509		)	0.1	%
	$	9,940,658	100.0	%	$	(545,307	)	100.0	%
December 31, 2012
1	$	1,992,406	61.5	%	$	(38,125	)	46.2	%
2	1,071,009		33.1	%	(23,969		)	29.1	%
3	157,464		4.9	%	(19,410		)	23.5	%
4	13,812		0.4	%	(299		)	0.4	%
5	—		—	%	—			—	%
6	1,812		0.1	%	(665		)	0.8	%
	$	3,236,503	100.0	%	$	(82,468	)	100.0	%

Our investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities (consisting of 803 and 198 securities, respectively) have been in a continuous unrealized loss position at June 30, 2013 and December 31, 2012, along with a description of the factors causing the unrealized losses is presented in Note 3 to our consolidated financial statements in this Form 10-Q, which is incorporated by reference in the Item 2.

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The amortized cost and fair value of fixed maturity securities and equity securities in an unrealized loss position and the number of months in a continuous unrealized loss position (fixed maturity securities that carry an NRSRO rating of BBB/Baa or higher considered investment grade) were as follows:

	Number of Securities	Amortized Cost		Fair Value		Gross Unrealized Losses
		(Dollars in thousands)
June 30, 2013
Fixed maturity securities:
Investment grade:
Less than six months	699	$	8,956,989	$	8,498,026	$	(458,963	)
Six months or more and less than twelve months	39	1,054,493		1,006,258		(48,235		)
Twelve months or greater	12	140,513		128,433		(12,080		)
Total investment grade	750	10,151,995		9,632,717		(519,278		)
Below investment grade:
Less than six months	40	157,228		153,213		(4,015		)
Six months or more and less than twelve months	—	—		—		—
Twelve months or greater	13	161,822		139,808		(22,014		)
Total below investment grade	53	319,050		293,021		(26,029		)
	803	$	10,471,045	$	9,925,738	$	(545,307	)
December 31, 2012
Fixed maturity securities:
Investment grade:
Less than six months	106	$	2,464,476	$	2,440,131	$	(24,345	)
Six months or more and less than twelve months	4	40,054		39,151		(903		)
Twelve months or greater	14	165,718		155,618		(10,100		)
Total investment grade	124	2,670,248		2,634,900		(35,348		)
Below investment grade:
Less than six months	23	110,435		108,531		(1,904		)
Six months or more and less than twelve months	9	135,915		129,086		(6,829		)
Twelve months or greater	41	387,806		349,419		(38,387		)
Total below investment grade	73	634,156		587,036		(47,120		)
Equity securities:
Less then six months	—	—		—		—
Six months or more and less than twelve months	1	10,125		8,722		(1,403		)
Twelve months or greater	—	—		—		—
Total equity securities	1	10,125		8,722		(1,403		)
	198	$	3,314,529	$	3,230,658	$	(83,871	)

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The amortized cost and fair value of fixed maturity securities (excluding United States Government and United States Government sponsored agency securities) segregated by investment grade (NRSRO rating of BBB/Baa or higher) and below investment grade and equity securities that had unrealized losses greater than 20% and the number of months in a continuous unrealized loss position were as follows:

	Number of Securities	Amortized Cost		Fair Value		Gross Unrealized Losses
		(Dollars in thousands)
June 30, 2013
Investment grade:
Less than six months	4	$	31,644	$	24,249	$	(7,395	)
Six months or more and less than twelve months	—	—		—		—
Twelve months or greater	1	20,000		14,565		(5,435		)
Total investment grade	5	51,644		38,814		(12,830		)
Below investment grade:
Less than six months	3	81,170		65,215		(15,955		)
Six months or more and less than twelve months	—	—		—		—
Twelve months or greater	2	2,050		1,541		(509		)
Total below investment grade	5	83,220		66,756		(16,464		)
	10	$	134,864	$	105,570	$	(29,294	)
December 31, 2012
Investment grade:
Less than six months	—	$	—	$	—	$	—
Six months or more and less than twelve months	1	20,000		15,379		(4,621		)
Twelve months or greater	—	—		—		—
Total investment grade	1	20,000		15,379		(4,621		)
Below investment grade:
Less than six months	1	1,416		1,131		(285		)
Six months or more and less than twelve months	—	—		—		—
Twelve months or greater	3	9,324		7,148		(2,176		)
Total below investment grade	4	10,740		8,279		(2,461		)
	5	$	30,740	$	23,658	$	(7,082	)

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The amortized cost and fair value of fixed maturity securities, by contractual maturity, that were in an unrealized loss position 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 a separate line.

	Available for sale				Held for investment
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
June 30, 2013
Due in one year or less	$	—	$	—	$	—	$	—
Due after one year through five years	22,522		22,106		—		—
Due after five years through ten years	4,217,818		4,027,854		—		—
Due after ten years through twenty years	2,461,129		2,343,870		—		—
Due after twenty years	1,708,620		1,605,481		76,170		61,250
	8,410,089		7,999,311		76,170		61,250
Residential mortgage backed securities	367,794		351,401		—		—
Commercial mortgage backed securities	1,147,811		1,064,758		—		—
Other asset backed securities	469,181		449,018		—		—
	$	10,394,875	$	9,864,488	$	76,170	$	61,250
December 31, 2012
Due in one year or less	$	—	$	—	$	—	$	—
Due after one year through five years	22,160		21,059		—		—
Due after five years through ten years	623,802		617,848		—		—
Due after ten years through twenty years	1,319,250		1,302,283		—		—
Due after twenty years	416,621		405,426		76,088		61,521
	2,381,833		2,346,616		76,088		61,521
Residential mortgage backed securities	508,576		480,848		—		—
Commercial mortgage backed securities	163,565		161,582		—		—
Other asset backed securities	174,342		171,369		—		—
	$	3,228,316	$	3,160,415	$	76,088	$	61,521

International Exposure

We hold fixed maturity securities with international exposure. As of June 30, 2013, 15% of the carrying value of our fixed maturity securities was comprised of corporate debt securities of issuers based outside of the United States and debt securities of foreign governments. All of these securities are denominated in U.S. dollars and all are investment grade (NAIC designation of either 1 or 2), except for thirteen securities with a total fair value of $74.7 million which are all NAIC 3 and one security (fair value of $2.3 million) which has an NAIC 4 designation. Our investment professionals analyze each holding for credit risk by economic and other factors of each country and industry. The following table presents our international exposure in our fixed maturity portfolio by country or region:

	June 30, 2013
	Amortized Cost		Carrying Amount/Fair Value		Percent of Total Carrying Amount
	(Dollars in thousands)
GIIPS (1)	$	238,434	$	243,285	0.9%
Asia/Pacific	174,344		172,967		0.7%
Non-GIIPS Europe	1,782,259		1,802,949		7.0%
Latin America	195,506		190,749		0.8%
Non-U.S. North America	722,194		736,819		2.9%
Australia & New Zealand	372,489		377,527		1.5%
Other	367,820		386,423		1.5%
	$	3,853,046	$	3,910,719	15.3%

(1) Greece, Ireland, Italy, Portugal and Spain continue to cause credit risk as economic conditions in these countries continue to be volatile, especially within the financial and banking sectors. All of our exposure in GIIPS are corporate securities with issuers domiciled in these countries. None of our foreign government obligations were held in any of these countries.

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Watch List

At each balance sheet date, we identify invested assets which have characteristics (i.e. significant unrealized losses compared to amortized cost and industry trends) creating uncertainty as to our future assessment of an other than temporary impairment. As part of this assessment, we review not only a change in current price relative to its amortized cost but the issuer's current credit rating and the probability of full recovery of principal based upon the issuer's financial strength. Specifically for corporate issues we evaluate the financial stability and quality of asset coverage for the securities relative to the term to maturity for the issues we own. A security which has a 25% or greater change in market price relative to its amortized cost and a possibility of a loss of principal will be included on a list which is referred to as our watch list. We exclude from this list securities with unrealized losses which are related to market movements in interest rates and which have no factors indicating that such unrealized losses may be other than temporary as we do not intend to sell these securities and it is more likely than not we will not have to sell these securities before a recovery is realized. In addition, we exclude our RMBS as we monitor all of our RMBS on a quarterly basis for changes in default rates, loss severities and expected cash flows for the purpose of assessing potential other than temporary impairments and related credit losses to be recognized in operations. At June 30, 2013, the amortized cost and fair value of securities on the watch list are as follows:

General Description	Number of Securities	Amortized Cost		Unrealized Losses			Fair Value		Months in Continuous Unrealized Loss Position	Months Unrealized Losses Greater Than 20%
		(Dollars in thousands)
Investment grade
Corporate fixed maturity securities:
Finance	3	$	49,530	$	(6,998	)	$	42,532	1 - 31	0 - 20
Industrial	3	28,875		(5,516		)	23,359		8 - 34	0 - 1
Industrial	1	9,365		22			9,387
	7	$	87,770	$	(12,492	)	$	75,278
Below investment grade
Corporate fixed maturity securities:
Industrial	1	20,606		(2,491		)	18,115		25	—
	8	$	108,376	(14,983		)	$	93,393

A majority of the investment grade securities on the watch list have Eurozone exposure that has contributed to their depressed fair values. Our analysis of all of the securities on the watch list that we have determined are temporarily impaired and their credit performance at June 30, 2013 is as follows:

Finance:  The decline in value of these securities which are rated investment grade is due to the continued wide spreads as a result of the ongoing concerns relating to capital, asset quality and earnings stability due to the financial events of the past three years and the ongoing events in the Eurozone, specifically the sovereign debt crisis. While these issuers have had their financial position and profitability weakened by the credit and liquidity crisis, we have determined that these securities were not other than temporarily impaired due to our evaluation of the operating performance and the credit worthiness of each individual issuer.

Industrial:  The decline in value of these securities relates to ongoing operational issues or recent corporate actions. These issues have caused the price for these securities to decline; however, the companies have strong liquidity and ample time to strengthen their credit profile. We have determined that these securities were not other than temporarily impaired due to the issuers' very strong market positions, restructuring actions that are expected to favorably impact future profitability and a history of strong reliable operating performance, improving economic conditions and rising security prices.

Other Than Temporary Impairments

We have a policy and process in place to identify securities in our investment portfolio for which we should recognize impairments. See Critical Accounting Policies—Evaluation of Other Than Temporary Impairments included in Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2012. We recognized other than temporary impairments and additional credit losses on a number of securities for which we have previously recognized OTTI. A summary of OTTI is presented in Note 3 to our unaudited consolidated financial statements in this Form 10-Q, which is incorporated by reference in this Item 2.

Several factors led us to believe that full recovery of amortized cost will not be expected. A discussion of these factors and our policy and process in place to identify securities that could potentially have impairment that is other than temporary is in Note 3 to our unaudited consolidated financial statements in this Form 10-Q, which is incorporated by reference in this Item 2.

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Mortgage Loans on Real Estate

Our commercial mortgage loan portfolio consists of mortgage loans collateralized by the related properties and diversified as to property type, location, and loan size. Our mortgage lending policies establish limits on the amount that can be loaned to one borrower and other criteria to attempt to reduce the risk of default. Our commercial mortgage loans on real estate are reported at cost, adjusted for amortization of premiums and accrual of discounts net of valuation allowances. At June 30, 2013 and December 31, 2012 the largest principal amount outstanding for any single mortgage loan was $14.7 million and $15.0 million, respectively, and the average loan size was $2.5 million and $2.4 million as of June 30, 2013 and December 31, 2012. respectively. We have the contractual ability to pursue full personal recourse on 11.0% of the loans and partial personal recourse on 31.4% of the loans. In addition, the average loan to value ratio for the overall portfolio was 54.6% and 53.5% at June 30, 2013 and December 31, 2012, respectively, based upon the underwriting and appraisal at the time the loan was made. This loan to value is indicative of our conservative underwriting policies and practices for making commercial mortgage loans and may not be indicative of collateral values at the current reporting date. Our current practice is to only obtain market value appraisals of the underlying collateral at the inception of the loan unless we identify indicators of impairment in our ongoing analysis of the portfolio, in which case, we either calculate a value of the collateral using a capitalization method or obtain a current appraisal of the underlying collateral. The commercial mortgage loan portfolio is summarized by geographic region and property type in Note 4 - Mortgage Loans on Real Estate in our unaudited consolidated financial statements.

In the normal course of business, we commit to fund commercial mortgage loans up to 90 days in advance. At June 30, 2013, we had commitments to fund commercial mortgage loans totaling $93.8 million, with fixed interest rates ranging from 3.80% to 4.55%. During 2012 and 2013, the commercial mortgage loan industry has been very competitive. This competition has resulted in a number of borrowers refinancing with other lenders. For the six months ended June 30, 2013, we received $224.3 million in cash for loans being paid in full compared to $165.4 million for the six months ended June 30, 2012. Some of the loans being paid off have either reached their maturity or are nearing maturity; however, some borrowers are paying the prepayment fee and refinancing at a lower rate.

See Note 4 to our unaudited consolidated financial statements for a presentation of our specific and general loan loss allowances, foreclosure activity and troubled debt restructure analysis.

We recorded impairment losses of $1.2 million on three mortgage loan with outstanding principal due totaling $5.9 million and impairment losses of $2.2 million on four mortgage loans with outstanding principal due totaling $9.5 million during the three and six months ended June 30, 2013, respectively. We recorded impairment losses of $3.5 million on five mortgage loan with outstanding principal due totaling $13.6 million and impairment losses of $10.3 million on sixteen mortgage loans with outstanding principal due totaling $45.6 million during the same periods in 2012.

In 2012, we initiated a process by which we evaluate the credit quality of each of our commercial mortgage loans. This process utilizes each loan's debt service coverage ratio as a primary metric. A summary of our portfolio by debt service coverage ratio follows:

	June 30, 2013				December 31, 2012
	Principal Outstanding		Percent of Total Principal Outstanding		Principal Outstanding		Percent of Total Principal Outstanding
	(Dollars in thousands)
Debt Service Coverage Ratio:
Greater than or equal to 1.5	$	1,596,745	61.0	%	$	1,517,840	57.1	%
Greater than or equal to 1.2 and less than 1.5	542,745		20.8	%	604,512		22.7	%
Greater than or equal to 1.0 and less than 1.2	225,451		8.6	%	262,165		9.9	%
Less than 1.0	251,238		9.6	%	274,366		10.3	%
	$	2,616,179	100.0	%	$	2,658,883	100.0	%

At June 30, 2013, we have six mortgages that are in the process of being satisfied by our taking ownership of the real estate serving as collateral. These loans have an outstanding principal balance of $15.3 million and we have recorded specific loan loss allowances totaling $5.4 million, of which $0.6 million was recognized during the three and six months ended June 30, 2013. We also have eleven commercial mortgage loans at June 30, 2013 with an outstanding principal balance of $28.3 million that have been given "workout" terms which generally allow for interest only payments or the capitalization of interest for a specified period of time and we have recorded specific loan loss allowances on four of these loans (principal balance of $10.6 million) of $3.5 million. At June 30, 2013, we had no commercial mortgage loans that were delinquent (60 days or more past due at the reporting date). The total outstanding principal balance of these seventeen loans is $43.6 million, which represents less than 2% of our total mortgage loan portfolio.

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Mortgage loans summarized in the following table represent all loans that we are either not currently collecting or those we feel it is probable we will not collect all amounts due according to the contractual terms of the loan agreements (all loans that we have worked with the borrower to alleviate short-term cash flow issues, loans delinquent for 60 days or more at the reporting date, loans we have determined to be collateral dependent and loans that we have recorded specific impairments on that we feel may continue to have performance issues).

	June 30, 2013			December 31, 2012
	(Dollars in thousands)
Mortgage loans with allowances	$	46,707		$	53,110
Mortgage loans with no allowance for losses	18,699			27,765
Allowance for probable loan losses	(21,176		)	(23,134		)
Net carrying value of impaired mortgage loans	$	44,230		$	57,741

Derivative Instruments

Our derivative instruments primarily consist of call options purchased to provide the income needed to fund the annual index credits on our fixed index annuity products. The fair value of the call options is based upon the amount of cash that would be required to settle the call options obtained from the counterparties adjusted for the nonperformance risk of the counterparty. The nonperformance risk for each counterparty is based upon its credit default swap rate. We have no performance obligations related to the call options.

We recognize all derivative instruments as assets or liabilities in the consolidated balance sheets at fair value. None of our derivatives qualify for hedge accounting, thus, any change in the fair value of the derivatives is recognized immediately in the consolidated statements of operations. A presentation of our derivative instruments along with a discussion of the business strategy involved with our derivatives is included in Note 5 to our unaudited consolidated financial statements in this Form 10-Q, which is incorporated by reference in this Item 2.

Liquidity and Capital Resources

Our insurance subsidiaries continue to have adequate cash flows from annuity deposits and investment income to meet their policyholder and other obligations. Net cash flows from annuity deposits and funds returned to policyholders as surrenders, withdrawals and death claims were $1.2 billion for the six months ended June 30, 2013 compared to $1.0 billion for the six months ended June 30, 2012, with the increase attributable to a $181.0 million increase in net annuity deposits after coinsurance and a $14.6 million (after coinsurance) decrease in funds returned to policyholders. We continue to invest the net proceeds from policyholder transactions and investment activities in high quality fixed maturity securities and fixed rate commercial mortgage loans. As discussed above under Overview, we have been through several cycles of calls of our United States Government callable agency securities that has resulted in excess cash and other short-term investments beginning in 2010.

We, as the parent company, are a legal entity separate and distinct from our subsidiaries, and have no business operations. We need liquidity primarily to service our debt, including the convertible senior notes and subordinated debentures issued to subsidiary trusts, pay operating expenses and pay dividends to stockholders. Our assets consist primarily of the capital stock and surplus notes of our subsidiaries. Accordingly, our future cash flows depend upon the availability of dividends, surplus note interest payments and other statutorily permissible payments from our subsidiaries, such as payments under our investment advisory agreements and tax allocation agreement with our subsidiaries. These sources provide adequate cash flow to us to meet our current and reasonably foreseeable future obligations and we expect they will be adequate to fund our parent company cash flow requirements for the rest of 2013.

The ability of our life insurance subsidiaries to pay dividends or distributions, including surplus note payments, will be limited by applicable laws and regulations of the states in which our life insurance subsidiaries are domiciled, which subject our life insurance subsidiaries to significant regulatory restrictions. These laws and regulations require, among other things, our insurance subsidiaries to maintain minimum solvency requirements and limit the amount of dividends these subsidiaries can pay.

Currently, American Equity Life may pay dividends or make other distributions without the prior approval of the Iowa Insurance Commissioner, unless such payments, together with all other such payments within the preceding twelve months, exceed the greater of (1) American Equity Life's net gain from operations for the preceding calendar year, or (2) 10% of American Equity Life's statutory capital and surplus at the preceding December 31. For 2013, up to $165.6 million can be distributed as dividends by American Equity Life without prior approval of the Iowa Insurance Commissioner. In addition, dividends and surplus note payments may be made only out of statutory earned surplus, and all surplus note payments are subject to prior approval by regulatory authorities in the life subsidiary's state of domicile. American Equity Life had $783.9 million of statutory earned surplus at June 30, 2013.

The maximum distribution permitted by law or contract is not necessarily indicative of an insurer's actual ability to pay such distributions, which may be constrained by business and regulatory considerations, such as the impact of such distributions on surplus, which could affect the insurer's ratings or competitive position, the amount of premiums that can be written and the ability to pay future dividends or make other distributions. Further, state insurance laws and regulations require that the statutory surplus of our life subsidiaries following any dividend or distribution must be reasonable in relation to their outstanding liabilities and adequate for their financial needs. Along with solvency regulations, the primary driver in determining the amount of capital used for dividends is the level of capital needed to maintain desired financial strength ratings from A.M. Best. Given recent economic events that have affected the insurance industry, both regulators and rating agencies could become more conservative in their methodology and criteria, including increasing capital requirements for our insurance subsidiaries which, in turn, could negatively affect the cash available to us from insurance subsidiaries. As of June 30, 2013, we estimate American Equity Life has sufficient statutory capital and surplus, combined with capital available to the holding company, to meet this rating objective. However, this capital may

48

not be sufficient if significant future losses are incurred or A.M. Best modifies its rating criteria and, given the current market conditions, access to additional capital could be limited.

The transfer of funds by American Equity Life is also restricted by a covenant in our line of credit agreement which requires American Equity Life to maintain a minimum risk-based capital ratio of 275% and a minimum level of statutory surplus equal to the sum of 1) 80% of statutory surplus at December 31, 2010, 2) 50% of the statutory net income for each fiscal quarter ending after December 31, 2010, and 3) 50% of all capital contributed to American Equity Life after September 30, 2010. American Equity Life's risk-based capital ratio was 332% at December 31, 2012. Under this agreement we are also required to maintain a maximum ratio of adjusted debt to total adjusted capital of 0.35 and a minimum cash coverage ratio of 1.0.

Cash and cash equivalents of the parent holding company at June 30, 2013, was $26.6 million. In addition, we have a $160 million line of credit, with $15.0 million outstanding, available through January 2014 for general corporate purposes of the parent company and its subsidiaries. We also have the ability to issue equity, debt or other types of securities through one or more methods of distribution under a currently effective shelf registration statement on Form S-3. The terms of any offering would be established at the time of the offering, subject to market conditions.

On July 16, 2013, we issued $400 million aggregate principal amount of senior unsecured notes due 2021 which will bear interest at 6.625% per year and will mature on July 15, 2021. We intend to use the net proceeds (i) to pay the cash consideration required to purchase our 5.25% Contingent Convertible Senior Notes due 2029 (the “2029 Notes”) tendered in connection with an offer to exchange  any and all of our outstanding 2029 Notes for cash and newly issued shares of common stock if we commence such an offer, depending on market conditions and other factors, including the payment of any applicable accrued and unpaid interest on our 2029 Notes, (ii) to pay the cash consideration required to purchase our 3.5% Convertible Senior Notes due 2015 (the “2015 Notes”) tendered in connection with an offer to exchange any and all of our outstanding 2015 Notes for cash and newly issued shares of common stock if we commence such an offer, depending on market conditions and other factors, including the payment of any applicable accrued and unpaid interest on our 2015 Notes, (iii) to repay all amounts outstanding under our existing revolving credit facility (we repaid all amounts outstanding on July 17, 2013) and (iv) to pay related fees and expenses.   Any proceeds we are unable to use in the manner described above, due to market conditions or otherwise, or any excess proceeds after those uses  may be used to tender for, redeem or repurchase any of the 2029 Notes or 2015 Notes that remain outstanding and/or for general corporate purposes.

On March 25, 2013, notice of mandatory redemption was issued for our 2024 notes. $25.8 million principal amount of the convertible notes exercised their conversion rights prior to the April 30, 2013 mandatory redemption date. The holders of these notes received the principal amount of their notes in cash and the conversion premium in shares of our common stock, for which 216,729 shares were issued. The balance of the convertible notes ($2.5 million principal amount) was redeemed for cash.

New Accounting Pronouncements

See Note 1 - Significant Accounting Policies to the Consolidated Financial Statements, which is incorporated by reference in this Item 2, for new accounting pronouncement disclosures that supplements the disclosure in Note 1 - Significant Accounting Policies to the Consolidated Financial Statements of our 2012 Annual Report on Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We seek to invest our available funds in a manner that will maximize shareholder value and fund future obligations to policyholders and debtors, subject to appropriate risk considerations. We seek to meet this objective through investments that: (i) consist substantially of investment grade fixed maturity securities; (ii) have projected returns which satisfy our spread targets; and (iii) have characteristics which support the underlying liabilities. Many of our products incorporate surrender charges, market interest rate adjustments or other features to encourage persistency.

We seek to maximize the total return on our available for sale investments through active investment management. Accordingly, we have determined that our available for sale portfolio of fixed maturity securities is available to be sold in response to: (i) changes in market interest rates; (ii) changes in relative values of individual securities and asset sectors; (iii) changes in prepayment risks; (iv) changes in credit quality outlook for certain securities; (v) liquidity needs: and (vi) other factors. An OTTI shall be considered to have occurred when we have an intention to sell available for sale securities in an unrealized loss position. If we do not intend to sell a debt security, we consider all available evidence to make an assessment of whether it is more likely than not that we will be required to sell the security before the recovery of its amortized cost basis. If it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis, an OTTI will be considered to have occurred.

Interest rate risk is our primary market risk exposure. Substantial and sustained increases and decreases in market interest rates can affect the profitability of our products, the fair value of our investments, and the amount of interest we pay on our floating rate subordinated debentures. Our floating rate trust preferred securities bear interest at the three month LIBOR plus 3.50% - 4.00%. Our outstanding balance of floating rate trust preferred securities was$169.6 millionat June 30, 2013, of which $85.5 million has been swapped to a fixed rate and $79.0 million has been capped for a term of seven years beginning March or July 2014 (See Note 5 to our unaudited consolidated financial statements). The profitability of most of our products depends on the spreads between interest yield on investments and rates credited on insurance liabilities. We have the ability to adjust crediting rates (caps, participation rates or asset fee rates for index annuities) on substantially all of our annuity liabilities at least annually (subject to minimum guaranteed values). In addition, substantially all of our annuity products have surrender and withdrawal penalty provisions designed to encourage persistency and to help ensure targeted spreads are earned. However, competitive factors, including the impact of the level of surrenders and withdrawals, may limit our ability to adjust or maintain crediting rates at levels necessary to avoid narrowing of spreads under certain market conditions.

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A major component of our interest rate risk management program is structuring the investment portfolio with cash flow characteristics consistent with the cash flow characteristics of our insurance liabilities. We use computer models to simulate cash flows expected from our existing business under various interest rate scenarios. These simulations enable us to measure the potential gain or loss in fair value of our interest rate-sensitive financial instruments, to evaluate the adequacy of expected cash flows from our assets to meet the expected cash requirements of our liabilities and to determine if it is necessary to lengthen or shorten the average life and duration of our investment portfolio. The "duration" of a security is the time weighted present value of the security's expected cash flows and is used to measure a security's sensitivity to changes in interest rates. When the durations of assets and liabilities are similar, exposure to interest rate risk is minimized because a change in value of assets should be largely offset by a change in the value of liabilities.

If interest rates were to increase 10% (35 basis points) from levels at June 30, 2013, we estimate that the fair value of our fixed maturity securities would decrease by approximately $780.9 million. The impact on stockholders' equity of such decrease (net of income taxes and certain adjustments for changes in amortization of deferred policy acquisition costs and deferred sales inducements) would be a decrease of $227.6 million in accumulated other comprehensive income and a decrease in stockholders' equity. The computer models used to estimate the impact of a 10% change in market interest rates incorporate numerous assumptions, require significant estimates and assume an immediate and parallel change in interest rates without any management of the investment portfolio in reaction to such change. Consequently, potential changes in value of our financial instruments indicated by the simulations will likely be different from the actual changes experienced under given interest rate scenarios, and the differences may be material. Because we actively manage our investments and liabilities, our net exposure to interest rates can vary over time. However, any such decreases in the fair value of our fixed maturity securities (unless related to credit concerns of the issuer requiring recognition of an other than temporary impairment) would generally be realized only if we were required to sell such securities at losses prior to their maturity to meet our liquidity needs, which we manage using the surrender and withdrawal provisions of our annuity contracts and through other means. See Financial Condition - Liquidity for Insurance Operations included in Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2012.

At June 30, 2013, 30% of our fixed income securities have call features of which 5% ($1.3 billion) will become subject to call redemption during the next twelve months. During the six months ended June 30, 2013 and 2012, we received $1.0 billion and $2.8 billion, respectively, in redemption proceeds related to the exercise of such call options. We have reinvestment risk related to these redemptions to the extent we cannot reinvest the net proceeds in assets with credit quality and yield characteristics similar to the redeemed bonds. Such reinvestment risk typically occurs in a declining rate environment. Should rates decline to levels which tighten the spread between our average portfolio yield and average cost of interest credited on annuity liabilities, we have the ability to reduce crediting rates (caps, participation rates or asset fees for index annuities) on most of our annuity liabilities to maintain the spread at our targeted level. At June 30, 2013, approximately 99% of our annuity liabilities were subject to annual adjustment of the applicable crediting rates at our discretion, limited by minimum guaranteed crediting rates specified in the policies.

We purchase call options on the applicable indices to fund the annual index credits on our fixed index annuities. These options are primarily one-year instruments purchased to match the funding requirements of the underlying policies. Fair value changes associated with those investments are substantially offset by an increase or decrease in the amounts added to policyholder account balances for fixed index products. For the six months ended June 30, 2013 and 2012, the annual index credits to policyholders on their anniversaries were $377.1 million and $101.3 million, respectively. Proceeds received at expiration of these options related to such credits were $380.0 million and $100.9 million for the six months ended June 30, 2013 and 2012, respectively.

Within our hedging process we purchase options out of the money to the extent of anticipated minimum guaranteed interest on index policies. On the anniversary dates of the index policies, we purchase new one-year call options to fund the next annual index credits. The risk associated with these prospective purchases is the uncertainty of the cost, which will determine whether we are able to earn our spread on our index business. We manage this risk through the terms of our fixed index annuities, which permit us to change caps, participation rates and asset fees, subject to contractual features. By modifying caps, participation rates or asset fees, we can limit option costs to budgeted amounts, except in cases where the contractual features would prevent further modifications. Based upon actuarial testing which we conduct as a part of the design of our index products and on an ongoing basis, we believe the risk that contractual features would prevent us from controlling option costs is not material.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In accordance with the Securities Exchange Act Rules 13a-15 and 15d-15, our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were effective as of June 30, 2013 in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act.

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2013 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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See Note 7 - Commitments and Contingencies to the Consolidated Financial Statements, which is incorporated by reference in this Item 1, for litigation and regulatory disclosures that supplements the disclosure in Note 13 - Commitments and Contingencies to the Consolidated Financial Statements of our 2012 Annual Report on Form 10-K.

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Item 1A. Risk Factors

Our 2012 Annual Report on Form 10-K described our Risk Factors. There have been no material changes to the Risk Factors during the six months ended June 30, 2013.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no issuer purchases of equity securities for the quarter ended June 30, 2013.

We have a Rabbi Trust, the NMO Deferred Compensation Trust, which purchases our common shares to fund the amount of shares earned by our agents under the NMO Deferred Compensation Plan. At June 30, 2013, all shares earned and vested by agents have been purchased and contributed to the Rabbi Trust.

In addition, we have a share repurchase program under which we are authorized to purchase up to 10,000,000 shares of our common stock. As of June 30, 2013, no shares of our common stock had been repurchased under this program.

Item 6. Exhibits

Number	Name	Method of Filing
4.2	First Supplemental Indenture, dated July 17, 2013, among American Equity Investment Life Holding Company, U.S. Bank National Association, and Wells Fargo Bank, National Association.	Incorporated by reference to Exhibit 4.2 to Form 8-K filed on July 17, 2013
4.3	Second Supplemental Indenture, dated July 17, 2013, between American Equity Investment Life Holding Company and Wells Fargo Bank, National Association.	Incorporated by reference to Exhibit 4.2 to Form 8-K filed on July 17, 2013
10.1	First Amendment, dated July 12, 2013, to the Credit Agreement dated January 28, 2011 among American Equity Investment Life Holding Company, JPMorgan Chase Bank, National Association, SunTrust Bank and Deutsche Bank Securities, Inc.	Incorporated by reference to Exhibit 10.1 to Form 8-K filed on July 17, 2013
10.2	American Equity Investment Life Holding Company Short-Term Performance Incentive Plan adopted April 15, 2013, as amended and restated.	Incorporated by reference to Exhibit 10.1 to Form 8-K filed on April 15, 2013
10.3	Form of Change in Control Agreement between American Equity Investment Life Holding Company and Scott A. Samuelson	Filed herewith
10.4	2013 Director Equity and Incentive Plan	Filed herewith
12.1	Ratio of Earnings to Fixed Charges	Filed herewith
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
101.INS	XBRL Instance Document	*
101.SCH	XBRL Taxonomy Extension Schema Document	*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	*
*	Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities and Exchange Act of 1934, as amended and otherwise are not subject to liability under those sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 7, 2013	AMERICAN EQUITY INVESTMENT LIFE
	HOLDING COMPANY
	By:	/s/ John M. Matovina
		John M. Matovina, Chief Executive Officer and President
		(Principal Executive Officer)
	By:	/s/ Ted M. Johnson
		Ted M. Johnson, Chief Financial Officer and Treasurer
		(Principal Financial Officer)
	By:	/s/ Scott A. Samuelson
		Scott A. Samuelson, Vice President - Controller
		(Principal Accounting Officer)

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EX-10.3

Exhibit 10.3

CHANGE IN CONTROL AGREEMENT

THIS AGREEMENT is entered into this ____ day of ________________ by and between AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY, an Iowa corporation (the "Company"), and ________________ (the "Executive"). The Company's Board of Directors (the "Board") has determined that it is in the best interests of the Company and its stockholders to ensure that the Company and its Affiliates will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a termination of the Executive's employment in certain circumstances, including following a Change in Control as defined herein. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened termination of the Executive's employment in such circumstances and to provide the Executive with compensation and benefits arrangements upon such a termination which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations who may seek to employ the Executive. In order to accomplish these objectives, the Board has caused the Company to enter into this Agreement with the Executive.

It is hereby agreed as follows:

1.Definitions. For purposes of this Agreement, the following terms will have the following meanings unless otherwise expressly provided in this Agreement:

A."Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

B."Base Amount" shall have the meaning set forth in Section 280G(b)(3) of the Code.

C."Beneficial Owner" shall have the meaning set forth in Rule 13d-3 promulgated under Section 13 of the Exchange Act.

D."Beneficiary" means any individual, trust or other entity named by the Executive to receive the Severance Payments in the event of the death of the Executive during the Continuation Period. Executive may designate a Beneficiary to receive such Severance Payments by completing a form provided by the Company and delivering it to the Secretary of the Company. Executive may change his or her designated Beneficiary at any time (without the consent of any prior Beneficiary) by completing and delivering to the Secretary of the Company a new beneficiary designation form. If a Beneficiary has not been designated by the Executive, or if no designated Beneficiary survives the Executive, then the Severance Payments if any, will be paid to the Executive's estate, which shall be deemed to be the Executive's Beneficiary.

E."Board" means the Board of Directors of the Company.

F."Cause" means:

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(i)the Executive's willful and continued failure to substantially perform the Executive's duties with the Company or its Affiliates (other than any such failure resulting from the Executive's incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board which specifically identifies the manner in which the Board believes that the Executive has not substantially performed his or her duties;

(ii)the final conviction of the Executive of, or an entering of a guilty plea or a plea of no contest by the Executive to, a felony; or

(iii)the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company.

For purposes of this definition, no act or failure to act on the part of the Executive shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without a reasonable belief that the action or omission was in the best interests of the Company or its Affiliates. Any act, or failure to act, based on authority given pursuant to a resolution duly adopted by the Board will be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company and its Affiliates.

G."Change in Control" shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(i)any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing 35% or more of the combined voting power of the Company's then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described paragraph (iii) below;

(ii)the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended;

(iii)there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (a) a merger or consolidation immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the Company, the entity surviving such merger or consolidation or, if the Company or the entity surviving such merger is then a subsidiary, the ultimate parent thereof or (b) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or

2

becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Company or its Affiliates) representing 35% or more of the combined voting power of the Company's then outstanding securities; or

(iv)the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets, other than a sale or disposition by the Company of all or substantially all of the Company's assets immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or any parent thereof.

Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

H."Code" means the Internal Revenue Code of 1986, as amended from time to time.

I."Date of Termination" means the date specified in a Notice of Termination pursuant to paragraph 3 hereof, or the Executive's last date as an active employee of the Company and its Affiliates before a termination of employment due to death, Disability or other reason, as the case may be.

J."Disability" means the Executive's total and permanent disability as defined under the terms of the Company's long-term disability plan in effect on the Date of Termination.

K."Effective Period" means the 12-month period following any Change in Control.

L."Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time.

M."Excise Tax" shall mean any excise tax imposed under Section 4999 of the Code.

N."Good Reason" means, unless the Executive has consented in writing thereto, the occurrence of any of the following:

(i)the assignment to the Executive of any duties materially inconsistent with the Executive's position, including any change in status, authority, duties or responsibilities or any other action which, in either such case, results in a material diminution in

3

such status, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company or the Executive's employer promptly after receipt of notice thereof given by the Executive;

(ii)a reduction by the Company or the Executive's employer in the Executive's base salary;

(iii)the relocation of the Executive's office to a location more than fifty (50) miles outside West Des Moines, Iowa;

(iv)unless a plan providing a substantially similar compensation or benefit is substituted, (a) the failure by the Company or any of its Affiliates to continue in effect any fringe benefit or compensation plan, retirement plan, life insurance plan, health and accident plan or disability plan in which the Executive is participating prior to the Change in Control which adversely affects the Executive's total compensation in a material manner, or (b) the taking of any action by the Company or any of its Affiliates which would materially adversely affect the Executive's participation in or materially reduce or deprive him of his benefits under, such plans; or

(v)the failure of the Company to obtain the assumption in writing of the Company's obligation to perform this Agreement by any successor to all or substantially all of the assets of the Company within 15 days after such succession.

The Executive's right to terminate the Executive's employment for Good Reason shall not be affected by the Executive's incapacity due to physical or mental illness. In order for Good Reason to exist hereunder, the Executive must provide notice to the Company of the existence of the condition or circumstance described above within 90 days of the initial existence of the condition or circumstance (or, if later, within 90 days of the Executive's becoming aware of such condition or circumstance), and the Company must have failed to cure such condition within 30 days of the receipt of such notice, and the Executive must terminate employment within ten (10) days after the expiration of such cure period. Subject to the preceding sentence, the Executive's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

O."Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their owner-ship of stock of the Company.

P."Severance Payments" means the severance payments and benefits listed in paragraph 4(A) of this Agreement.

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2.Term. The term ("Term") of this Agreement shall commence on the date first above written (the "Commencement Date") and, unless terminated earlier as provided hereunder, shall continue through December 31, 2014; provided, however, that commencing on January 1, 2014 and each January 1st thereafter, the Term shall automatically be extended for one additional year, unless at least 90 days prior to such January 1st date, the Company shall have given notice that it does not wish to extend this Agreement. Upon the occurrence of a Change in Control during the Term, including any extensions thereof, the Term shall automatically be extended until the end of the Effective Period and may not be terminated by the Company during such time.

3.Notice of Termination.

A.Any termination of the Executive's employment by the Company, or by any Affiliate of the Company by which the Executive is employed, for Cause, or by the Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with paragraph 10 of this Agreement. For purposes of this Agreement, a "Notice of Termination" for termination of employment for Cause or for Good Reason means a written notice which: (i) is given at least thirty (30) days prior to the Date of Termination; (ii) indicates the specific termination provision in this Agreement relied upon; (iii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated; (iv) specifies the employment termination date; and (v) allows the recipient of the Notice of Termination at least thirty (30) days to cure the act or omission relied upon in the Notice of Termination. The failure to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause will not waive any right of the party giving the Notice of Termination hereunder or preclude such party from asserting such fact or circumstance in enforcing its rights hereunder.

B.A termination of employment of the Executive will not be deemed to be for Cause unless and until there has been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive has engaged in the conduct described in paragraph 1(F) hereof, and specifying the particulars of such conduct in reasonable detail.

4.Obligations of the Company Upon Termination of Executive's Employment Following a Change in Control.

A.If, (i) during the Effective Period, the Company terminates the Executive's employment other than for Cause or the Executive terminates employment with the Company for Good Reason, or (ii) either (1) the Executive's employment is terminated by the Company other than for Cause prior to a Change in Control (but, only if a Change in Control actually occurs) and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control,

5

(2) the Executive terminates his employment for Good Reason prior to a Change in Control (but, only if a Change in Control actually occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person or (3) the Executive's employment is terminated by the Company other than for Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (but, only if a Change in Control actually occurs), then the Company will provide the Executive with the payments and benefits specified below:

(a)a cash lump sum in the amount of the Executive's annual base salary through the Date of Termination to the extent not theretofore paid;

(b)a cash lump sum in the amount of the annual bonus that the Executive would receive for the year in which the Date of Termination occurs, pro-rated by multiplying such bonus amount by the fraction obtained by dividing the number of days in the year through the Date of Termination by 365, based on actual achievement of performance and payable at the same time bonuses are paid to other executives at the Company;

(c)a cash lump sum in the amount equal to the product of one times the Executive's annual base salary at the greater of (A) the rate in effect at the time Notice of Termination is given or (B) the rate in effect immediately preceding the Change in Control, payable within five days following the Date of Termination;

(d)a cash lump sum amount equal to the product of one times the greater of (A) the target annual cash bonus in effect for the Executive at the time Notice of Termination is given or (B) the target annual cash bonus in effect immediately preceding the Change in Control, payable within five days following the Date of Termination; and

(e)the continuation of the provision of health insurance, dental insurance and life insurance benefits for a period of one year following the Date of Termination (the "Continuation Period") to the Executive and the Executive's family at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies of the Company as in effect and applicable generally to other peer executives and their families during the 90-day period immediately preceding the Effective Period or on the Date of Termination, at the election of the Executive; provided, however, that if the Executive becomes re-employed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the medical and other welfare benefits described herein will be secondary to those provided under such other plan during such applicable period of eligibility.

B.Any and all amounts paid under this Agreement in the amount of or otherwise in respect of the Executive's annual base salary and bonuses, whether or not deferred under a deferred compensation plan or program, are intended to be and will be treated as compensation under any and all retirement plans sponsored or maintained by the Company or by any Affiliate controlled by the Company; provided, however, to the extent the treatment of such amounts as compensation under a retirement plan could adversely affect such plan's qualification

6

status, the amount of the benefits under such plan attributable to such potentially disqualifying compensation shall be paid by the Company and not pursuant to such plan.

C.If the Executive's employment is terminated by reason of the Executive's death or Disability during the Term, this Agreement shall terminate automatically on the date of death or, in the event of Disability, on the Date of Termination. In the event of Executive's death or Disability during the Continuation Period, the Severance Payments will be paid or provided to the Executive, the Executive's Beneficiary and/or the Executive's dependents under the applicable plans for the remainder of the Continuation Period. If the Executive's employment is terminated by the Company for Cause during the Term, or if the Executive terminates his employment by the Company other than for Good Reason, this Agreement shall terminate on the Date of Termination.

5.Mitigation of Damages. The Executive will not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise. Except as otherwise specifically provided in this Agreement, the amount of any payment provided for under this Agreement will not be reduced by any compensation earned by the Executive as the result of self-employment or employment by another employer or otherwise.

6.Stock Options; Stock Appreciation Rights; Stock Bonus; Restricted Stock. The foregoing benefits are intended to be in addition to the value of any options to acquire common stock of the Company, any equity-based awards of the Company and any other incentive or similar award or plan heretofore or hereafter adopted by the Company.

7.Tax Effect.

A.Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit received or to be received by the Executive (including any payment or benefit received in connection with a Change in Control or the termination of the Executive's employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement) (all such payments and benefits, including the Severance Payments, being hereinafter referred to as the "Total Payments") would be subject (in whole or part), to the Excise Tax, then, after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, arrangement or agreement, the cash Severance Payments shall first be reduced, and the noncash Severance Payments shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income and employment taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments) is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income and employment taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments); provided, however, that, to the extent permitted by Section 409A of

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the Code, the Executive may elect to have the noncash Severance Payments reduced (or eliminated) prior to any reduction of the cash Severance Payments.

B.For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a "payment" within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of Tax Counsel (as defined below) does not constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Tax Counsel in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of this Agreement, "Tax Counsel" will mean a lawyer, a certified public accountant with a nationally recognized accounting firm, or a compensation consultant with a nationally recognized actuarial and benefits consulting firm with expertise in the area of executive compensation tax law, who will be selected by the Company and will be reasonably acceptable to the Executive, and whose fees and disbursements will be paid by the Company.

C.At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). If the Executive objects to the Company's calculations, the Company shall pay to the Executive such portion of the Severance Payments (up to 100% thereof) as the Executive determines is necessary to result in the proper application of subparagraph A of this paragraph 7.

D.Notwithstanding anything in this Agreement to the contrary, the amount of the Severance Payments, and the limitation on such payments set forth in this paragraph 7, cannot be finally determined on or before the scheduled payment date, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Executive of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at 120% of the rate provided in Section 1274(b)(2)(B) of the Code).

8.Confidential Information; Non-solicitation. During the Term and any Continuation Period, the Executive covenants and agrees as follows: (a) to hold in a fiduciary

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capacity for the benefit of the Company and its Affiliates all secret, proprietary or confidential material, knowledge, data or any other information relating to the Company or any of its Affiliates and their respective businesses ("Confidential Information"), which has been obtained by the Executive during the Executive's employment by the Company or any of its Affiliates and that has not been, is not now and hereafter does not become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement), and will not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it; the Executive further agrees to return to the Company any and all records and documents (and all copies thereof) and all other property belonging to the Company or relating to the Company, its Affiliates or their businesses, upon termination of Executive's employment with the Company and its Affiliates; and (b) not to solicit or entice any other employee of the Company or its Affiliates to leave the Company or its Affiliates to go to work for any other business or organization which is in direct or indirect competition with the Company or any of its Affiliates, nor request or advise a customer or client of the Company or its Affiliates to curtail or cancel such customer's business relationship with the Company or its Affiliates.

9.Rights and Remedies Upon Executive's Breach.

A.The Executive hereby acknowledges and agrees that the provisions contained in paragraph 8 of this Agreement (the "Restrictive Covenants") are reasonable and valid in duration and in all other respects. If any court of, or arbitrator with, competent jurisdiction determines that any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder of the Restrictive Covenants will not thereby be affected and will be given full effect without regard to the invalid portions.

B.If the Executive breaches, or threatens to commit a breach of, any of the Restrictive Covenants, the Company will have the following rights and remedies, each of which rights and remedies will be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity:

(i)Specific Performance. The right and remedy to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction in aid of arbitration, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company.

(ii)Accounting. The right and remedy to require the Executive to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits derived or received by the Executive as the result of any action constituting a breach of the Restrictive Covenants.

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(iii)Cessation of Severance Payments. The right and remedy to cease any further Severance Payments from and after the commencement of such breach by the Executive.

C.The provisions of this subparagraph 9(C) shall apply to any dispute relating to this Agreement and not governed by subparagraph 9(B). All such disputes shall be resolved exclusively by arbitration administered by JAMS (or its successor) under its Employment Arbitration Rules and Procedures then in effect (the "JAMS Rules"). Notwithstanding the foregoing, the Company and the Executive shall have the right to (i) seek a restraining order or other injunctive or equitable relief or order in aid of arbitration or to compel arbitration, from a court of competent jurisdiction, or (ii) interim injunctive or equitable relief from the arbitrator pursuant to the JAMS Rules, in each case to prevent any violation of this Agreement. The Company and the Executive must notify the other party in writing of a request to arbitrate any such disputes within the same statute of limitations period applicable to such disputes. Any arbitration proceeding brought under this Agreement shall be conducted before one arbitrator in Des Moines, Iowa or such other city to which the parties mutually agree. The arbitrator shall be selected in accordance with the JAMS Rules, provided that the arbitrator shall be an attorney with significant experience in employment matters. Subject to paragraph 9(D) below, each party to any dispute shall pay its own expenses of the arbitration. The arbitrator will be empowered to award either party any remedy at law or in equity that the party would otherwise have been entitled to had the matter been litigated in court, including, but not limited to, general, special and punitive damages, injunctive relief, costs and attorney fees; provided, however, that the authority to award any remedy is subject to whatever limitations, if any, exist in the applicable law on such remedies. The arbitrator shall issue a decision or award in writing, stating the essential findings of fact and conclusions of law, and the arbitrators shall be required to follow the laws of the State of Iowa. Any judgment on or enforcement of any award, including an award providing for interim or permanent injunctive relief, rendered by the arbitrator may be entered, enforced or appealed in any court having jurisdiction thereof. Any arbitration proceedings, decision or award rendered hereunder, and the validity, effect and interpretation of this arbitration provision, shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq. It is part of the essence of this Agreement that any such disputes hereunder shall be resolved expeditiously and as confidentially as possible. Accordingly, the Company and the Executive agree that all proceedings in any arbitration shall be conducted under seal and kept strictly confidential. In that regard, no party shall use, disclose or permit the disclosure of any information, evidence or documents produced by any other party in the arbitration proceedings or about the existence, contents or results of the proceedings except as necessary and appropriate for the preparation and conduct of the arbitration proceedings, or as may be required by any legal process, or as required in an action in aid of arbitration or for enforcement of or appeal from an arbitral award. Before making any disclosure permitted by the preceding sentence, the party intending to make such disclosure shall give the other party reasonable written notice of the intended disclosure and afford such other party a reasonable opportunity to protect its interests.

D.The Company shall pay to the Executive all legal fees and expenses incurred by the Executive in disputing in good faith any issue hereunder relating to the termination of the Executive's employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to

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the extent attributable to the application of Section 4999 of the Code to any payment or benefit provided hereunder. Such payments shall be made within five (5) business days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.

10.Notices. Any notice provided for in this Agreement will be given in writing and will be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified, registered or express mail, postage prepaid. Any such notice will be deemed given when so delivered personally, telegraphed, telexed or sent by facsimile transmission, or, if mailed, on the date of actual receipt thereof. Notices will be properly addressed to the parties at their respective addresses set forth below or to such other address as either party may later specify by notice to the other in accordance with the provisions of this paragraph:

If to the Company:

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

6000 Westown Parkway

West Des Moines, IA 50266

Attention: Chairman of the Board

With a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

155 N. Wacker Drive

Chicago, IL 60606

Attention: Shilpi Gupta

If to the Executive:

_______________________________

_______________________________

_______________________________

11.Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto, including, without limitation, any and all prior employment or severance agreements and related amendments entered into between the Company and the Executive; provided, however, that this Agreement shall supersede any agreement setting forth

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the terms and conditions of the Executive's employment with the Company only in the event that the Executive's employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason. Furthermore, the Severance Payments are separate and apart from and, to the extent they are actually paid, will be in lieu of any payment under any policy of the Company or any of its Affiliates regarding severance payments generally.

12.Waivers and Amendments. This Agreement may be amended, superseded, canceled, renewed or extended, and the terms and conditions hereof may be waived, only by a written instrument signed by the parties hereto or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any waiver on the part of any party of any such right, power or privilege hereunder, nor any single or partial exercise of any right, power or privilege hereunder, preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder.

13.Governing Law. This Agreement will be governed by and construed in accordance with the laws of the state of Iowa (without giving effect to the choice of law provisions thereof), where the employment of the Executive will be deemed, in part, to be performed, and enforcement of this Agreement or any action taken or held with respect to this Agreement will be taken in the courts of appropriate jurisdiction in Iowa.

14.Assignment. This Agreement, and any rights and obligations hereunder, may not be assigned by the Executive and may be assigned by the Company only to any successor in interest, whether by merger, consolidation, acquisition or the like, or to purchasers of substantially all of the assets of the Company.

15.Binding Agreement. This Agreement will inure to the benefit of and be binding upon the Company and its respective successors and assigns and the Executive and his legal representatives.

16.Counterparts. This Agreement may be executed in separate counterparts, each of which when so executed and delivered will be deemed an original, but all of which together will constitute one and the same instrument.

17.Headings. The headings in this Agreement are for reference purposes only and will not in any way affect the meaning or interpretation of this Agreement.

18.Authorization. The Company represents and warrants that the Board has authorized the execution of this Agreement.

19.Validity. The invalidity or unenforceability of any provisions of this Agreement will not affect the validity or enforceability of any other provisions of this Agreement, which will remain in full force and effect.

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20.Tax Withholding. The Company will have the right to deduct from all benefits and/or payments made under this Agreement to the Executive any and all taxes required by law to be paid or withheld with respect to such benefits or payments.

21.Section 409A. The parties intend that payments and benefits under this Agreement comply with Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively, "Section 409A") and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. Notwithstanding anything contained herein to the contrary, the Executive shall not be considered to have terminated employment with the Company for purposes of any payments under this Agreement which are subject to Section 409A until the Executive has incurred a "separation from service" within the meaning of Section 409A. Each amount to be paid or benefit to be provided under this Agreement shall be construed as a separate identified payment for purposes of Section 409A. Without limiting the foregoing and notwithstanding anything contained herein to the contrary, to the extent required in order to avoid an accelerated or additional tax under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement during the six-month period immediately following the Executive's separation from service shall instead be paid on the first business day after the date that is six months following the Executive's separation from service (or, if earlier, the Executive's date of death). To the extent required to avoid an accelerated or additional tax under Section 409A, amounts reimbursable to the Executive shall be paid to the Executive on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in kind benefits provided to the Executive) during one year may not affect amounts reimbursable or provided in any subsequent year. The Company makes no representation that any or all of the payments described in this Agreement will be exempt from or comply with Section 409A and makes no undertaking to preclude Section 409A from applying to any such payment.

22.No Contract of Employment. Nothing contained in this Agreement will be construed as a contract of employment between the Company or any of its Affiliates and the Executive, as a right of the Executive to be continued in the employment of the Company or any of its Affiliates, or as a limitation of the right of the Company or any of its Affiliates to discharge the Executive with or without Cause.

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY	EXECUTIVE
By:	By:

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EX-10.4

Exhibit 10.4

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY

2013 DIRECTOR EQUITY AND INCENTIVE PLAN

ARTICLE I

PURPOSE

The purposes of the American Equity Investment Life Holding Company 2013 Director Equity and Incentive Plan (as it may be amended, the “Plan”) are to provide long-term incentives to the Directors of the Company, to align the interests of such individuals with those of the Company's shareholders and to assist the Company in recruiting, retaining and motivating qualified individuals to serve as Directors.

ARTICLE II

DEFINITIONS AND CONSTRUCTION

Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates.

2.1“Administrator” shall have the meaning provided in Section 10.1 hereof.

2.2“Affiliate” shall mean (i) any entity that, directly or through one or more intermediaries, controls or is controlled by the Company, or (ii) any entity in which the Company has a significant equity interest, in each case as determined by the Committee.

2.3“Award” shall mean an Option, a Restricted Stock award, a Restricted Stock Unit award or an award of Stock Appreciation Rights, which may be awarded or granted under the Plan.

2.4“Award Agreement” shall mean the written notice, agreement, contract or other instrument or document evidencing an Award, including through an electronic medium, which shall contain such terms and conditions with respect to an Award as the Administrator shall determine, consistent with the Plan.

2.5“Beneficial Owner” (or any variant thereof) has the meaning defined in Rule 13d-3 under the Exchange Act.

2.6“Board” shall mean the Board of Directors of the Company.

2.7“Change in Capitalization” shall have the meaning provided in Section 3.2(a) hereof.

2.8“Change in Control” shall be deemed to have occurred if an event set forth in any one of the following paragraphs shall have occurred:

(a)    any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing 35% or more of the combined voting power of the Company's then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described paragraph (c) below;

(b)    the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office

who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended;

(c)    there is consummated a merger or consolidation of the Company or any direct or indirect Subsidiary with any other corporation, other than (i) a merger or consolidation immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the Company, the entity surviving such merger or consolidation or, if the Company or the entity surviving such merger is then a subsidiary, the ultimate parent thereof or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the beneficial owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing 35% or more of the combined voting power of the Company's then outstanding securities; or

(d)    the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets, other than a sale or disposition by the Company of all or substantially all of the Company's assets immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or any parent thereof.

Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Common Stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

2.9“Code” shall mean the Internal Revenue Code of 1986, as amended, including any related regulations.

2.10“Committee” shall mean the Compensation Committee of the Board, or another committee or subcommittee of the Board described in Article X hereof.

2.11“Common Stock” shall mean the common stock of the Company, par value $0.01 per share.

2.12“Company” shall mean American Equity Investment Life Holding Company, an Iowa corporation and any successor corporation.

2.13“Director” or “Non-Employee Director” shall mean a member of the Board who is not an Employee, as constituted from time to time.

2.14“Disability” means permanent and total disability within the meaning of Section 22(e)(3) of the Code, as determined by the Committee.

2.15“Effective Date” shall mean the date on which the Plan is adopted by the Board, provided that any such adoption requiring shareholder approval is subject to approval by the vote of the shareholders of the Company within twelve (12) months after such adoption by the Board.

2.16“Eligible Individual” shall mean any natural person who is a Non-Employee Director.

2.17“Employee” shall mean any officer or other employee of the Company or any Affiliate.

2.18“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

2.19“Fair Market Value” shall mean, as of any given date, the value of a Share determined as follows:

(a)if the Common Stock is (i) listed on any established securities exchange (such as the New York Stock Exchange, the NASDAQ Global Market and the NASDAQ Global Select Market), (ii) listed on any national market system or (iii) listed, quoted or traded on any automated quotation system, its Fair Market Value shall be the closing sales price for a Share

as quoted on such exchange or system for such date or, if there is no closing sales price for a Share on the date in question, the closing sales price for a Share on the last preceding date for which such quotation exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(b)if the Common Stock is traded only otherwise than on a securities exchange and is not quoted on the NASDAQ, the closing quoted selling price of the Common Stock on such date as quoted in “pink sheets” published by the National Daily Quotation Bureau;

(c)if the Common Stock is not listed on an established securities exchange, national market system or automated quotation system, but the Common Stock is regularly quoted by a recognized securities dealer, its Fair Market Value shall be the mean of the high bid and low asked prices for such date or, if there are no high bid and low asked prices for a Share on such date, the high bid and low asked prices for a Share on the last preceding date for which such information exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

(d)if the Common Stock is neither listed on an established securities exchange, national market system or automated quotation system nor regularly quoted by a recognized securities dealer, its Fair Market Value shall be determined by the Committee in good faith.

2.20“Option” shall mean a right to purchase Shares at a specified exercise price, granted under Article V hereof.

2.21“Participant” shall mean an Eligible Individual who has been granted an Award.

2.22“Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any Affiliate thereof, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Affiliate, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of Shares of the Company.

2.23“Plan” shall have the meaning set forth in Article I.

2.24“Restricted Stock” shall mean an Award of Shares made under Article VI hereof that is subject to certain restrictions and may be subject to risk of forfeiture or repurchase.

2.25“Restricted Stock Unit” shall mean a contractual right awarded under Article VII hereof to receive in cash or Shares the Fair Market Value of a Share of Common Stock.

2.26“Section 409A” means Section 409A of the Code, including the treasury regulations thereunder and other applicable Internal Revenue Service guidance.

2.27“Securities Act” shall mean the Securities Act of 1933, as amended.

2.28“Share Limit” shall have the meaning provided in Section 3.1 hereof.

2.29“Shares” shall mean shares of Common Stock.

2.30“Stock Appreciation Right” shall mean a stock appreciation right granted under Article VIII hereof.

2.31"Substitute Award” means any Award granted in assumption of, or in substitution for, an award of a company or business (that is not, prior to the applicable transaction, an Affiliate) acquired by the Company or an Affiliate or with which the Company or an Affiliate combines.

ARTICLE III

SHARES SUBJECT TO THE PLAN

3.1Number of Shares. Subject to Sections 3.2 hereof, the maximum number of Shares available for issuance under the Plan (the “Share Limit”) shall be 250,000 Shares. Shares issued under the Plan may, in whole or in part, be authorized but unissued Shares or Shares that have been or may be reacquired by the Company in the open market, in private transactions, or otherwise. If any Shares subject to an Award are forfeited, cancelled, exchanged or surrendered or if an Award otherwise terminates or expires without a distribution of Shares to the Participant, the Shares with respect to such Award shall, to the extent of any such forfeiture, cancellation, exchange, surrender, termination or expiration, again be available for Awards under the Plan. Notwithstanding the foregoing, Shares surrendered or withheld as payment of either the exercise price of an Award and/or withholding taxes in respect of an Award shall no longer be available for grant under the Plan. Shares delivered or deliverable in connection with a Substitute Award shall not be deemed granted or issued under the Plan for purposes of Section 3.1.

3.2Adjustments.

(a)In the event of any stock dividend, stock split, combination or exchange of Shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to shareholders, consolidation, reclassification, recapitalization, spin-off, spin-out, repurchase or other reorganization or corporate transaction or event, or any other change affecting the Shares or the Share price (any such occurrence or event, a “Change in Capitalization”), the Administrator shall make such equitable adjustments as it determines to be appropriate and equitable, in its sole discretion, to prevent dilution or enlargement of rights, if any, to reflect such change with respect to (i) the aggregate number and kind of shares or other securities that may be issued under the Plan (including, but not limited to, adjustments of the Share Limit); (ii) the number and kind of shares (or other securities or property) subject to outstanding Awards; (iii) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and/or (iv) the grant or exercise price per Share for any outstanding Awards under the Plan. Without limiting the generality of the foregoing, in connection with a Change in Capitalization, the Administrator may provide, in its sole discretion, for the cancellation of any outstanding Award in exchange for payment in cash or other property having an aggregate value equal to the Fair Market Value of the Shares covered by such Award, reduced by the aggregate exercise price or purchase price thereof, if any. In the case where the exercise price per Share of an Option or Stock Appreciation Right exceeds the Fair Market Value per Share, the Administrator may cancel, in its sole discretion, such Option or Stock Appreciation Right for no payment. The Administrator's determinations pursuant to this Section 3.2(a) shall be final, binding and conclusive.

(b)No action shall be taken under this Section 3.2 which shall cause an Award to fail to comply with Section 409A or an exemption therefrom, to the extent applicable to such Award.

ARTICLE IV

GRANTING OF AWARDS

4.1Participation. The Committee may, from time to time, select from among all Eligible Individuals, those to whom one or more Awards shall be granted and shall determine the nature and amount of each Award, which shall not be inconsistent with the requirements of the Plan. No Eligible Individual shall have any right to be granted an Award pursuant to the Plan.

4.2Award Agreement. Each Award shall be evidenced by an Award Agreement stating the terms and conditions applicable to such Award, consistent with the requirements of the Plan.

4.3Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan may, in the sole discretion of the Administrator, be granted either alone, in addition to or in tandem with, any other Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of such other Awards.

ARTICLE V

OPTIONS

5.1Granting of Options to Eligible Individuals. The Administrator is authorized to grant Options to Eligible Individuals from time to time, in its sole discretion, on such terms and conditions as it may determine which shall not be inconsistent with the Plan.

5.2Option Exercise Price. The exercise price per Share subject to each Option shall be set by the Administrator, but shall not be less than one hundred percent (100%) of the Fair Market Value of a Share on the date the Option is granted.

5.3Option Term. The term of each Option shall be set forth in the Award Agreement; provided, however, that the term shall not be more than ten (10) years from the date the Option is granted. The Award Agreement shall set forth the time period during which the Participant has the right to exercise the vested Options, which time period may not extend beyond the expiration date of the Award term. Except as limited by the requirements of Section 409A, the Administrator may extend the term of any outstanding Option, and may extend the time period during which vested Options may be exercised.

5.4Option Vesting.

(a)The terms and conditions pursuant to which an Option vests and becomes exercisable shall be set forth in the applicable Award Agreement. Such vesting may be based on service with the Company or any Affiliate, attainment of one or more performance goals, or any other criteria selected by the Administrator. At any time after the grant of an Option, the Administrator may, in its sole discretion and subject to whatever terms and conditions it selects, accelerate the vesting of the Option; provided, that in no event shall an Option become exercisable following its expiration, termination or forfeiture.

(b)No portion of an Option which is unexercisable at a Participant's termination of service shall thereafter become exercisable, except as may be otherwise provided in the applicable Award Agreement or by action of the Administrator following the grant of the Option.

5.5Partial Exercise of Options. An exercisable Option may be exercised in whole or in part. However, an Option shall not be exercisable with respect to fractional Shares and no Option may be exercised for less than one hundred (100) Shares.

5.6Manner of Exercise of Options. A Participant may exercise an exercisable Option, subject to applicable requirements established by the Administrator, by providing written notice of exercise accompanied by paying the full exercise price to the stock administrator of the Company for the Shares with respect to which the Option, or portion thereof, is exercised, in one or more of the following manners: (i) cash or check, (ii) Shares (including Shares issuable pursuant to the exercise of the Option) having a Fair Market Value on the date of exercise equal to the aggregate payments required, or (iii) other form of legal consideration acceptable to the Administrator (including cashless exercise via a broker).

ARTICLE VI

RESTRICTED STOCK

6.1Grant of Restricted Stock.

(a)The Administrator is authorized to grant Restricted Stock to Eligible Individuals from time to time, in its sole discretion, and shall determine the terms and conditions, including the restrictions, applicable to each award of Restricted Stock, which terms and conditions shall be set forth in the Award Agreement and shall not be inconsistent with the Plan, and may impose such conditions on the issuance of such Restricted Stock as it deems appropriate.

(b)The Award Agreement shall set forth the purchase price, if any, and form of payment for Restricted Stock; provided, however, that if a purchase price is charged, such purchase price shall be no less than the par value of the Shares to be purchased, unless otherwise permitted by applicable law. In all cases, legal consideration shall be required for each issuance of Restricted Stock to the extent required by applicable law.

6.2Rights as Shareholders. Upon issuance of Restricted Stock, the Participant shall have, unless otherwise provided herein or in the Award Agreement, all the rights of a shareholder with respect to said Shares. This includes, but is not limited to, the right to vote Shares of Restricted Stock as the record owner thereof, and the right to receive dividends and other distributions payable to an Eligible Individual during the restriction period; provided, however, that, the Award Agreement may provide that any distributions with respect to the Shares shall be subject to the restrictions set forth in Section 6.3 hereof.

6.3Restrictions. All Shares of Restricted Stock (including any Shares received by Participants thereof with respect to Shares of Restricted Stock as a result of a Change in Capitalization) shall be subject to restrictions and vesting requirements as set forth in the Award Agreement. Such restrictions may include, without limitation, restrictions concerning voting rights and transferability. Such restrictions may lapse separately or in combination at such times and pursuant to such circumstances or based on such criteria as set forth in the Award Agreement, including, without limitation, criteria based on the Participant's continuing to serve as a Director, Company or individual performance or other criteria set forth in the Award Agreement. Restricted Stock may not be sold or encumbered until all restrictions are terminated or expire.

6.4Certificates for Restricted Stock. Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Administrator shall determine. Certificates or book entries evidencing Shares of Restricted Stock must include an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock, and the Company may, in its sole discretion, retain physical possession of any stock certificate until such time as all applicable restrictions lapse.

6.5Section 83(b) Election. If a Participant makes an election under Section 83(b) of the Code to be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Participant would otherwise be taxable under Section 83(a) of the Code, the Participant shall be required to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service.

ARTICLE VII

RESTRICTED STOCK UNITS

7.1Grant of Restricted Stock Units.

(a)The Administrator is authorized to grant Restricted Stock Units to Eligible Individuals from time to time, in its sole discretion, and shall determine the terms and conditions, including the restrictions, applicable to each award of Restricted Stock Units, which terms and conditions shall be set forth in the Award Agreement and shall not be inconsistent with the Plan, and may impose such conditions on the issuance of such Restricted Stock Units as it deems appropriate. The Award Agreement shall set forth the time and form of payment of each Award of Restricted Stock Units.

(b)The Administrator shall specify, or permit the Participant to elect, the conditions and dates upon which the Shares underlying the Restricted Stock Units shall be issued (or cash in lieu thereof shall be paid), which dates shall not be earlier than the date as of which the Restricted Stock Units vest and become non-forfeitable. Such conditions and dates shall be established in accordance with the applicable provisions of Section 409A or an exemption therefrom. On the distribution dates, the Company shall issue to the Participant one unrestricted, fully transferable Share (or if provided in the Award Agreement, the Fair Market Value of one such Share in cash) for each vested and non-forfeitable Restricted Stock Unit.

ARTICLE VIII

STOCK APPRECIATION RIGHTS

8.1Grant of Stock Appreciation Rights.

(a)The Administrator is authorized to grant Awards of Stock Appreciation Rights to Eligible Individuals from time to time, in its sole discretion, on such terms and conditions as it may determine consistent with the Plan.

(b)Each Award of Stock Appreciation Rights shall entitle the Participant to exercise all or a specified portion of the Award of Stock Appreciation Rights (to the extent then exercisable pursuant to its terms) and to receive from the

Company an amount determined by multiplying the difference obtained by subtracting the exercise price per Share of the Stock Appreciation Rights from the Fair Market Value on the date of exercise of the Stock Appreciation Right by the number of Stock Appreciation Rights that shall have been exercised, subject to any limitations the Administrator may impose or set forth in the Award Agreement. Such amount shall be payable in Shares or in cash, as determined by the Administrator. The exercise price per Share subject to each Award of Stock Appreciation Rights shall be set by the Administrator, but shall not be less than one hundred percent (100%) of the Fair Market Value on the date the Stock Appreciation Rights are granted.

8.2Stock Appreciation Right Vesting.

(a)The terms and restrictions pursuant to which a Stock Appreciation Right vests and becomes exercisable shall be set forth in the applicable Award Agreement. Such vesting may be based on service with the Company or any Affiliate, attainment of one or more performance goals or any other criteria selected by the Administrator. At any time after grant of an Award of Stock Appreciation Rights, the Administrator may, in its sole discretion and subject to whatever terms and conditions it selects, accelerate the period during which the Stock Appreciation Rights vest; provided that in no event shall an Award of Stock Appreciation Rights become exercisable following its expiration, termination or forfeiture.

(b)No portion of an Awarded Stock Appreciation Right which is unexercisable at a Participant's termination of service shall thereafter become exercisable, except as may be otherwise provided in the applicable Award Agreement or by action of the Administrator following the grant of the Stock Appreciation Right.

8.3Manner of Exercise. A Participant may exercise an exercisable Stock Appreciation Right subject to applicable requirements established by the Administrator.

8.4Stock Appreciation Right Term. The term of each Award of Stock Appreciation Rights shall be set forth in the Award Agreement; provided, however, that the term shall not be more than ten (10) years from the date the Stock Appreciation Rights are granted. The Award Agreement shall set forth the time period during which the Participant has the right to exercise any vested Stock Appreciation Rights, which time period may not extend beyond the expiration date of the Award term. Except as limited by the requirements of Section 409A, the Administrator may extend the term of any outstanding Stock Appreciation Rights, and may extend the time period during which vested Stock Appreciation Rights may be exercised.

8.5No Net Share Counting. Stock Appreciation Rights to be settled in Shares shall be counted in full against the number of Shares available for award under the Plan under Section 3.1 regardless of the number of Shares issued upon settlement of the Stock Appreciation Rights.

ARTICLE IX

ADDITIONAL TERMS OF AWARDS

9.1Change in Control. Unless otherwise set forth in an Award Agreement, in the event of a Change in Control, each Award shall become fully vested and, if applicable, exercisable and the restrictions, payment conditions and forfeiture conditions applicable to any such Award granted shall lapse.

9.2Transferability of Awards.

(a)No Award under the Plan may be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution.

(b)No Award or interest or right therein shall be liable for the debts, contracts or engagements of the Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy) unless and until such Award has been exercised, or the Shares underlying such Award have been issued, and all restrictions applicable to such Shares have lapsed, and any attempted disposition of an Award prior to the satisfaction of these conditions shall be null and void and of no effect.

(c)During the lifetime of the Participant, only the Participant may exercise an Award. After the death of the Participant, any exercisable portion of an Award may be exercised by the Participant's personal representative or by any individual empowered to do so under the deceased Participant's will or under the then-applicable laws of descent and distribution.

(d)Notwithstanding the foregoing, the Administrator may, in its sole discretion, permit (on such terms, conditions and limitations as it may establish) Options, Restricted Stock, Restricted Stock Units and/or Stock Appreciation Rights to be transferred to a member of a Participant's immediate family or to a trust or similar vehicle for the benefit of a Participant's immediate family members.

9.3Conditions to Issuance of Shares.

(a)Notwithstanding anything herein to the contrary, neither the Company nor its Affiliates shall be required to issue or deliver any certificates or make any book entries evidencing Shares pursuant to the exercise of any Award, unless and until the Administrator has determined, with advice of counsel, that the issuance of such Shares is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the Shares are listed or traded, and the Shares are covered by an effective registration statement or applicable exemption from registration. In addition to the terms and conditions provided herein, the Administrator may require that a Participant make such reasonable covenants, agreements and representations as the Administrator, in its discretion, deems advisable in order to comply with any laws, regulations, or requirements.

(b)All Share certificates delivered pursuant to the Plan and all Shares issued pursuant to book entry procedures are subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state, or foreign securities or other laws, rules and regulations and the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded. The Administrator may place legends on any Share certificate or book entry to reference restrictions applicable to the Shares.

(c)The Administrator shall have the right to require any Participant to comply with any timing or other restrictions with respect to the settlement, distribution or exercise of any Award, including a trading window-period limitation, as may be imposed in the sole discretion of the Administrator.

(d)No fractional Shares shall be issued and the Administrator shall determine, in its sole discretion, whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding down.

(e)Notwithstanding any other provision of the Plan, unless otherwise determined by the Administrator or required by any applicable law, rule or regulation, the Company and/or its Affiliates may, in lieu of delivering to any Participant certificates evidencing Shares issued in connection with any Award, record the issuance of Shares in the books of the Company (or, as applicable, its transfer agent or stock plan administrator).

9.4Prohibition on Repricing. Except as provided in Section 3.2, in no event shall the exercise price with respect to an Award be reduced following the grant of an Award, nor shall an Award be cancelled in exchange for a replacement Award with a lower exercise price or in exchange for another type of Award or cash payment without shareholder approval.

9.5Death or Disability. Unless the Administrator or Award Agreement provides otherwise, if a Participant's service as a director is terminated because of death or Disability, his or her Award privileges, including any Awards the vesting of which have been accelerated pursuant to the provisions below, shall expire unless exercised within one (1) year after the date that his or her service was terminated; provided, however, nothing contained herein shall be construed to extend the ultimate term of the Award beyond its original term. In the event of the death of the Participant, his or her Awards may be exercised by the Participant's designated beneficiary. Unless the Administrator or Award Agreement provides otherwise, all Awards of Options, Restricted Stock, Restricted Stock Units or Stock Appreciation Rights, in each case held by a Participant immediately prior to the Participant's death or termination of service as a director as a result of Disability, to the extent not previously vested, shall vest and become non-forfeitable and any restrictions with respect to such Awards shall lapse; provided, however, that the applicable grants with respect to such Awards shall provide for payment terms that comply with, or are exempt from, the requirements of Section 409A.

ARTICLE X

ADMINISTRATION

10.1Administrator. Except to the extent determined by the Board, the Committee (or another committee or a subcommittee of the Board assuming the functions of the Committee under the Plan) shall administer the Plan (except as otherwise permitted herein) and shall be referred to herein as the “Administrator.” Unless otherwise determined by the Board, the Committee shall consist solely of two or more Non-Employee Directors appointed by and holding office at the pleasure of the Board, each of whom is intended to qualify as a “non-employee director” as defined by Rule 16b-3 of the Exchange Act and an “independent director” under the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded, in each case, to the extent required under such provision; provided, however, that any action taken by the Committee shall be valid and effective, whether or not members of the Committee at the time of such action are later determined not to have satisfied the requirements for membership set forth in this Section 10.l or otherwise provided in any charter of the Committee.

10.2Duties and Powers of Administrator. It shall be the duty of the Administrator to conduct the general administration of the Plan in accordance with its provisions. The Administrator shall have the power to interpret the Plan and all Award Agreements, and to adopt such rules for the administration, interpretation and application of the Plan as are not inconsistent with the Plan, to interpret, amend or revoke any such rules and to amend any Award Agreement, provided that the rights or obligations of the holder of the Award that is the subject of any such Award Agreement are not affected adversely by such amendment unless the consent of the Participant is obtained or such amendment is otherwise permitted under Section 11.1 hereof.

10.3Authority of Administrator. Subject to any specific designation in the Plan, the Administrator has the exclusive power, authority and sole discretion to:

(a)Designate Eligible Individuals to receive Awards;

(b)Determine the type or types of Awards to be granted to Eligible Individuals;

(c)Determine the number of Awards to be granted and the number of Shares to which an Award will relate;

(d)Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price, or purchase price, any performance criteria, any restrictions or limitations on the Award, any schedule for vesting, lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, and any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Administrator in its sole discretion determines;

(e)Determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be paid in cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;

(f)Prescribe the form of each Award Agreement, which need not be identical for each Participant;

(g)Decide all other matters that must be determined in connection with an Award;

(h)Establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;

(i)Interpret the terms of, and any matter arising pursuant to, the Plan or any Award Agreement; and

(j)Make all other decisions and determinations that may be required pursuant to the Plan or as the Administrator deems necessary or advisable to administer the Plan.

10.4Decisions Binding. The Administrator's interpretation of the Plan, any Awards granted pursuant to the Plan or any Award Agreement and all decisions and determinations by the Administrator with respect to the Plan are final, binding and conclusive on all parties.

10.5Delegation of Authority. To the extent permitted by applicable law or the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded, the Board or Committee may from time to time delegate to a committee of one or more members of the Board the authority to grant or amend Awards or to take other administrative actions pursuant to this Article X. Any delegation hereunder shall be subject to the restrictions and limits that the Board or Committee specifies at the time of such delegation, and the Board or Committee may at any time rescind the authority so delegated or appoint a new delegatee. At all times, the delegatee appointed under this Section 10.5 shall serve in such capacity at the pleasure of the Board and the Committee.

ARTICLE XI

MISCELLANEOUS PROVISIONS

11.1Amendment, Suspension or Termination of the Plan. The Plan may be amended or terminated at any time by action of the Board. However, no amendment may, without shareholder approval, (i) increase the aggregate number of Shares available for Awards, (ii) extend the term of the Plan, (iii) materially expand the types of awards available under the Plan, (iv) change the definition of Eligible Individual to add a category or categories of individuals who are eligible to participate in the Plan, (v) delete or limit the prohibition against repricing of Awards contained in Section 9.4, or (vi) make other changes which require approval by the shareholders of the Company in order to comply with applicable law or applicable stock market rules. No amendment or termination of the Plan may adversely modify any individual's rights under an outstanding Award unless such individual consents to the modification in writing.

11.2Paperless Administration. In the event that the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Participant may be permitted through the use of such an automated system.

11.3Titles and Headings, References to Sections of the Code or Exchange Act. The titles and headings of the sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. References to sections of the Code or the Exchange Act shall include any amendment or successor thereto.

11.4Governing Law. The Plan and any programs and agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of Iowa without regard to conflicts of laws thereof.

11.5Section 409A. The Plan and Awards are intended to comply with Section 409A to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted and be administered to be in compliance therewith. Any payments described in the Plan that are due within the “short-term deferral period” as defined in Section 409A shall not be treated as deferred compensation unless applicable law requires otherwise. Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, the Participant shall not be considered to have terminated service with the Company for purposes of the Plan or any Award until the Participant would be considered to have incurred a “separation from service” from the Company within the meaning of Section 409A. Each amount to be paid or benefit to be provided to the Participant pursuant to the Plan which constitutes deferred compensation subject to Section 409A shall be construed as a separate identified payment for purposes of Section 409A.

11.6No Rights to Awards. No Eligible Individual or other individual shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Administrator is obligated to treat Eligible Individuals, Participants or any other individuals uniformly.

11.7Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Company or any Affiliate.

11.8Indemnification. To the extent allowable pursuant to applicable law, each member of the Board and any officer or other employee to whom authority to administer any component of the Plan is delegated shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in

connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided, however, that he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled pursuant to the Company's Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

11.9Successors. The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company.

11.10Expenses. The expenses of administering the Plan shall be borne by the Company.

11.11Term of Plan. The Plan shall terminate on the tenth anniversary of the Effective Date; provided, however, any Awards that are outstanding as of the date of the Plan's termination shall remain in effect, and the terms of the Plan shall apply until such Awards terminate as provided in the applicable Award Agreements.

EX-12.1

Exhibit 12.1

Ratio of Earnings to Fixed Charges

	Six Months Ended		Year Ended December 31,
	June 30, 2013		2012		2011		2010		2009		2008
			(Dollars in thousands)
Consolidated income before income taxes	$	224,280	$	85,989	$	132,914	$	65,266	$	86,164	$	77,053
Interest sensitive and index product benefits and amortization of deferred sales inducements	711,201		905,244		847,538		793,091		387,882		235,836
Interest expense on notes payable	14,028		28,479		31,633		22,125		14,853		19,773
Interest expense on subordinated debentures	6,027		13,458		13,977		14,906		15,819		19,445
Interest expense on amounts due under repurchase agreements and other interest expense	8		—		30		—		534		8,207
Interest portion of rental expense	353		697		665		648		570		459
Consolidated earnings	$	955,897	$	1,033,867	$	1,026,757	$	896,036	$	505,822	$	360,773
Interest sensitive and index product benefits and amortization of deferred sales inducements	$	711,201	$	905,244	$	847,538	$	793,091	$	387,882	$	235,836
Interest expense on notes payable	14,028		28,479		31,633		22,125		14,853		19,773
Interest expense on subordinated debentures	6,027		13,458		13,977		14,906		15,819		19,445
Interest expense on amounts due under repurchase agreements and other interest expense	8		—		30		—		534		8,207
Interest portion of rental expense	353		697		665		648		570		459
Combined fixed charges	$	731,617	$	947,878	$	893,843	$	830,770	$	419,658	$	283,720
Ratio of consolidated earnings to fixed charges	1.3		1.1		1.1		1.1		1.2		1.3
Ratio of consolidated earnings to fixed charges, both excluding interest sensitive and index product benefits and amortization of deferred sales inducements	12.0		3.0		3.9		2.7		3.7		2.6

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John M. Matovina, certify that:

1. I have reviewed the quarterly report on Form 10-Q of American Equity Investment Life Holding Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 7, 2013	By:	/s/ JOHN M. MATOVINA
			John M. Matovina, Chief Executive Officer and President (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ted M. Johnson, certify that:

1. I have reviewed this annual report on Form 10-K of American Equity Investment Life Holding Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 7, 2013	By:	/s/ TED M. JOHNSON
			Ted M. Johnson, Chief Financial Officer and Treasurer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of American Equity Investment Life Holding Company (the "Company") on Form 10-Q for the period ended June 30, 2013 as filed with the Securities and Exchange Commission on or about the date hereof (the "Report"), I, John M. Matovina, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;

and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 7, 2013	By:	/s/ JOHN M. MATOVINA
			John M. Matovina, Chief Executive Officer and President (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of American Equity Investment Life Holding Company (the "Company") on Form 10-Q for the period ended June 30, 2013 as filed with the Securities and Exchange Commission on or about the date hereof (the "Report"), I, Ted M. Johnson, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;

and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 7, 2013	By:	/s/ TED M. JOHNSON
			Ted M. Johnson, Chief Financial Officer and Treasurer (Principal Financial Officer)

XML

Subsequent Event (Notes)

6 Months Ended

Jun. 30, 2012

Subsequent Events [Abstract]

Subsequent Events [Text Block]

On July 16, 2013, we issued $400 million aggregate principal amount of senior unsecured notes due 2021 which will bear interest at 6.625% per year and will mature on July 15, 2021. We intend to use the net proceeds (i) to pay the cash consideration required to purchase our 5.25% Contingent Convertible Senior Notes due 2029 (the “2029 Notes”) tendered in connection with an offer to exchange  any and all of our outstanding 2029 Notes for cash and newly issued shares of common stock if we commence such an offer, depending on market conditions and other factors, including the payment of any applicable accrued and unpaid interest on our 2029 Notes, (ii) to pay the cash consideration required to purchase our 3.5% Convertible Senior Notes due 2015 (the “2015 Notes”) tendered in connection with an offer to exchange any and all of our outstanding 2015 Notes for cash and newly issued shares of common stock if we commence such an offer, depending on market conditions and other factors, including the payment of any applicable accrued and unpaid interest on our 2015 Notes, (iii) to repay all amounts outstanding under our existing revolving credit facility (we repaid all amounts outstanding on July 17, 2013) and (iv) to pay related fees and expenses.   Any proceeds we are unable to use in the manner described above, due to market conditions or otherwise, or any excess proceeds after those uses  may be used to tender for, redeem or repurchase any of the 2029 Notes or 2015 Notes that remain outstanding and/or for general corporate purposes.

XML

Notes Payable Convertible Debt Issued in 2004 (Details) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Debt Instrument [Line Items]
Repayments of Notes Payable	$ 28,243,000	$ 0
Convertible Debt Issued in 2004 [Member]
Debt Instrument [Line Items]
Repayments of Long-term Debt	25,800,000
Repayments of Notes Payable	$ 2,500,000

XML

Consolidated Statements of Operations (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenues:
Traditional life insurance premiums	$ 2,913	$ 3,248	$ 5,611	$ 6,470
Annuity product charges	23,511	21,908	44,992	41,301
Net Investment Income	336,143	320,259	665,833	647,169
Change in fair value of derivatives	64,040	(150,847)	438,002	108,314
Net realized gains (losses) on investments, excluding other than temporary impairment (OTTI) losses	15,689	(611)	26,274	(6,687)
OTTI losses on investments:
Total OTTI losses	(2,775)	(375)	(4,964)	(2,156)
Portion of OTTI losses recognized from other comprehensive income	0	(603)	(1,048)	(1,703)
Net OTTI losses recognized in operations	(2,775)	(978)	(6,012)	(3,859)
Gains (Losses) on Extinguishment of Debt	(589)	0	(589)	0
Total revenues	438,932	192,979	1,174,111	792,708
Benefits and expenses:
Insurance policy benefits and change in future policy benefits	2,106	2,250	3,841	4,367
Interest Sensitive And Index Product Benefits	336,025	142,733	561,834	281,856
Amortization of deferred sales inducements	120,536	25,940	149,367	42,650
Change in fair value of embedded derivatives	(408,409)	(80,989)	(45,137)	278,077
Interest expense on notes payable	6,780	7,072	14,028	14,067
Interest expense on subordinated debentures	3,018	3,563	6,027	7,149
Amortization of deferred policy acquisition costs	169,270	44,848	215,500	79,132
Other Cost and Expense, Operating	24,851	18,902	44,371	40,615
Total benefits and expenses	254,177	164,319	949,831	747,913
Income before income taxes	184,755	28,660	224,280	44,795
Income Tax Expense	64,642	9,901	78,136	15,565
Net Income	$ 120,113	$ 18,759	$ 146,144	$ 29,230
Earnings Per Share, Basic	$ 1.87	$ 0.31	$ 2.29	$ 0.49
Earnings Per Share, Diluted	$ 1.71	$ 0.30	$ 2.09	$ 0.46
Weighted Average Number of Shares Outstanding, Basic	64,254,387	59,943,337	63,786,577	59,821,937
Weighted Average Number of Shares Outstanding, Diluted	70,382,065	64,253,628	69,882,240	64,229,656

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Fair Values of Financial Instruments

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

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

	June 30, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in thousands)
Assets
Fixed maturity securities:
Available for sale	$	25,545,642	$	25,545,642	$	24,172,136	$	24,172,136
Held for investment	76,170		61,250		76,088		61,521
Equity securities, available for sale	9,790		9,790		53,422		53,422
Mortgage loans on real estate	2,583,703		2,808,973		2,623,940		2,848,235
Derivative instruments	629,135		629,135		415,258		415,258
Other investments	182,026		182,219		163,193		163,517
Cash and cash equivalents	746,889		746,889		1,268,545		1,268,545
Coinsurance deposits	2,944,726		2,724,853		2,910,701		2,678,232
Interest rate caps	5,565		5,565		3,247		3,247
Interest rate swap	274		274		—		—
2015 notes hedges	71,400		71,400		43,105		43,105
Liabilities
Policy benefit reserves	33,304,622		27,895,416		31,452,496		26,264,831
Single premium immediate annuity (SPIA) benefit reserves	439,591		453,496		455,167		469,768
Notes payable	303,126		481,406		309,869		422,175
Subordinated debentures	245,958		229,623		245,869		218,283
2015 notes embedded derivatives	71,400		71,400		43,105		43,105
Interest rate swap	—		—		4,261		4,261

Fair value is the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The objective of a fair value measurement is to determine that price for each financial instrument at each measurement date. We meet this objective using various methods of valuation that include market, income and cost approaches.

We categorize our financial instruments into three levels of fair value hierarchy based on the priority of inputs used in determining fair value. The hierarchy defines the highest priority inputs (Level 1) as quoted prices in active markets for identical assets or liabilities. The lowest priority inputs (Level 3) are our own assumptions about what a market participant would use in determining fair value such as estimated future cash flows. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. We categorize financial assets and liabilities recorded at fair value in the consolidated balance sheets as follows:

Level 1— Quoted prices are available in active markets for identical financial instruments as of the reporting date. We do not adjust the quoted price for these financial instruments, even in situations where we hold a large position and a sale could reasonably impact the quoted price.

Level 2— Quoted prices in active markets for similar financial instruments, quoted prices for identical or similar financial instruments in markets that are not active; and models and other valuation methodologies using inputs other than quoted prices that are observable.

Level 3— Models and other valuation methodologies using significant inputs that are unobservable for financial instruments and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in Level 3 are securities for which no market activity or data exists and for which we used discounted expected future cash flows with our own assumptions about what a market participant would use in determining fair value.

Transfers of securities among the levels occur at times and depend on the type of inputs used to determine fair value of each security. There were no transfers between levels during the six months ended June 30, 2013.

Our assets and liabilities which are measured at fair value on a recurring basis as of June 30, 2013 and December 31, 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)
June 30, 2013
Assets
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	4,938	$	4,938	$	—	$	—
United States Government sponsored agencies	1,199,847		—		1,199,847		—
United States municipalities, states and territories	3,543,158		—		3,543,158		—
Foreign government obligations	92,811		—		92,811		—
Corporate securities	15,999,327		8,924		15,990,403		—
Residential mortgage backed securities	2,488,057		—		2,486,516		1,541
Commercial mortgage backed securities	1,222,689		—		1,222,689		—
Other asset backed securities	994,815		378		994,437		—
Equity securities, available for sale: finance, insurance and real estate	9,790		2,020		7,770		—
Derivative instruments	629,135		—		629,135		—
Cash and cash equivalents	746,889		746,889		—		—
Interest rate caps	5,565		—		5,565		—
Interest rate swap	274		—		274		—
2015 notes hedges	71,400		—		71,400		—
	$	27,008,695	$	763,149	$	26,244,005	$	1,541
Liabilities
2015 notes embedded derivatives	$	71,400	$	—	$	71,400	$	—
Fixed index annuities - embedded derivatives	3,747,052		—		—		3,747,052
	$	3,818,452	$	—	$	71,400	$	3,747,052
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 derivatives	$	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

The following methods and assumptions were used in estimating the fair values of financial instruments during the periods presented in these consolidated financial statements.

Fixed maturity securities and equity securities

The fair values of fixed maturity securities and equity securities in an active and orderly market are determined by utilizing independent pricing services. The independent pricing services incorporate a variety of observable market data in their valuation techniques, including:

• reported trading prices,

• benchmark yields,

• broker-dealer quotes,

• benchmark securities,

• bids and offers,

• credit ratings,

• relative credit information, and

• other reference data.

The independent pricing services also take into account perceived market movements and sector news, as well as a security's terms and conditions, including any features specific to that issue that may influence risk and marketability. Depending on the security, the priority of the use of observable market inputs may change as some observable market inputs may not be relevant or additional inputs may be necessary.

The independent pricing services provide quoted market prices when available. Quoted prices are not always available due to market inactivity. When quoted market prices are not available, the third parties use yield data and other factors relating to instruments or securities with similar characteristics to determine fair value for securities that are not actively traded. We generally obtain one value from our primary external pricing service. In situations where a price is not available from this service, we may obtain further quotes or prices from additional parties as needed. In addition, for our callable United States Government sponsored agencies, we obtain two broker quotes and take the average of the two broker prices received. Market indices of similar rated asset class spreads are considered for valuations and broker indications of similar securities are compared. Inputs used by the broker include market information, such as yield data and other factors relating to instruments or securities with similar characteristics. Valuations and quotes obtained from third party commercial pricing services are non-binding and do not represent quotes on which one may execute the disposition of the assets.

We validate external valuations at least quarterly through a combination of procedures that include the evaluation of methodologies used by the pricing services, analytical reviews and performance analysis of the prices against trends, and maintenance of a securities watch list. Additionally, as needed we utilize discounted cash flow models or perform independent valuations on a case-by-case basis using inputs and assumptions similar to those used by the pricing services. Although we do identify differences from time to time as a result of these validation procedures, we did not make any significant adjustments as of June 30, 2013 and December 31, 2012.

Mortgage loans on real estate

Mortgage loans on real estate are not measured at fair value on a recurring basis. The fair values of mortgage loans on real estate are calculated using discounted expected cash flows using current competitive market interest rates currently being offered for similar loans. The fair values of impaired mortgage loans on real estate that we have considered to be collateral dependent are based on the fair value of the real estate collateral (based on appraised values) less estimated costs to sell. The inputs utilized to determine fair value of all mortgage loans are unobservable market data (competitive market interest rates and appraised property values); therefore, fair value of mortgage loans falls into Level 3 in the fair value hierarchy.

Derivative instruments

The fair values of derivative instruments, primarily call options, are based upon the amount of cash that we will receive to settle each derivative instrument on the reporting date. These amounts are determined by our investment team using industry accepted valuation models and are adjusted for the nonperformance risk of each counterparty net of any collateral held. Inputs include market volatility and risk free interest rates and are used in income valuation techniques in arriving at a fair value for each option contract. The nonperformance risk for each counterparty is based upon its credit default swap rate. We have no performance obligations related to the call options purchased to fund our fixed index annuity policy liabilities.

Other investments

None of the financial instruments included in other investments are measured at fair value on a recurring basis. Financial instruments included in other investments are policy loans, equity method investments and company owned life insurance (COLI). We have not attempted to determine the fair values associated with our policy loans, as we believe any differences between carrying value and the fair values afforded these instruments are immaterial to our consolidated financial position and, accordingly, the cost to provide such disclosure does not justify the benefit to be derived. The fair values of our equity method investments qualify as Level 3 fair values and were determined by calculating the present value of future cash flows discounted by a risk free rate, a risk spread and a liquidity discount. The risk spread and liquidity discount are rates determined by our investment professionals and are unobservable market inputs. The fair value of our COLI approximates the cash surrender value of the policies and falls within Level 2 of the fair value hierarchy.

Cash and cash equivalents

Amounts reported in the consolidated balance sheets for these instruments are reported at their historical cost which approximates fair value due to the nature of the assets assigned to this category.

Interest rate swap and caps

The fair values of our pay fixed/receive variable interest rate swap and interest rate caps are obtained from third parties and are determined by discounting expected future cash flows using projected LIBOR rates for the term of the swap and caps.

2015 notes hedges

The fair value of these call options is determined by a third party who applies market observable data such as our common stock price, its dividend yield and its volatility, as well as the time to expiration of the call options to determine a fair value of the buy side of these options.

Policy benefit reserves, coinsurance deposits and SPIA benefit reserves

The fair values of the liabilities under contracts not involving significant mortality or morbidity risks (principally deferred annuities), are stated at the cost we would incur to extinguish the liability (i.e., the cash surrender value) as these contracts are generally issued without an annuitization date. The coinsurance deposits related to the annuity benefit reserves have fair values determined in a similar fashion. For period-certain annuity benefit contracts, the fair value is determined by discounting the benefits at the interest rates currently in effect for newly purchased immediate annuity contracts. We are not required to and have not estimated the fair value of the liabilities under contracts that involve significant mortality or morbidity risks, as these liabilities fall within the definition of insurance contracts that are exceptions from financial instruments that require disclosures of fair value. Policy benefit reserves, coinsurance deposits and SPIA benefit reserves are not measured at fair value on a recurring basis. All of the fair values presented within these categories fall within Level 3 of the fair value hierarchy as most of the inputs are unobservable market data.

Notes payable

The fair value of the convertible senior notes is based upon pricing matrices developed by a third party pricing service when quoted market prices are not available and are categorized as Level 2 within the fair value hierarchy. Notes payable are not remeasured at fair value on a recurring basis.

Subordinated debentures

Fair values for subordinated debentures are estimated using discounted cash flow calculations based principally on observable inputs including our incremental borrowing rates, which reflect our credit rating, for similar types of borrowings with maturities consistent with those remaining for the debt being valued. These fair values are categorized as Level 2 within the fair value hierarchy. Subordinated debentures are not measured at fair value on a recurring basis.

2015 notes embedded derivatives

The fair value of this embedded derivative is determined by pricing the call options that hedge this potential liability. The terms of the conversion premium are identical to the 2015 notes hedges and the method of determining fair value of the call options is based upon observable market data.

Fixed index annuities - embedded derivatives

We estimate the fair value of the embedded derivative component of our fixed index annuity policy benefit reserves at each valuation date by (i) projecting policy contract values and minimum guaranteed contract values over the expected lives of the contracts and (ii) discounting the excess of the projected contract value amounts at the applicable risk free interest rates adjusted for our nonperformance risk related to those liabilities. The projections of policy contract values are based on our best estimate assumptions for future policy growth and future policy decrements. Our best estimate assumptions for future policy growth include assumptions for the expected index credit on the next policy anniversary date which are derived from the fair values of the underlying call options purchased to fund such index credits and the expected costs of annual call options we will purchase in the future to fund index credits beyond the next policy anniversary. The projections of minimum guaranteed contract values include the same best estimate assumptions for policy decrements as were used to project policy contract values.

The following tables provide a reconciliation of the beginning and ending balances for our Level 3 assets and liabilities, which are measured at fair value on a recurring basis using significant unobservable inputs for the three and six months endedJune 30, 2013 and 2012:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Available for sale securities
Beginning balance	$	1,724		$	2,027		$	1,812		$	2,098
Principal returned	(193		)	(52		)	(561		)	(93		)
Accretion of discount	5			21			134			47
Total gains (losses) (realized/unrealized):
Included in other comprehensive income (loss)	5			81			156			183
Included in operations	—			(72		)	—			(230		)
Ending balance	$	1,541		$	2,005		$	1,541		$	2,005

The Level 3 assets included in the table above are not material to our financial position, results of operations or cash flows, and it is management's opinion that the sensitivity of the inputs used in determining the fair value of these assets is not material as well.

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Fixed index annuities - embedded derivatives
Beginning balance	$	3,848,902		$	2,921,037		$	3,337,556		$	2,530,496
Premiums less benefits	425,671			105,279			672,393			189,505
Change in unrealized gains, net	(527,521		)	(111,368		)	(262,897		)	194,947
Ending balance	$	3,747,052		$	2,914,948		$	3,747,052		$	2,914,948

Change in unrealized gains, net for each period in our embedded derivatives are included in change in fair value of embedded derivatives in the unaudited consolidated statements of operations.

Certain derivatives embedded in our fixed index annuity contracts are our most significant financial instrument measured at fair value that are categorized as Level 3 in the fair value hierarchy. The contractual obligations for future annual index credits within our fixed index annuity contracts are treated as a "series of embedded derivatives" over the expected life of the applicable contracts. We estimate the fair value of these embedded derivatives at each valuation date by the method described above under fixed index annuities - embedded derivatives. The projections of minimum guaranteed contract values include the same best estimate assumptions for policy decrements as were used to project policy contract values.

The most sensitive assumption in determining policy liabilities for fixed index annuities is the rates used to discount the excess projected contract values. As indicated above, the discount rate reflects our nonperformance risk. If the discount rates used to discount the excess projected contract values at June 30, 2013, were to increase by 100 basis points, the fair value of the embedded derivatives would decrease by $240.7 million recorded through operations as a decrease in the change in fair value of embedded derivatives and there would be a corresponding decrease of $147.2 million to our combined balance for deferred policy acquisition costs and deferred sales inducements recorded through operations as an increase in amortization of deferred policy acquisition costs and deferred sales inducements. A decrease by 100 basis points in the discount rate used to discount the excess projected contract values would increase the fair value of the embedded derivatives by $267.5 million recorded through operations as an increase in the change in fair value of embedded derivatives and increase our combined balance for deferred policy acquisition costs and deferred sales inducements by $161.1 million recorded through operations as a decrease in amortization of deferred policy acquisition costs and deferred sales inducements.

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Earnings Per Share Level 3 (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The following table sets forth the computation of earnings per common share and earnings per common share - assuming dilution:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(Dollars in thousands, except per share data)
Numerator:
Net income - numerator for earnings per common share	$	120,113	$	18,759	$	146,144	$	29,230
Interest on convertible subordinated debentures (net of income tax benefit)	—		257		—		515
Numerator for earnings per common share - assuming dilution	$	120,113	$	19,016	$	146,144	$	29,745
Denominator:
Weighted average common shares outstanding (1)	64,254,387		59,943,337		63,786,577		59,821,937
Effect of dilutive securities:
Convertible subordinated debentures	—		2,637,176		—		2,678,508
Convertible senior notes	5,009,622		1,158,686		5,082,208		1,158,686
Stock options and deferred compensation agreements	1,118,056		514,429		1,013,455		570,525
Denominator for earnings per common share - assuming dilution	70,382,065		64,253,628		69,882,240		64,229,656
Earnings per common share	$	1.87	$	0.31	$	2.29	$	0.49
Earnings per common share - assuming dilution	$	1.71	$	0.30	$	2.09	$	0.46

_____________________________

(1) Weighted average common shares outstanding include shares vested under the NMO Deferred Compensation Plan and exclude unallocated shares held by the ESOP.

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block]

Options to purchase shares of our common stock that were outstanding during the respective periods indicated but were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the common shares are as follows:

Period	Number of Shares	Range of Exercise Prices
		Minimum	Maximum
Three months ended June 30, 2013	—	$—	$—
Six months ended June 30, 2013	—	$—	$—
Three months ended June 30, 2012	1,502,900	$11.88	$14.34
Six months ended June 30, 2012	1,502,900	$11.88	$14.34

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Notes Payable Repurchase Agreements (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013
Repurchase Agreements [Abstract]
Repurchase Agreement, Maximum Amount Borrowed		$ 160.4
Repurchase Agreement, Average Borrowings	$ 10.0	$ 5.0
Repurchase Agreement, Average Interest Rate		0.32%

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Fair Values of Financial Instruments Reconciliation of Beginning and Ending Balances of Level 3 Assets (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net	$ 2,775	$ 978	$ 6,012	$ 3,859
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value	1,724	2,027	1,812	2,098
Principal Returned on Level 3 Assets	(193)	(52)	(561)	(93)
Amortization/Accretion of Premium/Discount on Level 3 Assets	5	21	134	47
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss)	5	81	156	183
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings	0	(72)	0	(230)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value	$ 1,541	$ 2,005	$ 1,541	$ 2,005

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Derivative Instruments Change in Fair Value of Derivatives Included in the Consolidated Statement of Operations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	$ 64,040	$ (150,847)	$ 438,002	$ 108,314
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net	(408,409)	(80,989)	(45,137)	278,077
Call Option [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	58,200	(122,241)	402,854	119,279
Option on Securities [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	197	(24,163)	28,295	(7,412)
Interest Rate Swap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	3,802	(4,038)	4,535	(3,148)
Interest Rate Cap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	1,841	(405)	2,318	(405)
2015 Notes Embedded Conversion Derivative [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net	(197)	24,163	(28,295)	7,412
Fixed Index Annuity Embedded Derivative Financial Instruments [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net	$ 408,606	$ 56,826	$ 73,432	$ (285,489)

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Contingencies Level 4 (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Sep. 30, 2012
Operating Leased Assets [Line Items]
Loss Contingency Accrual, at Carrying Value	$ 17.5

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Investments Cummlative Noncredit Portion of Other Than Temporary Impairment Recognized in Other Comprehensive Income and Change in Fair Value Since Other Than Temporary Impairment (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2011
Investment Holdings [Line Items]
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Credit Losses on Debt Securities Held	$ (128,513)	$ (122,954)	$ (128,513)	$ (122,954)	$ (134,027)	$ (129,813)	$ (121,976)	$ (119,095)
Securities with Noncredit Other Than Temporary Impairment at Amortized Cost	766,161		766,161		876,490
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Income (Loss), before Tax, Portion Attributable to Parent			(176,557)		(179,755)
Change in Fair Value of Securities with Noncredit Other Than Temporary Impairment Losses			236,865		186,858
Fair Value of Securities with Noncredit Other Than Temporary Impairments	826,469		826,469		883,593
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Additions, No Previous Impairment	(2,775)	(47)	(4,536)	(47)
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Additions, Additional Credit Losses	0	(931)	(1,048)	(3,812)
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Reductions, Securities Sold	4,075	0	11,098	0
Corporate Debt Securities [Member]
Investment Holdings [Line Items]
Securities with Noncredit Other Than Temporary Impairment at Amortized Cost	0		0		10,599
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Income (Loss), before Tax, Portion Attributable to Parent			0		(2,151)
Change in Fair Value of Securities with Noncredit Other Than Temporary Impairment Losses			24		5,676
Fair Value of Securities with Noncredit Other Than Temporary Impairments	24		24		14,124
Residential Mortgage Backed Securities [Member]
Investment Holdings [Line Items]
Securities with Noncredit Other Than Temporary Impairment at Amortized Cost	764,746		764,746		855,915
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Income (Loss), before Tax, Portion Attributable to Parent			(176,557)		(177,604)
Change in Fair Value of Securities with Noncredit Other Than Temporary Impairment Losses			236,236		171,514
Fair Value of Securities with Noncredit Other Than Temporary Impairments	824,425		824,425		849,825
Equity Securities [Member]
Investment Holdings [Line Items]
Securities with Noncredit Other Than Temporary Impairment at Amortized Cost	1,415		1,415		9,976
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Income (Loss), before Tax, Portion Attributable to Parent			0		0
Change in Fair Value of Securities with Noncredit Other Than Temporary Impairment Losses			605		9,668
Fair Value of Securities with Noncredit Other Than Temporary Impairments	$ 2,020		$ 2,020		$ 19,644

XML

Fair Values of Financial Instruments Assets and Liabilities Measured on a Recurring Basis by Fair Value Hierarchy (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012	Dec. 31, 2011
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Measurement with Unobservable Inputs Reconciliations, Recurring Basis, Liability Value	$ 3,747,052,000	$ 2,914,948,000	$ 3,747,052,000	$ 2,914,948,000	$ 3,848,902,000	$ 3,337,556,000	$ 2,921,037,000	$ 2,530,496,000
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Value	1,541,000	2,005,000	1,541,000	2,005,000	1,724,000	1,812,000	2,027,000	2,098,000
Assets [Abstract]
2015 Notes Hedges	71,400,000		71,400,000			43,105,000
Assets, Fair Value Disclosure	27,008,695,000		27,008,695,000			25,955,713,000
Liabilities
Fair Value Liabilities Measured on Recurring Basis, 2015 Notes Embedded Derivative	71,400,000		71,400,000			43,105,000
Liabilities, Fair Value Disclosure	3,818,452,000		3,818,452,000			3,384,922,000
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Settlements	(193,000)	(52,000)	(561,000)	(93,000)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Amortization or Accretion of Premium or Discount on Level 3 Assets	5,000	21,000	134,000	47,000
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss)	5,000	81,000	156,000	183,000
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings	0	(72,000)	0	(230,000)
Premiums Less Benefis Level 3 Liabilities	425,671,000	105,279,000	672,393,000	189,505,000
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings	(527,521,000)	(111,368,000)	(262,897,000)	194,947,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets [Abstract]
Derivative instruments	629,135,000		629,135,000			415,258,000
Cash and Cash Equivalents, at Carrying Value	746,889,000		746,889,000			1,268,545,000
Liabilities
Fair Value Liability Measured on Recurring Basis, Fixed Index Annuities Embedded Derivative	3,747,052,000		3,747,052,000			3,337,556,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Equity Securities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	9,790,000		9,790,000			53,422,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | US Treasury Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	4,938,000		4,938,000			5,154,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Corporate Debt Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	15,999,327,000		15,999,327,000			14,466,772,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | US Government Corporations and Agencies Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	1,199,847,000		1,199,847,000			1,772,025,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | US States and Political Subdivisions Debt Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	3,543,158,000		3,543,158,000			3,578,323,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Foreign Government Debt Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	92,811,000		92,811,000			105,259,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Residential Mortgage Backed Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	2,488,057,000		2,488,057,000			2,888,113,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Commercial Mortgage Backed Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	1,222,689,000		1,222,689,000			357,982,000
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | Asset-backed Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	994,815,000		994,815,000			998,508,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Assets [Abstract]
Derivative instruments	0		0			0
Cash and Cash Equivalents, at Carrying Value	746,889,000		746,889,000			1,268,545,000
2015 Notes Hedges	0		0			0
Assets, Fair Value Disclosure	763,149,000		763,149,000			1,344,136,000
Liabilities
Fair Value Liabilities Measured on Recurring Basis, 2015 Notes Embedded Derivative	0		0			0
Fair Value Liability Measured on Recurring Basis, Fixed Index Annuities Embedded Derivative	0		0			0
Liabilities, Fair Value Disclosure	0		0			0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	2,020,000		2,020,000			36,928,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | US Treasury Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	4,938,000		4,938,000			5,154,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Corporate Debt Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	8,924,000		8,924,000			33,131,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | US Government Corporations and Agencies Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	0		0			0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | US States and Political Subdivisions Debt Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	0		0			0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Foreign Government Debt Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	0		0			0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Residential Mortgage Backed Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	0		0			0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Commercial Mortgage Backed Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	0		0			0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Asset-backed Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	378,000		378,000			378,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets [Abstract]
Derivative instruments	629,135,000		629,135,000			415,258,000
Cash and Cash Equivalents, at Carrying Value	0		0			0
2015 Notes Hedges	71,400,000		71,400,000			43,105,000
Assets, Fair Value Disclosure	26,244,005,000		26,244,005,000			24,609,765,000
Liabilities
Fair Value Liabilities Measured on Recurring Basis, 2015 Notes Embedded Derivative	71,400,000		71,400,000			43,105,000
Fair Value Liability Measured on Recurring Basis, Fixed Index Annuities Embedded Derivative	0		0			0
Liabilities, Fair Value Disclosure	71,400,000		71,400,000			47,366,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Equity Securities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	7,770,000		7,770,000			16,494,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | US Treasury Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	0		0			0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Corporate Debt Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	15,990,403,000		15,990,403,000			14,433,641,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | US Government Corporations and Agencies Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	1,199,847,000		1,199,847,000			1,772,025,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | US States and Political Subdivisions Debt Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	3,543,158,000		3,543,158,000			3,578,323,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Foreign Government Debt Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	92,811,000		92,811,000			105,259,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Residential Mortgage Backed Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	2,486,516,000		2,486,516,000			2,886,301,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Commercial Mortgage Backed Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	1,222,689,000		1,222,689,000			357,982,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Asset-backed Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	994,437,000		994,437,000			998,130,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets [Abstract]
Derivative instruments	0		0			0
Cash and Cash Equivalents, at Carrying Value	0		0			0
2015 Notes Hedges	0		0			0
Assets, Fair Value Disclosure	1,541,000		1,541,000			1,812,000
Liabilities
Fair Value Liabilities Measured on Recurring Basis, 2015 Notes Embedded Derivative	0		0			0
Fair Value Liability Measured on Recurring Basis, Fixed Index Annuities Embedded Derivative	3,747,052,000		3,747,052,000			3,337,556,000
Liabilities, Fair Value Disclosure	3,747,052,000		3,747,052,000			3,337,556,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Equity Securities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	0		0			0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | US Treasury Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	0		0			0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Corporate Debt Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	0		0			0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | US Government Corporations and Agencies Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	0		0			0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | US States and Political Subdivisions Debt Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	0		0			0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Foreign Government Debt Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	0		0			0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Residential Mortgage Backed Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	1,541,000		1,541,000			1,812,000
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Commercial Mortgage Backed Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	0		0			0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Asset-backed Securities [Member] | Fixed Maturities [Member]
Assets [Abstract]
Available-for-sale Securities, Fair Value Disclosure	0		0			0
Interest Rate Cap [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets [Abstract]
Derivative instruments	5,565,000		5,565,000			3,247,000
Interest Rate Cap [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Assets [Abstract]
Derivative instruments	0		0			0
Interest Rate Cap [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets [Abstract]
Derivative instruments	5,565,000		5,565,000			3,247,000
Interest Rate Cap [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets [Abstract]
Derivative instruments	0		0			0
Interest Rate Swap [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets [Abstract]
Derivative instruments	274,000		274,000
Liabilities
Derivative Liability, Fair Value, Gross Liability						4,261,000
Interest Rate Swap [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Assets [Abstract]
Derivative instruments	0		0
Liabilities
Derivative Liability, Fair Value, Gross Liability						0
Interest Rate Swap [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets [Abstract]
Derivative instruments	274,000		274,000
Liabilities
Derivative Liability, Fair Value, Gross Liability						4,261,000
Interest Rate Swap [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets [Abstract]
Derivative instruments	0		0
Liabilities
Derivative Liability, Fair Value, Gross Liability						0
Fair Value, Sensitivity, Increase in Discount Rate by 10 Percent [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Sensitivity, Discount Rate Adjustment	100		100
Liabilities
Fair Value Liability Measured on Recurring Basis, Fixed Index Annuities Embedded Derivative	240,700,000		240,700,000
Deferred Policy Acquisition Costs and Deferred Sales Inducements, Adjustment Due to Change in Discount Rate, Combined Balance	147,200,000		147,200,000
Fair Value, Sensitivity, Decrease in Discount Rate by 10 Percent [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Sensitivity, Discount Rate Adjustment	100		100
Liabilities
Fair Value Liability Measured on Recurring Basis, Fixed Index Annuities Embedded Derivative	267,500,000		267,500,000
Deferred Policy Acquisition Costs and Deferred Sales Inducements, Adjustment Due to Change in Discount Rate, Combined Balance	$ 161,100,000		$ 161,100,000

XML

Fair Values of Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Assets [Abstract]
Available-for-sale Securities, Equity Securities	$ 9,790	$ 53,422
Mortgage loans on real estate	2,583,703	2,623,940
Other Investments	208,635	196,366
Coinsurance deposits	2,944,726	2,910,701
Liabilities
Policy benefit reserves	33,635,600	31,773,988
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Assets [Abstract]
Held-to-maturity Securities, Fair Value Disclosure	76,170	76,088
Mortgage loans on real estate	2,583,703	2,623,940
Derivative instruments	629,135	415,258
Other Investments	182,026	163,193
Cash and Cash Equivalents, at Carrying Value	746,889	1,268,545
Coinsurance deposits	2,944,726	2,910,701
2015 Notes Hedges	71,400	43,105
Liabilities
Policy benefit reserves	33,304,622	31,452,496
Liability for Future Policy Benefits, Other Contracts	439,591	455,167
Notes Payable	303,126	309,869
Subordinated debentures	245,958	245,869
2015 Notes Embedded Derivatives	71,400	43,105
Interest Rate Swaps	0	4,261
Estimate of Fair Value, Fair Value Disclosure [Member]
Assets [Abstract]
Held-to-maturity Securities, Fair Value Disclosure	61,250	61,521
Mortgage loans on real estate	2,808,973	2,848,235
Derivative instruments	629,135	415,258
Other Investments	182,219	163,517
Cash and Cash Equivalents, at Carrying Value	746,889	1,268,545
Coinsurance deposits	2,724,853	2,678,232
2015 Notes Hedges	71,400	43,105
Liabilities
Policy benefit reserves	27,895,416	26,264,831
Liability for Future Policy Benefits, Other Contracts	453,496	469,768
Notes Payable	481,406	422,175
Subordinated debentures	229,623	218,283
2015 Notes Embedded Derivatives	71,400	43,105
Interest Rate Swaps	0	4,261
Fixed Maturities [Member] | Carrying (Reported) Amount, Fair Value Disclosure [Member]
Assets [Abstract]
Available-for-sale Securities, Debt Securities	25,545,642	24,172,136
Fixed Maturities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets [Abstract]
Available-for-sale Securities, Debt Securities	25,545,642	24,172,136
Equity Securities [Member] | Carrying (Reported) Amount, Fair Value Disclosure [Member]
Assets [Abstract]
Available-for-sale Securities, Equity Securities	9,790	53,422
Equity Securities [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets [Abstract]
Available-for-sale Securities, Equity Securities	9,790	53,422
Interest Rate Cap [Member] | Carrying (Reported) Amount, Fair Value Disclosure [Member]
Assets [Abstract]
Interest Rate Derivative Assets, at Fair Value	5,565	3,247
Interest Rate Cap [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets [Abstract]
Interest Rate Derivative Assets, at Fair Value	5,565	3,247
Interest Rate Swap [Member] | Carrying (Reported) Amount, Fair Value Disclosure [Member]
Assets [Abstract]
Interest Rate Derivative Assets, at Fair Value	274	0
Interest Rate Swap [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Assets [Abstract]
Interest Rate Derivative Assets, at Fair Value	$ 274	$ 0

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Mortgage Loans on Real Estate Troubled Debt Restructures (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013 loans	Dec. 31, 2012 loans
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	$ 41,770	$ 57,081
Financing Receivable, Modifications, Number of Contracts	20	24
Financing Receivable, Modifications, Pre-Modification Recorded Investment	51,073	68,050
Financing Receivable, Allowance for Credit Losses	(9,303)	(10,969)
Troubled Debt Restructurings, East Region [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	2,763	2,783
Financing Receivable, Modifications, Number of Contracts	1	1
Financing Receivable, Modifications, Pre-Modification Recorded Investment	3,712	4,208
Financing Receivable, Allowance for Credit Losses	(949)	(1,425)
Troubled Debt Restructurings, Mountain Region [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	21,847	27,084
Financing Receivable, Modifications, Number of Contracts	8	10
Financing Receivable, Modifications, Pre-Modification Recorded Investment	23,019	28,786
Financing Receivable, Allowance for Credit Losses	(1,172)	(1,702)
Troubled Debt Restructurings, South Atlantic Region [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	11,351	18,311
Financing Receivable, Modifications, Number of Contracts	7	9
Financing Receivable, Modifications, Pre-Modification Recorded Investment	17,249	23,358
Financing Receivable, Allowance for Credit Losses	(5,898)	(5,047)
Troubled Debt Restructurings, East North Central Region [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	2,668	1,765
Financing Receivable, Modifications, Number of Contracts	2	1
Financing Receivable, Modifications, Pre-Modification Recorded Investment	3,697	2,232
Financing Receivable, Allowance for Credit Losses	(1,029)	(467)
Troubled Debt Restructurings, West North Central Region [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	1,938	7,138
Financing Receivable, Modifications, Number of Contracts	1	3
Financing Receivable, Modifications, Pre-Modification Recorded Investment	1,938	9,466
Financing Receivable, Allowance for Credit Losses	0	(2,328)
Troubled Debt Restructurings, West South Central Region [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Post-Modification Recorded Investment	1,203
Financing Receivable, Modifications, Number of Contracts	1
Financing Receivable, Modifications, Pre-Modification Recorded Investment	1,458
Financing Receivable, Allowance for Credit Losses	$ (255)

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Investments Net Realized Gains Losses on Invesments, Excluding Other Than Temporary Impairments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Gain (Loss) on Investments [Line Items]
Other Investments, Net Realized Gain (Loss)	$ 15,689	$ (611)	$ 26,274	$ (6,687)
Fixed Maturities [Member]
Gain (Loss) on Investments [Line Items]
Available-for-sale Securities, Gross Realized Gains	7,628	4,030	20,643	5,048
Available-for-sale Securities, Gross Realized Losses	(823)	(59)	(3,010)	(355)
Available-for-sale Securities, Gross Realized Gain (Loss), Excluding Other than Temporary Impairments	6,805	3,971	17,633	4,693
Equity Securities [Member]
Gain (Loss) on Investments [Line Items]
Available-for-sale Securities, Gross Realized Gains	9,571	0	9,571	562
Other Investments [Member]
Gain (Loss) on Investments [Line Items]
Gains (Losses) on Sales of Other Real Estate	715	1,450	1,304	2,895
Losses on Sales of Other Real Estate	0	0	(466)	0
Other Investments, Impairment Losses	(145)	(1,669)	(145)	(2,643)
Other Investments, Net Realized Gain (Loss)	570	(219)	693	252
Mortgage Loans on Real Estate [Member]
Gain (Loss) on Investments [Line Items]
Mortgage Loans on Real Estate, Write-down or Reserve, Amount	$ (1,257)	$ (4,363)	$ (1,623)	$ (12,194)

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Mortgage Loans on Real Estate Schedule of Mortgage Loan Portfolio by Geographic Region and Property Type (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	$ 2,600,000	$ 2,623,940
Commercial Real Estate Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	2,616,179	2,658,883
Percent of Mortgage Loans	100.00%	100.00%
Commercial Real Estate Portfolio Segment [Member] | Mortgage Loans Office Property Type [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	643,747	666,467
Percent of Mortgage Loans	24.60%	25.10%
Commercial Real Estate Portfolio Segment [Member] | Mortgage Loans Medical Office Property Type [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	137,746	136,764
Percent of Mortgage Loans	5.30%	5.10%
Commercial Real Estate Portfolio Segment [Member] | Mortgage Loans Retail Property Type [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	680,618	677,951
Percent of Mortgage Loans	26.00%	25.50%
Commercial Real Estate Portfolio Segment [Member] | Mortgage Loans Industrial and Warehouse Property Type [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	666,935	692,637
Percent of Mortgage Loans	25.50%	26.10%
Commercial Real Estate Portfolio Segment [Member] | Mortgage Loans Hotel Property Type [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	83,363	94,045
Percent of Mortgage Loans	3.20%	3.50%
Commercial Real Estate Portfolio Segment [Member] | Mortgage Loans Apartment Property Type [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	233,609	219,335
Percent of Mortgage Loans	8.90%	8.20%
Commercial Real Estate Portfolio Segment [Member] | Mortgage Loans Mixed Use or Other Property Type [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	170,161	171,684
Percent of Mortgage Loans	6.50%	6.50%
Commercial Real Estate Portfolio Segment [Member] | Mortgage Loans East United States Region [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	760,025	732,762
Percent of Mortgage Loans	29.10%	27.50%
Commercial Real Estate Portfolio Segment [Member] | Mortgage Loans Middle Atlantic United States Region [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	147,167	155,094
Percent of Mortgage Loans	5.60%	5.80%
Commercial Real Estate Portfolio Segment [Member] | Mortgage Loans Mountain United States Region [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	359,436	387,599
Percent of Mortgage Loans	13.70%	14.60%
Commercial Real Estate Portfolio Segment [Member] | Mortgage Loans New England United States Region [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	23,131	26,385
Percent of Mortgage Loans	0.90%	1.00%
Commercial Real Estate Portfolio Segment [Member] | Mortgage Loans Pacific United States Region [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	322,519	320,982
Percent of Mortgage Loans	12.30%	12.10%
Commercial Real Estate Portfolio Segment [Member] | Mortgage Loans South Atlantic United States Region [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	459,052	458,802
Percent of Mortgage Loans	17.60%	17.30%
Commercial Real Estate Portfolio Segment [Member] | Mortgage Loans West North Central United States Region [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	369,363	370,168
Percent of Mortgage Loans	14.10%	13.90%
Commercial Real Estate Portfolio Segment [Member] | Mortgage Loans West South Central United States Region [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	$ 175,486	$ 207,091
Percent of Mortgage Loans	6.70%	7.80%

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Derivative Instruments Derivative Call Options, Notional Amount and Fair Value, by Counterparty (Details) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Derivative [Line Items]
Derivative, Collateral, Obligation to Return Cash	$ 572,200,000	$ 328,700,000
Concentration Risk, Credit Risk, Financial Instrument, Maximum Exposure	78,400,000	93,700,000
Not Designated as Hedging Instrument [Member] | Call Option [Member]
Derivative [Line Items]
Derivative instruments	629,135,000	415,258,000
Derivative, Notional Amount	17,167,732,000	15,623,505,000
Not Designated as Hedging Instrument [Member] | Call Option [Member] | Derivative Counterparty, Bank of America [Member]
Derivative [Line Items]
Derivative instruments	39,162,000	16,533,000
Derivative, Notional Amount	1,075,595,000	568,786,000
Not Designated as Hedging Instrument [Member] | Call Option [Member] | Derivative Counterparty, Barclays [Member]
Derivative [Line Items]
Derivative instruments	131,476,000	103,929,000
Derivative, Notional Amount	3,617,125,000	3,463,777,000
Not Designated as Hedging Instrument [Member] | Call Option [Member] | Derivative Counterparty, BNP Paribas [Member]
Derivative [Line Items]
Derivative instruments	68,448,000	60,301,000
Derivative, Notional Amount	1,895,967,000	2,207,097,000
Not Designated as Hedging Instrument [Member] | Call Option [Member] | Derivative Counterparty, Citibank, N.A. [Member] [Member]
Derivative [Line Items]
Derivative instruments	64,812,000	67,592,000
Derivative, Notional Amount	1,501,845,000	2,878,588,000
Not Designated as Hedging Instrument [Member] | Call Option [Member] | Derivative Counterparty, Credit Suisse [Member]
Derivative [Line Items]
Derivative instruments	78,855,000	21,518,000
Derivative, Notional Amount	2,922,641,000	936,625,000
Not Designated as Hedging Instrument [Member] | Call Option [Member] | Derivative Counterparty, Deutsche Bank [Member]
Derivative [Line Items]
Derivative instruments	42,587,000	20,787,000
Derivative, Notional Amount	874,245,000	886,688,000
Not Designated as Hedging Instrument [Member] | Call Option [Member] | Derivative Counterparty, HSBC [Member]
Derivative [Line Items]
Derivative instruments	14,010,000	6,539,000
Derivative, Notional Amount	301,678,000	295,520,000
Not Designated as Hedging Instrument [Member] | Call Option [Member] | Derivative Counterparty, J.P. Morgan [Member]
Derivative [Line Items]
Derivative instruments	20,635,000	21,940,000
Derivative, Notional Amount	643,078,000	735,016,000
Not Designated as Hedging Instrument [Member] | Call Option [Member] | Derivative Counterparty, Morgan Stanley [Member]
Derivative [Line Items]
Derivative instruments	70,329,000	40,113,000
Derivative, Notional Amount	1,961,040,000	1,590,505,000
Not Designated as Hedging Instrument [Member] | Call Option [Member] | Derivative Counterparty, Wells Fargo (Wachovia) [Member]
Derivative [Line Items]
Derivative instruments	98,821,000	56,006,000
Derivative, Notional Amount	$ 2,374,518,000	$ 2,060,903,000

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Investments Schedule of Credit Quality of Fixed Maturity Security Portfolio by NAIC Designation (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Investment Holdings [Line Items]
Percentage of Investment Grade Fixed Maturity Securities, at Fair Value	98.00%	98.00%
Fair Value, Fixed Maturity Securities [Member]
Investment Holdings [Line Items]
NAIC 1 Designation	$ 16,049,276	$ 15,250,560
NAIC 2 Designation	9,028,631	8,533,121
NAIC 3 Designation	457,918	387,222
NAIC 4 Designation	69,502	56,151
NAIC 5 Designation	0	0
NAIC 6 Designation	1,565	6,603
Fixed Maturity Securities	25,606,892	24,233,657
Amortized Cost Basis [Member]
Investment Holdings [Line Items]
NAIC 1 Designation	15,440,564	13,737,381
NAIC 2 Designation	8,878,184	7,838,186
NAIC 3 Designation	475,652	398,294
NAIC 4 Designation	68,807	53,879
NAIC 5 Designation	0	0
NAIC 6 Designation	2,050	5,375
Fixed Maturity Securities	$ 24,865,257	$ 22,033,115

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Mortgage Loans on Real Estate Mortgage Loans by Credit Quality Indicator (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment [Line Items]
Notes, Loans and Financing Receivable, Gross	$ 2,600,000,000	$ 2,623,940,000
Financing Receivable, by Credit Quality Indicator [Domain]
Financing Receivable, Recorded Investment [Line Items]
Mortgage Loans on Real Estate Performing	2,572,527,000	2,597,440,000
Mortgage Loans on Real Estate In Workout	28,326,000	26,723,000
Mortgage Loans on Real Estate Collateral Dependent	15,326,000	34,720,000
Notes, Loans and Financing Receivable, Gross	2,616,179,000	2,658,883,000
Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	15,300,000	34,700,000
Notes, Loans and Financing Receivable, Gross	$ 2,616,179,000	$ 2,658,883,000

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Organization and Significant Accounting Policies Narrative (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Receipts credited to annuity policyholder account balances	$ 2,033,484	$ 1,808,845
Restatement Adjustment [Member]
Receipts credited to annuity policyholder account balances		87,900
Quantifying Error in Prior Year Financial Statements, Amount		$ 0

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Consolidated Statements of Changes in Stockholders' Equity (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Unallocated Common Stock Held by ESOP [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Stockholders' equity at beginning of period at Dec. 31, 2011	$ 1,408,679	$ 57,837	$ 468,281	$ (3,620)	$ 428,952	$ 457,229
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	29,230				29,230
Other comprehensive income	122,643					122,643
Conversion of subordinated debentures		1,550	10,291
Allocation of common stock by ESOP, including excess income tax benefits			22	445
Share-based compensation, including excess income tax benefits			3,719
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures		822	250
Debt Conversion, Converted Instrument, Shares Issued	0
Stockholders' equity at end of period at Jun. 30, 2012	1,577,651	60,209	482,563	(3,175)	458,182	579,872
Stockholders' equity at beginning of period at Dec. 31, 2012	1,720,237	61,751	496,715	(2,583)	477,547	686,807
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	146,144				146,144
Other comprehensive income	(442,527)					(442,527)
Allocation of common stock by ESOP, including excess income tax benefits			134	574
Share-based compensation, including excess income tax benefits			3,193
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures		1,533	11,024
Debt Conversion, Converted Instrument, Shares Issued	216,729	217,000	1,547,000
Stockholders' equity at end of period at Jun. 30, 2013	$ 1,442,076	$ 63,501	$ 512,613	$ (2,009)	$ 623,691	$ 244,280

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Proceeds from (Payments for) in Securities Sold under Agreements to Repurchase	$ 160,436	$ 0
Proceeds from Notes Payable	15,000	0
Operating activities
Net Income	146,144	29,230
Adjustments to reconcile net income to net cash provided by operating activities:
Interest Sensitive And Index Product Benefits	561,834	281,856
Amortization of deferred sales inducements	149,367	42,650
Annuity product charges	(44,992)	(41,301)
Change in fair value of embedded derivatives	(45,137)	278,077
Increase in traditional life and accident and health insurance reserves	(1,066)	12,652
Policy acquisition costs deferred	(205,519)	(186,573)
Amortization of deferred policy acquisition costs	215,500	79,132
Depreciation, Depletion and Amortization, Nonproduction	9,356	9,150
Amortization of discounts and premiums on investments	9,546	(64,020)
Realized gains on investments and net OTTI losses recognized	(20,262)	10,546
Change in fair value of derivatives	(438,002)	(108,314)
Deferred Income Tax Expense (Benefit)	38,781	(14,249)
Share-based Compensation	3,011	3,024
Change in accrued investment income	(25,859)	(15,707)
Change in income taxes recoverable/payable	(8,483)	(3,493)
Change in other assets	(296)	(10,077)
Change in other policy funds and contract claims	(15,535)	33,548
Change in collateral held for derivatives	164,269	175,549
Change in other liabilities	475	(11,421)
Other	(1,868)	164
Net Cash Provided by (Used in) Operating Activities	491,264	500,423
Sales, maturities, or repayments of investments:
Proceeds from Maturities, Prepayments and Calls of Available-for-sale Securities	2,292,959	1,423,179
Proceeds from Maturities, Prepayments and Calls of Held-to-maturity Securities	0	1,688,329
Equity securities - available for sale	44,829	5,605
Mortgage loans on real estate	266,539	219,423
Derivative instruments	409,050	110,201
Other investments	11,737	10,362
Acquisition of investments:
Fixed maturity securities - available for sale	(4,962,314)	(3,542,142)
Mortgage loans on real estate	(228,735)	(152,648)
Derivative instruments	(190,997)	(184,709)
Other investments	(19,594)	(83,811)
Purchases of property, furniture and equipment	(288)	(273)
Net Cash Provided by (Used in) Investing Activities	(2,376,814)	(506,484)
Financing activities
Receipts credited to annuity policyholder account balances	2,033,484	1,808,845
Coinsurance deposits	15,960	(28,630)
Return of annuity policyholder account balances	(829,047)	(760,423)
Repayments of notes payable	(28,243)	0
Excess tax benefits realized from share-based compensation plans	380	693
Proceeds from Issuance of Common Stock	12,284	1,062
Change in checks in excess of cash balance	(15,207)	(12,608)
Net cash provided by financing activities	1,363,894	1,008,939
Payments of Financing Costs	1,153	0
Cash and Cash Equivalents, Period Increase (Decrease)	(521,656)	1,002,878
Cash and cash equivalents at beginning of period	1,268,545	404,952
Cash and cash equivalents at end of period	746,889	1,407,830
Cash paid during period for:
Interest expense	12,595	14,308
Income taxes	47,700	32,650
Non-cash operating activity:
Deferral of sales inducements	164,931	143,248
Non-cash investing activity:
Real estate acquired in satisfaction of mortgage loans	844	11,985
Non-cash financing activities:
Conversion of subordinated debentures	0	12,554
Stock Issued During Period, Value, Other	$ 3,367	$ 0

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Investments

6 Months Ended

Jun. 30, 2013

Investments [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Investments

At June 30, 2013 and December 31, 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)
June 30, 2013
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	4,607	$	367	$	(36	)	$	4,938
United States Government sponsored agencies	1,241,898		4,796		(46,847		)	1,199,847
United States municipalities, states and territories	3,299,732		268,127		(24,701		)	3,543,158
Foreign government obligations	86,106		9,230		(2,525		)	92,811
Corporate securities	15,527,755		808,241		(336,669		)	15,999,327
Residential mortgage backed securities	2,337,399		167,051		(16,393		)	2,488,057
Commercial mortgage backed securities	1,304,028		1,714		(83,053		)	1,222,689
Other asset backed securities	987,562		27,416		(20,163		)	994,815
	$	24,789,087	$	1,286,942	$	(530,387	)	$	25,545,642
Held for investment:
Corporate security	$	76,170	$	—	$	(14,920	)	$	61,250
Equity securities, available for sale:
Finance, insurance, and real estate	$	8,915	$	875	$	—		$	9,790
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

During the six months endedJune 30, 2013 and 2012, we received $1.0 billion and $2.8 billion, respectively, in redemption proceeds related to calls of our callable United States Government sponsored agency securities and public and private corporate bonds, of which $1.7 billionfor the six months endedJune 30, 2012, were classified as held for investment. The proceeds from these redemptions that have been reinvested have primarily been in United States government sponsored agencies, corporate securities, commercial mortgage backed securities and other asset backed securities. At June 30, 2013, 30% of our fixed income securities have call features of which 5% ($1.3 billion) will become subject to call redemption during the next twelve months and $500.6 million of which are U.S. Government agency securities with a book yield of 0.75%. The $500.6 million of U.S. Government securities were expected to be called in July. However, with the increase in interest rates during June, these securities were not called and are currently yielding 3.75%. These securities are callable quarterly and a modest decline in interest rates from current levels could result in the calls being exercised on the next call date in October of 2013.

The amortized cost and fair value of fixed maturity securities at June 30, 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	$	113,074	$	116,889	$	—	$	—
Due after one year through five years	840,609		941,104		—		—
Due after five years through ten years	6,802,325		6,819,438		—		—
Due after ten years through twenty years	5,829,419		6,033,288		—		—
Due after twenty years	6,574,671		6,929,362		76,170		61,250
	20,160,098		20,840,081		76,170		61,250
Residential mortgage backed securities	2,337,399		2,488,057		—		—
Commercial mortgage backed securities	1,304,028		1,222,689		—		—
Other asset backed securities	987,562		994,815		—		—
	$	24,789,087	$	25,545,642	$	76,170	$	61,250

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:

	June 30, 2013			December 31, 2012
	(Dollars in thousands)
Net unrealized gains on available for sale fixed maturity securities and equity securities	$	757,430		$	2,223,933
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements	(416,281		)	(1,201,974		)
Deferred income tax valuation allowance reversal	22,534			22,534
Deferred income tax benefit	(119,403		)	(357,686		)
Net unrealized gains reported as accumulated other comprehensive income	$	244,280		$	686,807

The National Association of Insurance Commissioners (“NAIC”) assigns designations to fixed maturity securities. These designations range from Class 1 (highest quality) to Class 6 (lowest quality). In general, securities are assigned a designation based upon the ratings they are given by the Nationally Recognized Statistical Rating Organizations (“NRSRO’s”). The NAIC designations are utilized by insurers in preparing their annual statutory statements. NAIC Class 1 and 2 designations are considered “investment grade” while NAIC Class 3 through 6 designations are considered “non-investment grade.” Based on the NAIC designations, we had 98% of our fixed maturity portfolio rated investment grade at June 30, 2013 and December 31, 2012.

The following table summarizes the credit quality, as determined by NAIC designation, of our fixed maturity portfolio as of the dates indicated:

	June 30, 2013				December 31, 2012
NAIC Designation	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
1	$	15,440,564	$	16,049,276	$	13,737,381	$	15,250,560
2	8,878,184		9,028,631		7,838,186		8,533,121
3	475,652		457,918		398,294		387,222
4	68,807		69,502		53,879		56,151
5	—		—		—		—
6	2,050		1,565		5,375		6,603
	$	24,865,257	$	25,606,892	$	22,033,115	$	24,233,657

The following tables show our investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities (consisting of 803 and 198 securities, respectively) have been in a continuous unrealized loss position, at June 30, 2013 and December 31, 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)
June 30, 2013
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	984	$	(36	)	$	—	$	—		$	984	$	(36	)
United States Government sponsored agencies	1,126,107		(46,847		)	—		—			1,126,107		(46,847		)
United States municipalities, states and territories	407,748		(24,701		)	—		—			407,748		(24,701		)
Foreign government obligations	27,269		(2,525		)	—		—			27,269		(2,525		)
Corporate securities:
Finance, insurance and real estate	1,295,619		(67,115		)	84,262		(7,814		)	1,379,881		(74,929		)
Manufacturing, construction and mining	2,631,633		(135,270		)	12,079		(1,797		)	2,643,712		(137,067		)
Utilities and related sectors	1,334,828		(64,359		)	29,728		(3,728		)	1,364,556		(68,087		)
Wholesale/retail trade	301,898		(17,027		)	—		—			301,898		(17,027		)
Services, media and other	747,156		(39,559		)	—		—			747,156		(39,559		)
Residential mortgage backed securities	293,301		(13,905		)	58,100		(2,488		)	351,401		(16,393		)
Commercial mortgage backed securities	1,064,758		(83,053		)	—		—			1,064,758		(83,053		)
Other asset backed securities	426,195		(16,816		)	22,823		(3,347		)	449,018		(20,163		)
	$	9,657,496	$	(511,213	)	$	206,992	$	(19,174	)	$	9,864,488	$	(530,387	)
Held for investment:
Corporate security:
Insurance	$	—	$	—		$	61,250	$	(14,920	)	$	61,250	$	(14,920	)
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	)

The following is a description of the factors causing the temporary unrealized losses by investment category as of June 30, 2013:

United States Government sponsored agencies: These securities are relatively long in duration; however, they are callable in less than 12 months making the value of such securities sensitive to changes in market interest rates. The timing of when some of these securities were purchased gave rise to unrealized losses at June 30, 2013.

United States municipalities, states and territories: These securities are relatively long in duration and their fair values are sensitive to changes in market interest rates. The timing of the purchase of these securities have resulted in unrealized losses at this point in time.

Foreign government obligations: The unrealized losses on these securities are due to wider spreads on the announcement of increased capital expenditures with resulting higher leverage and greater supply.

Corporate securities: The unrealized losses in these securities are due partially to the timing of purchases in 2012 and 2013. These securities carry yields less than those available at June 30, 2013 as the result of rising interest rates in the first half of 2013. In addition, a small number of securities have seen their credit spreads remain wide due to issuer or industry specific news while some financial and industrial sector credit spreads remain wide due to continued economic uncertainty and concerns of economic instability.

Residential mortgage backed securities: At June 30, 2013, we had no exposure to sub-prime residential mortgage backed securities. All of our residential mortgage backed securities are pools of first-lien residential mortgage loans. Substantially all of the securities that we own are in the most senior tranche of the securitization in which they are structured and are not subordinated to any other tranche. Our "Alt-A" residential mortgage backed securities are comprised of 36 securities with a total amortized cost basis of $341.4 million and a fair value of $372.5 million. Despite recent improvements in the capital markets, the fair values of RMBS with weaker borrower characteristics continue at prices below amortized cost. These RMBS prices will likely remain below our cost basis until the housing market is able to absorb current and future foreclosures.

Commercial mortgage backed securities: The unrealized losses in these securities are due partially to the timing of purchases in 2012 and 2013. A number of purchases made in the middle of the fourth quarter 2012 were at yields lower than what could be executed at the end of this quarter due to the increase in the treasury yield since the time of purchase. Yield spreads for commercial mortgage backed securities have narrowed but remain attractive.

Other asset backed securities: The unrealized losses in these securities are predominantly assigned to financial sector capital trust securities which have longer maturity dates and have declined in price due to prolonged stress in the financial sector. Only one security in an unrealized loss position is rated below investment grade.

Approximately 95% and 75% of the unrealized losses on fixed maturity securities shown in the above table for June 30, 2013 and December 31, 2012, respectively, are on securities that are rated investment grade, defined as being the highest two NAIC designations. All of the securities with unrealized losses are current with respect to the payment of principal and interest.

Changes in net unrealized gains on investments for the three and six months endedJune 30, 2013 and 2012 are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
							(Dollars in thousands)
Fixed maturity securities held for investment carried at amortized cost	$	(964	)	$	1,690		$	(353	)	$	11,879
Investments carried at fair value:
Fixed maturity securities, available for sale	$	(1,339,484	)	$	603,462		$	(1,458,554	)	$	388,374
Equity securities, available for sale	(10,168		)	(787		)	(7,949		)	3,637
	(1,349,652		)	602,675			(1,466,503		)	392,011
Adjustment for effect on other balance sheet accounts:
Deferred policy acquisition costs and deferred sales inducements	707,525			(339,408		)	785,693			(203,330		)
Deferred income tax asset/liability	224,744			(92,142		)	238,283			(66,038		)
	932,269			(431,550		)	1,023,976			(269,368		)
Change in net unrealized gains on investments carried at fair value	$	(417,383	)	$	171,125		$	(442,527	)	$	122,643

Proceeds from sales of available for sale securities for the six months endedJune 30, 2013 and 2012 were $820.2 million and $165.2 million, respectively. Scheduled principal repayments, calls and tenders for available for sale securities for the six months endedJune 30, 2013 and 2012 were $1.6 billion and $1.4 billion, respectively.

Realized gains and losses on sales are determined on the basis of specific identification of investments based on the trade date. Net realized gains (losses) on investments, excluding net OTTI losses for the three and six months endedJune 30, 2013 and 2012 are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Available for sale fixed maturity securities:
Gross realized gains	$	7,628		$	4,030		$	20,643		$	5,048
Gross realized losses	(823		)	(59		)	(3,010		)	(355		)
	6,805			3,971			17,633			4,693
Equity securities:
Gross realized gains	9,571			—			9,571			562
Other investments:
Gain on sale of real estate	715			1,450			1,304			2,895
Loss on sale of real estate	—			—			(466		)	—
Impairment losses on real estate	(145		)	(1,669		)	(145		)	(2,643		)
	570			(219		)	693			252
Mortgage loans on real estate:
Increase in allowance for credit losses	(1,257		)	(4,363		)	(1,623		)	(12,194		)
	$	15,689		$	(611	)	$	26,274		$	(6,687	)

We review and analyze all investments on an ongoing basis for changes in market interest rates and credit deterioration. This review process includes analyzing our ability to recover the amortized cost basis of each investment that has a fair value that is materially lower than its amortized cost and requires a high degree of management judgment and involves uncertainty. The evaluation of securities for other than temporary impairments is a quantitative and qualitative process, which is subject to risks and uncertainties.

We have a policy and process in place to identify securities that could potentially have impairments that are other than temporary. This process involves monitoring market events and other items that could impact issuers. The evaluation includes but is not limited to such factors as:

• the length of time and the extent to which the fair value has been less than amortized cost or cost;

• whether the issuer is current on all payments and all contractual payments have been made as agreed;

• the remaining payment terms and the financial condition and near-term prospects of the issuer;

• the lack of ability to refinance due to liquidity problems in the credit market;

• the fair value of any underlying collateral;

• the existence of any credit protection available;

• our intent to sell and whether it is more likely than not we would be required to sell prior to recovery for debt securities;

• our assessment in the case of equity securities including perpetual preferred stocks with credit deterioration that the security cannot recover to cost in a reasonable period of time;

• our intent and ability to retain equity securities for a period of time sufficient to allow for recovery;

• consideration of rating agency actions; and

• changes in estimated cash flows of mortgage and asset backed securities.

We determine whether other than temporary impairment losses should be recognized for debt and equity securities by assessing all facts and circumstances surrounding each security. Where the decline in market value of debt securities is attributable to changes in market interest rates or to factors such as market volatility, liquidity and spread widening, and we anticipate recovery of all contractual or expected cash flows, we do not consider these investments to be other than temporarily impaired because we do not intend to sell these investments and it is not more likely than not we will be required to sell these investments before a recovery of amortized cost, which may be maturity. For equity securities, we recognize an impairment charge in the period in which we do not have the intent and ability to hold the securities until recovery of cost or we determine that the security will not recover to book value within a reasonable period of time. We determine what constitutes a reasonable period of time on a security-by-security basis by considering all the evidence available to us, including the magnitude of any unrealized loss and its duration. In any event, this period does not exceed 18 months from the date of impairment for perpetual preferred securities for which there is evidence of deterioration in credit of the issuer and common equity securities. For perpetual preferred securities absent evidence of a deterioration in credit of the issuer we apply an impairment model, including an anticipated recovery period, similar to a debt security.

Other than temporary impairment losses on equity securities are recognized in operations. If we intend to sell a debt security or if it is more likely than not that we will be required to sell a debt security before recovery of its amortized cost basis, other than temporary impairment has occurred and the difference between amortized cost and fair value will be recognized as a loss in operations.

If we do not intend to sell and it is not more likely than not we will be required to sell the debt security but also do not expect to recover the entire amortized cost basis of the security, an impairment loss would be recognized in operations in the amount of the expected credit loss. We determine the amount of expected credit loss by calculating the present value of the cash flows expected to be collected discounted at each security's acquisition yield based on our consideration of whether the security was of high credit quality at the time of acquisition. The difference between the present value of expected future cash flows and the amortized cost basis of the security is the amount of credit loss recognized in operations. The remaining amount of the other than temporary impairment is recognized in other comprehensive income.

The determination of the credit loss component of a mortgage backed security is based on a number of factors. The primary consideration in this evaluation process is the issuer's ability to meet current and future interest and principal payments as contractually stated at time of purchase. Our review of these securities includes an analysis of the cash flow modeling under various default scenarios considering independent third party benchmarks, the seniority of the specific tranche within the structure of the security, the composition of the collateral and the actual default, loss severity and prepayment experience exhibited. With the input of third party assumptions for default projections, loss severity and prepayment expectations, we evaluate the cash flow projections to determine whether the security is performing in accordance with its contractual obligation.

We utilize the models from a leading structured product software specialist serving institutional investors. These models incorporate each security's seniority and cash flow structure. In circumstances where the analysis implies a potential for principal loss at some point in the future, we use the "best estimate" cash flow projection discounted at the security's effective yield at acquisition to determine the amount of our potential credit loss associated with this security. The discounted expected future cash flows equates to our expected recovery value. Any shortfall of the expected recovery when compared to the amortized cost of the security will be recorded as the credit loss component of other than temporary impairment.

The cash flow modeling is performed on a security-by-security basis and incorporates actual cash flows on the residential mortgage backed securities through the current period, as well as the projection of remaining cash flows using a number of assumptions including default rates, prepayment rates and loss severity rates. The default curves we use are tailored to the Prime or Alt-A residential mortgage backed securities that we own, which assume lower default rates and loss severity for Prime securities versus Alt-A securities. These default curves are scaled higher or lower depending on factors such as current underlying mortgage loan performance, rating agency loss projections, loan to value ratios, geographic diversity, as well as other appropriate considerations.

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 six months endedJune 30, 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
Six months ended June 30, 2013
Prime	2003	5.1	%	5.1	%	2	%	2	%	30	%	30	%
	2005	6.5	%	7.7	%	8	%	17	%	50	%	50	%
	2006	6.0	%	6.9	%	9	%	16	%	50	%	50	%
	2007	6.5	%	6.7	%	12	%	25	%	40	%	60	%
	2008	6.6	%	6.6	%	16	%	16	%	45	%	45	%
Alt-A	2005	5.6	%	8.7	%	15	%	25	%	5	%	65	%
	2007	6.2	%	6.9	%	38	%	52	%	60	%	65	%
Six months ended June 30, 2012
Prime	2005	6.5	%	7.7	%	9	%	13	%	50	%	50	%
	2006	5.8	%	7.4	%	9	%	19	%	40	%	55	%
	2007	6.2	%	7.3	%	11	%	38	%	40	%	60	%
Alt-A	2005	5.6	%	7.7	%	12	%	27	%	5	%	50	%
	2006	6.0	%	6.0	%	32	%	46	%	55	%	60	%
	2007	6.2	%	7.0	%	31	%	55	%	55	%	60	%

The determination of the credit loss component of a corporate bond (including redeemable preferred stocks) is based on the underlying financial performance of the issuer and their ability to meet their contractual obligations. Considerations in our evaluation include, but are not limited to, credit rating changes, financial statement and ratio analysis, changes in management, significant changes in credit spreads, breaches of financial covenants and a review of the economic outlook for the industry and markets in which they trade. In circumstances where an issuer appears unlikely to meet its future obligation, or the security's price decline is deemed other than temporary, an estimate of credit loss is determined. Credit loss is calculated using default probabilities as derived from the credit default swaps markets in conjunction with recovery rates derived from independent third party analysis or a best estimate of credit loss. This credit loss rate is then incorporated into a present value calculation based on an expected principal loss in the future discounted at the yield at the date of purchase and compared to amortized cost to determine the amount of credit loss associated with the security.

In addition, for debt securities which we do not intend to sell and it is not more likely than not we will be required to sell, but our intent changes due to changes or events that could not have been reasonably anticipated, an other than temporary impairment charge is recognized. Once an impairment charge has been recorded, we then continue to review the other than temporarily impaired securities for appropriate valuation on an ongoing basis. Unrealized losses may be recognized in future periods through a charge to earnings, should we later conclude that the decline in fair value below amortized cost is other than temporary pursuant to our accounting policy described above. The use of different methodologies and assumptions to determine the fair value of investments and the timing and amount of impairments may have a material effect on the amounts presented in our consolidated financial statements.

The following table summarizes other than temporary impairments for the three and six months endedJune 30, 2013 and 2012, 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)
Three months ended June 30, 2013
Fixed maturity securities, available for sale:
United States Government sponsored agencies	2	$	(2,775	)	$	—		$	(2,775	)
Three months ended June 30, 2012
Fixed maturity securities, available for sale:
Residential mortgage backed securities	7	$	(375	)	$	(603	)	$	(978	)
Six months ended June 30, 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	5	—			(1,048		)	(1,048		)
Equity security, available for sale:
Industrial	1	(428		)	—			(428		)
	9	$	(4,964	)	$	(1,048	)	$	(6,012	)
Six months ended June 30, 2012
Fixed maturity securities, available for sale:
Residential mortgage backed securities	22	$	(2,156	)	$	(1,703	)	$	(3,859	)

Other than temporary impairments during the three and six months endedJune 30, 2013 on United States Government sponsored agencies were recognized as we had the intent to sell these securities as of June 30, 2013. The other than temporary impairments were determined based on the market values of the underlying securities at June 30, 2013.

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:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Cumulative credit loss at beginning of period	$	(129,813	)	$	(121,976	)	$	(134,027	)	$	(119,095	)
Credit losses on securities for which OTTI has not previously been recognized	(2,775		)	(47		)	(4,536		)	(47		)
Additional credit losses on securities for which OTTI has previously been recognized	—			(931		)	(1,048		)	(3,812		)
Accumulated losses on securities that were disposed of during the period	4,075			—			11,098			—
Cumulative credit loss at end of period	$	(128,513	)	$	(122,954	)	$	(128,513	)	$	(122,954	)

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 June 30, 2013 and December 31, 2012:

	Amortized Cost		OTTI Recognized in Other Comprehensive Income			Change in Fair Value Since OTTI was Recognized		Fair Value
	(Dollars in thousands)
June 30, 2013
Fixed maturity securities, available for sale:
Corporate securities	$	—	$	—		$	24	$	24
Residential mortgage backed securities	764,746		(176,557		)	236,236		824,425
Equity securities, available for sale:
Finance, insurance and real estate and services	1,415		—			605		2,020
	$	766,161	$	(176,557	)	$	236,865	$	826,469
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

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Organization and Significant Accounting Policies

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Significant Accounting Policies

Consolidation and Basis of Presentation

The accompanying consolidated financial statements of American Equity Investment Life Holding Company (“we”, “us” or “our”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by GAAP for complete financial statements. The consolidated financial statements reflect all adjustments, consisting only of normal recurring items, which are necessary to present fairly our financial position and results of operations on a basis consistent with the prior audited consolidated financial statements. Operating results for the three and six month periods ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ended December 31, 2013. All significant intercompany accounts and transactions have been eliminated. The preparation of financial statements requires the use of management estimates. For further information related to a description of areas of judgment and estimates and other information necessary to understand our financial position and results of operations, refer to the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2012.

As previously reported in the notes to consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012, we identified certain classification errors related to amounts reported in the financing activities section of our consolidated statements of cash flows. Consistent with that presentation, we have revised the consolidated statement of cash flows for the six months ended June 30, 2012 resulting in decreases of $87.9 million to receipts credited to annuity and single premium universal life policyholder account balances and return of annuity policyholder account balances. These revisions had no net impact on net cash provided by financing activities, and no impact on our consolidated balance sheets, statements of operations, statements of comprehensive income or statements of changes in stockholders' equity.

Adopted Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board ("FASB") issued an accounting standards update ("ASU") that expands the disclosure requirements related to other comprehensive income (loss). A reporting entity is now required to provide information about the amounts reclassified out of accumulated other comprehensive income (loss) by component. In addition, a reporting entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. This ASU became effective for interim and annual periods beginning after December 15, 2012. We adopted this ASU on January 1, 2013.

New Accounting Pronouncements

There are currently no accounting standards updates with effective dates after June 30, 2013 that will significantly affect our consolidated financial statements.

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Mortgage Loans on Real Estate Allowance for Loan Losses Table (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended			3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2013 Months	Dec. 31, 2012	Mar. 31, 2012 Quarters	Jun. 30, 2013 Allowance for Notes Receivable [Member]	Jun. 30, 2012 Allowance for Notes Receivable [Member]	Jun. 30, 2013 Allowance for Notes Receivable [Member]	Jun. 30, 2012 Allowance for Notes Receivable [Member]	Jun. 30, 2013 Allowance for Loan and Lease Losses [Member]	Jun. 30, 2012 Allowance for Loan and Lease Losses [Member]	Jun. 30, 2013 Allowance for Loan and Lease Losses [Member]	Jun. 30, 2012 Allowance for Loan and Lease Losses [Member]	Jun. 30, 2013 Commercial Real Estate Portfolio Segment [Member]	Dec. 31, 2012 Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Impaired Mortgage Loans, Workout Terms, Interest Only Payments, Six Month Terms	6
Debt Service Coverage Ratio			0.00%
Allowance for Loan Losses, General Allowance, Number of Quarters			4
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Financing Receivable, Allowance for Credit Losses	$ (10,969)			$ (22,631)	$ (29,595)	$ (23,134)	$ (23,664)	$ (10,400)	$ (10,300)	$ (11,100)	$ (9,300)
Financing Receivable, Allowance for Credit Losses, Charge-offs				2,612	7,613	4,181	8,513	0	0	0	0
Financing Receivable, Allowance for Credit Losses, Recoveries				0	0	0	0	0	0	0	0
Financing Receivable, Allowance for Credit Losses, Provisions				(1,157)	(3,463)	(2,223)	(10,294)	(100)	(900)	600	(1,900)
Financing Receivable, Allowance for Credit Losses	(9,303)			(21,176)	(25,445)	(21,176)	(25,445)	(10,500)	(11,200)	(10,500)	(11,200)
Financing Receivable, Individually Evaluated for Impairment												46,707	53,110
Financing Receivable, Collectively Evaluated for Impairment												2,569,472	2,605,773
Loans Receivable, Gross, Commercial, Real Estate	$ 2,600,000	$ 2,623,940										$ 2,616,179	$ 2,658,883
Impaired Mortgage Loans, Workout Terms, Interest Only Payments, Twelve Month Terms	12
Impaired Mortgage Loans, Workout Terms, Cash Flow Sweep, Number of Months	12

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Investments Schedule of Amortized Cost and Fair Value of Fixed Maturity and Equity Securities (Details) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Investment Holdings [Line Items]
Proceeds from Maturities, Prepayments and Calls of Held-to-maturity Securities	$ 0	$ 1,688,329,000
Proceeds From Calls of United States Government Sponsored Agency Securities	1,000,000,000	2,800,000,000
Available-for-sale Securities, Amortized Cost Basis	24,789,087,000		21,957,027,000
Fixed maturity securities, held for investment, at amortized cost	76,170,000		76,088,000
Fixed Income Securities with Call Features	30.00%
Fixed Income Securities with Call Features, Callable During Next 12 Months	5.00%
Fixed Income Securities with Call Features, Callable During Next 12 Months Amount	1,300,000,000
United States Government Agency Securities, Short-term, Callable During Next 12 Months	500,600,000
United States Government Agencies, Short-term, Callable During Next 12 Months, Book Yield	0.75%
United States Government Agencies, Short-term, Callable During Next 12 Months, Future Book Yield	3.75%
Fixed Maturities [Member] | Held-to-maturity Securities [Member] | Corporate Debt Securities [Member]
Investment Holdings [Line Items]
Fixed maturity securities, held for investment, at amortized cost	76,170,000		76,088,000
Held-to-maturity Securities, Unrecognized Holding Gain	0		0
Held-to-maturity Securities, Unrecognized Holding Loss	(14,920,000)		(14,567,000)
Held-to-maturity Securities, Fair Value Disclosure	61,250,000		61,521,000
Fixed Maturities [Member] | Available-for-sale Securities [Member]
Investment Holdings [Line Items]
Available-for-sale Securities, Amortized Cost Basis	24,789,087,000		21,957,027,000
Available-for-sale Securities, Gross Unrealized Gains	1,286,942,000		2,283,010,000
Available-for-sale Securities, Gross Unrealized Losses	(530,387,000)		(67,901,000)
Available-for-sale Securities, Fair Value Disclosure	25,545,642,000		24,172,136,000
Fixed Maturities [Member] | Available-for-sale Securities [Member] | US States and Political Subdivisions Debt Securities [Member]
Investment Holdings [Line Items]
Available-for-sale Securities, Amortized Cost Basis	3,299,732,000		3,116,678,000
Available-for-sale Securities, Gross Unrealized Gains	268,127,000		461,770,000
Available-for-sale Securities, Gross Unrealized Losses	(24,701,000)		(125,000)
Available-for-sale Securities, Fair Value Disclosure	3,543,158,000		3,578,323,000
Fixed Maturities [Member] | Available-for-sale Securities [Member] | Foreign Government Debt Securities [Member]
Investment Holdings [Line Items]
Available-for-sale Securities, Amortized Cost Basis	86,106,000		86,099,000
Available-for-sale Securities, Gross Unrealized Gains	9,230,000		19,160,000
Available-for-sale Securities, Gross Unrealized Losses	(2,525,000)		0
Available-for-sale Securities, Fair Value Disclosure	92,811,000		105,259,000
Fixed Maturities [Member] | Available-for-sale Securities [Member] | US Treasury Securities [Member]
Investment Holdings [Line Items]
Available-for-sale Securities, Amortized Cost Basis	4,607,000		4,590,000
Available-for-sale Securities, Gross Unrealized Gains	367,000		564,000
Available-for-sale Securities, Gross Unrealized Losses	(36,000)		0
Available-for-sale Securities, Fair Value Disclosure	4,938,000		5,154,000
Fixed Maturities [Member] | Available-for-sale Securities [Member] | Corporate Debt Securities [Member]
Investment Holdings [Line Items]
Available-for-sale Securities, Amortized Cost Basis	15,527,755,000		12,930,173,000
Available-for-sale Securities, Gross Unrealized Gains	808,241,000		1,568,223,000
Available-for-sale Securities, Gross Unrealized Losses	(336,669,000)		(31,624,000)
Available-for-sale Securities, Fair Value Disclosure	15,999,327,000		14,466,772,000
Fixed Maturities [Member] | Available-for-sale Securities [Member] | Residential Mortgage Backed Securities [Member]
Investment Holdings [Line Items]
Available-for-sale Securities, Amortized Cost Basis	2,337,399,000		2,743,537,000
Available-for-sale Securities, Gross Unrealized Gains	167,051,000		172,304,000
Available-for-sale Securities, Gross Unrealized Losses	(16,393,000)		(27,728,000)
Available-for-sale Securities, Fair Value Disclosure	2,488,057,000		2,888,113,000
Fixed Maturities [Member] | Available-for-sale Securities [Member] | Commercial Mortgage Backed Securities [Member]
Investment Holdings [Line Items]
Available-for-sale Securities, Amortized Cost Basis	1,304,028,000		354,870,000
Available-for-sale Securities, Gross Unrealized Gains	1,714,000		5,095,000
Available-for-sale Securities, Gross Unrealized Losses	(83,053,000)		(1,983,000)
Available-for-sale Securities, Fair Value Disclosure	1,222,689,000		357,982,000
Fixed Maturities [Member] | Available-for-sale Securities [Member] | Asset-backed Securities [Member]
Investment Holdings [Line Items]
Available-for-sale Securities, Amortized Cost Basis	987,562,000		957,291,000
Available-for-sale Securities, Gross Unrealized Gains	27,416,000		44,190,000
Available-for-sale Securities, Gross Unrealized Losses	(20,163,000)		(2,973,000)
Available-for-sale Securities, Fair Value Disclosure	994,815,000		998,508,000
Fixed Maturities [Member] | Available-for-sale Securities [Member] | US Government Corporations and Agencies Securities [Member]
Investment Holdings [Line Items]
Available-for-sale Securities, Amortized Cost Basis	1,241,898,000		1,763,789,000
Available-for-sale Securities, Gross Unrealized Gains	4,796,000		11,704,000
Available-for-sale Securities, Gross Unrealized Losses	(46,847,000)		(3,468,000)
Available-for-sale Securities, Fair Value Disclosure	1,199,847,000		1,772,025,000
Equity Securities [Member] | Available-for-sale Securities [Member]
Investment Holdings [Line Items]
Available-for-sale Securities, Amortized Cost Basis	8,915,000		44,598,000
Available-for-sale Securities, Gross Unrealized Gains	875,000		10,227,000
Available-for-sale Securities, Gross Unrealized Losses	0		(1,403,000)
Available-for-sale Securities, Fair Value Disclosure	$ 9,790,000		$ 53,422,000

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Investments Gross Unrealized Losses and Fair Value by Investment Category (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013 Securities	Dec. 31, 2012 Securities
Investment Holdings [Line Items]
Individual Securities with Unrealized Losses	803	198
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Debt Securities, Amortized Cost Basis	$ 24,789,087
Fixed Maturity Securities, Unrealized Loss Position, Classified as Investment Grade	95.00%	75.00%
Fixed Maturities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	9,657,496	2,716,900
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(511,213)	(33,982)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	206,992	443,515
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	(19,174)	(33,919)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	9,864,488	3,160,415
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	(530,387)	(67,901)
Fixed Maturities [Member] | US Treasury and Government [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	984
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(36)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	984
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	(36)
Fixed Maturities [Member] | US Government Agencies Debt Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	1,126,107	973,728
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	(46,847)	(3,468)
Fixed Maturities [Member] | US Government Corporations and Agencies Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	1,126,107	973,728
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(46,847)	(3,468)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	0	0
Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	407,748	24,393
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(24,701)	(125)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	407,748	24,393
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	(24,701)	(125)
Fixed Maturities [Member] | Foreign Government Debt Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	27,269
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(2,525)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	27,269
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	(2,525)
Fixed Maturities [Member] | Corporate Debt Securities [Member] | Corporate Debt Securities, Finance, Insurance, and Real Estate Sectors [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	1,295,619	177,962
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(67,115)	(4,126)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	84,262	85,709
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	(7,814)	(8,438)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	1,379,881	263,671
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	(74,929)	(12,564)
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	0	0
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	0	0
Held-to-maturity Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	61,250	61,521
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	(14,920)	(14,567)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value	61,250	61,521
Held-to-maturity Securities, Continuous Unrealized Loss Position, Aggregate Losses	(14,920)	(14,567)
Fixed Maturities [Member] | Corporate Debt Securities [Member] | Corporate Debt Securities, Manufacturing, Construction, and Mining Sectors [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	2,631,633	426,120
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(135,270)	(4,303)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	12,079	21,975
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	(1,797)	(1,281)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	2,643,712	448,095
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	(137,067)	(5,584)
Fixed Maturities [Member] | Corporate Debt Securities [Member] | Corporate Debt Securities, Utilities and Related Sectors [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	1,334,828	221,044
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(64,359)	(5,187)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	29,728	39,224
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	(3,728)	(4,212)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	1,364,556	260,268
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	(68,087)	(9,399)
Fixed Maturities [Member] | Corporate Debt Securities [Member] | Corporate Debt Securities, Wholesale and Retail Trade Sectors [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	301,898	101,790
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(17,027)	(784)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	0	10,250
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	0	(208)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	301,898	112,040
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	(17,027)	(992)
Fixed Maturities [Member] | Corporate Debt Securities [Member] | Corporate Debt Securities, Services, Media, and Other Sectors [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	747,156	264,421
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(39,559)	(3,085)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	747,156	264,421
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	(39,559)	(3,085)
Fixed Maturities [Member] | Residential Mortgage Backed Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	293,301	220,622
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(13,905)	(8,679)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	58,100	260,226
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	(2,488)	(19,049)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	351,401	480,848
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	(16,393)	(27,728)
Fixed Maturities [Member] | Commercial Mortgage Backed Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	1,064,758	161,582
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(83,053)	(1,983)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	1,064,758	161,582
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	(83,053)	(1,983)
Fixed Maturities [Member] | Asset-backed Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	426,195	145,238
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses	(16,816)	(2,242)
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	22,823	26,131
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses	(3,347)	(731)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	449,018	171,369
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	(20,163)	(2,973)
Equity Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value		0
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Losses		0
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value		8,722
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Losses		(1,403)
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value		8,722
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses		(1,403)
Residential Mortgage Backed Securities, Alt-A Sector [Member] | Residential Mortgage Backed Securities [Member]
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	36
Available-for-sale Debt Securities, Amortized Cost Basis	341,400
Available-for-sale Securities, Fair Value Disclosure	$ 372,500

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Investments Cummulative Credit Loss Portion of Other Than Temporary Impairment Recognized in Operations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Credit Losses on Debt Securities Held	$ (129,813)	$ (121,976)	$ (134,027)	$ (119,095)
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Additions, No Previous Impairment	(2,775)	(47)	(4,536)	(47)
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Additions, Additional Credit Losses	0	(931)	(1,048)	(3,812)
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Reductions, Securities Sold	4,075	0	11,098	0
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Credit Losses on Debt Securities Held	$ (128,513)	$ (122,954)	$ (128,513)	$ (122,954)

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Notes Payable Notes Payable 2021 (Details) (Senior Notes [Member])	Jun. 30, 2013
Senior Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	6.625%

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Derivative Instruments Interest Rate Swaps (Details) (USD $)					6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Not Designated as Hedging Instrument [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Not Designated as Hedging Instrument [Member] Interest Rate Swap [Member]	Jun. 30, 2013 Derivative Counterparty, SunTrust [Member] Not Designated as Hedging Instrument [Member] Years	Jun. 30, 2013 Derivative Counterparty, SunTrust [Member] Not Designated as Hedging Instrument [Member] Interest Rate Swap [Member]	Dec. 31, 2012 Derivative Counterparty, SunTrust [Member] Not Designated as Hedging Instrument [Member] Interest Rate Swap [Member]
Derivative [Line Items]
Derivative, Cap Interest Rate					2.50%
Derivative, Notional Amount						$ 85,500,000
Derivative, Fixed Interest Rate						2.415%
Derivative Liability, Fair Value, Gross Liability			0	4,261,000		274,000	(4,261,000)
Derivative Instruments, Interest Rate Swaps and Caps, Duration					7
Derivative, Collateral, Obligation to Return Cash	$ 572,200,000	$ 328,700,000			$ 6,400,000

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Mortgage Loans on Real Estate Schedule of Impaired Financing Receivables (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013 Months	Dec. 31, 2012
Financing Receivable, Impaired [Line Items]
Impaired Mortgage Loans, Workout Terms, Interest Only Payments, Six Month Terms	6
Impaired Mortgage Loans, Workout Terms, Interest Only Payments, Twelve Month Terms	12
Impaired Mortgage Loans, Workout Terms, Cash Flow Sweep, Number of Months	12
Impaired Financing Receivable, with Related Allowance, Recorded Investment	$ 25,531	$ 29,976
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	18,699	27,765
Impaired Financing Receivable, Recorded Investment	44,230	57,741
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	46,707	53,110
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	18,699	27,765
Impaired Financing Receivable, Unpaid Principal Balance	65,406	80,875
Impaired Financing Receivable, Related Allowance	(21,176)	(23,134)
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	27,923	37,480
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	18,760	27,696
Impaired Financing Receivable, Average Recorded Investment	46,683	65,176
Impaired Financing Receivable, with Related Allowance, Interest Income, Accrual Method	885	1,946
Impaired Financing Receivable, with No Related Allowance, Interest Income, Accrual Method	531	1,664
Impaired Financing Receivable, Interest Income, Accrual Method	$ 1,416	$ 3,610

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Balance Sheet Parentheticals Document (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fixed maturity securities:
Available-for-sale Securities, Amortized Cost Basis	$ 24,789,087	$ 21,957,027
Held for investment, at amortized cost, fair value	61,250	61,521
Equity securities, available for sale, at fair value, cost	$ 8,915	$ 44,598
Stockholders' equity:
Preferred stock par value (per Share)	$ 1	$ 1
Preferred stock shares authorized	2,000,000	2,000,000
Preferred stock shares issued	0	0
Preferred stock shares outstanding	0	0
Common stock par value (per Share)	$ 1	$ 1
Common stock shares authorized	200,000,000	200,000,000
Common stock shares issued	63,500,933	61,750,601
Common stock shares outstanding	63,500,933	61,750,601
Common stock share held in treasury	4,877,735	5,127,379
Unallocated common stock shares held by ESOP	186,485	239,799

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Notes Payable

6 Months Ended

Jun. 30, 2013

Notes Payable [Abstract]

Debt Disclosure [Text Block]

Notes Payable

The convertible senior notes included in notes payable are accounted for separately as a liability component and an equity component in the consolidated balance sheets. The liability component and equity component are as follows:

	June 30, 2013						December 31, 2012
	September 2015 Notes			December 2029 Notes			September 2015 Notes			December 2029 Notes			December 2024 Notes
	(Dollars in thousands)
Notes payable:
Principal amount of liability component	$	200,000		$	115,839		$	200,000		$	115,839		$	28,243
Unamortized discount	(18,285		)	(9,428		)	(21,944		)	(12,269		)	—
Net carrying amount of liability component	$	181,715		$	106,411		$	178,056		$	103,570		$	28,243
Additional paid-in capital:
Carrying amount of equity component				$	15,586					$	15,586		$	22,637
Amount by which the if-converted value exceeds principal	$	54,179		$	77,831		$	—		$	30,382		$	—

The discount is being amortized over the expected lives of the notes, which is December 15, 2014 for the 2029 notes and September 15, 2015 for the 2015 notes. The effective interest rates during the discount amortization periods are 8.9% and 11.9% on the 2015 notes and the 2029 notes, respectively. The interest cost recognized in operations for the convertible notes, inclusive of the coupon and amortization of the discount and debt issue costs, was $6.8 million and $14.0 million for the three and six months ended June 30, 2013, respectively, and $7.1 million and $14.1 million for the same periods in 2012.

We are required to include the dilutive effect of the 2029 notes in our diluted earnings per share calculation. Because these notes include a mandatory cash settlement feature for the principal amount, incremental dilutive shares will only exist when the fair value of our common stock at the end of the reporting period exceeds the conversion price per share of $9.57. At June 30, 2013 and 2012, the conversion premium of the 2029 notes was dilutive and the effect has been included in diluted earnings per share for the three and six months ended June 30, 2013 and 2012. The 2015 notes and the 2015 notes hedges are excluded from the dilutive effect in our diluted earnings per share calculation as they are currently to be settled only in cash. The 2015 warrants could have a dilutive effect on our earnings per share to the extent that the price of our common stock exceeds the strike price of the 2015 warrants.

On March 25, 2013, notice of mandatory redemption was issued for our 2024 notes. $25.8 million principal amount of the convertible notes exercised their conversion rights prior to the April 30, 2013 mandatory redemption date. The holders of these notes received the principal amount of their notes in cash and the conversion premium in shares of our common stock, for which 216,729 shares were issued. The balance of the convertible notes ($2.5 million principal amount) was redeemed for cash.

In 2011, we entered into a three year $160 million revolving line of credit agreement with seven banks. The interest rate is floating at a rate based on our election that will be equal to the alternate base rate (as defined in the credit agreement) plus the applicable margin or the adjusted LIBOR rate (as defined in the credit agreement) plus the applicable margin. We also pay a commitment fee on the available unused portion of the credit facility. The applicable margin and commitment fee rate are based on our credit rating and can change throughout the period of the credit facility. Based upon our current credit rating, the applicable margin is 2.00% for alternate base rate borrowings and 3.00% for adjusted LIBOR rate borrowings and the commitment fee is 0.50%. Under this agreement, we are required to maintain a minimum risk-based capital ratio at American Equity Life, a maximum ratio of debt to total capital, a minimum cash coverage ratio, and a minimum level of statutory surplus at American Equity Life. At June 30, 2013, $15.0 million was outstanding. No amount was outstanding at December 31, 2012.

As part of our investment strategy, we enter into securities repurchase agreements (short-term collateralized borrowings). The maximum amount borrowed during the six months ended June 30, 2013 was $160.4 million. We had no borrowings under repurchase agreements during the six months ended June 30, 2012. When we do borrow cash on these repurchase agreements, we pledge collateral in the form of debt securities with fair values approximately equal to the amount due and we use the cash to purchase debt securities ahead of the time we collect the cash from selling annuity policies to avoid a lag between the investment of funds and the obligation to credit interest to policyholders. We earn investment income on the securities purchased with these borrowings at a rate in excess of the cost of these borrowings. Such borrowings averaged $10.0 million and $5.0 million for the three and six months ended June 30, 2013, respectively. The weighted average interest rate on amounts due under repurchase agreements was 0.32% for both the three and six months ended June 30, 2013.

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Net Income	$ 120,113	$ 18,759	$ 146,144	$ 29,230
Other comprehensive income:
Change in net unrealized investment gains/losses (1)	(634,688)	263,366	(669,871)	188,391
Noncredit component of OTTI losses	0	(99)	347	290
Other Comprehensive Income (Loss), Reclassification Adjustment for Sale of Securities Included in Net Income, Net of Tax	(7,439)	0	(11,286)	0
Other comprehensive income before income tax	(642,127)	263,267	(680,810)	188,681
Income tax effect related to other comprehensive income	224,744	(92,142)	238,283	(66,038)
Other comprehensive loss	(417,383)	171,125	(442,527)	122,643
Comprehensive income (loss)	$ (297,270)	$ 189,884	$ (296,383)	$ 151,873

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Contingencies Commitments (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013
Unrecorded Unconditional Purchase Obligation [Line Items]
UnfundedCommitmentsToPrivateEquityLimitedPartnerships	$ 31.5
Other Commitment	$ 29.3

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fixed maturity securities:
Available for sale, at fair value (amortized cost: 2013 - $24,789,087 ; 2012 - $21,957,027)	$ 25,545,642	$ 24,172,136
Fixed maturity securities, held for investment, at amortized cost (fair value: 2013 - $61,250; 2012 - $61,521)	76,170	76,088
Equity securities, available for sale, at fair value (cost: 2013 - $8,915; 2012 - $44,598)	9,790	53,422
Mortgage loans on real estate	2,583,703	2,623,940
Derivative instruments	629,135	415,258
Other Investments	208,635	196,366
Total investments	29,053,075	27,537,210
Cash and Cash Equivalents	746,889	1,268,545
Coinsurance deposits	2,944,726	2,910,701
Accrued investment income	287,692	261,833
Deferred policy acquisition costs	2,147,252	1,709,799
Deferred sales inducements	1,646,164	1,292,341
Other Assets	307,406	153,049
Total assets	37,288,550	35,133,478
Liabilities
Policy benefit reserves	33,635,600	31,773,988
Other policy funds and contract claims	440,217	455,752
Notes Payable	303,126	309,869
Subordinated debentures	245,958	245,869
Securities Sold under Agreements to Repurchase	160,436	0
Deferred income taxes	0	49,303
Income taxes payable	0	4,756
Other Liabilities	1,061,137	573,704
Total liabilities	35,846,474	33,413,241
Stockholders' equity:
Preferred stock, no par value, 2,000,000 shares authorized, 2013 and 2012 no shares issued and outstanding	0	0
Common stock, par value $1 per share, 200,000,000 shares authorized; shares issued and outstanding: 2013 - 63,500,933 shares (excluding 4,877,735 treasury shares); 2012 - 61,750,601 shares (excluding 5,127,379 treasury shares)	63,501	61,751
Additional Paid in Capital	512,613	496,715
Unallocated common stock held by ESOP; 2013 - 186,485 shares; 2012 - 239,799 shares	(2,009)	(2,583)
Accumulated other comprehensive income	244,280	686,807
Retained earnings	623,691	477,547
Total stockholders' equity	1,442,076	1,720,237
Total liabilities and stockholders' equity	37,288,550	35,133,478
Deferred Tax Assets, Net of Valuation Allowance	153,701	0
Income Taxes Receivable	$ 1,645	$ 0

XML

Derivative Instruments Interest Rate Caps (Details) (USD $)					6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Not Designated as Hedging Instrument [Member] Interest Rate Cap [Member]	Dec. 31, 2012 Not Designated as Hedging Instrument [Member] Interest Rate Cap [Member]	Jun. 30, 2013 Derivative Counterparty, SunTrust [Member] Not Designated as Hedging Instrument [Member] Years	Jun. 30, 2013 Derivative Counterparty, SunTrust [Member] Not Designated as Hedging Instrument [Member] Interest Rate Caps, Maturity Date, July 29, 2021, 2.50% [Member]	Dec. 31, 2012 Derivative Counterparty, SunTrust [Member] Not Designated as Hedging Instrument [Member] Interest Rate Caps, Maturity Date, July 29, 2021, 2.50% [Member]	Jun. 30, 2013 Derivative Counterparty, SunTrust [Member] Not Designated as Hedging Instrument [Member] Interest Rate Caps, Maturity Date, July 8, 2021, 2.50% [Member]	Dec. 31, 2012 Derivative Counterparty, SunTrust [Member] Not Designated as Hedging Instrument [Member] Interest Rate Caps, Maturity Date, July 8, 2021, 2.50% [Member]	Jun. 30, 2013 Derivative Counterparty, SunTrust [Member] Not Designated as Hedging Instrument [Member] Interest Rate Caps, Maturity Date, July 7, 2021, 2.50% [Member]	Dec. 31, 2012 Derivative Counterparty, SunTrust [Member] Not Designated as Hedging Instrument [Member] Interest Rate Caps, Maturity Date, July 7, 2021, 2.50% [Member]	Jun. 30, 2013 Derivative Counterparty, SunTrust [Member] Not Designated as Hedging Instrument [Member] Interest Rate Cap [Member]	Dec. 31, 2012 Derivative Counterparty, SunTrust [Member] Not Designated as Hedging Instrument [Member] Interest Rate Cap [Member]
Derivative [Line Items]
Derivative Instruments, Interest Rate Swaps and Caps, Duration					7
Derivative, Notional Amount						$ 27,000,000		$ 12,000,000		$ 40,000,000		$ 79,000,000
Derivative, Cap Interest Rate					2.50%
Derivative instruments			5,565,000	3,247,000		1,920,000	1,123,000	841,000	490,000	2,804,000	1,634,000	5,565,000	3,247,000
Derivative, Collateral, Obligation to Return Cash	$ 572,200,000	$ 328,700,000			$ 6,400,000

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Investments Fixed Maturity Securities by Contractual Maturity (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Available-for-sale Securities, Debt Maturities, within One Year, Amortized Cost Basis	$ 113,074
Available-for-sale Securities, Debt Maturities, after One Through Five Years, Amortized Cost Basis	840,609
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years, Amortized Cost Basis	6,802,325
Available-for-sale Securities, Debt Maturities, after Ten Years through Twenty Years, Amortized Cost Basis	5,829,419
Available-for-sale Securities, Debt Maturities, after Twenty Years, Amortized Cost	6,574,671
Available-for-sale Securities, Debt Maturities, Single Maturity Date, Amortized Cost	20,160,098
Available-for-sale Debt Securities, Amortized Cost Basis	24,789,087
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Available-for-sale Securities, Debt Maturities, within One Year, Fair Value	116,889
Available-for-sale Securities, Debt Maturities, after One Through Five Years, Fair Value	941,104
Available-for-sale Securities, Debt Maturities, after Five Through Ten Years, Fair Value	6,819,438
Available-for-sale Securities, Debt Maturities, after Ten Years Through Twenty Years, Fair Value	6,033,288
Available-for-sale Securities, Debt Maturities, after Twenty Years, Fair Value	6,929,362
Available-for-sale Securities, Debt Maturities, Single Maturity Date, Fair Value	20,840,081
Available-for-sale Securities, Debt Securities	25,545,642	24,172,136
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract]
Held-to-maturity Securities, Debt Maturities, within One Year, Net Carrying Amount	0
Held-to-maturity Securities, Debt Maturities, after One Through Five Years, Net Carrying Amount	0
Held-to-maturity Securities, Debt Maturities, after Five Through Ten Years, Net Carrying Amount	0
Held-to-maturity Securities, Debt Maturities, after Ten Years Through Twenty Years, Net Carrying Amount	0
Held-to-maturity Securities, Debt Maturities, after Twenty Years, Net Carrying Amount	76,170
Held-to-maturity Securities, Debt Maturities, Single Maturity Date, Net Carrying Amount	76,170
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount	76,170
Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Held-to-maturity Securities, Debt Maturities, within One Year, Fair Value	0
Held-to-maturity Securities, Debt Maturities, after One Through Five Years, Fair Value	0
Held-to-maturity Securities, Debt Maturities, after Five Through Ten Years, Fair Value	0
Held-to-maturity Securities, Debt Maturities, after Ten Years Through Twenty Years, Fair Value	0
Held-to-maturity Securities, Debt Maturities, after Twenty Years, Fair Value	61,250
Held-to-maturity Securities, Debt Maturities, Single Maturity Date, Fair Value	61,250
Held-to-maturity Securities, Debt Maturities, Fair Value	61,250
Residential Mortgage Backed Securities [Member]
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Available-for-sale Securities, without Single Maturity Date, Amortized Cost	2,337,399
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Available-for-sale Securities, without Single Maturity Date, Fair Value	2,488,057
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract]
Held-to-maturity Securities, Debt Maturities, without Single Maturity Date, Net Carrying Amount	0
Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Held-to-maturity Securities, Debt Maturities, without Single Maturity Date, Fair Value	0
Commercial Mortgage Backed Securities [Member]
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Available-for-sale Securities, without Single Maturity Date, Amortized Cost	1,304,028
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Available-for-sale Securities, without Single Maturity Date, Fair Value	1,222,689
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract]
Held-to-maturity Securities, Debt Maturities, without Single Maturity Date, Net Carrying Amount	0
Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Held-to-maturity Securities, Debt Maturities, without Single Maturity Date, Fair Value	0
Asset-backed Securities [Member]
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Available-for-sale Securities, without Single Maturity Date, Amortized Cost	987,562
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Available-for-sale Securities, without Single Maturity Date, Fair Value	994,815
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract]
Held-to-maturity Securities, Debt Maturities, without Single Maturity Date, Net Carrying Amount	0
Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Held-to-maturity Securities, Debt Maturities, without Single Maturity Date, Fair Value	$ 0

XML

Notes Payable Level 3 (Tables)

6 Months Ended

Jun. 30, 2013

Convertible Notes Payable [Abstract]

Convertible Notes Payable [Table Text Block]

The convertible senior notes included in notes payable are accounted for separately as a liability component and an equity component in the consolidated balance sheets. The liability component and equity component are as follows:

	June 30, 2013						December 31, 2012
	September 2015 Notes			December 2029 Notes			September 2015 Notes			December 2029 Notes			December 2024 Notes
	(Dollars in thousands)
Notes payable:
Principal amount of liability component	$	200,000		$	115,839		$	200,000		$	115,839		$	28,243
Unamortized discount	(18,285		)	(9,428		)	(21,944		)	(12,269		)	—
Net carrying amount of liability component	$	181,715		$	106,411		$	178,056		$	103,570		$	28,243
Additional paid-in capital:
Carrying amount of equity component				$	15,586					$	15,586		$	22,637
Amount by which the if-converted value exceeds principal	$	54,179		$	77,831		$	—		$	30,382		$	—

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Mortgage Loans on Real Estate Schedule of Financing Receivables Past Due (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, 30 to 59 Days Past Due	$ 0	$ 0
Financing Receivable, Recorded Investment, 60 to 89 Days Past Due	0	0
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	0	0
Financing Receivable, Recorded Investment, Past Due	0	0
Financing Receivable, Recorded Investment, Current	2,600,853,000	2,624,163,000
Mortgage Loans on Real Estate Collateral Dependent	15,326,000	34,720,000
Notes, Loans and Financing Receivable, Gross	2,616,179,000	2,658,883,000
Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 15,300,000	$ 34,700,000

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Notes Payable Line of Credit Due 2014 (Details) (Line of Credit 2011 [Member], USD $)	6 Months Ended
	Jun. 30, 2013 banks	Dec. 31, 2012
Line of Credit 2011 [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 160,000,000
Line of Credit, Number of Banks in Agreement	7
Line of Credit, Interest Rate, Floating, Applicable Margin	2.00%
Line of Credit, Interest Rate, Floating, Adjusted LIBOR	3.00%
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.50%
Line of Credit Facility, Amount Outstanding	$ 15,000,000	$ 0

XML

Mortgage Loans on Real Estate Schedule of Mortgage Loans on Real Estate, Amortized Cost and Carrying Value (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Mortgage Loans on Real Estate [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	$ 2,600,000,000	$ 2,623,940,000
Allowance for Notes, Loans and Financing Receivable	(9,303,000)	(10,969,000)
Mortgage loans on real estate	2,583,703,000	2,623,940,000
Loans and Leases Receivable, Commercial, Loans in Process	93,800,000
Commercial Real Estate Portfolio Segment [Member]
Mortgage Loans on Real Estate [Line Items]
Loans Receivable, Gross, Commercial, Real Estate	2,616,179,000	2,658,883,000
Allowance for Notes, Loans and Financing Receivable	31,676,000	34,234,000
Unamortized Loan Commitment and Origination Fees and Unamortized Discounts or Premiums, Commercial	(800,000)	(709,000)
Mortgage loans on real estate	$ 2,583,703,000	$ 2,623,940,000

XML

Investments Significant Assumptions in Determining Credit Loss Component of Other Than Temporary Impariment on Residential Mortgage Backed Securities (Details) (Residential Mortgage Backed Securities [Member])	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Minimum [Member] | Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2008 [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate	16.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity	45.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate	6.60%
Minimum [Member] | Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2007 [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate	12.00%	11.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity	40.00%	40.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate	6.50%	6.20%
Minimum [Member] | Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2006 [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate	9.00%	9.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity	50.00%	40.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate	6.00%	5.80%
Minimum [Member] | Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2005 [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate	8.00%	9.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity	50.00%	50.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate	6.50%	6.50%
Minimum [Member] | Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2003 [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate	2.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity	30.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate	5.10%
Minimum [Member] | Residential Mortgage Backed Securities, Alt-A Sector [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate	15.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity	5.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate	5.60%
Minimum [Member] | Residential Mortgage Backed Securities, Alt-A Sector [Member] | Vintage Year 2007 [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate	38.00%	31.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity	60.00%	55.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate	6.20%	6.20%
Minimum [Member] | Residential Mortgage Backed Securities, Alt-A Sector [Member] | Vintage Year 2006 [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate		32.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity		55.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate		6.00%
Minimum [Member] | Residential Mortgage Backed Securities, Alt-A Sector [Member] | Vintage Year 2005 [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate		12.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity		5.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate		5.60%
Maximum [Member] | Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2008 [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate	16.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity	45.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate	6.60%
Maximum [Member] | Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2007 [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate	25.00%	38.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity	60.00%	60.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate	6.70%	7.30%
Maximum [Member] | Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2006 [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate	16.00%	19.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity	50.00%	55.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate	6.90%	7.40%
Maximum [Member] | Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2005 [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate	17.00%	13.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity	50.00%	50.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate	7.70%	7.70%
Maximum [Member] | Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2003 [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate	2.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity	30.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate	5.10%
Maximum [Member] | Residential Mortgage Backed Securities, Alt-A Sector [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate	25.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity	65.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate	8.70%
Maximum [Member] | Residential Mortgage Backed Securities, Alt-A Sector [Member] | Vintage Year 2007 [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate	52.00%	55.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity	65.00%	60.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate	6.90%	7.00%
Maximum [Member] | Residential Mortgage Backed Securities, Alt-A Sector [Member] | Vintage Year 2006 [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate		46.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity		60.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate		6.00%
Maximum [Member] | Residential Mortgage Backed Securities, Alt-A Sector [Member] | Vintage Year 2005 [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Portion Recognized in Earnings, Net, Qualitative Disclosures, Default Rate		27.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Loss Severity		50.00%
Other Than Temporary Impairment Losses, Available for Sale Securities, Portion Recognized in Earnings, Net Qualitative Disclosures, Discount Rate		7.70%

XML

Investments Other Than Temporary Impairments by Asset Type (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Securities	Jun. 30, 2012
Investment Holdings [Line Items]
Other Than Temporary Impairment, Number of Securities			9
Other than Temporary Impairment Losses, Investments			$ (4,964)
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Income (Loss), before Tax, Portion Attributable to Parent	0	(603)	(1,048)	(1,703)
Net OTTI losses recognized in operations	(2,775)	(978)	(6,012)	(3,859)
US Government Agencies Debt Securities [Member]
Investment Holdings [Line Items]
Other Than Temporary Impairment, Number of Securities	2		2
Other than Temporary Impairment Losses, Investments	(2,775)		(2,775)
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Income (Loss), before Tax, Portion Attributable to Parent	0		0
Net OTTI losses recognized in operations	(2,775)		(2,775)
Residential Mortgage Backed Securities [Member]
Investment Holdings [Line Items]
Other Than Temporary Impairment, Number of Securities		7	5	22
Other than Temporary Impairment Losses, Investments		(375)	0	(2,156)
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Income (Loss), before Tax, Portion Attributable to Parent		(603)	(1,048)	(1,703)
Net OTTI losses recognized in operations		(978)	(1,048)	(3,859)
Equity Securities [Member]
Investment Holdings [Line Items]
Other Than Temporary Impairment, Number of Securities			1
Other than Temporary Impairment Losses, Investments			(428)
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Income (Loss), before Tax, Portion Attributable to Parent			0
Net OTTI losses recognized in operations			(428)
Corporate Debt Securities, Manufacturing, Construction, and Mining Sectors [Member]
Investment Holdings [Line Items]
Other Than Temporary Impairment, Number of Securities			1
Other than Temporary Impairment Losses, Investments			(1,761)
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Income (Loss), before Tax, Portion Attributable to Parent			0
Net OTTI losses recognized in operations			$ (1,761)

XML

Derivative Instruments

6 Months Ended

Jun. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Derivative Instruments

We recognize all derivative instruments as assets or liabilities in the consolidated balance sheets at fair value. None of our derivatives qualify for hedge accounting, thus, any change in the fair value of the derivatives is recognized immediately in the consolidated statements of operations. The fair value of our derivative instruments, including derivative instruments embedded in fixed index annuity contracts, presented in the consolidated balance sheets are as follows:

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Assets
Derivative instruments
Call options	$	629,135	$	415,258
Other assets
2015 notes hedges	71,400		43,105
Interest rate caps	5,565		3,247
Interest rate swap	274		—
	$	706,374	$	461,610
Liabilities
Policy benefit reserves - annuity products
Fixed index annuities - embedded derivatives	$	3,747,052	$	3,337,556
Other liabilities
2015 notes embedded derivatives	71,400		43,105
Interest rate swap	—		4,261
	$	3,818,452	$	3,384,922

The changes in fair value of derivatives included in the unaudited consolidated statements of operations are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Change in fair value of derivatives:
Call options	$	58,200		$	(122,241	)	$	402,854		$	119,279
2015 notes hedges	197			(24,163		)	28,295			(7,412		)
Interest rate swap	3,802			(4,038		)	4,535			(3,148		)
Interest rate caps	1,841			(405		)	2,318			(405		)
	$	64,040		$	(150,847	)	$	438,002		$	108,314
Change in fair value of embedded derivatives:
2015 notes embedded derivatives	$	197		$	(24,163	)	$	28,295		$	(7,412	)
Fixed index annuities	(408,606		)	(56,826		)	(73,432		)	285,489
	$	(408,409	)	$	(80,989	)	$	(45,137	)	$	278,077

We have fixed index annuity products that guarantee the return of principal to the policyholder and credit interest based on a percentage of the gain in a specified market index. When fixed index annuity deposits are received, a portion of the deposit is used to purchase derivatives consisting of call options on the applicable market indices to fund the index credits due to fixed index annuity policyholders. Substantially all such call options are one year options purchased to match the funding requirements of the underlying policies. The call options are marked to fair value with the change in fair value included as a component of revenues. The change in fair value of derivatives includes the gains or losses recognized at the expiration of the option term or upon early termination and the changes in fair value for open positions. On the respective anniversary dates of the index policies, the index used to compute the annual index credit is reset and we purchase new one-year call options to fund the next annual index credit. We manage the cost of these purchases through the terms of our fixed index annuities, which permit us to change caps, participation rates, and/or asset fees, subject to guaranteed minimums on each policy's anniversary date. By adjusting caps, participation rates, or asset fees, we can generally manage option costs except in cases where the contractual features would prevent further modifications.

Our strategy attempts to mitigate any potential risk of loss under these agreements through a regular monitoring process which evaluates the program's effectiveness. We do not purchase call options that would require payment or collateral to another institution and our call options do not contain counterparty credit-risk-related contingent features. We are exposed to risk of loss in the event of nonperformance by the counterparties and, accordingly, we purchase our option contracts from multiple counterparties and evaluate the creditworthiness of all counterparties prior to purchase of the contracts. All of these options have been purchased from nationally recognized financial institutions with a Standard and Poor's credit rating of A- or higher at the time of purchase and the maximum credit exposure to any single counterparty is subject to concentration limits. We also have credit support agreements that allow us to request the counterparty to provide collateral to us when the fair value of our exposure to the counterparty exceeds specified amounts.

The notional amount and fair value of our call options by counterparty and each counterparty's current credit rating are as follows:

			June 30, 2013				December 31, 2012
Counterparty	Credit Rating (S&P)	Credit Rating (Moody's)	Notional Amount		Fair Value		Notional Amount		Fair Value
			(Dollars in thousands)
Bank of America	A	A3	$	1,075,595	$	39,162	$	568,786	$	16,533
Barclays	A	A2	3,617,125		131,476		3,463,777		103,929
BNP Paribas	A+	A2	1,895,967		68,448		2,207,097		60,301
Citibank, N.A.	A	A3	1,501,845		64,812		2,878,588		67,592
Credit Suisse	A	A1	2,922,641		78,855		936,625		21,518
Deutsche Bank	A	A2	874,245		42,587		886,688		20,787
HSBC	AA-	A1	301,678		14,010		295,520		6,539
J.P. Morgan	A+	Aa3	643,078		20,635		735,016		21,940
Morgan Stanley	A-	Baa1	1,961,040		70,329		1,590,505		40,113
Wells Fargo	AA-	Aa3	2,374,518		98,821		2,060,903		56,006
			$	17,167,732	$	629,135	$	15,623,505	$	415,258

As of June 30, 2013 and December 31, 2012, we held $572.2 million and $328.7 million, respectively, of cash and cash equivalents and other securities from counterparties for derivative collateral, which is included in other liabilities on our consolidated balance sheets. This derivative collateral limits the maximum amount of economic loss due to credit risk that we would incur if parties to the call options failed completely to perform according to the terms of the contracts to $78.4 million and $93.7 million at June 30, 2013 and December 31, 2012, respectively.

The future annual index credits on our fixed index annuities are treated as a "series of embedded derivatives" over the expected life of the applicable contract. We do not purchase call options to fund the index liabilities which may arise after the next policy anniversary date. We must value both the call options and the related forward embedded options in the policies at fair value.

We entered into an interest rate swap and interest rate caps to manage interest rate risk associated with the floating rate component on certain of our subordinated debentures. See note 10 in our Annual Report on Form 10-K for the year ended December 31, 2012 for more information on our subordinated debentures. The terms of the interest rate swap provide that we pay a fixed rate of interest and receive a floating rate of interest. The terms of the interest rate caps limit the three month London Interbank Offered Rate to 2.50%. The interest rate swap and caps are not effective hedges under accounting guidance for derivative instruments and hedging activities. Therefore, we record the interest rate swap and caps at fair value and any net cash payments received or paid are included in the change in fair value of derivatives in the unaudited consolidated statements of operations.

Details regarding the interest rate swap are as follows:

	Notional			Pay			June 30, 2013		December 31, 2012
Maturity Date	Amount		Receive Rate	Rate		Counterparty	Fair Value		Fair Value
							(Dollars in thousands)
March 15, 2021	$	85,500	*LIBOR	2.415	%	SunTrust	$	274	$	(4,261	)

___________________________________

* - three month London Interbank Offered Rate

Details regarding the interest rate caps are as follows:

	Notional			Cap			June 30, 2013		December 31, 2012
Maturity Date	Amount		Floating Rate	Rate		Counterparty	Fair Value		Fair Value
							(Dollars in thousands)
July 7, 2021	$	40,000	*LIBOR	2.50	%	SunTrust	$	2,804	$	1,634
July 8, 2021	12,000		*LIBOR	2.50	%	SunTrust	841		490
July 29, 2021	27,000		*LIBOR	2.50	%	SunTrust	1,920		1,123
	$	79,000					$	5,565	$	3,247

___________________________________

* - three month London Interbank Offered Rate

The interest rate swap has a forward starting date beginning in March 2014 and converts floating rates to fixed rates for seven years. The interest rate caps have a forward starting date beginning in July 2014 and cap our interest rates for seven years. As of June 30, 2013, we held $6.4 million of cash and cash equivalents from the counterparty for derivative collateral related to the swap and caps, which is included in other liabilities on our consolidated balance sheets.

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Investments Net Unrealized Gains/(Losses) on Available-for-sale Fixed Income and Equity Securities Reported as a Seperate Component of Stockholders' Equity (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Components of Net Unrealized Gains or Losses Reported as Other Comprehensive Income [Line Items]
Net Unrealized gains (losses) on available for sale fixed maturity securities and equity securities	$ 757,430	$ 2,223,933
Adjustments for Assumed Changes in Amortization of Deferred Policy Acquisition Costs and Deferred Sales Inducements	(416,281)	(1,201,974)
Deferred tax valuation allowance reversal	22,534	22,534
Deferred income tax benefit	(119,403)	(357,686)
Net unrealized gains (losses) reported as accumulated other comprehensive income (loss)	$ 244,280	$ 686,807

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Mortgage Loans on Real Estate Real Estate Owned (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Real Estate Owned [Roll Forward]
Real Estate Acquired Through Foreclosure	$ 28,764	$ 35,824	$ 33,172	$ 36,821
Real Estate, Acquisitions Through Foreclosures	0	8,683	844	11,985
Other Real Estate, Improvements	480	117	480	117
Real Estate, Cost of Real Estate Sold	(2,333)	(4,283)	(7,413)	(7,366)
Real Estate Owned, Valuation Allowance, Provision	(145)	(1,669)	(145)	(2,643)
Real Estate Acquired Through Foreclosure CLONE	26,609	38,390	26,609	38,390
Real Estate Accumulated Depreciation, Depreciation Expense	$ (157)	$ (282)	$ (329)	$ (524)
Commercial Real Estate Portfolio Segment [Member]
Real Estate Owned [Line Items]
Mortgage Loans on Real Estate, Number of Loans Satisfied by Foreclosure	0	4	1	6

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Earnings Per Share

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

Earnings Per Share

The following table sets forth the computation of earnings per common share and earnings per common share - assuming dilution:

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(Dollars in thousands, except per share data)
Numerator:
Net income - numerator for earnings per common share	$	120,113	$	18,759	$	146,144	$	29,230
Interest on convertible subordinated debentures (net of income tax benefit)	—		257		—		515
Numerator for earnings per common share - assuming dilution	$	120,113	$	19,016	$	146,144	$	29,745
Denominator:
Weighted average common shares outstanding (1)	64,254,387		59,943,337		63,786,577		59,821,937
Effect of dilutive securities:
Convertible subordinated debentures	—		2,637,176		—		2,678,508
Convertible senior notes	5,009,622		1,158,686		5,082,208		1,158,686
Stock options and deferred compensation agreements	1,118,056		514,429		1,013,455		570,525
Denominator for earnings per common share - assuming dilution	70,382,065		64,253,628		69,882,240		64,229,656
Earnings per common share	$	1.87	$	0.31	$	2.29	$	0.49
Earnings per common share - assuming dilution	$	1.71	$	0.30	$	2.09	$	0.46

_____________________________

(1) Weighted average common shares outstanding include shares vested under the NMO Deferred Compensation Plan and exclude unallocated shares held by the ESOP.

Options to purchase shares of our common stock that were outstanding during the respective periods indicated but were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the common shares are as follows:

Period	Number of Shares	Range of Exercise Prices
		Minimum	Maximum
Three months ended June 30, 2013	—	$—	$—
Six months ended June 30, 2013	—	$—	$—
Three months ended June 30, 2012	1,502,900	$11.88	$14.34
Six months ended June 30, 2012	1,502,900	$11.88	$14.34

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Mortgage Loans on Real Estate

6 Months Ended

Jun. 30, 2013

Mortgage Loans on Real Estate [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Mortgage Loans on Real Estate

Our mortgage loan portfolio, summarized in the following table, totaled $2.6 billion at June 30, 2013 and December 31, 2012, with commitments outstanding of $93.8 million at June 30, 2013.

	June 30, 2013			December 31, 2012
	(Dollars in thousands)
Principal outstanding	$	2,616,179		$	2,658,883
Loan loss allowance	(31,676		)	(34,234		)
Deferred prepayment fees	(800		)	(709		)
Carrying value	$	2,583,703		$	2,623,940

The portfolio consists of commercial mortgage loans collateralized by the related properties and diversified as to property type, location and loan size. Our mortgage lending policies establish limits on the amount that can be loaned to one borrower and other criteria to attempt to reduce the risk of default. The mortgage loan portfolio is summarized by geographic region and property type as follows:

	June 30, 2013				December 31, 2012
	Principal Outstanding		Percent		Principal Outstanding		Percent
	(Dollars in thousands)
Geographic distribution
East	$	760,025	29.1	%	$	732,762	27.5	%
Middle Atlantic	147,167		5.6	%	155,094		5.8	%
Mountain	359,436		13.7	%	387,599		14.6	%
New England	23,131		0.9	%	26,385		1.0	%
Pacific	322,519		12.3	%	320,982		12.1	%
South Atlantic	459,052		17.6	%	458,802		17.3	%
West North Central	369,363		14.1	%	370,168		13.9	%
West South Central	175,486		6.7	%	207,091		7.8	%
	$	2,616,179	100.0	%	$	2,658,883	100.0	%
Property type distribution
Office	$	643,747	24.6	%	$	666,467	25.1	%
Medical Office	137,746		5.3	%	136,764		5.1	%
Retail	680,618		26.0	%	677,951		25.5	%
Industrial/Warehouse	666,935		25.5	%	692,637		26.1	%
Hotel	83,363		3.2	%	94,045		3.5	%
Apartment	233,609		8.9	%	219,335		8.2	%
Mixed use/other	170,161		6.5	%	171,684		6.5	%
	$	2,616,179	100.0	%	$	2,658,883	100.0	%

We evaluate our mortgage loan portfolio for the establishment of a loan loss reserve by specific identification of impaired loans and the measurement of an estimated loss for each individual loan identified. A mortgage loan is impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. If we determine that the value of any specific mortgage loan is impaired, the carrying amount of the mortgage loan will be reduced to its fair value, based upon the present value of expected future cash flows from the loan discounted at the loan's effective interest rate, or the fair value of the underlying collateral less estimated costs to sell. In addition, we analyze the mortgage loan portfolio for the need of a general loan allowance for probable losses on all other loans. The amount of the general loan allowance is based upon management's evaluation of the collectability of the loan portfolio, historical loss experience, delinquencies, credit concentrations, underwriting standards and national and local economic conditions.

Our financing receivables currently consist of one portfolio segment which is our commercial mortgage loan portfolio. These are mortgage loans with collateral consisting of commercial real estate and borrowers consisting mostly of limited liability partnerships or limited liability corporations.

We have a population of mortgage loans that we have been carrying with workout terms (e.g. interest only periods, period of suspended payments, etc.) and a population of mortgage loans that have been in a delinquent status (i.e. more than 60 days past due). It is from this population that we have been recognizing some impairment loss due to nonpayment and, in some cases, eventual satisfaction of the loan by taking ownership of the collateral real estate. In most cases the fair value of the collateral less estimated costs to sell such collateral has been less than the outstanding principal amount of the mortgage loan.

Our general loan loss allowance for the period ended June 30, 2012 was calculated utilizing a group of loans which had a debt service coverage ratio (DSCR) of less than 1.0. The DSCR is calculated by dividing the net operating income of the mortgaged property by the contractual principal and interest payment due for the corresponding period. We developed the loss rates to apply to this group of loans by dividing the specific impairment loss for the most recent 4 quarters by the principal outstanding of the loans with a DSCR of less than 1.0.

Currently, we rate the mortgage loans in our portfolio based on factors such as historical operating performance, loan to value ratio and economic outlook, among others. We calculate a loss factor to apply to each rating based on historical losses we have recognized in our mortgage loan portfolio. We apply the loss factors to the total principal outstanding within each rating category to determine an appropriate estimate of general loan loss allowance at June 30, 2013. We began this process in the third quarter of 2012.

The following tables present a rollforward of our specific and general valuation allowances for mortgage loans on real estate:

	Three Months Ended June 30, 2013						Three Months Ended June 30, 2012
	Specific Allowance			General Allowance			Specific Allowance			General Allowance
	(Dollars in thousands)
Beginning allowance balance	$	(22,631	)	$	(10,400	)	$	(29,595	)	$	(10,300	)
Charge-offs	2,612			—			7,613			—
Recoveries	—			—			—			—
Provision for credit losses	(1,157		)	(100		)	(3,463		)	(900		)
Ending allowance balance	$	(21,176	)	$	(10,500	)	$	(25,445	)	$	(11,200	)

	Six Months Ended June 30, 2013						Six Months Ended June 30, 2012
	Specific Allowance			General Allowance			Specific Allowance			General Allowance
	(Dollars in thousands)
Beginning allowance balance	$	(23,134	)	$	(11,100	)	$	(23,664	)	$	(9,300	)
Charge-offs	4,181			—			8,513			—
Recoveries	—			—			—			—
Provision for credit losses	(2,223		)	600			(10,294		)	(1,900		)
Ending allowance balance	$	(21,176	)	$	(10,500	)	$	(25,445	)	$	(11,200	)

The specific allowance is a total of credit loss allowances on loans which are individually evaluated for impairment. The general allowance is the group of loans discussed above which are collectively evaluated for impairment. The following table presents the total outstanding principal of loans evaluated for impairment by basis of impairment method:

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Individually evaluated for impairment	$	46,707	$	53,110
Collectively evaluated for impairment	2,569,472		2,605,773
Total loans evaluated for impairment	$	2,616,179	$	2,658,883

The amount of charge-offs include the amount of allowance that has been established for loans that were satisfied by taking ownership of the collateral. When the property is taken it is recorded at its fair value as a component of other investments and the mortgage loan is recorded as fully paid, with any allowance for credit loss that has been established charged off. Fair value of the real estate is determined by third party appraisal. There could be other situations that develop where we have established a larger specific loan loss allowance than is needed based on increases in the fair value of collateral supporting collateral dependent loans, or improvements in the financial position of a borrower so that a loan would become reliant on cash flows from debt service instead of dependent upon sale of the collateral. Charge-offs of the allowance would be recognized in those situations as well. We define collateral dependent loans as those mortgage loans for which we will depend on the value of the collateral real estate to satisfy the outstanding principal of the loan.

During the second quarter of 2013, no mortgage loans were satisfied by taking ownership of any real estate serving as collateral and during the six months ended June 30, 2013, one mortgage loan was satisfied by taking ownership of the real estate serving as collateral compared to four and six mortgage loans for the same periods in 2012. The following table summarizes the activity in the real estate owned which was obtained in satisfaction of mortgage loans on real estate:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Real estate owned at beginning of period	$	28,764		$	35,824		$	33,172		$	36,821
Real estate acquired in satisfaction of mortgage loans	—			8,683			844			11,985
Additions	480			117			480			117
Sales	(2,333		)	(4,283		)	(7,413		)	(7,366		)
Impairments	(145		)	(1,669		)	(145		)	(2,643		)
Depreciation	(157		)	(282		)	(329		)	(524		)
Real estate owned at end of period	$	26,609		$	38,390		$	26,609		$	38,390

We analyze credit risk of our mortgage loans by analyzing all available evidence on loans that are delinquent and loans that are in a workout period.

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Credit Exposure--By Payment Activity
Performing	$	2,572,527	$	2,597,440
In workout	28,326		26,723
Collateral dependent	15,326		34,720
	$	2,616,179	$	2,658,883

Mortgage loans are considered delinquent when they become 60 days past due. When loans become 90 days past due, become collateral dependent or enter a period with no debt service payments required we place them on non-accrual status and discontinue recognizing interest income. If payments are received on a delinquent loan, interest income is recognized to the extent it would have been recognized if normal principal and interest would have been received timely. If payments are received to bring a delinquent loan back to current we will resume accruing interest income on that loan. Outstanding principal of loans in a non-accrual status at June 30, 2013 and December 31, 2012 totaled $15.3 million and $34.7 million, respectively.

All of our commercial mortgage loans depend on the cash flow of the borrower to be at a sufficient level to service the principal and interest payments as they come due. In general, cash inflows of the borrowers are generated by collecting monthly rent from tenants occupying space within the borrowers' properties. Our borrowers face collateral risks such as tenants going out of business, tenants struggling to make rent payments as they become due, and tenants canceling leases and moving to other locations. We have a number of loans where the real estate is occupied by a single tenant. Our borrowers sometimes face both a reduction in cash flow on their mortgage property as well as a reduction in the fair value of the real estate collateral. If borrowers are unable to replace lost rent revenue and increases in the fair value of their property do not materialize we could potentially incur more losses than what we have allowed for in our specific and general loan loss allowances.

Aging of financing receivables is summarized in the following table, with loans in a "workout" period as of the reporting date considered current if payments are current in accordance with agreed upon terms:

	30 - 59 Days		60 - 89 Days		90 Days and Over		Total Past Due		Current		Collateral Dependent Receivables		Total Financing Receivables
	(Dollars in thousands)
Commercial Mortgage Loans
June 30, 2013	$	—	$	—	$	—	$	—	$	2,600,853	$	15,326	$	2,616,179
December 31, 2012	$	—	$	—	$	—	$	—	$	2,624,163	$	34,720	$	2,658,883

Financing receivables summarized in the following table represent all loans that we are either not currently collecting or those we feel it is probable we will not collect all amounts due according to the contractual terms of the loan agreements (all loans that we have worked with the borrower to alleviate short-term cash flow issues, loans delinquent for more than 60 days at the reporting date, loans we have determined to be collateral dependent and loans that we have recorded specific impairments on that we feel may continue to have performance issues).

	Recorded Investment		Unpaid Principal Balance		Related Allowance			Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
June 30, 2013
Mortgage loans with an allowance	$	25,531	$	46,707	$	(21,176	)	$	27,923	$	885
Mortgage loans with no related allowance	18,699		18,699		—			18,760		531
	$	44,230	$	65,406	$	(21,176	)	$	46,683	$	1,416
December 31, 2012
Mortgage loans with an allowance	$	29,976	$	53,110	$	(23,134	)	$	37,480	$	1,946
Mortgage loans with no related allowance	27,765		27,765		—			27,696		1,664
	$	57,741	$	80,875	$	(23,134	)	$	65,176	$	3,610

The loans that are categorized as "in workout" consist of loans that we have agreed to lower or no mortgage payments for a period of time while the borrowers address cash flow and/or operational issues. The key features of these workouts have been determined on a loan-by-loan basis. Most of these loans are in a period of low cash flow due to tenants vacating their space or tenants requesting rent relief during difficult economic periods. Generally, we have allowed the borrower a six month interest only period and in some cases a twelve month period of interest only. Interest only workout loans are expected to return to their regular debt service payments after the interest only period. Interest only loans that are not fully amortizing will have a larger balance at their balloon date than originally contracted. Fully amortizing loans that are in interest only periods will have larger debt service payments for their remaining term due to lost principal payments during the interest only period. In limited circumstances we have allowed borrowers to pay the principal portion of their loan payment into an escrow account that can be used for capital and tenant improvements for a period of not more than twelve months. In these situations new loan amortization schedules are calculated based on the principal not collected during this twelve month workout period and larger payments are collected for the remaining term of each loan. In all cases, original interest rate and maturity date have not been modified and we have not forgiven any principal amounts.

A Troubled Debt Restructuring ("TDR") is a situation where we have granted a concession to a borrower for economic or legal reasons related to the borrower's financial difficulties that we would not otherwise consider. A mortgage loan that has been granted new terms, including workout terms as described previously, would be considered a TDR if it meets conditions that would indicate a borrower is experiencing financial difficulty and the new terms constitute a concession on our part. We analyze all loans where we have agreed to workout terms and all loans that we have refinanced to determine if they meet the definition of a TDR. We consider the following factors in determining whether or not a borrower is experiencing financial difficulty:

• borrower is in default,

• borrower has declared bankruptcy,

• there is growing concern about the borrower's ability to continue as a going concern,

• borrower has insufficient cash flows to service debt,

• borrower's inability to obtain funds from other sources, and

• there is a breach of financial covenants by the borrower.

If the borrower is determined to be in financial difficulty, we consider the following conditions to determine if the borrower was granted a concession:

• assets used to satisfy debt are less than our recorded investment,

• interest rate is modified,

• maturity date extension at an interest rate less than market rate,

• capitalization of interest,

• delaying principal and/or interest for a period of three months or more, and

• partial forgiveness of the balance or charge-off.

Mortgage loan workouts, refinances or restructures that are classified as TDRs are individually evaluated and measured for impairment. A summary of mortgage loans on commercial real estate with outstanding principal at June 30, 2013 and December 31, 2012 that we determined to be TDRs are as follows:

Geographic Region	Number of TDRs	Principal Balance Outstanding		Specific Loan Loss Allowance			Net Carrying Amount
		(Dollars in thousands)
June 30, 2013
East	1	$	3,712	$	(949	)	$	2,763
Mountain	8	23,019		(1,172		)	21,847
South Atlantic	7	17,249		(5,898		)	11,351
East North Central	2	3,697		(1,029		)	2,668
West North Central	1	1,938		—			1,938
West South Central	1	1,458		(255		)	1,203
	20	$	51,073	$	(9,303	)	$	41,770
December 31, 2012
East	1	$	4,208	$	(1,425	)	$	2,783
Mountain	10	28,786		(1,702		)	27,084
South Atlantic	9	23,358		(5,047		)	18,311
East North Central	1	2,232		(467		)	1,765
West North Central	3	9,466		(2,328		)	7,138
	24	$	68,050	$	(10,969	)	$	57,081

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Stockholders Equity Parenthetical information (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Conversion of subordinated debentures	$ 0	$ 12,554
Shares of common stock by ESOP allocated, including excess income tax benefits	53,314	41,323
Shares of common stock under compensation plans issued, including excess income tax benefits	1,750,332	822,390
Debt Conversion, Converted Instrument, Shares Issued	216,729	0

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Notes Payable Level 4 (Details) (USD $)	3 Months Ended		6 Months Ended			12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Convertible Debt Issued in 2010 [Member]	Dec. 31, 2012 Convertible Debt Issued in 2010 [Member]	Jun. 30, 2013 Convertible Debt Issued in 2009 [Member]	Dec. 31, 2012 Convertible Debt Issued in 2009 [Member]	Jun. 30, 2013 Convertible Debt Issued in 2004 [Member]	Dec. 31, 2012 Convertible Debt Issued in 2004 [Member]	Jun. 30, 2013 Convertible Debt Issued 2009 [Member]	Jun. 30, 2013 Line of Credit 2011 [Member]	Dec. 31, 2012 Line of Credit 2011 [Member]
Debt Instrument [Line Items]
Debt Conversion, Converted Instrument, Shares Issued			216,729	0					216,729
Debt Instrument, Interest Rate, Effective Percentage					8.90%						11.90%
Line of Credit Facility, Amount Outstanding												$ 15,000,000	$ 0
Debt Instrument, Convertible, Interest Expense	6,800,000	7,100,000	14,000,000	14,100,000
Principal Amount of Convertible Senior Notes Payable at Issuance					200,000,000
Long-term Debt, Gross						200,000,000	115,839,000	115,839,000		28,243,000
Debt Instrument, Unamortized Discount					(18,285,000)	(21,944,000)	(9,428,000)	(12,269,000)		0
Convertible Debt					181,715,000	178,056,000	106,411,000	103,570,000		28,243,000
Debt Instrument, Convertible, Carrying Amount of Equity Component							15,586,000	15,586,000		22,637,000
Debt Instrument, Convertible, If-converted Value in Excess of Principal					$ 54,179,000	$ 0	$ 77,831,000	$ 30,382,000		$ 0
Debt Instrument, Convertible, Conversion Price							$ 9.57

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Derivative Instruments Fair Value of Derivative Instruments as Presented in the Consolidated Balance Sheets (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Derivatives, Fair Value [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	$ 64,040	$ (150,847)	$ 438,002	$ 108,314
Derivative instruments	629,135		629,135		415,258
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net	(408,409)	(80,989)	(45,137)	278,077
Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative instruments	706,374		706,374		461,610
Derivative Liabilities	3,818,452		3,818,452		3,384,922
Call Option [Member]
Derivatives, Fair Value [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	58,200	(122,241)	402,854	119,279
Call Option [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative instruments	629,135		629,135		415,258
Option on Securities [Member]
Derivatives, Fair Value [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	197	(24,163)	28,295	(7,412)
Option on Securities [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative instruments	71,400		71,400		43,105
Interest Rate Cap [Member]
Derivatives, Fair Value [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	1,841	(405)	2,318	(405)
Interest Rate Cap [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative instruments	5,565		5,565		3,247
Fixed Index Annuity Embedded Derivative Financial Instruments [Member]
Derivatives, Fair Value [Line Items]
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net	408,606	56,826	73,432	(285,489)
Fixed Index Annuity Embedded Derivative Financial Instruments [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	3,747,052		3,747,052		3,337,556
2015 Notes Embedded Conversion Derivative [Member]
Derivatives, Fair Value [Line Items]
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net	(197)	24,163	(28,295)	7,412
2015 Notes Embedded Conversion Derivative [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative Liability, Fair Value, Gross Liability	71,400		71,400		43,105
Interest Rate Swap [Member]
Derivatives, Fair Value [Line Items]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	3,802	(4,038)	4,535	(3,148)
Interest Rate Swap [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative instruments	274		274		0
Derivative Liability, Fair Value, Gross Liability	$ 0		$ 0		$ 4,261

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Investments Changes in Net Unrealized Gains/Losses on Investments (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Alt A Residential Mortgage Backed Securities [Abstract]
Available-for-sale Debt Securities, Amortized Cost Basis	$ 24,789,087,000		$ 24,789,087,000
Fixed Maturity Securities, Unrealized Loss Position, Classified as Investment Grade	95.00%		95.00%		75.00%
Available-for-sale Securities, Change in Net Unrealized Holding Gain (Loss) before Taxes	(1,349,652,000)	602,675,000	(1,466,503,000)	392,011,000
Available-for-sale Securities, Change in Net Unrealized Holding Gain (Loss), Net of Tax	(417,383,000)	171,125,000	(442,527,000)	122,643,000
Adjustment for Effect on Other Balance Sheet Accounts [Abstract]
Adjustments for Assumed Changes in Amortization of Deferred Policy Acquisition Costs and Deferred Sales Inducements	707,525,000	(339,408,000)	785,693,000	(203,330,000)
Increase (Decrease) in Deferred Income Taxes	224,744,000	(92,142,000)	238,283,000	(66,038,000)
Changes Net Unrealized Gains/Losses for Adjustments in Deferred Policy Acquisition Costs, Deferred Sales Inducements, Deferred Tax Valuation Allowances, and Deferred Income Taxes	932,269,000	(431,550,000)	1,023,976,000	(269,368,000)
Proceeds from Maturities, Prepayments and Calls of Available-for-sale Securities			2,292,959,000	1,423,179,000
Fixed Maturities [Member]
Alt A Residential Mortgage Backed Securities [Abstract]
Change in Net Unrealized Gain/Loss, Fixed Maturity Securities, Held for Investment	(964,000)	1,690,000	(353,000)	11,879,000
Available-for-sale Securities, Change in Net Unrealized Holding Gain (Loss) before Taxes	(1,339,484,000)	603,462,000	(1,458,554,000)	388,374,000
Adjustment for Effect on Other Balance Sheet Accounts [Abstract]
Proceeds from Sale of Available-for-sale Securities			820,200,000	165,200,000
Proceeds from Maturities, Prepayments and Calls of Available-for-sale Securities			1,600,000,000	1,400,000,000
Equity Securities [Member]
Alt A Residential Mortgage Backed Securities [Abstract]
Available-for-sale Securities, Change in Net Unrealized Holding Gain (Loss) before Taxes	(10,168,000)	(787,000)	(7,949,000)	3,637,000
Residential Mortgage Backed Securities, Alt-A Sector [Member] | Residential Mortgage Backed Securities [Member]
Alt A Residential Mortgage Backed Securities [Abstract]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	36		36
Available-for-sale Debt Securities, Amortized Cost Basis	341,400,000		341,400,000
Available-for-sale Securities, Fair Value Disclosure	$ 372,500,000		$ 372,500,000

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Earnings Per Share Level 4 (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share, Basic and Dilutive [Line Items]
Net Income	$ 120,113,000	$ 18,759,000	$ 146,144,000	$ 29,230,000
Interest Expense, Subordinated Notes and Debentures	0	257,000	0	515,000
Net Income (Loss) Available to Common Stockholders, Diluted	120,113,000	19,016,000	146,144,000	29,745,000
Weighted Average Number of Shares Outstanding, Basic	64,254,387	59,943,337	63,786,577	59,821,937
Incremental Common Shares Attributable to Share-based Payment Arrangements	1,118,056	514,429	1,013,455	570,525
Weighted Average Number of Shares Outstanding, Diluted	70,382,065	64,253,628	69,882,240	64,229,656
Earnings Per Share, Basic	$ 1.87	$ 0.31	$ 2.29	$ 0.49
Earnings Per Share, Diluted	$ 1.71	$ 0.30	$ 2.09	$ 0.46
Convertible Subordinated Debt [Member]
Earnings Per Share, Basic and Dilutive [Line Items]
Incremental Common Shares Attributable to Conversion of Debt Securities	0	2,637,176	0	2,678,508
Convertible Notes Payable [Member]
Earnings Per Share, Basic and Dilutive [Line Items]
Incremental Common Shares Attributable to Conversion of Debt Securities	5,009,622	1,158,686	5,082,208	1,158,686
Stock Options [Member]
Earnings Per Share, Basic and Dilutive [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0	1,502,900	0	1,502,900
Minimum [Member]
Earnings Per Share, Basic and Dilutive [Line Items]
Stock Options, Excluded from Diluted Earnings per Share, Range of Exercise Prices	0	11.88	0	11.88
Maximum [Member]
Earnings Per Share, Basic and Dilutive [Line Items]
Stock Options, Excluded from Diluted Earnings per Share, Range of Exercise Prices	$ 0	$ 14.34	$ 0	$ 14.34

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Fair Values of Financial Instruments Reconciliation of Beginning and Ending Balances of Level 3 Liabilities (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Fair Value, Measurements, Recurring [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair Value, Measurement with Unobservable Inputs Reconciliations, Recurring Basis, Liability Value	$ 3,848,902,000	$ 2,921,037,000	$ 3,337,556,000	$ 2,530,496,000
Premiums Less Benefis Level 3 Liabilities	425,671,000	105,279,000	672,393,000	189,505,000
Change in unrealized losses (gains), net	(527,521,000)	(111,368,000)	(262,897,000)	194,947,000
Fair Value, Measurement with Unobservable Inputs Reconciliations, Recurring Basis, Liability Value	3,747,052,000	2,914,948,000	3,747,052,000	2,914,948,000
Fair Value, Sensitivity, Increase in Discount Rate by 10 Percent [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value, Sensitivity, Discount Rate Adjustment	100		100
Fair Value Liability Measured on Recurring Basis, Fixed Index Annuities Embedded Derivative	240,700,000		240,700,000
Deferred Policy Acquisition Costs and Deferred Sales Inducements, Adjustment Due to Change in Discount Rate, Combined Balance	147,200,000		147,200,000
Fair Value, Sensitivity, Decrease in Discount Rate by 10 Percent [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value, Sensitivity, Discount Rate Adjustment	100		100
Fair Value Liability Measured on Recurring Basis, Fixed Index Annuities Embedded Derivative	267,500,000		267,500,000
Deferred Policy Acquisition Costs and Deferred Sales Inducements, Adjustment Due to Change in Discount Rate, Combined Balance	$ 161,100,000		$ 161,100,000

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Contingencies

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Commitments and Contingencies

We are occasionally involved in litigation, both as a defendant and as a plaintiff. In addition, state regulatory bodies, such as state insurance departments, the SEC, FINRA, the Department of Labor, and other regulatory bodies regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, the Employee Retirement Income Security Act of 1974, as amended, and laws governing the activities of broker-dealers.

In accordance with applicable accounting guidelines, we establish an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. As a litigation or regulatory matter is developing we, in conjunction with outside counsel, evaluate on an ongoing basis whether the matter presents a loss contingency that meets conditions indicating the need for accrual and/or disclosure, and if not the matter will continue to be monitored for further developments. If and when the loss contingency related to litigation or regulatory matters is deemed to be both probable and estimable, we will establish an accrued liability with respect to that matter and will continue to monitor the matter for further developments that may affect the amount of the accrued liability. We recorded an estimated litigation liability of $17.5 million during the third quarter of 2012 based on developments in the mediation of the matter discussed below.

In recent years, companies in the life insurance and annuity business have faced litigation, including class action lawsuits, alleging improper product design, improper sales practices and similar claims. We are currently a defendant in a purported class action, McCormack, et al. v. American Equity Investment Life Insurance Company, et al., in the United States District Court for the Central District of California, Western Division and Anagnostis v. American Equity, et al., coordinated in the Central District, entitled, In Re: American Equity Annuity Practices and Sales Litigation (complaint filed September 7, 2005) (the "Los Angeles Case"), involving allegations of improper sales practices and similar claims as described below.

The Los Angeles Case is a consolidated action involving several lawsuits filed by individuals, and the individuals are seeking class action status for a national class of purchasers of annuities issued by us; however, no class has yet been certified. The named plaintiffs in this consolidated case are Bernard McCormack, Gust Anagnostis by and through Gary S. Anagnostis and Robert C. Anagnostis, Regina Bush by and through Sharon Schipiour, Lenice Mathews by and through Mary Ann Maclean and George Miller. The allegations generally attack the suitability of sales of deferred annuity products to persons over the age of 65. The plaintiffs seek rescission and injunctive relief including restitution and disgorgement of profits on behalf of all class members under California Business & Professions Code section 17200 et seq. and Racketeer Influenced and Corrupt Organizations Act; compensatory damages for breach of fiduciary duty and aiding and abetting of breach of fiduciary duty; unjust enrichment and constructive trust; and other pecuniary damages under California Civil Code section 1750 and California Welfare & Institutions Codes section 15600 et seq. On July 30, 2013, the parties entered into a settlement agreement and stipulated to certification of the case as a class action for settlement purposes only. Based upon the terms of the settlement agreement, the $17.5 million litigation liability referred to above represents our best estimate of probable loss with respect to this litigation; however, the settlement is contingent upon court approval which has not yet been granted. Additionally, other factors could potentially result in a change in this estimate as further developments take place. In particular, part of the settlement involves a claims process for individual class members, and it is difficult to predict the amount of the liabilities that will ultimately result from that process. In light of the inherent uncertainties involved in the pending purported class action lawsuit, there can be no assurance that such litigation, or any other pending or future litigation, will not have a material adverse effect on our business, financial condition, or results of operations.

In addition to our commitments to fund mortgage loans, we have unfunded commitments at June 30, 2013 to private equity limited partnerships of $31.5 million and to secured bank loans of $29.3 million.

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Derivative Instruments Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

We recognize all derivative instruments as assets or liabilities in the consolidated balance sheets at fair value. None of our derivatives qualify for hedge accounting, thus, any change in the fair value of the derivatives is recognized immediately in the consolidated statements of operations. The fair value of our derivative instruments, including derivative instruments embedded in fixed index annuity contracts, presented in the consolidated balance sheets are as follows:

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Assets
Derivative instruments
Call options	$	629,135	$	415,258
Other assets
2015 notes hedges	71,400		43,105
Interest rate caps	5,565		3,247
Interest rate swap	274		—
	$	706,374	$	461,610
Liabilities
Policy benefit reserves - annuity products
Fixed index annuities - embedded derivatives	$	3,747,052	$	3,337,556
Other liabilities
2015 notes embedded derivatives	71,400		43,105
Interest rate swap	—		4,261
	$	3,818,452	$	3,384,922

Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance [Table Text Block]

The changes in fair value of derivatives included in the unaudited consolidated statements of operations are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Change in fair value of derivatives:
Call options	$	58,200		$	(122,241	)	$	402,854		$	119,279
2015 notes hedges	197			(24,163		)	28,295			(7,412		)
Interest rate swap	3,802			(4,038		)	4,535			(3,148		)
Interest rate caps	1,841			(405		)	2,318			(405		)
	$	64,040		$	(150,847	)	$	438,002		$	108,314
Change in fair value of embedded derivatives:
2015 notes embedded derivatives	$	197		$	(24,163	)	$	28,295		$	(7,412	)
Fixed index annuities	(408,606		)	(56,826		)	(73,432		)	285,489
	$	(408,409	)	$	(80,989	)	$	(45,137	)	$	278,077

Schedule of Derivative Instruments [Table Text Block]

The notional amount and fair value of our call options by counterparty and each counterparty's current credit rating are as follows:

			June 30, 2013				December 31, 2012
Counterparty	Credit Rating (S&P)	Credit Rating (Moody's)	Notional Amount		Fair Value		Notional Amount		Fair Value
			(Dollars in thousands)
Bank of America	A	A3	$	1,075,595	$	39,162	$	568,786	$	16,533
Barclays	A	A2	3,617,125		131,476		3,463,777		103,929
BNP Paribas	A+	A2	1,895,967		68,448		2,207,097		60,301
Citibank, N.A.	A	A3	1,501,845		64,812		2,878,588		67,592
Credit Suisse	A	A1	2,922,641		78,855		936,625		21,518
Deutsche Bank	A	A2	874,245		42,587		886,688		20,787
HSBC	AA-	A1	301,678		14,010		295,520		6,539
J.P. Morgan	A+	Aa3	643,078		20,635		735,016		21,940
Morgan Stanley	A-	Baa1	1,961,040		70,329		1,590,505		40,113
Wells Fargo	AA-	Aa3	2,374,518		98,821		2,060,903		56,006
			$	17,167,732	$	629,135	$	15,623,505	$	415,258

Schedule of Interest Rate Derivatives [Table Text Block]

Details regarding the interest rate swap are as follows:

	Notional			Pay			June 30, 2013		December 31, 2012
Maturity Date	Amount		Receive Rate	Rate		Counterparty	Fair Value		Fair Value
							(Dollars in thousands)
March 15, 2021	$	85,500	*LIBOR	2.415	%	SunTrust	$	274	$	(4,261	)

___________________________________

* - three month London Interbank Offered Rate

Details regarding the interest rate caps are as follows:

	Notional			Cap			June 30, 2013		December 31, 2012
Maturity Date	Amount		Floating Rate	Rate		Counterparty	Fair Value		Fair Value
							(Dollars in thousands)
July 7, 2021	$	40,000	*LIBOR	2.50	%	SunTrust	$	2,804	$	1,634
July 8, 2021	12,000		*LIBOR	2.50	%	SunTrust	841		490
July 29, 2021	27,000		*LIBOR	2.50	%	SunTrust	1,920		1,123
	$	79,000					$	5,565	$	3,247

___________________________________

* - three month London Interbank Offered Rate

The interest rate swap has a forward starting date beginning in March 2014 and converts floating rates to fixed rates for seven years. The interest rate caps have a forward starting date beginning in July 2014 and cap our interest rates for seven years. As of June 30, 2013, we held $6.4 million of cash and cash equivalents from the counterparty for derivative collateral related to the swap and caps, which is included in other liabilities on our consolidated balance sheets.

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Investments (Tables)

6 Months Ended

Jun. 30, 2013

Investments [Abstract]

Schedule of Components of Net Unrealized Gain or Loss on Availabe-for-sale Fixed Maturity and Equity Securities Reported as Seperate Component of Stockholders' Equity [Table Text Block]

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:

	June 30, 2013			December 31, 2012
	(Dollars in thousands)
Net unrealized gains on available for sale fixed maturity securities and equity securities	$	757,430		$	2,223,933
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements	(416,281		)	(1,201,974		)
Deferred income tax valuation allowance reversal	22,534			22,534
Deferred income tax benefit	(119,403		)	(357,686		)
Net unrealized gains reported as accumulated other comprehensive income	$	244,280		$	686,807

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Table Text Block]

The following tables show our investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities (consisting of 803 and 198 securities, respectively) have been in a continuous unrealized loss position, at June 30, 2013 and December 31, 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)
June 30, 2013
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	984	$	(36	)	$	—	$	—		$	984	$	(36	)
United States Government sponsored agencies	1,126,107		(46,847		)	—		—			1,126,107		(46,847		)
United States municipalities, states and territories	407,748		(24,701		)	—		—			407,748		(24,701		)
Foreign government obligations	27,269		(2,525		)	—		—			27,269		(2,525		)
Corporate securities:
Finance, insurance and real estate	1,295,619		(67,115		)	84,262		(7,814		)	1,379,881		(74,929		)
Manufacturing, construction and mining	2,631,633		(135,270		)	12,079		(1,797		)	2,643,712		(137,067		)
Utilities and related sectors	1,334,828		(64,359		)	29,728		(3,728		)	1,364,556		(68,087		)
Wholesale/retail trade	301,898		(17,027		)	—		—			301,898		(17,027		)
Services, media and other	747,156		(39,559		)	—		—			747,156		(39,559		)
Residential mortgage backed securities	293,301		(13,905		)	58,100		(2,488		)	351,401		(16,393		)
Commercial mortgage backed securities	1,064,758		(83,053		)	—		—			1,064,758		(83,053		)
Other asset backed securities	426,195		(16,816		)	22,823		(3,347		)	449,018		(20,163		)
	$	9,657,496	$	(511,213	)	$	206,992	$	(19,174	)	$	9,864,488	$	(530,387	)
Held for investment:
Corporate security:
Insurance	$	—	$	—		$	61,250	$	(14,920	)	$	61,250	$	(14,920	)
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	)

Realized Gain (Loss) on Investments [Table Text Block]

Realized gains and losses on sales are determined on the basis of specific identification of investments based on the trade date. Net realized gains (losses) on investments, excluding net OTTI losses for the three and six months endedJune 30, 2013 and 2012 are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Available for sale fixed maturity securities:
Gross realized gains	$	7,628		$	4,030		$	20,643		$	5,048
Gross realized losses	(823		)	(59		)	(3,010		)	(355		)
	6,805			3,971			17,633			4,693
Equity securities:
Gross realized gains	9,571			—			9,571			562
Other investments:
Gain on sale of real estate	715			1,450			1,304			2,895
Loss on sale of real estate	—			—			(466		)	—
Impairment losses on real estate	(145		)	(1,669		)	(145		)	(2,643		)
	570			(219		)	693			252
Mortgage loans on real estate:
Increase in allowance for credit losses	(1,257		)	(4,363		)	(1,623		)	(12,194		)
	$	15,689		$	(611	)	$	26,274		$	(6,687	)

Schedule of Unrealized Loss on Investments [Table Text Block]

Changes in net unrealized gains on investments for the three and six months endedJune 30, 2013 and 2012 are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
							(Dollars in thousands)
Fixed maturity securities held for investment carried at amortized cost	$	(964	)	$	1,690		$	(353	)	$	11,879
Investments carried at fair value:
Fixed maturity securities, available for sale	$	(1,339,484	)	$	603,462		$	(1,458,554	)	$	388,374
Equity securities, available for sale	(10,168		)	(787		)	(7,949		)	3,637
	(1,349,652		)	602,675			(1,466,503		)	392,011
Adjustment for effect on other balance sheet accounts:
Deferred policy acquisition costs and deferred sales inducements	707,525			(339,408		)	785,693			(203,330		)
Deferred income tax asset/liability	224,744			(92,142		)	238,283			(66,038		)
	932,269			(431,550		)	1,023,976			(269,368		)
Change in net unrealized gains on investments carried at fair value	$	(417,383	)	$	171,125		$	(442,527	)	$	122,643

Schedule of Credit Quality of Fixed Maturity Security Portfolio by NAIC Designatio [Table Text Block]

The following table summarizes the credit quality, as determined by NAIC designation, of our fixed maturity portfolio as of the dates indicated:

	June 30, 2013				December 31, 2012
NAIC Designation	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
1	$	15,440,564	$	16,049,276	$	13,737,381	$	15,250,560
2	8,878,184		9,028,631		7,838,186		8,533,121
3	475,652		457,918		398,294		387,222
4	68,807		69,502		53,879		56,151
5	—		—		—		—
6	2,050		1,565		5,375		6,603
	$	24,865,257	$	25,606,892	$	22,033,115	$	24,233,657

Investments Classified by Contractual Maturity Date [Table Text Block]

The amortized cost and fair value of fixed maturity securities at June 30, 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	$	113,074	$	116,889	$	—	$	—
Due after one year through five years	840,609		941,104		—		—
Due after five years through ten years	6,802,325		6,819,438		—		—
Due after ten years through twenty years	5,829,419		6,033,288		—		—
Due after twenty years	6,574,671		6,929,362		76,170		61,250
	20,160,098		20,840,081		76,170		61,250
Residential mortgage backed securities	2,337,399		2,488,057		—		—
Commercial mortgage backed securities	1,304,028		1,222,689		—		—
Other asset backed securities	987,562		994,815		—		—
	$	24,789,087	$	25,545,642	$	76,170	$	61,250

Schedule of Available for Sale and Held for Investment Securites Reconciliation [Table Text Block]

At June 30, 2013 and December 31, 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)
June 30, 2013
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	4,607	$	367	$	(36	)	$	4,938
United States Government sponsored agencies	1,241,898		4,796		(46,847		)	1,199,847
United States municipalities, states and territories	3,299,732		268,127		(24,701		)	3,543,158
Foreign government obligations	86,106		9,230		(2,525		)	92,811
Corporate securities	15,527,755		808,241		(336,669		)	15,999,327
Residential mortgage backed securities	2,337,399		167,051		(16,393		)	2,488,057
Commercial mortgage backed securities	1,304,028		1,714		(83,053		)	1,222,689
Other asset backed securities	987,562		27,416		(20,163		)	994,815
	$	24,789,087	$	1,286,942	$	(530,387	)	$	25,545,642
Held for investment:
Corporate security	$	76,170	$	—	$	(14,920	)	$	61,250
Equity securities, available for sale:
Finance, insurance, and real estate	$	8,915	$	875	$	—		$	9,790
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

Other Than Temporary Impairment by Asset Type [Table Text Block]

The following table summarizes other than temporary impairments for the three and six months endedJune 30, 2013 and 2012, 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)
Three months ended June 30, 2013
Fixed maturity securities, available for sale:
United States Government sponsored agencies	2	$	(2,775	)	$	—		$	(2,775	)
Three months ended June 30, 2012
Fixed maturity securities, available for sale:
Residential mortgage backed securities	7	$	(375	)	$	(603	)	$	(978	)
Six months ended June 30, 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	5	—			(1,048		)	(1,048		)
Equity security, available for sale:
Industrial	1	(428		)	—			(428		)
	9	$	(4,964	)	$	(1,048	)	$	(6,012	)
Six months ended June 30, 2012
Fixed maturity securities, available for sale:
Residential mortgage backed securities	22	$	(2,156	)	$	(1,703	)	$	(3,859	)

Other than Temporary Impairment, Credit Losses Recognized in Earnings [Table Text Block]

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:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Cumulative credit loss at beginning of period	$	(129,813	)	$	(121,976	)	$	(134,027	)	$	(119,095	)
Credit losses on securities for which OTTI has not previously been recognized	(2,775		)	(47		)	(4,536		)	(47		)
Additional credit losses on securities for which OTTI has previously been recognized	—			(931		)	(1,048		)	(3,812		)
Accumulated losses on securities that were disposed of during the period	4,075			—			11,098			—
Cumulative credit loss at end of period	$	(128,513	)	$	(122,954	)	$	(128,513	)	$	(122,954	)

XML

Document and Entity Information Document	6 Months Ended
	Jun. 30, 2013	Jul. 31, 2013
Document Information [Line Items]
Entity Registrant Name	AMERICAN EQUITY INVESTMENT LIFE HOLDING CO
Entity Central Index Key	0001039828
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		64,710,572

XML

Mortgage Loans on Real Estate Mortgage Loans on Real Estate (Tables)

6 Months Ended

Jun. 30, 2013

Mortgage Loans on Real Estate [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Our mortgage loan portfolio, summarized in the following table, totaled $2.6 billion at June 30, 2013 and December 31, 2012, with commitments outstanding of $93.8 million at June 30, 2013.

	June 30, 2013			December 31, 2012
	(Dollars in thousands)
Principal outstanding	$	2,616,179		$	2,658,883
Loan loss allowance	(31,676		)	(34,234		)
Deferred prepayment fees	(800		)	(709		)
Carrying value	$	2,583,703		$	2,623,940

Schedule of Commercial Mortgage Loans by Geographic Region and Specific Collateral Property Type [Table Text Block]

The portfolio consists of commercial mortgage loans collateralized by the related properties and diversified as to property type, location and loan size. Our mortgage lending policies establish limits on the amount that can be loaned to one borrower and other criteria to attempt to reduce the risk of default. The mortgage loan portfolio is summarized by geographic region and property type as follows:

	June 30, 2013				December 31, 2012
	Principal Outstanding		Percent		Principal Outstanding		Percent
	(Dollars in thousands)
Geographic distribution
East	$	760,025	29.1	%	$	732,762	27.5	%
Middle Atlantic	147,167		5.6	%	155,094		5.8	%
Mountain	359,436		13.7	%	387,599		14.6	%
New England	23,131		0.9	%	26,385		1.0	%
Pacific	322,519		12.3	%	320,982		12.1	%
South Atlantic	459,052		17.6	%	458,802		17.3	%
West North Central	369,363		14.1	%	370,168		13.9	%
West South Central	175,486		6.7	%	207,091		7.8	%
	$	2,616,179	100.0	%	$	2,658,883	100.0	%
Property type distribution
Office	$	643,747	24.6	%	$	666,467	25.1	%
Medical Office	137,746		5.3	%	136,764		5.1	%
Retail	680,618		26.0	%	677,951		25.5	%
Industrial/Warehouse	666,935		25.5	%	692,637		26.1	%
Hotel	83,363		3.2	%	94,045		3.5	%
Apartment	233,609		8.9	%	219,335		8.2	%
Mixed use/other	170,161		6.5	%	171,684		6.5	%
	$	2,616,179	100.0	%	$	2,658,883	100.0	%

Allowance for Credit Losses on Financing Receivables [Table Text Block]

The following tables present a rollforward of our specific and general valuation allowances for mortgage loans on real estate:

	Three Months Ended June 30, 2013						Three Months Ended June 30, 2012
	Specific Allowance			General Allowance			Specific Allowance			General Allowance
	(Dollars in thousands)
Beginning allowance balance	$	(22,631	)	$	(10,400	)	$	(29,595	)	$	(10,300	)
Charge-offs	2,612			—			7,613			—
Recoveries	—			—			—			—
Provision for credit losses	(1,157		)	(100		)	(3,463		)	(900		)
Ending allowance balance	$	(21,176	)	$	(10,500	)	$	(25,445	)	$	(11,200	)

	Six Months Ended June 30, 2013						Six Months Ended June 30, 2012
	Specific Allowance			General Allowance			Specific Allowance			General Allowance
	(Dollars in thousands)
Beginning allowance balance	$	(23,134	)	$	(11,100	)	$	(23,664	)	$	(9,300	)
Charge-offs	4,181			—			8,513			—
Recoveries	—			—			—			—
Provision for credit losses	(2,223		)	600			(10,294		)	(1,900		)
Ending allowance balance	$	(21,176	)	$	(10,500	)	$	(25,445	)	$	(11,200	)

Real Estate Acquired Via Foreclosure or Deed In Lieu [Table Text Block]

uring the six months ended June 30, 2013, one mortgage loan was satisfied by taking ownership of the real estate serving as collateral compared to four and six mortgage loans for the same periods in 2012. The following table summarizes the activity in the real estate owned which was obtained in satisfaction of mortgage loans on real estate:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(Dollars in thousands)
Real estate owned at beginning of period	$	28,764		$	35,824		$	33,172		$	36,821
Real estate acquired in satisfaction of mortgage loans	—			8,683			844			11,985
Additions	480			117			480			117
Sales	(2,333		)	(4,283		)	(7,413		)	(7,366		)
Impairments	(145		)	(1,669		)	(145		)	(2,643		)
Depreciation	(157		)	(282		)	(329		)	(524		)
Real estate owned at end of period	$	26,609		$	38,390		$	26,609		$	38,390

Financing Receivable Credit Quality Indicators [Table Text Block]

We analyze credit risk of our mortgage loans by analyzing all available evidence on loans that are delinquent and loans that are in a workout period.

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Credit Exposure--By Payment Activity
Performing	$	2,572,527	$	2,597,440
In workout	28,326		26,723
Collateral dependent	15,326		34,720
	$	2,616,179	$	2,658,883

Past Due Financing Receivables [Table Text Block]

Aging of financing receivables is summarized in the following table, with loans in a "workout" period as of the reporting date considered current if payments are current in accordance with agreed upon terms:

	30 - 59 Days		60 - 89 Days		90 Days and Over		Total Past Due		Current		Collateral Dependent Receivables		Total Financing Receivables
	(Dollars in thousands)
Commercial Mortgage Loans
June 30, 2013	$	—	$	—	$	—	$	—	$	2,600,853	$	15,326	$	2,616,179
December 31, 2012	$	—	$	—	$	—	$	—	$	2,624,163	$	34,720	$	2,658,883

Impaired Financing Receivables [Table Text Block]

Financing receivables summarized in the following table represent all loans that we are either not currently collecting or those we feel it is probable we will not collect all amounts due according to the contractual terms of the loan agreements (all loans that we have worked with the borrower to alleviate short-term cash flow issues, loans delinquent for more than 60 days at the reporting date, loans we have determined to be collateral dependent and loans that we have recorded specific impairments on that we feel may continue to have performance issues).

	Recorded Investment		Unpaid Principal Balance		Related Allowance			Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
June 30, 2013
Mortgage loans with an allowance	$	25,531	$	46,707	$	(21,176	)	$	27,923	$	885
Mortgage loans with no related allowance	18,699		18,699		—			18,760		531
	$	44,230	$	65,406	$	(21,176	)	$	46,683	$	1,416
December 31, 2012
Mortgage loans with an allowance	$	29,976	$	53,110	$	(23,134	)	$	37,480	$	1,946
Mortgage loans with no related allowance	27,765		27,765		—			27,696		1,664
	$	57,741	$	80,875	$	(23,134	)	$	65,176	$	3,610

Troubled Debt Restructurings on Financing Receivables Workout Loans [Table Text Block]

Mortgage loan workouts, refinances or restructures that are classified as TDRs are individually evaluated and measured for impairment. A summary of mortgage loans on commercial real estate with outstanding principal at June 30, 2013 and December 31, 2012 that we determined to be TDRs are as follows:

Geographic Region	Number of TDRs	Principal Balance Outstanding		Specific Loan Loss Allowance			Net Carrying Amount
		(Dollars in thousands)
June 30, 2013
East	1	$	3,712	$	(949	)	$	2,763
Mountain	8	23,019		(1,172		)	21,847
South Atlantic	7	17,249		(5,898		)	11,351
East North Central	2	3,697		(1,029		)	2,668
West North Central	1	1,938		—			1,938
West South Central	1	1,458		(255		)	1,203
	20	$	51,073	$	(9,303	)	$	41,770
December 31, 2012
East	1	$	4,208	$	(1,425	)	$	2,783
Mountain	10	28,786		(1,702		)	27,084
South Atlantic	9	23,358		(5,047		)	18,311
East North Central	1	2,232		(467		)	1,765
West North Central	3	9,466		(2,328		)	7,138
	24	$	68,050	$	(10,969	)	$	57,081

Impaired Mortgage Loans on Real Estate by Basis of Impairment [Table Text Block]

The specific allowance is a total of credit loss allowances on loans which are individually evaluated for impairment. The general allowance is the group of loans discussed above which are collectively evaluated for impairment. The following table presents the total outstanding principal of loans evaluated for impairment by basis of impairment method:

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Individually evaluated for impairment	$	46,707	$	53,110
Collectively evaluated for impairment	2,569,472		2,605,773
Total loans evaluated for impairment	$	2,616,179	$	2,658,883

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Subsequent Event Debt Issuance (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013 Senior Notes [Member]	Jun. 30, 2013 Convertible Debt Issued in 2004 [Member]	Jun. 30, 2013 Convertible Debt Issued in 2010 [Member]	Jul. 16, 2013 Issuance of Debt [Member] Senior Notes [Member]
Subsequent Event [Line Items]
Debt Instrument, Face Amount				$ 400
Debt Instrument, Interest Rate, Stated Percentage	6.625%	5.25%	3.50%