DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2013

DERIVATIVE FINANCIAL INSTRUMENTS

Notional amounts and fair values of derivative financial instruments

	As of
	March 31, 2013				December 31, 2012
	Notional		Fair		Notional		Fair
	Amount		Value		Amount		Value
	(Dollars In Thousands)
Other long-term investments
Cash flow hedges:
Inflation	$	135,531	$	251	$	—	$	—
Derivatives not designated as hedging instruments:
Interest rate swaps	300,000		5,368		355,000		6,532
Volatility swaps	400		20		500		406
Derivatives with PLC(1)	1,432,876		13,287		1,404,750		17,064
Embedded derivative - Modco reinsurance treaties	30,561		1,321		30,244		1,330
Embedded derivative - GMWB	2,615,909		55,796		1,640,075		30,261
Interest rate futures	473,257		3,201		—		—
Equity futures	55,441		1,040		147,581		595
Currency futures	31,948		531		15,944		784
Interest rate caps	3,000,000		—		3,000,000		—
Equity options	840,276		64,559		573,493		61,833
Interest rate swaptions	400,000		7,268		400,000		11,370
Other	224		240		224		253
	$	9,316,423	$	152,882	$	7,567,811	$	130,428
Other liabilities
Cash flow hedges:
Inflation	$	47,434	$	65	$	182,965	$	5,027
Derivatives not designated as hedging instruments:
Interest rate swaps	1,105,000		25,057		400,000		10,025
Volatility swaps	4,075		22,245		2,675		12,198
Embedded derivative - Modco reinsurance treaties	2,636,425		395,123		2,655,134		411,907
Embedded derivative - GMWB	4,746,591		144,691		5,253,961		199,530
Interest rate futures	—		—		893,476		13,970
Equity futures	106,724		1,126		152,364		3,316
Currency futures	101,339		1,254		131,979		1,901
	$	8,747,588	$	589,561	$	9,672,554	$	657,874

(1) These derivatives include the Interest, YRT premium support, and portfolio maintenance agreements between certain of the Company’s subsidiaries and PLC.

Schedule of gain (loss) on derivatives in cash flow hedging relationship

Gain (Loss) on Derivatives in Cash Flow Relationship

				Amount and Location of
	Amount of Gains (Losses)			Gains (Losses)
	Deferred in			Reclassified from			Amount and Location of
	Accumulated Other			Accumulated Other			(Losses) Recognized in
	Comprehensive Income			Comprehensive Income			Income (Loss) on
	(Loss) on Derivatives			(Loss) into Income (Loss)			Derivatives
	(Effective Portion)			(Effective Portion)			(Ineffective Portion)
				Benefits and settlement			Realized investment
				expenses			gains (losses)
	(Dollars In Thousands)
For The Three Months Ended March 31, 2013
Interest rate	$	—		$	—		$	—
Inflation	4,409			(497		)	368
Total	$	4,409		$	(497	)	$	368
For The Three Months Ended March 31, 2012
Interest rate	$	(73	)	$	(854	)	$	—
Inflation	8,277			180			646
Total	$	8,204		$	(674	)	$	646

Schedule of realized investment gains (losses) - derivative financial instruments

Realized investment gains (losses) - derivative financial instruments

	For The Three Months Ended March 31,
	2013			2012
	(Dollars In Thousands)
Derivatives related to variable annuity contracts:
Interest rate futures - VA	$	(16,484	)	$	(33,406	)
Equity futures - VA	(23,225		)	(25,099		)
Currency futures - VA	8,083			(984		)
Volatility futures - VA	—			(475		)
Volatility swaps - VA	(10,433		)	(1,884		)
Equity options - VA	(28,406		)	(23,872		)
Interest rate swaptions - VA	(4,102		)	(3,519		)
Interest rate swaps - VA	(16,556		)	(2,128		)
Embedded derivative - GMWB	80,375			50,167
Total derivatives related to variable annuity contracts	(10,748		)	(41,200		)
Embedded derivative - Modco reinsurance treaties	16,775			10,706
Interest rate swaps	1,003			2,037
Interest rate caps	—			(2,164		)
Derivatives with PLC(1)	(3,778		)	—
Other derivatives	355			712
Total realized gains (losses) - derivatives	$	3,607		$	(29,909	)

(1) These derivatives include the Interest, YRT premium support, and portfolio maintenance agreements between certain of the Company’s subsidiaries and PLC.

Schedule of realized investment gains (losses) - all other investments

Realized investment gains (losses) - all other investments

	For The Three Months Ended March 31,
	2013			2012
	(Dollars In Thousands)
Modco trading portfolio(1)	$	(15,328	)	$	18,099

(1)The Company elected to include the use of alternate disclosures for trading activities.