FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2013

FAIR VALUE OF FINANCIAL INSTRUMENTS

Schedule of assets and liabilities measured at fair value on a recurring basis

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2013:

	Level 1		Level 2		Level 3		Total
	(Dollars In Thousands)
Assets:
Fixed maturity securities - available-for-sale
Residential mortgage-backed securities	$	—	$	1,445,040	$	28	$	1,445,068
Commercial mortgage-backed securities	—		970,656		—		970,656
Other asset-backed securities	—		326,175		545,808		871,983
U.S. government-related securities	1,211,141		296,749		—		1,507,890
State, municipalities, and political subdivisions	—		1,407,154		3,675		1,410,829
Other government-related securities	—		51,427		—		51,427
Corporate bonds	107		24,191,367		1,549,940		25,741,414
Total fixed maturity securities - available-for-sale	1,211,248		28,688,568		2,099,451		31,999,267
Fixed maturity securities - trading
Residential mortgage-backed securities	—		310,877		—		310,877
Commercial mortgage-backed securities	—		158,570		—		158,570
Other asset-backed securities	—		93,278		194,977		288,255
U.S. government-related securities	191,332		4,906		—		196,238
State, municipalities, and political subdivisions	—		260,892		—		260,892
Other government-related securities	—		57,097		—		57,097
Corporate bonds	—		1,497,362		29,199		1,526,561
Total fixed maturity securities - trading	191,332		2,382,982		224,176		2,798,490
Total fixed maturity securities	1,402,580		31,071,550		2,323,627		34,797,757
Equity securities	483,482		50,927		67,979		602,388
Other long-term investments (1)	56,469		54,965		98,886		210,320
Short-term investments	131,421		1,603		—		133,024
Total investments	2,073,952		31,179,045		2,490,492		35,743,489
Cash	345,579		—		—		345,579
Assets related to separate accounts
Variable annuity	12,791,438		—		—		12,791,438
Variable universal life	783,618		—		—		783,618
Total assets measured at fair value on a recurring basis	$	15,994,587	$	31,179,045	$	2,490,492	$	49,664,124
Liabilities:
Annuity account balances(2)	$	—	$	—	$	107,000	$	107,000
Other liabilities (1)	30,241		191,182		233,738		455,161
Total liabilities measured at fair value on a recurring basis	$	30,241	$	191,182	$	340,738	$	562,161

(1)Includes certain freestanding and embedded derivatives.

(2)Represents liabilities related to fixed indexed annuities.

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2012:

	Level 1		Level 2		Level 3		Total
	(Dollars In Thousands)
Assets:
Fixed maturity securities - available-for-sale
Residential mortgage-backed securities	$	—	$	1,839,326	$	4	$	1,839,330
Commercial mortgage-backed securities	—		869,823		—		869,823
Other asset-backed securities	—		378,870		596,143		975,013
U.S. government-related securities	909,988		258,458		—		1,168,446
State, municipalities, and political subdivisions	—		1,439,378		4,275		1,443,653
Other government-related securities	—		80,767		20,011		100,778
Corporate bonds	207		20,197,528		167,892		20,365,627
Total fixed maturity securities - available-for-sale	910,195		25,064,150		788,325		26,762,670
Fixed maturity securities - trading
Residential mortgage-backed securities	—		357,803		—		357,803
Commercial mortgage-backed securities	—		171,073		—		171,073
Other asset-backed securities	—		87,395		70,535		157,930
U.S. government-related securities	304,704		1,169		—		305,873
State, municipalities, and political subdivisions	—		278,898		—		278,898
Other government-related securities	—		63,444		—		63,444
Corporate bonds	—		1,672,172		115		1,672,287
Total fixed maturity securities - trading	304,704		2,631,954		70,650		3,007,308
Total fixed maturity securities	1,214,899		27,696,104		858,975		29,769,978
Equity securities	273,072		35,116		65,527		373,715
Other long-term investments (1)	23,639		58,134		48,655		130,428
Short-term investments	214,295		2,492		—		216,787
Total investments	1,725,905		27,791,846		973,157		30,490,908
Cash	269,582		—		—		269,582
Other assets	—		—		—		—
Assets related to separate accounts
Variable annuity	9,601,417		—		—		9,601,417
Variable universal life	562,817		—		—		562,817
Total assets measured at fair value on a recurring basis	$	12,159,721	$	27,791,846	$	973,157	$	40,924,724
Liabilities:
Annuity account balances (2)	$	—	$	—	$	129,468	$	129,468
Other liabilities (1)	19,187		27,250		611,437		657,874
Total liabilities measured at fair value on a recurring basis	$	19,187	$	27,250	$	740,905	$	787,342

(1)Includes certain freestanding and embedded derivatives.

(2)Represents liabilities related to fixed indexed annuities.

Schedule of valuation method for material financial instruments included in Level 3, as well as the unobservable inputs used in the valuation of those financial instruments

	Fair Value
	As of		Valuation	Unobservable	Range
	December 31, 2013		Technique	Input	(Weighted Average)
	(Dollars In Thousands)
Assets:
Other asset-backed securities	$	545,808	Discounted cash flow	Liquidity premium Paydown rate	1.00%-1.68% (1.08%) 8.57% - 16.87% (12.05%)
Corporate bonds	1,555,898		Discounted cash flow	Spread over treasury	0.11% - 6.75% (2.06%)
Embedded derivatives - GMWB(1)	156,287		Actuarial cash flow model	Mortality Lapse	49% to 80% of 1994 MGDB table 0% - 24%, depending on
					product/duration/funded status of guarantee
				Utilization	97% - 103%
				Nonperformance risk	0.15% - 1.06%
Liabilities:
Annuity account balances(2)	$	107,000	Actuarial cash flow model	Asset earned rate Expenses	5.37% $88 - $102 per policy
				Withdrawal rate	2.20%
				Mortality	49% to 80% of 1994 MGDB table
				Lapse	2.2% - 33.0%, depending on duration/surrender charge period
				Return on assets	1.50% - 1.85% depending on surrender charge period
				Nonperformance risk	0.15% - 1.06%
Embedded derivative-FIA	25,324		Actuarial cash flow model	Expenses	$83 - $97 per policy 1.1% - 4.5% depending on
				Withdrawal rate Mortality	duration and tax qualification
					49% - 80% of 1994 MGDB table
				Lapse Nonperformance risk	2.5% - 40.0%, depending on duration/surrender charge period
					0.15% - 1.06%

(1)The fair value for the GMWB embedded derivative is presented as a net asset. Excludes modified coinsurance agreements.

(2)Represents liabilities related to fixed indexed annuities.

	Fair Value
	As of		Valuation	Unobservable	Range
	December 31, 2012		Technique	Input	(Weighted Average)
	(Dollars In Thousands)
Assets:
Other asset-backed securities	$	596,143	Discounted cash flow	Liquidity premium Paydown rate	0.72% - 1.68% (1.29%) 8.51% - 18.10% (11.40%)
Other government-related securities	20,011		Discounted cash flow	Spread over treasury	(0.30)%
Corporate bonds	168,007		Discounted cash flow	Spread over treasury	0.92% - 7.75% (3.34%)
Liabilities:
Embedded derivatives - GMWB(1)	$	169,041	Actuarial cash flow model	Mortality Lapse	57% of 1994 MGDB table 0% - 24%, depending on product/duration/funded
					status of guarantee
				Utilization	93% - 100%
				Nonperformance risk	0.09% - 1.34%
Annuity account balances(2)	129,468		Actuarial cash flow model	Asset earned rate Expenses	5.81% $88 - $108 per policy
				Withdrawal rate	2.20%
				Mortality	57% of 1994 MGDB table
				Lapse	2.2% - 45.0%, depending on duration/surrender charge period
				Return on assets	1.50% - 1.85% depending on surrender charge period
				Nonperformance risk	0.09% - 1.34%

(1)The fair value for the GMWB embedded derivative is presented as a net liability. Excludes modified coinsurance arrangements.

(2)Represents liabilities related to fixed indexed annuities.

Schedule of reconciliation of the beginning and ending balances for fair value measurements, for which the Company has used significant unobservable inputs (Level 3)

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the year ended December 31, 2013, for which the Company has used significant unobservable inputs (Level 3):

																														Total
																														Gains (losses)
			Total				Total																							included in
			Realized and Unrealized				Realized and Unrealized																							Earnings
			Gains				Losses																							related to
					Included in					Included in																				Instruments
					Other					Other												Transfers								still held at
	Beginning		Included in		Comprehensive		Included in			Comprehensive												in/out of						Ending		the Reporting
	Balance		Earnings		Income		Earnings			Income			Purchases		Sales			Issuances		Settlements		Level 3			Other			Balance		Date
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	4	$	—	$	1,310	$	—		$	(338	)	$	14,349	$	(23	)	$	—	$	—	$	(15,287	)	$	13		$	28	$	—
Commercial mortgage-backed securities	—		—		—		—			—			—		—			—		—		—			—			—		—
Other asset-backed securities	596,143				44,620		—			(58,937		)	24,931		(62,760		)	—		—		1,227			584			545,808		—
U.S. government-related securities	—		—		—		—						—					—		—		—						—		—
States, municipals, and political subdivisions	4,275		—		—		—			—					(600		)	—		—		—			—			3,675		—
Other government-related securities	20,011		—		2		—			(3		)			(20,000		)	—		—		—			(10		)	—		—
Corporate bonds	167,892		116		8,310					(20,118		)	736,012		(67,431		)	—		—		726,760			(1,601		)	1,549,940		—
Total fixed maturity securities - available-for-sale	788,325		116		54,242		—			(79,396		)	775,292		(150,814		)	—		—		712,700			(1,014		)	2,099,451		—
Fixed maturity securities - trading
Residential mortgage-backed securities	—		—		—		(1		)	—			1,582		(72		)	—		—		(1,494		)	(15		)	—		—
Commercial mortgage-backed securities	—		—		—		—			—			—		—			—		—		—			—			—		—
Other asset-backed securities	70,535		8,785		—		(5,947		)	—			147,224		(29,344		)	—		—		2,210			1,514			194,977		3,588
U.S. government-related securities	—		—		—		—			—			—		—			—		—		—			—			—		—
States, municipals and political subdivisions	—		—		—		(123		)	—			3,500		—			—		—		(3,377		)	—			—		—
Other government-related securities	—		—		—		—			—			—		—			—		—		—			—			—		—
Corporate bonds	115		1		—		(102		)	—			4,880		(17		)	—		—		24,312			10			29,199		(5		)
Total fixed maturity securities - trading	70,650		8,786		—		(6,173		)	—			157,186		(29,433		)	—		—		21,651			1,509			224,176		3,583
Total fixed maturity securities	858,975		8,902		54,242		(6,173		)	(79,396		)	932,478		(180,247		)	—		—		734,351			495			2,323,627		3,583
Equity securities	65,527						—						2,452					—		—		—			—			67,979		—
Other long-term investments(1)	48,655		100,441		—		(16,117		)	—			—		—			—		—		—			(34,093		)	98,886		84,324
Short-term investments	—		—		—		—			—			—		—			—		—		—			—			—		—
Total investments	973,157		109,343		54,242		(22,290		)	(79,396		)	934,930		(180,247		)	—		—		734,351			(33,598		)	2,490,492		87,907
Total assets measured at fair value on a recurring basis	$	973,157	$	109,343	$	54,242	$	(22,290	)	$	(79,396	)	$	934,930	$	(180,247	)	$	—	$	—	$	734,351		$	(33,598	)	$	2,490,492	$	87,907
Liabilities:
Annuity account balances(2)	$	129,468	$	—	$	—	$	(8,029	)	$	—		$	—	$	—		$	406	$	30,903	$	—		$	—		$	107,000	$	—
Other liabilities(1)	611,437		295,910		—		(52,716		)	—			—		—			—		—		—			134,505			233,738		242,411
Total liabilities measured at fair value on a recurring basis	$	740,905	$	295,910	$	—	$	(60,745	)	$	—		$	—	$	—		$	406	$	30,903	$	—		$	134,505		$	340,738	$	242,411

(1)Represents certain freestanding and embedded derivatives.

(2)Represents liabilities related to fixed indexed annuities.

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the year ended December 31, 2012, for which the Company has used significant unobservable inputs (Level 3):

																													Total
																													Gains (losses)
			Total				Total																						included in
			Realized and Unrealized				Realized and Unrealized																						Earnings
			Gains				Losses																						related to
					Included in					Included in																			Instruments
					Other					Other												Transfers							still held at
	Beginning		Included in		Comprehensive		Included in			Comprehensive												in/out of					Ending		the Reporting
	Balance		Earnings		Income		Earnings			Income			Purchases		Sales			Issuances		Settlements		Level 3		Other			Balance		Date
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	7	$	—	$	—	$	—		$	—		$	—	$	(3	)	$	—	$	—	$	—	$	—		$	4	$	—
Commercial mortgage-backed securities	—		—				—			—			—					—		—							—		—
Other asset-backed securities	614,813		339		21,780					(22,587		)	—		(19,050		)	—		—		771		77			596,143		—
U.S. government-related securities	15,000		—		—		—			(2		)	—		(15,000		)	—		—		—		2			—		—
States, municipals, and political subdivisions	—		—		—		—						4,275		—			—		—		—					4,275		—
Other government-related securities	—		—		29		—			(27		)	20,024		—			—		—		—		(15		)	20,011		—
Corporate bonds	119,565		470		8,052		(4		)	(2,723		)	11,960		(9,854		)	—		—		40,060		366			167,892		—
Total fixed maturity securities - available-for-sale	749,385		809		29,861		(4		)	(25,339		)	36,259		(43,907		)	—		—		40,831		430			788,325		—
Fixed maturity securities - trading
Residential mortgage-backed securities	—		—		—		—			—			—		—			—		—		—		—			—		—
Commercial mortgage-backed securities	—		—		—		—			—			—		—			—		—		—		—			—		—
Other asset-backed securities	28,343		4,086		—		(2,306		)	—			48,255		(9,896		)	—		—				2,053			70,535		1,780
U.S. government-related securities					—					—			—		—			—		—		—					—		—
States, municipals and political subdivisions	—		—		—		—			—			—		—			—		—		—		—			—		—
Other government-related securities	—		—		—		—			—			—		—			—		—		—		—			—		—
Corporate bonds	—		2		—					—			1		—			—		—		112					115		10
Total fixed maturity securities - trading	28,343		4,088		—		(2,306		)	—			48,256		(9,896		)	—		—		112		2,053			70,650		1,790
Total fixed maturity securities	777,728		4,897		29,861		(2,310		)	(25,339		)	84,515		(53,803		)	—		—		40,943		2,483			858,975		1,790
Equity securities	70,080		8		827		—			(1,097		)	4		(4,295		)	—		—				—			65,527		—
Other long-term investments(1)	19,103		—		—		29,552			—			—		—			—		—		—		—			48,655		29,552
Short-term investments	—		—		—		—			—			—		—			—		—		—		—			—		—
Total investments	866,911		4,905		30,688		27,242			(26,436		)	84,519		(58,098		)	—		—		40,943		2,483			973,157		31,342
Total assets measured at fair value on a recurring basis	$	866,911	$	4,905	$	30,688	$	27,242		$	(26,436	)	$	84,519	$	(58,098	)	$	—	$	—	$	40,943	$	2,483		$	973,157	$	31,342
Liabilities:
Annuity account balances(2)	$	136,462	$	—	$	—	$	12,293		$	—		$	—	$	—		$	860	$	20,147	$	—	$	—		$	129,468	$	—
Other liabilities(1)	437,613		86,523		—		(260,347		)	—			—		—			—		—		—		—			611,437		(173,824		)
Total liabilities measured at fair value on a recurring basis	$	574,075	$	86,523	$	—	$	(248,054	)	$	—		$	—	$	—		$	860	$	20,147	$	—	$	—		$	740,905	$	(173,824	)

(1)Represents certain freestanding and embedded derivatives.

(2)Represents liabilities related to fixed indexed annuities.

Schedule of the carrying amounts and estimated fair value of the Company's financial instruments

		As of December 31,
		2013				2012
	Fair Value	Carrying				Carrying
	Level	Amounts		Fair Values		Amounts		Fair Values
		(Dollars In Thousands)
Assets:
Mortgage loans on real estate	3	$	5,486,417	$	5,949,058	$	4,948,625	$	5,723,579
Policy loans	3	1,815,744		1,815,744		865,391		865,391
Fixed maturities, held-to-maturity(1)	3	365,000		335,676		300,000		319,163
Liabilities:
Stable value product account balances	3	$	2,559,552	$	2,566,209	$	2,510,559	$	2,534,094
Annuity account balances	3	11,125,253		10,639,637		10,658,463		10,525,702
Debt:
Non-recourse funding obligations(2)	3	$	1,495,448	$	1,272,425	$	1,446,900	$	1,357,290

Except as noted below, fair values were estimated using quoted market prices.

(1) Security purchased from unconsolidated subsidiary, Red Mountain LLC.

(2) Of this carrying amount $365.0 million, fair value of $321.5 million, as of December 31, 2013, and $300 million, fair value of $297.6 million, as of December 31, 2012, relates to non-recourse funding obligations issued by Golden Gate V.