DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2014

DERIVATIVE FINANCIAL INSTRUMENTS

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

	For The Three Months Ended March 31,
	2014			2013
	(Dollars In Thousands)
Derivatives related to variable annuity contracts:
Interest rate futures - VA	$	4,250		$	(16,484	)
Equity futures - VA	(2,651		)	(23,225		)
Currency futures - VA	(1,278		)	8,083
Variance swaps - VA	(1,850		)	(10,433		)
Equity options - VA	(12,341		)	(28,406		)
Interest rate swaptions - VA	(9,403		)	(4,102		)
Interest rate swaps - VA	57,368			(16,556		)
Embedded derivative - GMWB	(27,315		)	80,375
Funds withheld derivative	10,699			—
Total derivatives related to variable annuity contracts	17,479			(10,748		)
Derivatives related to FIA contracts:
Embedded derivative - FIA	1,733			—
Equity futures - FIA	345			—
Equity options - FIA	994			—
Total derivatives related to FIA contracts	3,072			—
Embedded derivative - Modco reinsurance treaties	(60,169		)	16,775
Interest rate swaps	—			1,003
Derivatives with PLC(1)	105			(3,778		)
Other derivatives	(61		)	355
Total realized gains (losses) - derivatives	$	(39,574	)	$	3,607

(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

	For The Three Months Ended March 31,
	2014		2013
	(Dollars In Thousands)
Modco trading portfolio(1)	$	66,303	$	(15,328	)

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

Schedule of components of the gains or losses on derivatives that qualify as a cash flow hedging 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, 2014
Inflation	$	903	$	(670	)	$	39
Total	$	903	$	(670	)	$	39
For The Three Months Ended March 31, 2013
Inflation	$	4,409	$	(497	)	$	368
Total	$	4,409	$	(497	)	$	368

Notional amounts and fair values of derivative financial instruments

	As of
	March 31, 2014				December 31, 2013
	Notional		Fair		Notional		Fair
	Amount		Value		Amount		Value
	(Dollars In Thousands)
Other long-term investments
Cash flow hedges:
Inflation	$	39,882	$	12	$	—	$	—
Derivatives not designated as hedging instruments:
Interest rate swaps	245,000		3,104		200,000		1,961
Derivatives with PLC(1)	1,449,673		2,098		1,464,164		1,993
Embedded derivative - Modco reinsurance treaties	44,858		1,011		80,376		1,517
Embedded derivative - GMWB	1,803,638		72,604		1,921,443		95,376
Interest rate futures	39,834		131		—		—
Equity futures	78,458		484		3,387		111
Currency futures	40,062		208		14,338		321
Equity options	1,877,846		108,706		1,376,205		78,277
Interest rate swaptions	625,000		20,889		625,000		30,291
Other	425		382		425		473
	$	6,244,676	$	209,629	$	5,685,338	$	210,320
Other liabilities
Cash flow hedges:
Inflation	$	143,083	$	199	$	182,965	$	1,865
Derivatives not designated as hedging instruments:
Interest rate swaps	1,230,000		99,091		1,230,000		153,322
Variance swaps	1,000		2,959		1,500		1,744
Embedded derivative - Modco reinsurance treaties	2,598,197		266,581		2,578,590		206,918
Funds withheld derivative	1,205,546		52,790		991,568		34,251
Embedded derivative - GMWB	371,076		6,039		104,180		1,496
Embedded derivative - FIA	395,528		35,929		244,424		25,324
Interest rate futures	257,692		1,072		322,902		5,221
Equity futures	70,047		700		164,595		6,595
Currency futures	104,052		294		118,008		840
Equity options	399,765		22,489		257,065		17,558
Other	226		31		230		27
	$	6,776,212	$	488,174	$	6,196,027	$	455,161

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