Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis



	December 31, 2011
	Total		Level 1	Level 2	Level 3
	(In thousands)

Debt securities, available for sale	$	2,608,407	—	2,608,407	—
Equity securities, available for sale	16,546		8,233	195	8,118
Derivatives, index options	30,844		—	30,844	—

Total assets	$	2,655,797	8,233	2,639,446	8,118

Policyholder account balances (a)	$	47,129	—	47,129	—
Other liabilities (b)	1,647		—	—	1,647

Total liabilities	$	48,776	—	47,129	1,647

(a) Represents the fair value of certain product-related embedded derivatives that were recorded at fair value.

(b) Represents the liability for share-based compensation.

The following tables set forth the Company’s assets and liabilities that are measured at fair value on a recurring basis as of the date indicated:



	September 30, 2012
	Total		Level 1	Level 2	Level 3
	(In thousands)

Debt securities, available for sale	$	2,809,062	—	2,809,062	—
Equity securities, available for sale	12,305		12,184	121	—
Derivatives, index options	87,833		—	87,833	—

Total assets	$	2,909,200	12,184	2,897,016	—

Policyholder account balances (a)	$	98,396	—	98,396	—
Other liabilities (b)	2,003		—	—	2,003

Total liabilities	$	100,399	—	98,396	2,003

Schedule of Assets by Pricing Source and Fair Value Hierarchy Measured on Recurring Basis

The following tables present, by pricing source and fair value hierarchy level, the Company’s assets that are measured at fair value on a recurring basis:



	September 30, 2012
	Total			Level 1		Level 2		Level 3
	(In thousands)

Debt securities, available for sale:
Priced by third-party vendors	$	2,809,062		—		2,809,062		—
Priced internally	—			—		—		—
Subtotal	2,809,062			—		2,809,062		—

Equity securities, available for sale:
Priced by third-party vendors	12,305			12,184		121		—
Priced internally	—			—		—		—
Subtotal	12,305			12,184		121		—

Derivatives, index options:
Priced by third-party vendors	87,833			—		87,833		—
Priced internally	—			—		—		—
Subtotal	87,833			—		87,833		—

Total	$	2,909,200		12,184		2,897,016		—

Percent of total	100.0		%	0.4	%	99.6	%	—	%



	December 31, 2011
	Total			Level 1		Level 2		Level 3
	(In thousands)

Debt securities, available for sale:
Priced by third-party vendors	$	2,608,407		—		2,608,407		—
Priced internally	—			—		—		—
Subtotal	2,608,407			—		2,608,407		—

Equity securities, available for sale:
Priced by third-party vendors	8,428			8,233		195		—
Priced internally	8,118			—		—		8,118
Subtotal	16,546			8,233		195		8,118

Derivatives, index options:
Priced by third-party vendors	30,844			—		30,844		—
Priced internally	—			—		—		—
Subtotal	30,844			—		30,844		—

Total	$	2,655,797		8,233		2,639,446		8,118

Percent of total	100.0		%	0.3	%	99.4	%	0.3	%

Schedule of Significant Unobservable Inputs for Fair Value Measurements

The following tables provide additional information about fair value measurements for which significant unobservable (Level 3) inputs were utilized to determine fair value.



	For the Three Months Ended September 30, 2012
	Debt Securities, Available for Sale		Equity Securities, Available for Sale	Total Assets	Other Liabilities
	(In thousands)

Beginning balance, July 1, 2012	$	—	—	—	2,217
Total realized and unrealized gains (losses):
Included in net income	—		—	—	(166	)
Included in other comprehensive income	—		—	—	—
Purchases, sales, issuances and settlements, net	—		—	—	(48	)
Transfers into (out of) Level 3	—		—	—	—

Balance at end of period	$	—	—	—	2,003

Amount of total gains (losses) for the period included in net income attributable to the change in unrealized gains (losses) relating to assets still held at end of period	$	—	—	—	(68	)



	For the Three Months Ended September 30, 2011
	Debt Securities, Available for Sale			Equity Securities, Available for Sale	Total Assets		Other Liabilities
	(In thousands)

Beginning balance, July 1, 2011	$	17,157		8,119	25,276		3,090
Total realized and unrealized gains (losses):
Included in net income	—			—	—		(1,375	)
Included in other comprehensive income	(1,802		)	—	(1,802	)	—
Purchases, sales, issuances and settlements, net	30			—	30		—
Transfers into (out of) Level 3	—			—	—		—

Balance at end of period	$	15,385		8,119	23,504		1,715

Amount of total gains (losses) for the period included in net income attributable to the change in unrealized gains (losses) relating to assets still held at end of period	$	—		—	—		(1,375	)



	For the Nine Months Ended September 30, 2012
	Debt Securities, Available for Sale		Equity Securities, Available for Sale		Total Assets		Other Liabilities
	(In thousands)

Beginning balance, January 1, 2012	$	—	8,118		8,118		1,647
Total realized and unrealized gains (losses):
Included in net income	—		—		—		422
Included in other comprehensive income	—		897		897		—
Purchases, sales, issuances and settlements, net	—		—		—		(66	)
Transfers into (out of) Level 3	—		(9,015	)	(9,015	)	—

Balance at end of period	$	—	—		—		2,003

Amount of total gains (losses) for the period included in net income attributable to the change in unrealized gains (losses) relating to assets still held at end of period	$	—	—		—		583



	For the Nine Months Ended September 30, 2011
	Debt Securities, Available for Sale			Equity Securities, Available for Sale	Total Assets		Other Liabilities
	(In thousands)

Beginning balance, January 1, 2011	$	18,602		7,564	26,166		4,512
Total realized and unrealized gains (losses):
Included in net income	—			—	—		(2,240	)
Included in other comprehensive income	(2,615		)	555	(2,060	)	—
Purchases, sales, issuances and settlements, net	(602		)	—	(602	)	(557	)
Transfers into (out of) Level 3	—			—	—		—

Balance at end of period	$	15,385		8,119	23,504		1,715

Amount of total gains (losses) for the period included in net income attributable to the change in unrealized gains (losses) relating to assets still held at end of period	$	—		—	—		(1,642	)

Schedule of Carrying Amounts and Fair Values of Financial Instruments

The carrying amounts and fair values of the Company's financial instruments are as follows:



	September 30, 2012			December 31, 2011
	Carrying Values		Fair Values	Carrying Values	Fair Values
	(In thousands)
ASSETS
Investments in debt and equity securities:
Securities held to maturity	$	5,849,916	6,414,860	5,641,909	6,082,330
Securities available for sale	2,821,367		2,821,367	2,624,953	2,624,953

Cash and short-term investments	127,945		127,945	119,290	119,290
Mortgage loans	135,776		141,013	157,460	158,958
Policy loans	74,138		74,138	74,967	74,967
Other loans	14,691		14,903	16,287	16,780
Derivatives, index options	87,833		87,833	30,844	30,844
Life interest in Libbie Shearn Moody Trust	83		12,775	330	12,775

LIABILITIES
Deferred annuity contracts	$	6,840,702	6,466,991	6,606,886	6,273,379
Immediate annuity and supplemental contracts	503,147		548,490	506,982	521,122

- Definition

Tabular disclosure of assets, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

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Reference 10: http://www.xbrl.org/2003/role/presentationRef

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