Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2014

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

During the three months ended March 31, 2014, the Company had no transfers into or out of Levels 1, 2 or 3.



	December 31, 2013
	Total		Level 1	Level 2	Level 3
	(In thousands)

Debt securities, available for sale	$	2,636,666	—	2,636,666	—
Equity securities, available for sale	14,878		13,802	1,076	—
Derivatives, index options	169,314		—	—	169,314

Total assets	$	2,820,858	13,802	2,637,742	169,314

Policyholder account balances (a)	$	187,399	—	—	187,399
Other liabilities (b)	5,939		—	—	5,939

Total liabilities	$	193,338	—	—	193,338

(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:



	March 31, 2014
	Total		Level 1	Level 2	Level 3
	(In thousands)

Debt securities, available for sale	$	2,665,975	—	2,665,975	—
Equity securities, available for sale	15,687		14,297	1,390	—
Derivatives, index options	134,916		—	—	134,916

Total assets	$	2,816,578	14,297	2,667,365	134,916

Policyholder account balances (a)	$	153,437	—		153,437
Other liabilities (b)	7,099		—	—	7,099

Total liabilities	$	160,536	—	—	160,536

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:



	March 31, 2014
	Total			Level 1		Level 2		Level 3
	(In thousands)

Debt securities, available for sale:
Priced by third-party vendors	$	2,665,975		—		2,665,975		—
Priced internally	—			—		—		—
Subtotal	2,665,975			—		2,665,975		—

Equity securities, available for sale:
Priced by third-party vendors	15,687			14,297		1,390		—
Priced internally	—			—		—		—
Subtotal	15,687			14,297		1,390		—

Derivatives, index options:
Priced by third-party vendors	134,916			—		—		134,916
Priced internally	—			—		—		—
Subtotal	134,916			—		—		134,916

Total	$	2,816,578		14,297		2,667,365		134,916

Percent of total	100.0		%	0.5	%	94.7	%	4.8	%



	December 31, 2013
	Total			Level 1		Level 2		Level 3
	(In thousands)

Debt securities, available for sale:
Priced by third-party vendors	$	2,636,666		—		2,636,666		—
Priced internally	—			—		—		—
Subtotal	2,636,666			—		2,636,666		—

Equity securities, available for sale:
Priced by third-party vendors	14,878			13,802		1,076		—
Priced internally	—			—		—		—
Subtotal	14,878			13,802		1,076		—

Derivatives, index options:
Priced by third-party vendors	169,314			—		—		169,314
Priced internally	—			—		—		—
Subtotal	169,314			—		—		169,314

Total	$	2,820,858		13,802		2,637,742		169,314

Percent of total	100.0		%	0.5	%	93.5	%	6.0	%

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 March 31, 2014
	Debt Securities, Available for Sale		Equity Securities, Available for Sale	Derivatives, Index Options		Total Assets		Other Liabilities
	(In thousands)

Balance at January 1, 2014	$	—	—	169,314		169,314		193,338
Total realized and unrealized gains (losses):
Included in net income	—		—	548		548		2,651
Included in other comprehensive income	—		—	—		—		—
Purchases, sales, issuances and settlements, net	—		—	(34,946	)	(34,946	)	(35,453	)
Transfers into (out of) Level 3	—		—	—		—		—

Balance at end of period	$	—	—	134,916		134,916		160,536

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	$	—	—	—		—		2,085



	For the Three months ended March 31, 2013
	Debt Securities, Available for Sale		Equity Securities, Available for Sale	Derivatives, Index Options	Total Assets	Other Liabilities
	(In thousands)

Balance at January 1, 2013	$	—	—	—	—	2,718
Total realized and unrealized gains (losses):
Included in net income	—		—	—	—	1,481
Included in other comprehensive income	—		—	—	—	—
Purchases, sales, issuances and settlements, net	—		—	—	—	(126	)
Transfers into (out of) Level 3	—		—	—	—	—

Balance at end of period	$	—	—	—	—	4,073

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	$	—	—	—	—	1,551

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:



	March 31, 2014
				Fair Value Hierarchy Level
	Carrying Values		Fair Values	Level 1		Level 2	Level 3
	(In thousands)
ASSETS
Investments in debt and equity securities:
Securities held to maturity	$	6,605,854	6,853,264	—	—	6,853,264	—
Securities available for sale	2,681,662		2,681,662	14,297	—	2,667,365	—

Cash and short-term investments	132,839		132,839	132,839	—	—	—
Mortgage loans	128,506		135,036	—	—	—	135,036
Policy loans	65,144		65,144	—	—	—	65,144
Other loans	2,704		2,937	—	—	—	2,937
Derivatives, index options	134,916		134,916	—	—	—	134,916
Life interest in Libbie Shearn Moody Trust	—		12,775	—	—	—	12,775

LIABILITIES
Deferred annuity contracts	$	7,302,032	6,946,413	—	—	—	6,946,413
Immediate annuity and supplemental contracts	455,511		477,718	—	—	—	477,718



	December 31, 2013
				Fair Value Hierarchy Level
	Carrying Values		Fair Values	Level 1		Level 2	Level 3
	(In thousands)
ASSETS
Investments in debt and equity securities:
Securities held to maturity	$	6,510,320	6,656,144	—	—	6,656,144	—
Securities available for sale	2,651,544		2,651,544	13,802	—	2,637,742	—

Cash and short-term investments	120,859		120,859	120,859	—	—	—
Mortgage loans	132,765		138,159	—	—	—	138,159
Policy loans	65,969		65,969	—	—	—	65,969
Other loans	2,986		3,143	—	—	—	3,143
Derivatives, index options	169,314		169,314	—	—	—	169,314
Life interest in Libbie Shearn Moody Trust	—		12,775	—	—	—	12,775

LIABILITIES
Deferred annuity contracts	$	7,288,861	6,941,902	—	—	—	6,941,902
Immediate annuity and supplemental contracts	463,276		483,690	—	—	—	483,690

- 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, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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