Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

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

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:

	June 30, 2014
	Total		Level 1	Level 2	Level 3
	(In thousands)
Debt securities, available for sale	$	2,782,949	—	2,782,949	—
Equity securities, available for sale	16,501		15,083	1,418	—
Derivatives, index options	146,514		—	—	146,514
Total assets	$	2,945,964	15,083	2,784,367	146,514
Policyholder account balances (a)	$	163,770	—		163,770
Other liabilities (b)	7,658		—	—	7,658
Total liabilities	$	171,428	—	—	171,428

During the three and six months ended June 30, 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.

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:

	June 30, 2014
	Total			Level 1		Level 2		Level 3
	(In thousands)
Debt securities, available for sale:
Priced by third-party vendors	$	2,782,949		—		2,782,949		—
Priced internally	—			—		—		—
Subtotal	2,782,949			—		2,782,949		—
Equity securities, available for sale:
Priced by third-party vendors	16,501			15,083		1,418		—
Priced internally	—			—		—		—
Subtotal	16,501			15,083		1,418		—
Derivatives, index options:
Priced by third-party vendors	146,514			—		—		146,514
Priced internally	—			—		—		—
Subtotal	146,514			—		—		146,514
Total	$	2,945,964		15,083		2,784,367		146,514
Percent of total	100.0		%	0.5	%	94.5	%	5.0	%

	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 June 30, 2014
	Debt Securities, Available for Sale		Equity Securities, Available for Sale	Derivatives, Index Options		Total Assets		Other Liabilities
	(In thousands)
Balance at April 1, 2014	$	—	—	134,916		134,916		160,536
Total realized and unrealized gains (losses):
Included in net income	—		—	45,251		45,251		44,779
Included in other comprehensive income	—		—			—		—
Purchases, sales, issuances and settlements, net				(33,653	)	(33,653	)	(33,887	)
Transfers into (out of) Level 3	—		—			—		—
Balance at end of period	$	—	—	146,514		146,514		171,428
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets held at the end of the reporting period	$	—	—	43,313		43,313		1,006

	For the Three Months ended June 30, 2013
	Debt Securities, Available for Sale		Equity Securities, Available for Sale	Derivatives, Index Options	Total Assets	Other Liabilities
	(In thousands)
Balance at April 1, 2013	$	—	—	—	—	4,073
Total realized and unrealized gains (losses):
Included in net income	—		—	—	—	1,484
Included in other comprehensive income	—		—	—	—	—
Purchases, sales, issuances and settlements, net	—		—	—	—	(1,187	)
Transfers into (out of) Level 3	—		—	—	—	—
Balance at end of period	$	—	—	—	—	4,370
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets held at the end of the reporting period	$	—	—	—	—	2,190

	Six Months Ended June 30, 2014
	Debt Securities, Available for Sale		Equity Securities, Available for Sale	Derivatives, Index Options		Total Assets		Other Liabilities
	(In thousands)
Beginning balance, January 1, 2014	$	—	—	169,314		169,314		193,338
Total realized and unrealized gains (losses):
Included in net income	—		—	45,799		45,799		47,430
Included in other comprehensive income	—		—	—		—		—
Purchases, sales, issuances and settlements, net	—		—	(68,599	)	(68,599	)	(69,340	)
Transfers into (out of) Level 3	—		—	—		—		—
Balance at end of period	$	—	—	146,514		146,514		171,428
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets held at the end of the reporting period	$	—	—	44,200		44,200		3,091

	Six Months Ended June 30, 2013
	Debt Securities, Available for Sale		Equity Securities, Available for Sale	Derivatives, Index Options	Total Assets	Other Liabilities
	(In thousands)
Beginning balance, January 1, 2013	$	—	—	—	—	2,718
Total realized and unrealized gains (losses):
Included in net income	—		—	—	—	2,966
Included in other comprehensive income	—		—	—	—	—
Purchases, sales, issuances and settlements, net	—		—	—	—	(1,314	)
Transfers into (out of) Level 3	—		—	—	—	—
Balance at end of period	$	—	—	—	—	4,370
Change in unrealized gains or losses for the period included in earnings (or changes in net assets) for assets held at the end of the reporting period	$	—	—	—	—	3,742

Schedule of quantitative information of Level 3 liabilities

The following tables show the quantitative information about the Company's level 3 assets and liabilities.

	June 30, 2014
	Fair Value		Valuation Technique	Unobservable Input
	(In thousands)
Derivatives, index options	$	146,514	Broker prices	Implied volatility
				Inputs from broker proprietary models
Total assets	$	146,514
Policyholder account balances	$	163,770	Deterministic cash flow model	Projected option cost
Other liabilities	7,658		Black Scholes	Expected term
				Forfeiture assumptions
Total liabilities	$	171,428

	December 31, 2013
	Fair Value		Valuation Technique	Unobservable Input
	(In thousands)
Derivatives, index options	$	169,314	Broker prices	Implied volatility
				Inputs from broker proprietary models
Total assets	$	169,314
Policyholder account balances	$	187,399	Deterministic cash flow model	Projected option cost
Other liabilities	5,939		Black Scholes	Expected term
				Forfeiture assumptions
Total liabilities	$	193,338

Schedule of quantitative information of Level 3 assets

he following tables show the quantitative information about the Company's level 3 assets and liabilities.

	June 30, 2014
	Fair Value		Valuation Technique	Unobservable Input
	(In thousands)
Derivatives, index options	$	146,514	Broker prices	Implied volatility
				Inputs from broker proprietary models
Total assets	$	146,514
Policyholder account balances	$	163,770	Deterministic cash flow model	Projected option cost
Other liabilities	7,658		Black Scholes	Expected term
				Forfeiture assumptions
Total liabilities	$	171,428

	December 31, 2013
	Fair Value		Valuation Technique	Unobservable Input
	(In thousands)
Derivatives, index options	$	169,314	Broker prices	Implied volatility
				Inputs from broker proprietary models
Total assets	$	169,314
Policyholder account balances	$	187,399	Deterministic cash flow model	Projected option cost
Other liabilities	5,939		Black Scholes	Expected term
				Forfeiture assumptions
Total liabilities	$	193,338

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:

	June 30, 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	$	6,641,083	6,979,345	—	6,979,345	—
Securities available for sale	2,799,450		2,799,450	15,083	2,784,367	—
Cash and short-term investments	133,506		133,506	133,506	—	—
Mortgage loans	152,208		158,893	—	—	158,893
Policy loans	64,988		64,988	—	—	64,988
Other loans	2,705		2,855	—	—	2,855
Derivatives, index options	146,514		146,514	—	—	146,514
Life interest in Libbie Shearn Moody Trust	—		12,775	—	—	12,775
LIABILITIES
Deferred annuity contracts	$	7,402,701	7,038,029	—	—	7,038,029
Immediate annuity and supplemental contracts	447,040		471,381	—	—	471,381

	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