Future Policy Benefit Reserve

12 Months Ended

Dec. 31, 2014

Liability for Future Policy Benefits and Unpaid Claims and Claims Adjustment Expense [Abstract]

Future policy benefit reserve

Future Policy Benefit Reserves

Future policy benefit reserves are comprised of the following:

Year ended December 31 (U.S. dollars in thousands)	2014		2013
Traditional Life	$	789,133	$	827,341
Annuities	3,918,066		3,976,475
Total future policy benefit reserves	$	4,707,199	$	4,803,816

The Company entered into long duration contracts that subject the Company to mortality and morbidity risks and that were accounted for as life premiums earned. Future policy benefit reserves were established using appropriate assumptions for investment yields, mortality, and expenses, including a provision for adverse deviation. At December 31, 2014 and 2013, the average interest rate used for the determination of the future policy benefits for these contracts was 3.3% and 4.4%, respectively. Total future policy benefit reserves for the years ended December 31, 2014 and 2013 were $4.7 billion and $4.8 billion, respectively. The net decrease, during 2014, in the total future policy benefit reserves was from normal course releases on single premium annuities in line with the benefits paid and mortality of underlying policyholders, which has been partially offset by foreign exchange movements.

Under the terms of the transaction described in Note 3, "Sale of Life Reinsurance Subsidiary," the Company has reinsured $4.3 billion of its future policy benefit reserves. Based upon the contractual right of offset, future policy benefit reserves recoverable are netted against the funds withheld liability owing to GCLR. See Note 14, “Funds Withheld on Life Retrocession Arrangements,” for further information.