Future Policy Benefit Reserve

12 Months Ended

Dec. 31, 2012

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

Future Policy Benefit Reserve

12. FuturePolicyBenefitReserve

Future policy benefit reserves are comprised of the following:

Year ended December 31
(U.S. dollars in thousands)	2012		2011
Traditional Life		805,558		812,628
Annuities		4,006,487		4,032,766
Total future policy benefit reserves		4,812,045		4,845,394

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. The average interest rate used for the determination of the future policy benefits for these contracts was 4.5% at December 31, 2012 and 2011. Total future policy benefit reserves for the year ended December 31, 2012 and 2011 were $4.8 billion. There were 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, resulting in a net decrease of $26.3 million during 2012.