The following tables provide information relating to fixed maturities and equity securities (excluding investments classified as trading) as of the dates indicated:

			December 31, 2012
											Other-than-
						Gross		Gross			temporary
			Amortized			Unrealized		Unrealized	Fair		impairments
			Cost			Gains		Losses	Value		in AOCI (3)

			(in thousands)
Fixed maturities, available-for-sale
U.S. Treasury securities and obligations of U.S.
	government authorities and agencies		$	4,568	$	118	$	-	$	4,686	$	-
Obligations of U.S. states and their political
	subdivisions			95,107		7,359		350		102,116		-
Foreign government bonds				45,733		9,796		-		55,529		-
Public utilities				253,566		29,554		569		282,551		-
Redeemable preferred stock				2,565		697		-		3,262		-
Corporate securities				2,622,982		283,117		658		2,905,441		-
Asset-backed securities (1)				179,037		8,772		332		187,477		(3,514)
Commercial mortgage-backed securities				369,187		25,725		10		394,902		-
Residential mortgage-backed securities (2)				254,751		12,735		-		267,486		(48)
		Total fixed maturities, available-for-sale	$	3,827,496	$	377,873	$	1,919	$	4,203,450	$	(3,562)

Equity securities, available-for-sale
Common Stocks
	Industrial, miscellaneous & other		$	18	$	4	$	-	$	22
		Total equity securities, available-for-sale	$	18	$	4	$	-	$	22

			December 31, 2011 (4)
											Other-than-
						Gross		Gross			temporary
			Amortized			Unrealized		Unrealized	Fair		impairments
			Cost			Gains		Losses	Value		in AOCI (3)

			(in thousands)
Fixed maturities, available-for-sale
	U.S. Treasury securities and obligations of U.S.
		government authorities and agencies	$	85,196	$	839	$	-	$	86,035	$	-
	Obligations of U.S. states and their political
		subdivisions		85,822		8,336		-		94,158		-
	Foreign government bonds			66,449		10,782		-		77,231		-
	Redeemable preferred stock			5,380		1,325		-		6,705		-
	Corporate securities			3,580,396		368,444		4,336		3,944,504		(236)
	Asset-backed securities (1)			172,390		9,798		4,804		177,384		(3,906)
	Commercial mortgage-backed securities			463,576		28,189		8		491,757		-
	Residential mortgage-backed securities (2)			379,486		16,562		55		395,993		(55)
		Total fixed maturities, available-for-sale	$	4,838,695	$	444,275	$	9,203	$	5,273,767	$	(4,197)

Equity securities, available-for-sale
Common Stocks
	Industrial, miscellaneous & other		$	2,510	$	561	$	-	$	3,071
		Total equity securities, available-for-sale	$	2,510	$	561	$	-	$	3,071

The amortized cost and fair value of fixed maturities by contractual maturities at December 31, 2012, are as follows:

		Available-for-Sale
		Amortized		Fair
		Cost		Value

		(in thousands)
Due in one year or less		$	733,849	$	756,660
Due after one year through five years			1,212,915		1,326,333
Due after five years through ten years			580,784		670,816
Due after ten years			496,973		599,776
Asset-backed securities			179,037		187,477
Commercial mortgage-backed securities			369,187		394,902
Residential mortgage-backed securities			254,751		267,486
	Total	$	3,827,496	$	4,203,450

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Asset-backed, commercial mortgage-backed, and residential mortgage-backed securities are shown separately in the table above, as they are not due at a single maturity date.

The following table depicts the sources of fixed maturity proceeds and related gross investment gains (losses), as well as losses on impairments of both fixed maturities and equity securities:


		2012		2011		2010

		(in thousands)
Fixed maturities, available-for-sale
	Proceeds from sales	$	504,001	$	1,121,792	$	1,422,218
	Proceeds from maturities/repayments		861,512		545,155		497,378
	Gross investment gains from sales, prepayments, and maturities		23,077		75,580		131,492
	Gross investment losses from sales and maturities		(134)		(223)		(1,801)

Equity securities, available-for-sale
	Proceeds from sales	$	3,201	$	-	$	-
	Proceeds from maturities/repayments		-		-		-
	Gross investment gains from sales, prepayments, and maturities		703		-		-
	Gross investment losses from sales and maturities		-		-		-

Fixed maturity and equity security impairments
	Net writedowns for other-than-temporary impairment losses
	on fixed maturities recognized in earnings (1)	$	(258)	$	(962)	$	(3,004)

As discussed in Note 2, a portion of certain OTTI losses on fixed maturity securities are recognized in OCI. For these securities the net amount recognized in earnings (“credit loss impairments”) represents the difference between the amortized cost of the security and the net present value of its projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. Any remaining difference between the fair value and amortized cost is recognized in OCI.

The following table sets forth the amount of pre-tax credit loss impairments on fixed maturity securities held by the Company as of the dates indicated, for which a portion of the OTTI loss was recognized in OCI, and the corresponding changes in such amounts.

		Year Ended		Year Ended
		December 31,		December 31,
		2012		2011

			(in thousands)
Balance, beginning of period		$	3,542	$	14,148
Credit loss impairments previously recognized on securities which matured, paid down,
	prepaid or were sold during the period		(275)		(11,446)
Credit loss impairments previously recognized on securities impaired to fair value during the period			-		-
Credit loss impairment recognized in the current period on securities not previously impaired			-		-
Additional credit loss impairments recognized in the current period on securities previously impaired			258		961
Increases due to the passage of time on previously recorded credit losses			197		340
Accretion of credit loss impairments previously recognized due to an increase in cash flows expected
	to be collected		(341)		(461)
Balance, end of period		$	3,381	$	3,542

The following table sets forth the composition of the Company's “trading account assets” as of the dates indicated:

The net change in unrealized gains and losses from trading account assets still held at period end, recorded within “Asset administration fees and other income” was ($0.4) million of losses, ($4.1) million of losses and $1.6 million of gains during the years ended December 31, 2012, 2011 and 2010, respectively.

The Company's commercial mortgage and other loans are comprised as follows, as of the dates indicated:

		December 31, 2012				December 31, 2011
			% of				% of
		Amount	Total			Amount	Total

Commercial mortgage and other loans by property type:		(in thousands)				(in thousands)
Office	$	59,074	13.8	%	$	60,220	13.3	%
Retail		71,546	16.7			68,369	15.1
Apartments/Multi-Family		120,066	28.0			114,900	25.5
Industrial		114,619	26.7			144,513	32.1
Hospitality		4,621	1.1			9,289	2.1
Total commercial mortgage loans		369,926	86.3			397,291	88.1
Agricultural property loans		50,026	11.7			48,964	10.9
Other		9,206	2.0			4,605	1.0
Total commercial mortgage and other loans by property type		429,158	100.0	%		450,860	100.0	%
Valuation allowance		(2,177)				(1,501)
Total net commercial mortgage and other loans by property type	$	426,981			$	449,359

The commercial mortgage and agricultural property loans are geographically dispersed throughout the United States, Canada and Asia with the largest concentrations in California (17%), New York (14%), and Ohio (11%) at December 31, 2012.

Activity in the allowance for losses for all commercial mortgage and other loans, for the years ended December 31, is as follows:

(1) Agricultural loans represent $0.2 million of the ending allowance at December 31, 2012, 2011 and 2010, respectively.

The following tables set forth the allowance for credit losses and the recorded investment in commercial mortgage and other loans for the years ended December 31:


	December 31, 2012		December 31, 2011
	Total Loans		Total Loans

	(in thousands)
Allowance for Credit Losses:
Ending balance: individually evaluated for impairment (1)	$	-	$	-
Ending balance: collectively evaluated for impairment (2)		2,177		1,501
Total ending balance	$	2,177	$	1,501

Recorded Investment (3):
Ending balance gross of reserves: individually evaluated for impairment (1)	$	-	$	-
Ending balance gross of reserves: collectively evaluated for impairment (2)		429,158		450,860
Total ending balance, gross of reserves	$	429,158	$	450,860

Impaired loans include those loans for which it is probable that all amounts due will not be collected according to the contractual terms of the loan agreement. As shown in the table above, there were no impaired commercial mortgage and other loans identified in management's specific review of probable loan losses and related allowance at December 31, 2012 and 2011. The average recorded investment in impaired loans with an allowance recorded, before the allowance for losses, was $0 million and $3 million at December 31, 2012 and 2011, respectively.

There was no net investment income recognized on these loans for the years ended December 31, 2012 and 2011. See Note 2 for information regarding the Company's accounting policies for non-performing loans.

Impaired commercial mortgage and other loans with no allowance for losses are loans in which the fair value of the collateral or the net present value of the loans' expected future cash flows equals or exceeds the recorded investment. The Company had no such loans at December 31, 2012 and 2011. See Note 2 for information regarding the Company's accounting policies for non-performing loans.

As described in Note 2, loan-to-value and debt service coverage ratios are measures commonly used to assess the quality of commercial mortgage and other loans. As of December 31, 2012 and 2011, 85% or $363 million of the recorded investment and 85% or $384 million of the recorded investment, respectively, had a loan-to-value ratio of less than 80%. As of both December 31, 2012 and 2011, 96% of the recorded investment had a debt service coverage ratio of 1.0X or greater. As of December 31, 2012 and 2011, approximately 4% or $17 million and 4% or $19 million, respectively, of the recorded investment had a loan-to-value ratio greater than 100% or debt service coverage ratio less than 1.0X, reflecting loans where the mortgage amount exceeds the collateral value or where current debt payments are greater than income from property operations; none of which related to agricultural loans.

All commercial mortgage and other loans were in current status including $0 million and $3.1 million of hospitality loans in non-accrual status at December 31, 2012 and 2011, respectively. Nonaccrual loans are those on which the accrual of interest has been suspended after the loans become 90 days delinquent as to principal or interest payments, or earlier when the Company has doubts about collectability and loans for which a loan specific reserve has been established. See Note 2 for further discussion regarding non-accrual status loans.

During 2012 and 2011, the Company sold commercial mortgage loans to an affiliated company. See Note 13 for further discussion regarding related party transactions.

Commercial mortgage and other loans are occasionally restructured in a troubled debt restructuring. These restructurings generally include one or more of the following: full or partial payoffs outside of the original contract terms: changes to interest rates; extensions of maturity; or additions or modifications to covenants. Additionally, the Company may accept assets in full or partial satisfaction of the debt as part of a troubled debt restructuring. When restructurings occur, they are evaluated individually to determine whether the restructuring or modification constitutes a “troubled debt restructuring” as defined by authoritative accounting guidance. The Company's outstanding investment related to commercial mortgage and other loans that have been restructured in a troubled debt restructuring is not material.

As of December 31, 2012, the Company has not committed to provide additional funds to borrowers that have been involved in a troubled debt restructuring.

Net investment income for the years ended December 31, 2012, 2011 and 2010, was from the following sources:

			2012		2011		2010
		(in thousands)
Fixed maturities, available-for-sale			$	246,479	$	282,108	$	349,906
Equity securities, available-for-sale				7		278		932
Trading account assets				923		2,023		3,378
Commercial mortgage and other loans				28,449		28,044		26,665
Policy loans				845		902		986
Short-term investments and cash equivalents				620		724		1,334
Other long-term investments				8,302		1,016		2,101
Gross investment income				285,625		315,095		385,302
Less investment expenses				(7,974)		(9,085)		(8,193)
	Net investment income		$	277,651	$	306,010	$	377,109

Realized investment gains (losses), net, for the years ended December 31, 2012, 2011 and 2010, were from the following sources:

Net unrealized investment gains and losses on securities classified as “available-for-sale” and certain other long-term investments and other assets are included in the Statements of Financial Position as a component of AOCI. Changes in these amounts include reclassification adjustments to exclude from OCI those items that are included as part of “Net income” for a period that had been part of OCI in earlier periods. The amounts for the periods indicated below, split between amounts related to fixed maturity securities on which an OTTI loss has been recognized, and all other net unrealized investment gains and losses, are as follows:

Net Unrealized Investment Gains and Losses on Fixed Maturity Securities on which an OTTI loss has been recognized


				Deferred Policy				Accumulated Other
				Acquisition Costs,				Comprehensive
				Deferred Sales				Income (Loss) Related
		Net Unrealized		Inducements		Deferred		To Net Unrealized
		Gains (Losses) on		and Valuation of		Income Tax		Investment
		Investments		Business Acquired		(Liability) Benefit		Gains (Losses)
		(in thousands)
Balance, December 31, 2009		$	(8,543)	$	4,341	$	1,488	$	(2,714)
Cumulative effect of adoption of
	accounting principle		-		-		-		-
Net investment (losses) gains on investments arising during
	the period		(646)		-		229		(417)
Reclassification adjustment for gains (losses) included in
	net income		2,640		-		(935)		1,705
Reclassification adjustment for OTTI losses excluded from
	net income(1)		(11)		-		4		(7)
Impact of net unrealized investment (losses) gains on
	deferred policy acquisition costs, deferred sales inducements and
	valuation of business acquired		-		(1,489)		527		(962)
Balance, December 31, 2010		$	(6,560)	$	2,852	$	1,313	$	(2,395)
Net investment (losses) gains on investments arising during
	the period		(1,482)		-		519		(963)
Reclassification adjustment for gains (losses) included in
	net income		6,302		-		(2,206)		4,096
Reclassification adjustment for OTTI losses excluded from
	net income(1)		-		-		-		-
Impact of net unrealized investment (losses) gains on
	deferred policy acquisition costs, deferred sales inducements and
	valuation of business acquired		-		(2,160)		756		(1,404)
Balance, December 31, 2011		$	(1,740)	$	692	$	382	$	(666)
Net investment (losses) gains on investments arising during
	the period		3,067		-		(1,073)		1,994
Reclassification adjustment for gains (losses) included in
	net income		(782)		-		274		(508)
Impact of net unrealized investment (losses) gains on
	deferred policy acquisition costs, deferred sales inducements and
	valuation of business acquired		-		(906)		317		(589)
Balance, December 31, 2012		$	545	$	(214)	$	(100)	$	231

				Deferred Policy						Accumulated Other
				Acquisition Costs,						Comprehensive
				Deferred Sales			Policy	Deferred		Income (Loss) Related
		Net Unrealized		Inducements			Holders'	Income Tax		To Net Unrealized
		Gains/(Losses) on		and Valuation of			Account	(Liability)		Investment
		Investments (1)		Business Acquired			Balances	Benefit		Gains (Losses)
		(in thousands)
Balance, December 31, 2009			451,879		(242,840)		-		(74,007)		135,032
Cumulative effect of adoption of
	accounting principle		-		16,957		-		(5,929)		11,028
Net investment gains (losses) on investments arising during
	the period		87,097		-		-		(30,485)		56,612
Reclassification adjustment for (losses) gains included in
	net income		(34,323)		-		-		12,013		(22,310)
Reclassification adjustment for OTTI losses excluded
	from net income(1)		11		-		-		(4)		7
Impact of net unrealized investment (losses) gains on
	deferred policy acquisition costs, deferred sales inducements
	and valuation of business acquired		-		19,837		-		(6,940)		12,897
Balance, December 31, 2010		$	504,664	$	(206,046)	$	-	$	(105,352)	$	193,266
Net investment gains (losses) on investments arising during
	the period		19,706		-		-		(6,897)		12,809
Reclassification adjustment for (losses) gains included in
	net income		(82,693)		-		-		28,947		(53,746)
Reclassification adjustment for OTTI losses excluded
	from net income(1)		-		-		-		-		-
Impact of net unrealized investment (losses) gains on
	deferred policy acquisition costs, deferred sales inducements
	and valuation of business acquired		-		13,927		-		(4,879)		9,048
Balance, December 31, 2011		$	441,677	$	(192,119)	$	-	$	(88,181)	$	161,377
Net investment gains (losses) on investments arising during
	the period		(42,295)		-		-		14,804		(27,491)
Reclassification adjustment for (losses) gains included in
	net income		(22,605)		-		-		7,912		(14,693)
Impact of net unrealized investment (losses) gains on
	deferred policy acquisition costs, deferred sales inducements
	and valuation of business acquired		-		45,030		-		(15,760)		29,270

Impact of net unrealized investment (gains) losses on
	policyholders' account balances		-		-		(2,164)		757		(1,407)
Balance, December 31, 2012		$	376,777	$	(147,089)		(2,164)	$	(80,468)	$	147,056

The table below presents net unrealized gains (losses) on investments by asset class as of the dates indicated:


		December 31, 2012		December 31, 2011		December 31, 2010

		(in thousands)
Fixed maturity securities on which an OTTI loss has been recognized		$	545	$	(1,740)	$	(6,560)
Fixed maturity securities, available-for-sale - all other			375,409		436,812		498,517
Equity securities, available-for-sale			4		561		3,103
Affiliated notes			4,386		5,263		5,511
Derivatives designated as cash flow hedges (1)			(3,068)		(962)		(2,462)
Other investments			46		3		(5)
Unrealized gains (losses) on investments and derivatives		$	377,322	$	439,937	$	498,104

	(1) See Note 11 for more information on cash flow hedges.

Duration of Gross Unrealized Loss Positions for Fixed Maturities and Equity Securities

The following table shows the fair value and gross unrealized losses aggregated by investment category and length of time that individual fixed maturity securities and equity securities have been in a continuous unrealized loss position, as of the dates indicated:

			December 31, 2012
			Less than twelve months				Twelve months or more				Total
			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

			(in thousands)
Fixed maturities, available-for-sale
Obligations of U.S. States and their
	political subdivisions		$	7,090	$	350	$	-	$	-	$	7,090	$	350
Corporate securities				35,248	$	897		14,867		330		50,115		1,227
Commercial mortgage-backed securities				3,326		10		-		-		3,326		10
Asset-backed securities				13,817		42		2,994		290		16,811		332
Residential mortgage-backed securities				-		-		-		-		-		-
		Total	$	59,481	$	1,299	$	17,861	$	620	$	77,342	$	1,919
Equity securities, available-for-sale			$	-	$	-	$	-	$	-	$	-	$	-

		December 31, 2011
		Less than twelve months				Twelve months or more				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

		(in thousands)
Fixed maturities, available-for-sale
Corporate securities		$	129,881	$	4,010	$	1,130	$	326	$	131,011	$	4,336
Commercial mortgage-backed securities			7,014		8		-		-		7,014		8
Asset-backed securities			48,831		782		28,430		4,022		77,261		4,804
Residential mortgage-backed securities			484		55		-		-		484		55
	Total	$	186,210	$	4,855	$	29,560	$	4,348	$	215,770	$	9,203
Equity securities, available-for-sale		$	-	$	-	$	-	$	-	$	-	$	-

The gross unrealized losses, related to fixed maturities at December 31, 2012 and 2011, are composed of $1.6 million and $5.4 million, respectively, related to high or highest quality securities based on National Association of Insurance Commissioners (“NAIC”) or equivalent rating and $0.3 million and $3.8 million, respectively, related to other than high or highest quality securities based on NAIC or equivalent rating. At December 31, 2012, none of the gross unrealized losses represented declines in value of greater than 20%, as compared to $3.4 million at December 31, 2011, that represented declines in value of greater than 20%, $0.3 million of which had been in that position for less than six months. At December 31, 2012, the $0.6 million of gross unrealized losses of twelve months or more were concentrated in asset backed securities and the service and manufacturing sectors of the Company's corporate securities. At December 31, 2011, $4.3 million of gross unrealized losses of twelve months or more were concentrated in asset backed securities, $1.7 million in services and $1.1 million in manufacturing sector of the Company's corporate securities.

In accordance with its policy described in Note 2, the Company concluded that an adjustment to earnings for other-than-temporary impairments for these securities was not warranted at December 31, 2012 or 2011. These conclusions are based on a detailed analysis of the underlying credit and cash flows on each security. The gross unrealized losses are primarily attributable to credit spread widening and increased liquidity discounts. At December 31, 2012, the Company does not intend to sell the securities and it is not more likely than not that the Company will be required to sell the securities before the anticipated recovery of its remaining amortized cost basis.

At December 31, 2012 and 2011, there were no gross unrealized losses, related to equity securities that represented declines of greater than 20%.

The Company pledges as collateral investment securities it owns to unaffiliated parties through certain transactions, including securities lending, securities sold under agreements to repurchase and future contracts. At December 31, the carrying value of investments pledged to third parties as reported in the Statements of Financial Position included the following:

The carrying amount of the associated liabilities supported by the pledged collateral was $39.0 million and $125.9 million at December 31, 2012 and 2011, respectively, which was “Cash collateral for loaned securities”.

Fixed maturities of $5 million at December 31, 2012 and 2011, respectively, were on deposit with governmental authorities or trustees as required by certain insurance laws.