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

			March 31, 2013
											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		$	4,556	$	98	$	-	$	4,654	$	-
Obligations of U.S. states and their political
	subdivisions			95,765		6,993		315		102,443		-
Foreign government bonds				30,510		9,076		-		39,586		-
Public utilities				243,597		26,724		543		269,778		-
Redeemable preferred stock				-		-		-		-		-
Corporate securities				2,470,504		244,000		734		2,713,770		-
Asset-backed securities (1)				173,529		9,618		14		183,133		(1,352)
Commercial mortgage-backed securities				379,751		21,141		315		400,577		-
Residential mortgage-backed securities (2)				223,510		10,757		-		234,267		(46)
		Total fixed maturities, available-for-sale	$	3,621,722	$	328,407	$	1,921	$	3,948,208	$	(1,398)

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

			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
	Mutual Funds (4)		$	18	$	4	$	-	$	22
		Total equity securities, available-for-sale	$	18	$	4	$	-	$	22

The amortized cost and fair value of fixed maturities by contractual maturities at March 31, 2013, are as follows:

		Available-for-Sale
		Amortized		Fair
		Cost		Value

		(in thousands)
Due in one year or less		$	1,170,549	$	1,209,770
Due after one year through five years			712,092		808,650
Due after five years through ten years			509,424		589,668
Due after ten years			452,867		522,143
Asset-backed securities			173,529		183,133
Commercial mortgage-backed securities			379,751		400,577
Residential mortgage-backed securities			223,510		234,267
	Total	$	3,621,722	$	3,948,208

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:

		Three Months Ended
			March 31,
			2013		2012

			(in thousands)
Fixed maturities, available-for-sale
	Proceeds from sales		$	114,927	$	283,320
	Proceeds from maturities/repayments			206,415		149,141
	Gross investment gains from sales, prepayments, and maturities			2,792		7,138
	Gross investment losses from sales and maturities			(80)		(1)

Equity securities, available-for-sale
	Proceeds from sales		$	1	$	-
	Proceeds from maturities/repayments			-		-
	Gross investment gains from sales, prepayments, and maturities			1		-
	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)		$	-	$	(69)

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.

		Three Months Ended
		March 31, 2013		March 31, 2012

			(in thousands)
Balance, beginning of period		$	3,381	$	3,542
Credit loss impairments previously recognized on securities which matured, paid down,
	prepaid or were sold during the period		(1,614)		(18)
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			-		69
Increases due to the passage of time on previously recorded credit losses			27		23
Accretion of credit loss impairments previously recognized due to an increase in cash flows expected
	to be collected		(68)		(134)
Balance, end of period		$	1,726	$	3,482

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

	March 31, 2013				December 31, 2012
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value

	(in thousands)

Fixed maturities	$	1,982	$	2,014	$	1,973	$	2,022
Equity securities		5,308		6,416		5,217		5,894
Total trading account assets	$	7,290	$	8,430	$	7,190	$	7,916

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 and $0.0 million of losses during the three months ended March 31, 2013 and 2012, respectively.

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

		March 31, 2013				December 31, 2012
			% of				% of
		Amount	Total			Amount	Total

Commercial mortgage and other loans by property type:		(in thousands)				(in thousands)
Office	$	62,954	14.6	%	$	59,074	13.8	%
Retail		71,178	16.5			71,546	16.7
Apartments/Multi-Family		118,732	27.5			120,066	28.0
Industrial		113,894	26.4			114,619	26.7
Hospitality		4,613	1.1			4,621	1.1
Other		10,727	2.5			9,206	2.0
Total commercial mortgage loans		382,098	88.5			379,132	88.3
Agricultural property loans		49,517	11.5			50,026	11.7
Total commercial and agricultural mortgage loans by property type		431,615	100.0	%		429,158	100.0	%
Valuation allowance		(2,139)				(2,177)
Total net commercial and agricultural mortgage loans by property type		429,476				426,981

Other Loans
Uncollateralized loans		2,740				-
Total other loans		2,740				-
Valuation Allowance		-				-
Total net other loans		2,740				-
Total commercial mortgage and other loans	$	432,216			$	426,981

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 March 31, 2013.

Activity in the allowance for losses for all commercial mortgage and other loans, as of the dates indicated, is as follows:

(1) Agricultural loans represent $0.2 million of the ending allowance at both March 31, 2013 and December 31, 2012.

The following tables set forth the allowance for credit losses and the recorded investment in commercial mortgage and other loans as of the dates indicated:


	March 31, 2013		December 31, 2012
	Total Loans

	(in thousands)
Allowance for Credit Losses:
Ending balance: individually evaluated for impairment (1)	$	-	$	-
Ending balance: collectively evaluated for impairment (2)		2,139		2,177
Total ending balance	$	2,139	$	2,177

Recorded Investment (3):
Ending balance gross of reserves: individually evaluated for impairment (1)	$	-	$	-
Ending balance gross of reserves: collectively evaluated for impairment (2)		434,355		429,158
Total ending balance, gross of reserves	$	434,355	$	429,158

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 March 31, 2013 and December 31, 2012. The average recorded investment in impaired loans with an allowance recorded, before the allowance for losses, was $0 million at both March 31, 2013 and December 31, 2012.

There was no net investment income recognized on these loans for both the periods ended March 31, 2013 and December 31, 2012. 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 March 31, 2013 and December 31, 2012. 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 March 31, 2013 and December 31, 2012, 85% of the $432 million recorded investment and 85% of the $429 million recorded investment, respectively, had a loan-to-value ratio of less than 80%. As of March 31, 2013 and December 31, 2012, 95% and 96% of the recorded investment had a debt service coverage ratio of 1.0X or greater. As of March 31, 2013 and December 31, 2012, approximately 5% or $23 million and 4% or $17 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 or uncollateralized loans.

All commercial mortgage and other loans were in current status at both March 31, 2013 and December 31, 2012. 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, the Company sold commercial mortgage loans to an affiliated company. See Note 7 for further discussion regarding related party transactions.

Commercial mortgage and other loans may occasionally be involved 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 does not hold any outstanding investments related to commercial mortgage and other loans that have been restructured in a troubled debt restructuring.

As of March 31, 2013, 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 three months ended March 31, 2013 and 2012 was from the following sources:

			Three Months Ended
			March 31,
			2013		2012
		(in thousands)
Fixed maturities, available-for-sale			$	53,294	$	67,621
Equity securities, available-for-sale				-		-
Trading account assets				32		444
Commercial mortgage and other loans				6,128		6,822
Policy loans				114		131
Short-term investments and cash equivalents				82		200
Other long-term investments				691		738
Gross investment income				60,341		75,956
Less investment expenses				(1,801)		(2,063)
	Net investment income		$	58,540	$	73,893

Realized investment gains (losses), net, for the three months ended March 31, 2013 and 2012, were from the following sources:

		Three Months Ended
		March 31,
		2013		2012

		(in thousands)
Fixed maturities		$	2,712	$	7,068
Equity securities			1		-
Commercial mortgage and other loans			38		(556)
Derivatives			(40,826)		(42,595)
Other			(21)		-
	Realized investment gains (losses), net	$	(38,096)	$	(36,083)

The balance of and changes in each component of “Accumulated other comprehensive income (loss)” for the three months ended March 31, 2013 and 2012 are as follows:

	Accumulated Other Comprehensive Income (Loss)
		Foreign Currency Translation Adjustment		Net Unrealized Investment Gains (Losses) (1)		Total Accumulated Other Comprehensive Income (Loss)
	(in thousands)
Balance, December 31, 2012	$	7	$	147,280	$	147,287
Change in other comprehensive income
before reclassifications		(15)		(11,298)		(11,313)
Amounts reclassified from AOCI		-		(2,713)		(2,713)
Income tax benefit (expense)		5		4,904		4,909
Balance, March 31, 2013	$	(3)	$	138,173	$	138,170


	Accumulated Other Comprehensive Income (Loss)
		Foreign Currency Translation Adjustment		Net Unrealized Investment Gains (Losses) (1)		Total Accumulated Other Comprehensive Income (Loss)
	(in thousands)
Balance, December 31, 2011	$	-	$	160,712	$	160,712
Change in component during period (2)		2		(13,564)		(13,562)
Balance, March 31, 2012	$	2	$	147,148	$	147,150

Reclassifications out of Accumulated Other Comprehensive Income (Loss) ("AOCI")

		Three Months Ended
		March 31, 2013
		(in thousands)
Amounts reclassified from AOCI (1)(2):

Net unrealized investment gains (losses):
Cash flow hedges - Currency/Interest rate (3)	$	(29)
Net unrealized investment gains (losses) on available-for-sale securities		2,742
Total net unrealized investment gains (losses) (4)		2,713

Total reclassifications for the period	$	2,713

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 Unaudited Interim 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, 2012		$	545	$	(214)	$	(100)	$	231
Net investment (losses) gains on investments arising during
	the period		608		-		(213)		395
Reclassification adjustment for gains (losses) included in
	net income		(788)		-		276		(512)
Impact of net unrealized investment (losses) gains on
	deferred policy acquisition costs, deferred sales inducements and
	valuation of business acquired		-		85		(30)		55
Balance, March 31, 2013		$	365	$	(129)	$	(67)	$	169

				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, 2012		$	376,777	$	(147,089)	$	(2,164)	$	(80,468)	$	147,056
Net investment gains (losses) on investments arising during
	the period		(46,049)		-		-		16,118		(29,931)
Reclassification adjustment for (losses) gains included in
	net income		(1,925)		-		-		674		(1,251)
Impact of net unrealized investment (losses) gains on
	deferred policy acquisition costs, deferred sales inducements
	and valuation of business acquired		-		31,896		-		(11,163)		20,733

Impact of net unrealized investment (gains) losses on
	policyholders' account balances		-		-		2,164		(770)		1,394
Balance, March 31, 2013		$	328,803	$	(115,193)	$	-	$	(75,609)	$	138,001

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


	March 31, 2013		December 31, 2012

	(in thousands)
Fixed maturity securities on which an OTTI loss has been recognized	$	365	$	545
Fixed maturity securities, available-for-sale - all other		326,121		375,409
Equity securities, available-for-sale		4		4
Affiliated notes		4,069		4,386
Derivatives designated as cash flow hedges (1)		(1,322)		(3,068)
Other investments		(69)		46
Unrealized gains (losses) on investments and derivatives	$	329,168	$	377,322

(1) See Note 5 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:

			March 31, 2013
			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		$	7,111	$	315	$	-	$	-	$	7,111	$	315
Corporate securities				76,285		1,077		11,881		200		88,166		1,277
Commercial mortgage-backed securities				27,901		314		407		1		28,308		315
Asset-backed securities				387		-		80		14		467		14
		Total	$	111,684	$	1,706	$	12,368	$	215	$	124,052	$	1,921
Equity securities, available-for-sale			$	-	$	-	$	-	$	-	$	-	$	-

			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
		Total	$	59,481	$	1,299	$	17,861	$	620	$	77,342	$	1,919
Equity securities, available-for-sale			$	-	$	-	$	-	$	-	$	-	$	-

The gross unrealized losses, related to fixed maturities at March 31, 2013 and December 31, 2012, are composed of $1.8 million and $1.6 million, respectively, related to high or highest quality securities based on National Association of Insurance Commissioners (“NAIC”) or equivalent rating and $0.1 million and $0.3 million, respectively, related to other than high or highest quality securities based on NAIC or equivalent rating. At March 31, 2013, none of the gross unrealized losses represented declines in value of greater than 20%, as compared to $0 million at December 31, 2012, that represented declines in value of greater than 20%, $0 million of which had been in that position for less than six months. At March 31, 2013 and December 31, 2012, respectively, the $0.2 million and $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.

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 March 31, 2013 or December 31, 2012. 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 March 31, 2013, 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 March 31, 2013 and December 31, 2012, there were no gross unrealized losses, related to equity securities.