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Investments (Tables)
 9 Months Ended
Sep. 30, 2013
Investments [Abstract]  
Fixed Maturities and Equity Securities, Available-for-sale Securities
     September 30, 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 $5,196 $62 $ - $5,258 $ -
Obligations of U.S. states and their political               
 subdivisions  66,828  3,398  1,577  68,649   -
Foreign government bonds  25,464  6,636   -  32,100   -
Public utilities  259,819  16,920  3,782  272,957   -
Redeemable preferred stock   -   -   -   -   -
Corporate securities  2,361,234  178,496  13,686  2,526,044   -
Asset-backed securities (1)  177,401  7,382  144  184,639  (1,351)
Commercial mortgage-backed securities  372,540  13,368  4,646  381,262   -
Residential mortgage-backed securities (2)  161,450  6,087  178  167,359  (41)
Total fixed maturities, available-for-sale $3,429,932 $232,349 $24,013 $3,638,268 $(1,392)
                   
Equity securities, available-for-sale               
Common Stocks:               
 Mutual Funds $14 $2 $ - $16   
Total equity securities, available-for-sale $14 $2 $ - $16   

_____________

  • Includes credit-tranched securities collateralized by sub-prime mortgages, credit cards, education loans, and other asset types.
  • Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.
  • Represents the amount of other-than-temporary impairment losses in “Accumulated other comprehensive income (loss),” or “AOCI,” which were not included in earnings. Amount excludes $1.8 million of net unrealized gains on impaired available-for-sale securities relating to changes in the value of such securities subsequent to the impairment measurement date.

     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   

_____________

  • Includes credit-tranched securities collateralized by sub-prime mortgages, credit cards, education loans, and other asset types.
  • Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.
  • Represents the amount of other-than-temporary impairment losses in AOCI, which were not included in earnings. Amount excludes $4.1 million of net unrealized gains or losses on impaired available-for-sale securities relating to changes in the value of such securities subsequent to the impairment measurement date.
  • Prior period has been reclassified to conform to the current period presentation.
 [1],[2],[3],[4],[5]
Investments Classified by Contractual Maturity Date
     Available-for-Sale
     Amortized Fair
     Cost Value
          
     (in thousands)
Due in one year or less $ 710,510 $ 723,337
Due after one year through five years   849,257   928,836
Due after five years through ten years   679,681   739,249
Due after ten years   479,093   513,586
Asset-backed securities   177,401   184,639
Commercial mortgage-backed securities   372,540   381,262
Residential mortgage-backed securities   161,450   167,359
  Total $ 3,429,932 $ 3,638,268
Sources of Fixed Maturity Proceeds, Related Investment Gains (Losses), and Losses on Impairments of Fixed Maturities and Equity Securities
     Three Months Ended Nine Months Ended
     September 30, September 30,
     2013 2012 2013 2012
                
     (in thousands)
Fixed maturities, available-for-sale   
  Proceeds from sales $59,715 $186,603 $181,143 $380,099
  Proceeds from maturities/repayments  249,890  282,052  842,968  655,857
  Gross investment gains from sales, prepayments, and maturities  6,506  2,233  14,411  16,266
  Gross investment losses from sales and maturities  (2,597)  (109)  (2,694)  (133)
Equity securities, available-for-sale            
  Proceeds from sales $4 $ - $5 $ -
  Proceeds from maturities/repayments   -   -   -   -
  Gross investment gains from sales  2   -  2   -
  Gross investment losses from sales    -   -   -   -
Fixed maturity and equity security impairments            
  Net writedowns for other-than-temporary impairment losses            
   on fixed maturities recognized in earnings (1) $ - $(71) $ - $(223)
  Writedowns for impairments on equity securities   -   -   -   -

_____________

  • Excludes the portion of other-than-temporary impairments recorded in “Other comprehensive income (loss),” representing any difference between the fair value of the impaired debt security and the net present value of its projected future cash flows at the time of the impairment.

 
Credit Losses Recognized in Earnings on Fixed Maturity Securities Held by the Company for which a Portion of the OTTI Loss was Recognized in OCI
    Three Months Nine Months
    Ended Ended
    September 30, September 30,
    2013 2013
         
     (in thousands)
         
Balance, beginning of period $1,749 $3,381
Credit loss impairments previously recognized on securities which matured, paid       
 down, prepaid or were sold during the period  (6)  (1,625)
Additional credit loss impairments recognized in the current period on securities      
 previously impaired   -   -
Increases due to the passage of time on previously recorded credit losses  32  87
Accretion of credit loss impairments previously recognized due to an increase in       
 cash flows expected to be collected   -  (68)
Balance, end of period $1,775 $1,775
         
         
    Three Months Nine Months
    Ended Ended
    September 30, September 30,
    2012 2012
         
     (in thousands)
         
Balance, beginning of period $3,387 $3,542
Credit loss impairments previously recognized on securities which matured, paid       
 down, prepaid or were sold during the period  (59)  (190)
Additional credit loss impairments recognized in the current period on securities      
 previously impaired  71  223
Increases due to the passage of time on previously recorded credit losses  28  79
Accretion of credit loss impairments previously recognized due to an increase in      
 cash flows expected to be collected  (114)  (341)
Balance, end of period $3,313 $3,313
Trading Account Assets Disclosure
     September 30, 2013 December 31, 2012
     Amortized Fair Amortized Fair
     Cost Value Cost Value
                
  (in thousands)
             
Fixed maturities $ - $ - $1,973 $2,022
Equity securities  4,901  6,326  5,217  5,894
  Total trading account assets $4,901 $6,326 $7,190 $7,916
Commercial Mortgage and Other Loans
     September 30, 2013  December 31, 2012 
     Amount % of  Amount % of 
     (in thousands) Total  (in thousands) Total 
                  
Commercial and agricultural mortgage loans by property type:              
Office $41,242  10.2% $59,074  13.8%
Retail   72,727  18.0   71,546  16.7 
Apartments/Multi-Family   123,727  30.7   120,066  28.0 
Industrial  92,549  23.0   114,619  26.7 
Hospitality  5,144  1.3   4,621  1.1 
Other  12,432  3.1   9,206  2.0 
                  
  Total commercial mortgage loans  347,821  86.3   379,132  88.3 
Agricultural property loans  55,411  13.7   50,026  11.7 
  Total commercial and agricultural mortgage loans by property              
   type  403,232  100.0%  429,158  100.0%
Valuation allowance  (1,769)      (2,177)    
                  
  Total net commercial and agricultural mortgage loans by property               
   type  401,463      426,981    
                  
Other Loans              
Uncollateralized loans   2,740       -    
                  
  Total other loans   2,740       -    
                  
  Total commercial mortgage and other loans $ 404,203     $426,981    
Allowance for Losses
     September 30, 2013 December 31, 2012
          
  (in thousands)
Allowance for losses, beginning of year $2,177 $1,501
Addition to / (release of) allowance for losses   (408)   676
Total ending balance (1) $1,769 $2,177

_____________

  • Agricultural loans represent $0.2 million of the ending allowance at both September 30, 2013 and December 31, 2012.

 
Allowance for Credit Losses and Recorded Investment in Commercial Mortgage and Other Loans
     September 30, 2013 December 31, 2012
      
  (in thousands)
Allowance for Credit Losses:      
Ending balance: individually evaluated for impairment (1) $ - $ -
Ending balance: collectively evaluated for impairment (2)  1,769  2,177
Total ending balance $1,769 $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)  405,972  429,158
Total ending balance, gross of reserves $405,972 $429,158

_____________

  • There were no loans individually evaluated for impairments at September 30, 2013 and December 31, 2012.
  • Agricultural loans collectively evaluated for impairment had a recorded investment of $55 million and $50 million at September 30, 2013 and December 31, 2012 respectively, and a related allowance of $0.2 million for both periods. Uncollateralized loans collectively evaluated for impairment had a recorded investment of $3 million at September 30, 2013 and $0 million at December 31, 2012, respectively, and no related allowance for both periods.
  • Recorded investment reflects the balance sheet carrying value gross of related allowance.

 
Net Investment Income
    Three Months Ended Nine Months Ended
    September 30, September 30,
    2013 2012 2013 2012
               
    (in thousands)
Fixed maturities, available-for-sale $45,868 $59,419 $148,402 $190,400
Equity securities, available-for-sale   -   -   -  7
Trading account assets  76  35  137  849
Commercial mortgage and other loans  6,075  6,871  22,478  20,584
Policy loans  176  273  515  625
Short-term investments  77  140  255  503
Other long-term investments  754  6,614  2,183  7,529
  Gross investment income  53,026  73,352  173,970  220,497
Less: investment expenses  (1,705)  (1,981)  (5,176)  (6,056)
  Net investment income $51,321 $71,371 $168,794 $214,441
Realized Gain (Loss) on Investments
     Three Months Ended Nine Months Ended
     September 30, September 30,
     2013 2012 2013 2012
                
     (in thousands)
Fixed maturities $3,908 $2,056 $11,716 $15,912
Equity securities  1  703  2  703
Commercial mortgage and other loans  52  (483)  420  (588)
Derivatives  (72,935)  (62,916)  (162,600)  (77,590)
Other  (6)   -  (29)   -
  Realized investment gains (losses), net $(68,980) $(60,640) $(150,491) $(61,563)
Net Unrealized Investment Gain (Loss) AOCI Rollforward
     Net Unrealized Gains (Losses) on Investments Deferred Policy Acquisition Costs and Other Costs Deferred Income Tax (Liability) Benefit Accumulated Other Comprehensive Income (Loss) Related to Net Unrealized Investment Gains (Losses)
                
     (in thousands)
Balance, December 31, 2012 $545 $(214) $(100) $231
Net investment gains (losses) on investments             
  arising during the period  545   -  (191)  354
Reclassification adjustment for gains (losses)             
 included in net income   (731)   -  256  (475)
Impact of net unrealized investment (losses) gains on            
 deferred policy acquisition costs, deferred sales             
 inducements and valuation of business acquired   -  85  (30)  55
Balance, September 30, 2013 $359 $(129) $(65) $165
All Other Net Unrealized Investment Gain (Loss) AOCI Rollforward
                Accumulated Other
                Comprehensive
             Deferred  Income (Loss) Related
     Net Unrealized  Deferred Policy  Future Income Tax   To Net Unrealized
     Gains/(Losses) on  Acquisition Costs Policy (Liability) Investment
     Investments (1) and Other Costs Benefits 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  (157,976)   -   -  55,291  (102,685)
Reclassification adjustment for (losses) gains                
 included in net income  (10,987)   -   -  3,846  (7,141)
Impact of net unrealized investment gains                
 (losses) on deferred policy acquisition                
 costs, deferred sales inducements and                
 valuation of business acquired   -  72,334   -  (25,317)  47,017
Impact of net unrealized investment (gains)               
 losses on future policy benefits   -   -  (7,489)  2,621  (4,868)
Balance, September 30, 2013 $207,814 $(74,755) $(9,653) $(44,027) $79,379

_____________

  • Includes cash flow hedges. See Note 5 for additional discussion of our cash flow hedges.

 

 
Unrealized Gains and (Losses) on Investments
     September 30,  December 31,
     2013 2012
          
  (in thousands)
Fixed maturity securities on which an OTTI loss has been recognized $359 $545
Fixed maturity securities, available-for-sale - all other  207,976  375,409
Equity securities, available-for-sale  2  4
Affiliated notes  3,264  4,386
Derivatives designated as cash flow hedges (1)  (3,506)  (3,068)
Other investments  78  46
Unrealized gains (losses) on investments and derivatives $208,173 $377,322

_____________

  • See Note 5 for more information on cash flow hedges.

 

 [6]
Duration Of Gross Unrealized Losses On Fixed Maturity Securities Disclosures
    September 30, 2013
    Less than twelve months Twelve months or more Total
                     
    Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses
                     
  (in thousands)
Fixed maturities, available-for-sale  
Obligations of U.S. States and their                   
 political subdivisions $5,550 $464 $6,285 $1,113 $11,835 $1,577
Corporate securities  423,896  16,593  5,510  875  429,406  17,468
Commercial mortgage-backed securities  63,450  4,646  118   -  63,568  4,646
Asset-backed securities  26,645  144   -   -  26,645  144
Residential mortgage-backed securities  6,514  178   -   -  6,514  178
  Total $526,055 $22,025 $11,913 $1,988 $537,968 $24,013
                     
Equity securities, available-for-sale $ - $ - $ - $ - $ - $ -

    December 31, 2012
    Less than twelve months Twelve months or more Total
                     
    Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross 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 $ - $ - $ - $ - $ - $ -
Reclassifications Out Of Accumulated Other Comprehensive Income
Reclassifications out of Accumulated Other Comprehensive Income (Loss) ("AOCI")   
           
      Three Months Nine Months
      Ended Ended
      September 30, 2013 September 30, 2013
           
      (in thousands)
Amounts reclassified from AOCI (1)(2):      
Net unrealized investment gains (losses):      
 Cash flow hedges - Currency/Interest rate (3) $(47) $(66)
 Net unrealized investment gains (losses) on available-for-sale securities  3,956  11,784
  Total net unrealized investment gains (losses) (4)  3,909  11,718
           
    Total reclassifications for the period $3,909 $11,718

_____________

  • All amounts are shown before tax.
  • Positive amounts indicate gains/benefits reclassified out of AOCI. Negative amounts indicate losses/costs reclassified out of AOCI.
  • See Note 5 for additional information on cash flow hedges.
  • See table below for additional information on unrealized investment gains (losses), including the impact on deferred policy acquisition and other costs, future policy benefits and policyholders' dividends.
 [10],[7],[8],[9]
Accumulated Other Comprehensive Income Loss Table
   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    -  (92,502)  (92,502)
Amounts reclassified from AOCI    -  (11,718)  (11,718)
Income tax benefit (expense)   -  36,477  36,477
Balance, September 30, 2013 $7 $79,537 $79,544
           
           
   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)   -  5,548  5,548
Balance, September 30, 2012 $ - $166,260 $166,260

_____________

  • Includes cash flow hedges of ($4) million and ($3) million as of September 30, 2013 and December 31, 2012, respectively, and ($1) million as of both September 30, 2012 and December 31, 2011.
  • Net of taxes.
 [11],[12]
[1] _____________ Includes credit-tranched securities collateralized by sub-prime mortgages, credit cards, education loans, and other asset types.
[2] Includes publicly-traded agency pass-through securities and collateralized mortgage obligations.
[3] Prior period has been reclassified to conform to the current period presentation.
[4] Represents the amount of other-than-temporary impairment losses in “Accumulated other comprehensive income (loss),” or “AOCI,” which were not included in earnings. Amount excludes $1.8 million of net unrealized gains on impaired available-for-sale securities relating to changes in the value of such securities subsequent to the impairment measurement date.
[5] Represents the amount of other-than-temporary impairment losses in AOCI, which were not included in earnings. Amount excludes $4.1 million of net unrealized gains or losses on impaired available-for-sale securities relating to changes in the value of such securities subsequent to the impairment measurement date.
[6] _____________ See Note 5 for more information on cash flow hedges.
[7] _____________ All amounts are shown before tax.
[8] Positive amounts indicate gains/benefits reclassified out of AOCI. Negative amounts indicate losses/costs reclassified out of AOCI.
[9] See table below for additional information on unrealized investment gains (losses), including the impact on deferred policy acquisition and other costs, future policy benefits and policyholders’ dividends.
[10] See Note 5 for additional information on cash flow hedges.
[11] Includes cash flow hedges of ($4) million and ($3) million as of September 30, 2013 and December 31, 2012, respectively, and ($1) million as of both September 30, 2012 and December 31, 2011.
[12] Net of taxes.