Fair Value Measurement – Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative fair value guidance establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1 - Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities. The Company's Level 1 assets and liabilities primarily include short term investments and equity securities that trade on an active exchange market.

Level 2 - Fair value is based on significant inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets and liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities, and other market observable inputs. The Company's Level 2 assets and liabilities include: fixed maturities (corporate public and private bonds, most government securities, certain asset-backed and mortgage-backed securities, etc.), certain equity securities (mutual funds, which do not actively trade and are priced based on a net asset value), certain short term investments and certain over-the-counter derivatives.

Level 3 - Fair value is based on at least one or more significant unobservable inputs for the asset or liability. The assets and liabilities in this category may require significant judgment or estimation in determining the fair value. The Company's Level 3 assets and liabilities primarily include: certain private fixed maturities and equity securities, certain manually priced public equity securities and fixed maturities, certain highly structured over-the-counter derivative contracts, and embedded derivatives resulting from certain products with guaranteed benefits.

Assets and Liabilities by Hierarchy Level -The tables below present the balances of assets and liabilities measured at fair value on a recurring basis, as of the dates indicated.

		As of December 31, 2013
		Level 1		Level 2		Level 3			Netting (2)	Total
		(in thousands)
Fixed maturities, available-for-sale:
	U.S Treasury securities and obligations of U.S. government authorities and agencies	$	-	$	6,384	$	-	$	-	$	6,384
	Obligations of U.S. states and their political subdivisions		-		68,566		-		-		68,566
	Foreign government bonds		-		31,154		-		-		31,154
	Corporate securities		-		2,325,846		96,796		-		2,422,642
	Asset-backed securities		-		124,103		63,789		-		187,892
	Commercial mortgage-backed securities		-		390,633		-		-		390,633
	Residential mortgage-backed securities		-		156,945		-		-		156,945
Sub-total			-		3,103,631		160,585		-		3,264,216
Trading account assets:
	Equity securities		6,364		-		313		-		6,677
Sub-total			6,364		-		313		-		6,677
Equity securities, available-for-sale			-		16		192		-		208
Short-term investments			118,188		-		-		-		118,188
Other long-term investments			-		73,535		486		(73,535)		486
Reinsurance recoverables			-		-		748,005		-		748,005
Receivables from parent and affiliates			-		19,071		6,347		-		25,418
Sub-total excluding separate account assets			124,552		3,196,253		915,928		(73,535)		4,163,198
Separate account assets (1)			1,190,903		45,435,925		-		-		46,626,828
Total assets		$	1,315,455	$	48,632,178	$	915,928	$	(73,535)	$	50,790,026
Future policy benefits (3)		$	-	$	-	$	778,226	$	-	$	778,226
Other liabilities			-		94,580		-		(72,822)		21,758
Total liabilities		$	-	$	94,580	$	778,226	$	(72,822)	$	799,984

		As of December 31, 2012
		Level 1		Level 2		Level 3			Netting (2)	Total
		(in thousands)
Fixed maturities, available-for-sale:
	U.S Treasury securities and obligations of U.S. government authorities and agencies	$	-	$	4,686	$	-	$	-	$	4,686
	Obligations of U.S. states and their political subdivisions		-		102,116		-		-		102,116
	Foreign government securities		-		55,529		-		-		55,529
	Corporate securities		-		3,095,699		95,555		-		3,191,254
	Asset-backed securities		-		118,179		69,298		-		187,477
	Commercial mortgage-backed securities		-		394,902		-		-		394,902
	Residential mortgage-backed securities		-		267,486		-		-		267,486
Sub-total			-		4,038,597		164,853		-		4,203,450
Trading account assets:
	Asset-backed securities		-		2,022		-		-		2,022
	Equity securities		5,687		-		207		-		5,894
Sub-total			5,687		2,022		207		-		7,916
Equity securities, available-for-sale			-		22		-		-		22
Short-term investments			103,761		-		-		-		103,761
Other long-term investments			-		173,348		1,054		(42,352)		132,050
Reinsurance recoverables			-		-		1,732,094		-		1,732,094
Receivables from parent and affiliates			-		20,632		1,995		-		22,627
Sub-total excluding separate account assets			109,448		4,234,621		1,900,203		(42,352)		6,201,920
Separate account assets (1)			122,142		44,479,578		-		-		44,601,720
Total assets		$	231,590	$	48,714,199	$	1,900,203	$	(42,352)	$	50,803,640
Future policy benefits (3)		$	-	$	-	$	1,793,137	$	-	$	1,793,137
Other liabilities			-		42,352		-		(42,352)		-
Total liabilities		$	-	$	42,352	$	1,793,137	$	(42,352)	$	1,793,137

The methods and assumptions the Company uses to estimate the fair value of assets and liabilities measured at fair value on a recurring basis are summarized below.

Fixed Maturity Securities - The fair values of the Company's public fixed maturity securities are generally based on prices obtained from independent pricing services. Prices for each security are generally sourced from multiple pricing vendors, and a vendor hierarchy is maintained by asset type based on historical pricing experience and vendor expertise. The Company ultimately uses the price from the pricing service highest in the vendor hierarchy based on the respective asset type. The pricing hierarchy is updated for new financial products and recent pricing experience. Consistent with the fair value hierarchy described above, securities with validated quotes from pricing services are generally reflected within Level 2, as they are primarily based on observable pricing for similar assets and/or other market observable inputs. If the pricing information received from third party pricing services is not reflective of market activity or other inputs observable in the market, the Company may challenge the price through a formal process with the pricing service. If the pricing service updates the price to be more consistent with the presented market observations, the security remains within Level 2.

Internally-developed valuations or indicative broker quotes are also used to determine fair value in circumstances where vendor pricing is not available, or where the Company ultimately concludes that pricing information received from the independent pricing service is not reflective of market activity. If the Company concludes the values from both pricing services and brokers are not reflective of market activity, it may over-ride the information with an internally developed valuation. As of December 31, 2013 and December 31, 2012 over-rides on a net basis were not material. Pricing service over-rides, internally developed valuations and indicative broker quotes are generally included in Level 3 in the fair value hierarchy.

The fair value of private fixed maturities, which are comprised of investments in private placement securities, originated by internal private asset managers, are primarily determined using a discounted cash flow model. If the fair value is determined using pricing inputs that are observable in the market, the securities have been reflected within Level 2; otherwise a Level 3 classification is used.

Trading Account Assets – Trading account assets consist primarily of equity securities whose fair values are determined consistent with similar instruments described below under “Equity Securities.”

Equity Securities - Equity securities consist principally of investments in common stock of publicly traded companies, perpetual preferred stock, privately traded securities, as well as mutual fund shares. The fair values of most publicly traded equity securities are based on quoted market prices in active markets for identical assets and are classified within Level 1 in the fair value hierarchy. Estimated fair values for most privately traded equity securities are determined using discounted cash flow, earnings multiple and other valuation models that require a substantial level of judgment around inputs and therefore are classified within Level 3. The fair values of mutual fund shares that transact regularly (but do not trade in active markets because they are not publicly available) are based on transaction prices of identical fund shares and are classified within Level 2 in the fair value hierarchy. The fair values of perpetual preferred stock are based on inputs obtained from independent pricing services that are primarily based on indicative broker quotes. As a result, the fair values of perpetual preferred stock are classified as Level 3.

Derivative Instruments - Derivatives are recorded at fair value either as assets, within “Other long-term investments,” or as liabilities, within “Other liabilities,” except for embedded derivatives which are recorded with the associated host contract. The fair values of derivative contracts can be affected by changes in interest rates, foreign exchange rates, credit spreads, market volatility, expected returns, NPR, liquidity and other factors. Liquidity valuation adjustments are made to reflect the cost of exiting significant risk positions, and consider the bid-ask spread, maturity, complexity, and other specific attributes of the underlying derivative position.

The majority of the Company's derivative positions are traded in the OTC derivative market and are classified within Level 2 in the fair value hierarchy. OTC derivatives classified within Level 2 are valued using models that utilize actively quoted or observable market input values from external market data providers, third-party pricing vendors and/or recent trading activity. The Company's policy is to use mid-market pricing in determining its best estimate of fair value. The fair values of most OTC derivatives, including interest rate and cross currency swaps and single name credit default swaps are determined using discounted cash flow models. The fair values of European style option contracts are determined using Black-Scholes option pricing models. These models' key inputs include the contractual terms of the respective contract, along with significant observable inputs, including interest rates, currency rates, credit spreads, equity prices, index dividend yields, non-performance risk, volatility, and other factors.

The Company's cleared interest rate swaps and credit derivatives linked to an index are valued using models that utilize actively quoted or observable market inputs, including overnight indexed swap discount rates, obtained from external market data providers, third-party pricing vendors, and/or recent trading activity. These derivatives are classified as Level 2 in the fair value hierarchy.

The vast majority of the Company's derivative agreements are with highly rated major international financial institutions. To reflect the market's perception of its own and the counterparty's non-performance risk, the Company incorporates additional spreads over LIBOR into the discount rate used in determining the fair value of OTC derivative assets and liabilities that are not otherwise collateralized.

Derivatives classified as Level 3 include structured products. These derivatives are valued based upon models, such as Monte Carlo simulation models and other techniques, that utilize significant unobservable inputs. Level 3 methodologies are validated through periodic comparison of the Company's fair values to external broker-dealer values. As of December 31, 2013 and December 31, 2012, there were derivatives with the fair value of $0 and $0.7 million, respectively, classified within Level 3, and all other derivatives were classified within Level 2. See Note 11 for more details on the fair value of derivative instruments by primary underlying.

Short-Term Investments - Short-term investments include money market instruments and other highly liquid debt instruments. Certain money market instruments are valued using unadjusted quoted prices in active markets that are accessible for identical assets and are primarily classified as Level 1.

Separate Account Assets – Separate Account Assets include fixed maturity securities, treasuries, and equity securities for which values are determined consistent with similar instruments described above under "Fixed Maturity Securities” and “Equity Securities.”

Receivables from Parent and Affiliates - Receivables from Parent and Affiliates carried at fair value include affiliated bonds within the Company's legal entity whose fair value are determined consistent with similar securities described above under “Fixed Maturity Securities” managed by affiliated asset managers.

Reinsurance Recoverables – Reinsurance recoverables carried at fair value include the reinsurance of the Company's living benefit guarantees on certain of its variable annuities. These guarantees are accounted for as embedded derivatives and are described below in "Future Policy Benefits." The reinsurance agreements covering these guarantees are derivatives with fair value determined in the same manner as the living benefit guarantees.

Future Policy Benefits - The liability for future policy benefits primarily includes general account liabilities for the optional living benefit features of the Company's variable annuity contracts, including guaranteed minimum accumulation benefits (“GMAB”), guaranteed minimum withdrawal benefits (“GMWB”) and guaranteed minimum income and withdrawal benefits (“GMIWB”), accounted for as embedded derivatives. The fair values of the GMAB, GMWB, and GMIWB liabilities are calculated as the present value of future expected benefit payments to customers less the present value of assessed rider fees attributable to the optional living benefit feature. This methodology could result in either a liability or contra-liability balance, given changing capital market conditions and various actuarial assumptions. Since there is no observable active market for the transfer of these obligations, the valuations are calculated using internally developed models with option pricing techniques. The models are based on a risk neutral valuation framework and incorporate premiums for risks inherent in valuation techniques, inputs, and the general uncertainty around the timing and amount of future cash flows. The determination of these risk premiums requires the use of management judgment.

The significant inputs to the valuation models for these embedded derivatives include capital market assumptions, such as interest rate levels and volatility assumptions, the Company's market-perceived risk of its own non-performance, as well as actuarially determined assumptions, including contractholder behavior, such as lapse rates, benefit utilization rates, withdrawal rates, and mortality rates. Since many of these assumptions are unobservable and are considered to be significant inputs to the liability valuation, the liability included in future policy benefits has been reflected within Level 3 in the fair value hierarchy.

Capital market inputs and actual policyholders' account values are updated each quarter based on capital market conditions as of the end of the quarter, including interest rates, equity markets, and volatility. In the risk neutral valuation, the initial swap curve drives the total return used to grow the policyholders' account value. The Company's discount rate assumption is based on the LIBOR swap curve, adjusted for an additional spread relative to LIBOR to reflect NPR.

Actuarial assumptions, including contractholder behavior and mortality, are reviewed at least annually, and updated based upon emerging experience, future expectations, and other data, including any observable market data, such as available industry studies or market transactions such as acquisitions and reinsurance transactions. These assumptions are generally updated in the third quarter of each year unless a material change that the Company feels is indicative of a long term trend is observed in an interim period.

Transfers between Levels 1 and 2 – Periodically there are transfers between Level 1 and Level 2 for assets held in the Company's Separate Account. The classification of Separate Account funds may vary dependent on the availability of information to the public. Should a fund's net asset value become publicly observable, the fund would be transferred from Level 2 to Level 1. During the year ended December 31, 2013, $933 million was transferred from Level 2 to Level 1. During the year ended December 31, 2012, $5 million was transferred from Level 2 to Level 1. During the year ended December 31, 2012, $7 million of preferred stock was transferred from Level 1 to Level 2. These transfers were the result of an ongoing monitoring assessment of pricing inputs to ensure appropriateness of the level classification in the fair value hierarchy. Transfers between levels are generally reported at the values as of the beginning of the period in which the transfers occur.

Level 3 Assets and Liabilities by Price Source – The tables below present the balances of Level 3 assets and liabilities measured at fair value with their corresponding pricing sources.

	As of December 31, 2013
		Internal (1)		External (2)		Total
	(in thousands)
Corporate securities	$	94,730	$	2,066	$	96,796
Asset-backed securities		-		63,789		63,789
Equity securities		192		313		505
Other long-term Investments		-		486		486
Reinsurance recoverables		748,005		-		748,005
Receivables from parent and affiliates		-		6,347		6,347
Total assets	$	842,927	$	73,001	$	915,928

Future policy benefits		778,226		-		778,226
Total liabilities	$	778,226	$	-	$	778,226

	As of December 31, 2012
		Internal (1)		External (2)		Total
	(in thousands)
Corporate securities	$	92,263	$	3,292	$	95,555
Asset-backed securities		-		69,298		69,298
Equity securities		-		207		207
Other long-term Investments		739		315		1,054
Reinsurance recoverables		1,732,094		-		1,732,094
Receivables from parent and affiliates		-		1,995		1,995
Total assets	$	1,825,096	$	75,107	$	1,900,203

Future policy benefits		1,793,137		-		1,793,137
Total liabilities	$	1,793,137	$	-	$	1,793,137

Quantitative Information Regarding Internally Priced Level 3 Assets and Liabilities – The tables below present quantitative information on significant internally priced Level 3 assets and liabilities.

	As of December 31, 2013
		Fair Value	Primary Valuation Techniques	Unobservable Inputs	Minimum	Maximum	Weighted Average	Impact of Increase in Input on Fair Value (1)
	(in thousands)
Assets:
Corporate securities	$	94,730	Discounted cash flow	Discount rate	3.73%	12.06%	3.90%	Decrease

Reinsurance recoverables	$	748,005	Fair values are determined in the same manner as future policy benefits

Liabilities:
Future policy benefits (2)	$	778,226	Discounted cash flow	Lapse rate (3)	0%	11%		Decrease
				NPR spread (4)	0.08%	1.09%		Decrease
				Utilization rate (5)	70%	94%		Increase
				Withdrawal rate (6)	86%	100%		Increase
				Mortality rate (7)	0%	13%		Decrease
				Equity Volatility curve	15%	28%		Increase

	As of December 31, 2012
		Fair Value	Primary Valuation Techniques	Unobservable Inputs	Minimum	Maximum	Weighted Average	Impact of Increase in Input on Fair Value (1)
	(in thousands)
Assets:
Corporate securities	$	92,263	Discounted cash flow	Discount rate	3.27%	17.50%	3.74%	Decrease
			Cap at call price	Call price	100.00%	100.00%		Increase
Reinsurance recoverables	$	1,732,094	Fair values are determined in the same manner as future policy benefits

Liabilities:
Future policy benefits (2)	$	1,793,137	Discounted cash flow	Lapse rate (3)	0%	14%		Decrease
				NPR spread (4)	0.20%	1.60%		Decrease
				Utilization rate (5)	70%	94%		Increase
				Withdrawal rate (6)	85%	100%		Increase
				Mortality rate (7)	0%	13%		Decrease
				Equity Volatility curve	19%	34%		Increase

Interrelationships Between Unobservable Inputs—In addition to the sensitivities of fair value measurements to changes in each unobservable input in isolation, as reflected in the table above, interrelationships between these inputs may also exist, such that a change in one unobservable input may give rise to a change in another, or multiple, inputs. Examples of such interrelationships for significant internally-priced Level 3 assets and liabilities are as follows:

Corporate Securities— The rate used to discount future cash flows reflects current risk-free rates plus credit and liquidity spread requirements that market participants would use to value an asset. The discount rate may be influenced by many factors, including market cycles, expectations of default, collateral, term, and asset complexity. Each of these factors can influence discount rates, either in isolation, or in response to other factors.

Future Policy Benefits— The unobservable contractholder behavior inputs related to the liability for the optional living benefit features of the Company's variable annuity contracts included in future policy benefits are generally based on emerging experience, future expectations, and other data. While experience for these products is still emerging, the Company expects efficient benefit utilization and withdrawal rates to generally be correlated with lapse rates. However, behavior is generally highly dependent on the facts and circumstances surrounding the individual contractholder, such as their liquidity needs or tax situation, which could drive lapse behavior independent of other contractholder behavior assumptions. The dynamic lapse adjustment assumes lower lapses when the benefit amount is greater than the account value, as in-the-money contracts are less likely to lapse. Therefore, to the extent more efficient contractholder behavior results in greater in-the-moneyness at the contract level, the dynamic lapse function will reduce lapse rates for those contracts. Similarly, to the extent that increases in equity volatility are correlated with overall declines in the capital markets, the dynamic lapse function will lower overall lapse rates as contracts become more in-the-money.

Valuation Process for Fair Value Measurements Categorized within Level 3 - The Company has established an internal control infrastructure over the valuation of financial instruments that requires ongoing oversight by its various Business Groups. These management control functions are segregated from the trading and investing functions. For invested assets, the Company has established oversight teams, often in the form of Pricing Committees within each asset management group. The teams, which typically include representation from investment, accounting, operations, legal and other disciplines are responsible for overseeing and monitoring the pricing of the Company's investments and performing periodic due diligence reviews of independent pricing services. An actuarial valuation team oversees the valuation of optional living benefit features of the Company's variable annuity contracts.

The Company has also established policies and guidelines that require the establishment of valuation methodologies and consistent application of such methodologies. These policies and guidelines govern the use of inputs and price source hierarchies and provide controls around the valuation processes. These controls include appropriate review and analysis of investment prices against market activity or indicators of reasonableness, approval of price source changes, price overrides, methodology changes and classification of fair value hierarchy levels. For optional living benefit features of the Company's variable annuity products, the actuarial valuation unit periodically performs baseline testing of contract input data and actuarial assumptions are reviewed at least annually, and updated based upon emerging experience, future expectations and other data, including any observable market data, such as available industry studies. The valuation policies and guidelines are reviewed and updated as appropriate.

Within the trading and investing functions, the Company has established policies and procedures that relate to the approval of all new transaction types, transaction pricing sources and fair value hierarchy coding within the financial reporting system. For variable annuity product changes or new launches of optional living benefit features, the actuarial valuation unit validates input logic and new product features and agrees new input data directly to source documents.

Changes in Level 3 assets and liabilities - The following tables provide summaries of the changes in fair values of Level 3 assets and liabilities as of the dates indicated, as well as the portion of gains or losses included in income attributable to unrealized gains or losses related to those assets and liabilities still held at the end of their respective periods.

				Year Ended December 31, 2013
				Fixed Maturities Available-For-Sale							Trading Account Assets - Equity Securities		Equity Securities Available-for -Sale
				Corporate Securities		Asset- Backed Securities			Commercial Mortgage-Backed		Trading Account Assets - Equity Securities		Equity Securities Available-for -Sale
				(in thousands)
Fair Value, beginning of period assets/(liabilities)				$	95,555	$	69,298	$	-	$	207	$	-
	Total gains (losses) (realized/unrealized):
		Included in earnings:
			Realized investment gains (losses), net		49		-		-		-		-
			Asset management fees and other income		-		-		-		106		-
		Included in other comprehensive income (loss)			(4,179)		(470)		18		-		-
	Net investment income				4,729		454		-		-		-
	Purchases				4,817		40,868		17,169		-		192
	Sales				-		-		-		-		-
	Issuances				-		-		-		-		-
	Settlements				(4,629)		(13,924)		-		-		-
	Transfers into Level 3 (1)				4,976		-		-		-		-
	Transfers out of Level 3 (1)				(4,522)		(29,441)		(17,187)		-		-
	Other (3)				-		(2,996)		-		-		-
Fair Value, end of period assets/(liabilities)				$	96,796	$	63,789	$	-	$	313	$	192

Unrealized gains (losses) for the period relating to those
	Level 3 assets that were still held at the end of the period (2):
		Included in earnings:
			Realized investment gains (losses), net	$	-	$	-	$	-	$	-	$	-
			Asset management fees and other income	$	-	$	-	$	-	$	107	$	-

				Year Ended December 31, 2013
				Other Long-term Investments		Reinsurance Recoverables		Receivables from parent and affiliates			Future Policy Benefits
				(in thousands)
Fair Value, beginning of period assets/(liabilities)				$	1,054	$	1,732,094	$	1,995	$	(1,793,137)
	Total gains (losses) (realized/unrealized):
		Included in earnings:
			Realized investment gains (losses), net		(739)		(1,220,073)		-		1,262,310
			Asset management fees and other income		60		-		-		-
		Included in other comprehensive income (loss)			-		-		99		-
	Net investment income				-		-		-		-
	Purchases				111		235,984		6,250		-
	Sales				-		-		(2,996)		-
	Issuances				-		-		-		(247,399)
	Settlements				-		-		-		-
	Transfers into Level 3 (1)				-		-		-		-
	Transfers out of Level 3 (1)				-		-		(1,997)		-
	Other (3)				-		-		2,996		-
Fair Value, end of period assets/(liabilities)				$	486	$	748,005	$	6,347	$	(778,226)
					.		.
Unrealized gains (losses) for the period relating to those
	Level 3 assets that were still held at the end of the period (2):
		Included in earnings:
			Realized investment gains (losses), net	$	-	$	(1,166,676)	$	-	$	1,207,600
			Asset management fees and other income	$	51	$	-	$	-	$	-

					Year Ended December 31, 2012
					Fixed Maturities Available-For-Sale
					Corporate Securities		Asset Backed Securities		Trading Account Assets - Equity			Other Long-term Investments		Reinsurance Recoverables
					(in thousands)
Fair Value, beginning of period assets/(liabilities)					$	89,658	$	48,563	$	203	$	1,213	$	1,747,757
	Total gains or (losses) (realized/unrealized):
		Included in earnings:
			Realized investment gains (losses), net			1,606		-		-		(2,326)		(244,519)
			Asset management fees and other income			-		-		4		(3)		-
		Included in other comprehensive income (loss)				2,271		1,109		-		-		-
	Net investment income					4,634		649		-		-		-
	Purchases					5,400		30,311		-		2,166		228,856
	Sales					(29)		-		-		-		-
	Issuances					-		-		-		-		-
	Settlements					(8,286)		(11,334)		-		4		-
	Transfers into Level 3 (1)					11,992		-		-		-		-
	Transfers out of Level 3 (1)					(11,691)		-		-		-		-
Fair Value, end of period assets/(liabilities)					$	95,555	$	69,298	$	207	$	1,054	$	1,732,094

Unrealized gains (losses) for the period relating to
	those Level 3 assets that were still held
	at the end of the period (2):
		Included in earnings:
			Realized investment gains (losses), net		$	-	$	-	$	-	$	(1,349)	$	(194,274)
			Asset management fees and other income		$	-	$	-	$	4	$	(3)	$	-

				Year Ended December 31, 2012
				Receivables from parent and affiliates				Future Policy Benefits
				(in thousands)
Fair Value, beginning of period assets/(liabilities)					$	-	$	(1,783,595)
	Total gains or (losses) (realized/unrealized):
		Included in earnings:
			Realized investment gains (losses), net			-		230,349
			Asset management fees and other income			-		-
			Included in other comprehensive income (loss)			(5)		-
		Net investment income				-		-
		Purchases				2,000		-
		Sales				-		-
		Issuances				-		(239,891)
		Settlements				-		-
		Transfers into Level 3 (1)				-		-
		Transfers out of Level 3 (1)				-		-
Fair Value, end of period assets/(liabilities)					$	1,995	$	(1,793,137)

Unrealized gains (losses) for the period relating to
	those Level 3 assets that were still held
	at the end of the period (2):
		Included in earnings:
			Realized investment gains (losses), net		$	-	$	179,477
			Asset management fees and other income		$	-	$	-

					Year Ended December 31, 2011
					Fixed Maturities Available-For-Sale
					Corporate Securities			Asset Backed Securities		Equity Securities - Available- For-Sale		Other Long-term Investments		Reinsurance Recoverable		Trading Account Assets - Equity Securities
					(in thousands)
Fair Value, beginning of period assets/(liabilities)					$	74,255	$	53,857	$	-	$	-	$	186,735	$	-
	Total gains or (losses) (realized/unrealized):
		Included in earnings:
			Realized investment gains (losses), net			46		-		-		(1,285)		1,348,271		-
			Asset management fees and other income			-		-		-		(19)		-		(27)
		Included in other comprehensive income (loss)				5,472		206		-		-		-		-
	Net investment income					4,579		430		1		-		-		-
	Purchases					8,702		-		-		262		212,751		-
	Sales					-		-		(747)		-		-		-
	Issuances					-		-		-		-		-		-
	Settlements					(5,356)		(5,930)		-		-		-		-
	Transfers into Level 3 (1)					51,135		-		976		2,255		-		-
	Transfers out of Level 3 (1)					(49,175)		-		-		-		-		-
	Other (3)					-		-		(230)		-		-		230
Fair Value, end of period assets/(liabilities)					$	89,658	$	48,563	$	-	$	1,213	$	1,747,757	$	203
Unrealized gains (losses) for the period relating to those
	Level 3 assets that were still held at the
	end of the period (2):
		Included in earnings:
			Realized investment gains (losses), net		$	-	$	-	$	-	$	(1,311)	$	1,356,358	$	-
			Asset management fees and other income		$	-	$	-	$	-	$	(19)	$	-	$	(27)

				Year Ended December 31, 2011
				Future Policy Benefits
				(in thousands)
Fair Value, beginning of period assets/(liabilities)					$	(164,283)
	Total gains or (losses) (realized/unrealized):
		Included in earnings:
			Realized investment gains (losses), net			(1,396,276)
			Asset management fees and other income			-
		Included in other comprehensive income (loss)				-
	Net investment income					-
	Purchases					-
	Sales					(223,036)
	Issuances					-
	Settlements					-
	Transfers into Level 3 (1)					-
	Transfers out of Level 3 (1)					-
Fair Value, end of period assets/(liabilities)					$	(1,783,595)
Unrealized gains (losses) for the period relating to
	Level 3 assets that were still held at the
	end of the period (2):
		Included in earnings:
			Realized investment gains (losses), net		$	(1,403,609)

(1) Transfers into or out of Level 3 are generally reported as the value as of the beginning of the quarter in which the transfer occurs.

(2) Unrealized gains or losses related to assets still held at the end of the period do not include amortization or accretion of premiums and discounts.

(3) “Other” primarily represents reclasses of certain assets between reporting categories.

Transfers – Transfers into Level 3 are generally the result of unobservable inputs utilized within valuation methodologies and the use of indicative broker quotes for assets that were previously valued using observable inputs. Transfers out of Level 3 are generally due to the use of observable inputs in valuation methodologies as well as the utilization of pricing service information for certain assets that the Company is able to validate

For the year ended December 31, 2011, the majority of Equity Securities Available-for-Sale transfers into Level 3 were due to the determination that the pricing inputs for perpetual preferred stocks provided by third party pricing services were primarily based on indicative broker quotes which could not always be verified against directly observable market information.

The table below presents the carrying amount and fair value by fair value hierarchy level of certain financial instruments that are not reported at fair value. However, in some cases, as described below, the carrying amount equals or approximates fair value.

				December 31, 2013										December 31, 2012
				Fair Value								Carrying Amount (1)		Fair Value		Carrying Amount
				Level 1		Level 2		Level 3		Total		Total		Total		Total

			(in thousands)
Assets:
	Commercial mortgage and other loans		$	-	$	-	$	422,584	$	422,584	$	398,991	$	473,964	$	426,981
	Policy loans			-		-		12,454		12,454		12,454		11,957		11,957
	Other long term investments			-		-		1,623		1,623		1,440		983		877
	Cash			1,417		-		-		1,417		1,417		266		266
	Accrued investment income			-		32,169		-		32,169		32,169		44,656		44,656
	Receivables from parent and affiliates			-		10,177		-		10,177		10,177		199		199
	Other assets			-		11,190		-		11,190		11,190		12,410		12,410
		Total assets	$	1,417	$	53,536	$	436,661	$	491,614	$	467,838	$	544,435	$	497,346

Liabilities:
	Policyholders' Account Balances - Investment contracts		$	-	$	-	$	84,153	$	84,153	$	85,672	$	78,159	$	75,242
	Cash collateral for loaned securities			-		47,896		-		47,896		47,896		38,976		38,976
	Short-term debt			-		218,488		-		218,488		205,000		-		-
	Long-term debt			-		-		-		-		-		426,827		400,000
	Payables to parent and affiliates			-		85,204		-		85,204		85,204		94,953		94,953
	Other liabilities			-		101,656		-		101,656		101,656		99,094		99,094
	Separate account liabilities - investment contracts			-		796		-		796		796		964		964
		Total liabilities	$	-	$	454,040	$	84,153	$	538,193	$	526,224	$	738,973	$	709,229

The fair values presented above have been determined by using available market information and by applying market valuation methodologies, as described in more detail below.

The fair value of most commercial mortgage loans is based upon the present value of the expected future cash flows discounted at the appropriate U.S. Treasury rate plus an appropriate credit spread for similar quality loans. The quality ratings for these loans, a primary determinant of the credit spreads and a significant component of the pricing process, are based on an internally-developed methodology.

Other long-term investments include investments in joint ventures and limited partnerships. The estimated fair values of these cost method investments are generally based on the Company's share of the net asset value (“NAV”) as provided in the financial statements of the investees. In certain circumstances, management may adjust the NAV by a premium or discount when it has sufficient evidence to support applying such adjustments. For the year end December 31, 2013 and 2012 no such adjustments were made.

Cash, Accrued Investment Income, Receivables from Parent and Affiliates, and Other Assets

The Company believes that due to the short-term nature of certain assets, the carrying value approximates fair value. These assets include: cash, accrued investment income, and other assets that meet the definition of financial instruments, including receivables such as unsettled trades, accounts receivable.

Only the portion of policyholders' account balances related to products that are investment contracts (those without significant mortality or morbidity risk) are reflected in the table above. For fixed deferred annuities and payout annuities and other similar contracts without life contingencies, fair values are derived using discounted projected cash flows based on interest rates that are representative of the Company's financial strength ratings, and hence reflect the Company's own non-performance risk. For those balances that can be withdrawn by the customer at any time without prior notice or penalty, the fair value is the amount estimated to be payable to the customer as of the reporting date, which is generally the carrying value.

Cash collateral for loaned securities represents the collateral received or paid in connection with loaning or borrowing securities. For these transactions, the carrying value of the related asset/liability approximates fair value as they equal the amount of cash collateral received/paid.

The fair value of short term and long−term debt is generally determined by either prices obtained from independent pricing services, which are validated by the Company, or discounted cash flow models. These fair values consider the Company's own non−performance risk. Discounted cash flow models predominately use market observable inputs such as the borrowing rates currently available to the Company for debt and financial instruments with similar terms and remaining maturities.

Other liabilities and Payables to Parent and Affiliates are primarily payables, such as unsettled trades, drafts, escrow deposits and accrued expense payables. Due to the short term until settlement of most of these liabilities, the Company believes that carrying value approximates fair value.

Only the portion of separate account liabilities related to products that are investments contracts are reflected in the table above. Separate account liabilities are recorded at the amount credited to the contractholder, which reflects the change in fair value of the corresponding separate account assets including contractholder deposits less withdrawals and fees. Therefore, carrying value approximates fair value.