Investments

Fixed Maturity and Equity Securities Available-for-Sale

The following tables provide information relating to investments in fixed maturity and equity securities by sector as of September 30, 2014 and December 31, 2013 (dollars in thousands):



September 30, 2014:	Amortized		Unrealized		Unrealized		Estimated Fair		% of		Other-than- temporary impairments
	Cost		Gains		Losses		Value		Total		in AOCI
Available-for-sale:
Corporate securities	$	13,413,102	$	849,695	$	72,341	$	14,190,456	58.0	%	$	—
Canadian and Canadian provincial governments	2,726,064		989,925		1,651		3,714,338		15.2		—
Residential mortgage-backed securities	964,436		46,453		10,172		1,000,717		4.1		(300		)
Asset-backed securities	993,028		22,054		9,034		1,006,048		4.1		354
Commercial mortgage-backed securities	1,404,648		85,609		8,435		1,481,822		6.0		(1,609		)
U.S. government and agencies	462,675		19,063		1,752		479,986		1.9		—
State and political subdivisions	369,631		45,211		4,778		410,064		1.7		—
Other foreign government, supranational and foreign government-sponsored enterprises	2,119,357		82,424		9,761		2,192,020		9.0		—
Total fixed maturity securities	$	22,452,941	$	2,140,434	$	117,924	$	24,475,451	100.0	%	$	(1,555	)
Non-redeemable preferred stock	$	82,236	$	7,051	$	1,698	$	87,589	54.1	%
Other equity securities	74,726		866		1,230		74,362		45.9
Total equity securities	$	156,962	$	7,917	$	2,928	$	161,951	100.0	%



December 31, 2013:	Amortized		Unrealized		Unrealized		Estimated Fair		% of		Other-than- temporary impairments
	Cost		Gains		Losses		Value		Total		in AOCI
Available-for-sale:
Corporate securities	$	11,697,394	$	616,147	$	202,786	$	12,110,755	56.4	%	$	—
Canadian and Canadian provincial governments	2,728,111		669,762		16,848		3,381,025		15.7		—
Residential mortgage-backed securities	970,434		38,126		18,917		989,643		4.6		(300		)
Asset-backed securities	891,751		18,893		15,812		894,832		4.2		(2,259		)
Commercial mortgage-backed securities	1,314,782		91,651		17,487		1,388,946		6.5		(1,609		)
U.S. government and agencies	489,631		16,468		4,748		501,351		2.3		—
State and political subdivisions	313,252		21,907		14,339		320,820		1.5		—
Other foreign government, supranational and foreign government-sponsored enterprises	1,865,379		45,347		23,962		1,886,764		8.8		—
Total fixed maturity securities	$	20,270,734	$	1,518,301	$	314,899	$	21,474,136	100.0	%	$	(4,168	)
Non-redeemable preferred stock	$	81,993	$	5,342	$	5,481	$	81,854	20.2	%
Other equity securities	327,479		618		4,220		323,877		79.8
Total equity securities	$	409,472	$	5,960	$	9,701	$	405,731	100.0	%

The Company enters into various collateral arrangements that require both the pledging and acceptance of fixed maturity securities as collateral with derivative and reinsurance counterparties. Pledged fixed maturity securities are included in fixed maturity securities, available-for-sale in the condensed consolidated balance sheets. Fixed maturity securities received as collateral are held in separate custodial accounts and are not recorded on the Company’s condensed consolidated balance sheets. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge collateral it receives; however, as of September 30, 2014 and December 31, 2013, none of the collateral received had been sold or re-pledged. The Company also holds securities in trust to satisfy collateral requirements under certain third-party reinsurance treaties. The following table includes fixed maturity securities pledged and received as collateral, and assets in trust held to satisfy collateral requirements under certain third-party reinsurance treaties as of September 30, 2014 and December 31, 2013 (dollars in millions):



	September 30, 2014				December 31, 2013
	Amortized Cost		Estimated Fair Value		Amortized Cost	Estimated Fair Value
Fixed maturity securities pledged as collateral	$	72	$	74	57	58
Fixed maturity securities received as collateral	n/a		126		n/a	94
Securities held in trust	9,350		9,917		7,843	8,125

The Company monitors its concentrations of financial instruments on an on-going basis, and mitigates credit risk by maintaining a diversified investment portfolio which limits exposure to any one issuer. The Company’s exposure to concentrations of credit risk of single issuers greater than 10% of the Company’s stockholders’ equity as of September 30, 2014 and December 31, 2013 is as follows (dollars in millions).



	September 30, 2014				December 31, 2013
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Fixed maturity securities guaranteed or issued by:
Canadian province of Ontario	$	996	$	1,312	$	1,023	$	1,222
Canadian province of Quebec	1,030		1,521		1,041		1,389

The amortized cost and estimated fair value of fixed maturity securities available-for-sale at September 30, 2014 are shown by contractual maturity in the table below (dollars in thousands). Actual maturities can differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Asset and mortgage-backed securities are shown separately in the table below, as they are not due at a single maturity date.



	Amortized Cost		Fair Value
Available-for-sale:
Due in one year or less	$	593,119	$	599,642
Due after one year through five years	4,100,619		4,325,143
Due after five years through ten years	7,604,908		7,972,837
Due after ten years	6,792,183		8,089,242
Asset and mortgage-backed securities	3,362,112		3,488,587
Total	$	22,452,941	$	24,475,451

Corporate Fixed Maturity Securities

The tables below show the major industry types of the Company’s corporate fixed maturity holdings as of September 30, 2014 and December 31, 2013 (dollars in thousands):



September 30, 2014:			Estimated
	Amortized Cost		Fair Value		% of Total
Finance	$	4,592,728	$	4,827,880	34.0	%
Industrial	7,310,121		7,740,313		54.6
Utility	1,510,253		1,622,263		11.4
Total	$	13,413,102	$	14,190,456	100.0	%

December 31, 2013:			Estimated
	Amortized Cost		Fair Value		% of Total
Finance	$	3,838,716	$	3,983,623	32.9	%
Industrial	6,607,100		6,824,063		56.3
Utility	1,240,353		1,292,305		10.7
Other	11,225		10,764		0.1
Total	$	11,697,394	$	12,110,755	100.0	%

Other-Than-Temporary Impairments - Fixed Maturity and Equity Securities

As discussed in Note 2 – “Summary of Significant Accounting Policies” of the 2013 Annual Report, a portion of certain other-than-temporary impairment (“OTTI”) losses on fixed maturity securities are recognized in AOCI. For these securities the net amount recognized in the condensed consolidated statements of income (“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 AOCI. 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 AOCI, and the corresponding changes in such amounts (dollars in thousands):



	Three months ended September 30,
	2014			2013
Balance, beginning of period	$	7,284		$	13,324
Additional impairments - credit loss OTTI recognized on securities previously impaired	—			134
Credit loss OTTI previously recognized on securities impaired to fair value during the period	—			—
Credit loss OTTI previously recognized on securities which matured, paid down, prepaid or were sold during the period	—			(1,762		)
Balance, end of period	$	7,284		$	11,696

	Nine months ended September 30,
	2014			2013
Balance, beginning of period	$	11,696		$	16,675
Additional impairments - credit loss OTTI recognized on securities previously impaired	—			134
Credit loss OTTI previously recognized on securities impaired to fair value during the period	—			(1,449		)
Credit loss OTTI previously recognized on securities which matured, paid down, prepaid or were sold during the period	(4,412		)	(3,664		)
Balance, end of period	$	7,284		$	11,696

Unrealized Losses for Fixed Maturity and Equity Securities Available-for-Sale

The following table presents the total gross unrealized losses for the 1,030 and 1,396 fixed maturity and equity securities as of September 30, 2014 and December 31, 2013, respectively, where the estimated fair value had declined and remained below amortized cost by the indicated amount (dollars in thousands):



	September 30, 2014				December 31, 2013
	Gross Unrealized Losses		% of Total		Gross Unrealized Losses		% of Total
Less than 20%	$	110,657	91.5	%	$	296,731	91.4	%
20% or more for less than six months	683		0.6		6,444		2.0
20% or more for six months or greater	9,512		7.9		21,425		6.6
Total	$	120,852	100.0	%	$	324,600	100.0	%

The Company’s determination of whether a decline in value is other-than-temporary includes analysis of the underlying credit and the extent and duration of a decline in value. The Company’s credit analysis of an investment includes determining whether the issuer is current on its contractual payments, evaluating whether it is probable that the Company will be able to collect all amounts due according to the contractual terms of the security and analyzing the overall ability of the Company to recover the amortized cost of the investment. In the Company’s impairment review process, the duration and severity of an unrealized loss position for equity securities are given greater weight and consideration given the lack of contractual cash flows or deferability features.

The following tables present the estimated fair values and gross unrealized losses, including other-than-temporary impairment losses reported in AOCI, for 1,030 and 1,396 fixed maturity and equity securities that have estimated fair values below amortized cost as of September 30, 2014 and December 31, 2013, respectively (dollars in thousands). These investments are presented by class and grade of security, as well as the length of time the related fair value has remained below amortized cost.



	Less than 12 months				12 months or greater				Total
			Gross				Gross				Gross
September 30, 2014:	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Investment grade securities:
Corporate securities	$	1,381,925	$	20,285	$	787,728	$	41,002	$	2,169,653	$	61,287
Canadian and Canadian provincial governments	53,864		427		27,870		1,224		81,734		1,651
Residential mortgage-backed securities	91,041		1,139		148,006		8,672		239,047		9,811
Asset-backed securities	234,958		2,074		121,589		4,656		356,547		6,730
Commercial mortgage-backed securities	103,327		922		40,865		2,950		144,192		3,872
U.S. government and agencies	40,941		70		71,551		1,682		112,492		1,752
State and political subdivisions	40,692		124		45,205		4,654		85,897		4,778
Other foreign government, supranational and foreign government-sponsored enterprises	147,718		3,160		156,858		5,746		304,576		8,906
Total investment grade securities	2,094,466		28,201		1,399,672		70,586		3,494,138		98,787
Non-investment grade securities:
Corporate securities	428,285		8,710		31,577		2,344		459,862		11,054
Residential mortgage-backed securities	19,548		206		3,477		155		23,025		361
Asset-backed securities	9,642		161		9,514		2,143		19,156		2,304
Commercial mortgage-backed securities	—		—		6,446		4,563		6,446		4,563
Other foreign government, supranational and foreign government-sponsored enterprises	15,973		855		—		—		15,973		855
Total non-investment grade securities	473,448		9,932		51,014		9,205		524,462		19,137
Total fixed maturity securities	$	2,567,914	$	38,133	$	1,450,686	$	79,791	$	4,018,600	$	117,924
Non-redeemable preferred stock	$	3,765	$	287	$	17,149	$	1,411	$	20,914	$	1,698
Other equity securities	24,552		90		28,561		1,140		53,113		1,230
Total equity securities	$	28,317	$	377	$	45,710	$	2,551	$	74,027	$	2,928



	Less than 12 months				12 months or greater				Total
			Gross				Gross				Gross
December 31, 2013:	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Investment grade securities:
Corporate securities	$	3,141,179	$	148,895	$	301,303	$	40,548	$	3,442,482	$	189,443
Canadian and Canadian provincial governments	188,491		14,419		12,029		2,429		200,520		16,848
Residential mortgage-backed securities	283,967		15,900		23,068		1,688		307,035		17,588
Asset-backed securities	255,656		4,916		56,668		4,983		312,324		9,899
Commercial mortgage-backed securities	219,110		3,725		20,068		5,745		239,178		9,470
U.S. government and agencies	133,697		4,469		4,406		279		138,103		4,748
State and political subdivisions	120,193		9,723		15,202		4,616		135,395		14,339
Other foreign government, supranational and foreign government-sponsored enterprises	665,313		21,075		36,212		2,847		701,525		23,922
Total investment grade securities	5,007,606		223,122		468,956		63,135		5,476,562		286,257
Non-investment grade securities:
Corporate securities	283,603		9,451		38,256		3,892		321,859		13,343
Residential mortgage-backed securities	62,146		1,075		3,945		254		66,091		1,329
Asset-backed securities	28,670		415		32,392		5,498		61,062		5,913
Commercial mortgage-backed securities	15,762		81		10,980		7,936		26,742		8,017
Other foreign government, supranational and foreign government-sponsored enterprises	9,403		40		—		—		9,403		40
Total non-investment grade securities	399,584		11,062		85,573		17,580		485,157		28,642
Total fixed maturity securities	$	5,407,190	$	234,184	$	554,529	$	80,715	$	5,961,719	$	314,899
Non-redeemable preferred stock	$	51,386	$	5,479	$	1	$	2	$	51,387	$	5,481
Other equity securities	218,834		1,748		32,550		2,472		251,384		4,220
Total equity securities	$	270,220	$	7,227	$	32,551	$	2,474	$	302,771	$	9,701

As of September 30, 2014, the Company does not intend to sell these fixed maturity securities and does not believe it is more likely than not that it will be required to sell these fixed maturity securities before the recovery of the fair value up to the current amortized cost of the investment, which may be maturity. As of September 30, 2014, the Company has the ability and intent to hold the equity securities until the recovery of the fair value up to the current cost of the investment. However, unforeseen facts and circumstances may cause the Company to sell fixed maturity and equity securities in the ordinary course of managing its portfolio to meet certain diversification, credit quality, asset-liability management and liquidity guidelines.

Unrealized losses on non-investment grade securities as of September 30, 2014 are primarily related to high-yield corporate securities and commercial mortgage-backed securities. Unrealized losses decreased across all security types as interest rates decreased during the first nine months of 2014.

Investment Income, Net of Related Expenses

Major categories of investment income, net of related expenses, consist of the following (dollars in thousands):



	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Fixed maturity securities available-for-sale	$	269,346		$	243,938		$	766,764		$	723,772
Mortgage loans on real estate	39,070			33,013			102,535			89,618
Policy loans	13,825			15,743			41,014			49,103
Funds withheld at interest	124,685			80,024			345,484			376,495
Short-term investments	462			374			1,507			1,609
Other invested assets	15,416			9,411			48,937			36,712
Investment income	462,804			382,503			1,306,241			1,277,309
Investment expense	(15,698		)	(13,137		)	(44,153		)	(38,578		)
Investment income, net of related expenses	$	447,106		$	369,366		$	1,262,088		$	1,238,731

Investment Related Gains (Losses), Net

Investment related gains (losses), net consist of the following (dollars in thousands):



	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Fixed maturities and equity securities available for sale:
Other-than-temporary impairment losses on fixed maturity securities recognized in earnings	$	(246	)	$	(332	)	$	(1,419	)	$	(10,643	)
Impairment losses on equity securities	—			—			—			—
Gain on investment activity	8,819			21,560			51,773			70,085
Loss on investment activity	(6,355		)	(30,434		)	(19,815		)	(48,406		)
Other impairment losses and change in mortgage loan provision	(2,041		)	233			(5,686		)	(1,268		)
Derivatives and other, net	22,141			(67,492		)	200,563			56,381
Total investment related gains (losses), net	$	22,318		$	(76,465	)	$	225,416		$	66,149

During the three months ended September 30, 2014 and 2013, the Company sold fixed maturity and equity securities with fair values of $225.6 million and $410.4 million at losses of $6.4 million and $30.4 million, respectively. During the nine months ended September 30, 2014 and 2013, the Company sold fixed maturity and equity securities with fair values of $683.5 million and $872.2 million at losses of $19.8 million and $48.4 million, respectively. The Company generally does not engage in short-term buying and selling of securities.

Securities Borrowing and Other

The Company participates in a securities borrowing program whereby securities, which are not reflected on the Company’s condensed consolidated balance sheets, are borrowed from a third party. The borrowed securities are used to provide collateral under an affiliated reinsurance transaction. The Company is required to maintain a minimum of 100% of the fair value of the borrowed securities as collateral, which consists of rights to reinsurance treaty cash flows.

The Company also participates in a repurchase program in which securities, reflected as investments on the Company’s condensed consolidated balance sheets, are pledged to a third party. In return, the Company receives cash from the third party, which is reflected as a payable to the third party, included in other liabilities on the condensed consolidated balance sheets. The Company is required to maintain a minimum collateral balance with a fair value of 105% of the cash received.

Additionally, the Company participates in a repurchase/reverse repurchase program in which securities, reflected as investments on the Company’s condensed consolidated balance sheets, are pledged to a third party. In return, the Company receives securities from the third party with an estimated fair value equal to a minimum of 100% of the securities pledged. The securities received are not reflected on the Company’s condensed consolidated balance sheets.

The following table includes the amount of borrowed securities, repurchased securities pledged and repurchased/reverse repurchased securities pledged and received as of September 30, 2014 and December 31, 2013 (dollars in millions).



	September 30, 2014				December 31, 2013
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Borrowed securities	$	204	$	211	$	93	$	93
Repurchase program securities pledged	90		104		—		—
Repurchase program/reverse repurchase program:
Securities pledged	298		310		300		311
Securities received	n/a		341		n/a		344

Mortgage Loans on Real Estate

Mortgage loans represented approximately 7.4% and 7.7% of the Company’s total investments as of September 30, 2014 and December 31, 2013. The Company makes mortgage loans on income producing properties that are geographically diversified throughout the U.S. with the largest concentration being in California, which accounted for 19.6% and 23.3% of mortgage loans on real estate as of September 30, 2014 and December 31, 2013, respectively. Loan-to-value ratios at the time of loan approval are 75% or less. The distribution of mortgage loans, gross of valuation allowances, by property type is as follows as of September 30, 2014 and December 31, 2013 (dollars in thousands):



	September 30, 2014				December 31, 2013
	Recorded Investment		% of Total		Recorded Investment		% of Total
Apartment	$	371,209	14.1	%	$	289,394	11.6	%
Retail	792,978		30.2		748,731		30.0
Office building	859,402		32.8		917,284		36.7
Industrial	457,945		17.5		439,890		17.6
Other commercial	142,399		5.4		101,487		4.1
Total	$	2,623,933	100.0	%	$	2,496,786	100.0	%

The maturities of the mortgage loans, gross of valuation allowances, as of September 30, 2014 and December 31, 2013 are as follows (dollars in thousands):



	September 30, 2014				December 31, 2013
	Recorded Investment		% of Total		Recorded Investment		% of Total
Due within five years	$	874,003	33.3	%	$	987,109	39.5	%
Due after five years through ten years	1,155,740		44.0		984,289		39.4
Due after ten years	594,190		22.7		525,388		21.1
Total	$	2,623,933	100.0	%	$	2,496,786	100.0	%

Information regarding the Company’s credit quality indicators, as determined by the Company's internal evaluation methodology for its recorded investment in mortgage loans, gross of valuation allowances, as of September 30, 2014 and December 31, 2013 is as follows (dollars in thousands):



	September 30, 2014				December 31, 2013
Internal credit quality grade:	Recorded Investment		% of Total		Recorded Investment		% of Total
High investment grade	$	1,347,805	51.4	%	$	1,437,244	57.5	%
Investment grade	1,114,920		42.5		827,993		33.2
Average	112,183		4.3		155,914		6.2
Watch list	29,511		1.1		49,404		2.0
In or near default	19,514		0.7		26,231		1.1
Total	$	2,623,933	100.0	%	$	2,496,786	100.0	%

None of the payments due to the Company on its recorded investment in mortgage loans were delinquent as of September 30, 2014 and December 31, 2013.

The following table presents the recorded investment in mortgage loans, by method of measuring impairment, and the related valuation allowances as of September 30, 2014 and December 31, 2013 (dollars in thousands):



	September 30, 2014		December 31, 2013
Mortgage loans:
Individually measured for impairment	$	19,514	$	37,841
Collectively measured for impairment	2,604,419		2,458,945
Mortgage loans, gross of valuation allowances	2,623,933		2,496,786
Valuation allowances:
Individually measured for impairment	786		3,211
Collectively measured for impairment	6,056		6,895
Total valuation allowances	6,842		10,106
Mortgage loans, net of valuation allowances	$	2,617,091	$	2,486,680

Information regarding the Company’s loan valuation allowances for mortgage loans for the three and nine months ended September 30, 2014 and 2013 is as follows (dollars in thousands):



	Three months ended September 30,
	2014			2013
Balance, beginning of period	$	9,692		$	7,903
Recoveries	97			—
Charge-offs	(2,854		)	—
Provision (release)	(93		)	(234		)
Balance, end of period	$	6,842		$	7,669

	Nine months ended September 30,
	2014			2013
Balance, beginning of period	$	10,106		$	11,580
Recoveries	121			—
Charge-offs	(2,854		)	(2,148		)
Provision (release)	(531		)	(1,763		)
Balance, end of period	$	6,842		$	7,669

Information regarding the portion of the Company’s mortgage loans that were impaired as of September 30, 2014 and December 31, 2013 is as follows (dollars in thousands):



	Unpaid Principal Balance		Recorded Investment		Related Allowance		Carrying Value
September 30, 2014:
Impaired mortgage loans with no valuation allowance recorded	$	9,750	$	9,148	$	—	$	9,148
Impaired mortgage loans with valuation allowance recorded	10,329		10,366		786		9,580
Total impaired mortgage loans	$	20,079	$	19,514	$	786	$	18,728
December 31, 2013:
Impaired mortgage loans with no valuation allowance recorded	$	21,698	$	21,100	$	—	$	21,100
Impaired mortgage loans with valuation allowance recorded	16,772		16,741		3,211		13,530
Total impaired mortgage loans	$	38,470	$	37,841	$	3,211	$	34,630

The Company’s average investment in impaired mortgage loans and the related interest income are reflected in the table below for the periods indicated (dollars in thousands):
	Three months ended September 30,
	2014				2013
	Average Recorded Investment⁽¹⁾		Interest Income		Average Recorded Investment⁽¹⁾		Interest Income
Impaired mortgage loans with no valuation allowance recorded	$	9,159	$	225	$	13,631	$	349
Impaired mortgage loans with valuation allowance recorded	14,870		26		21,490		266
Total	$	24,029	$	251	$	35,121	$	615

	Nine months ended September 30,
	2014				2013
	Average Recorded Investment⁽¹⁾		Interest Income		Average Recorded Investment⁽¹⁾		Interest Income
Impaired mortgage loans with no valuation allowance recorded	$	14,856	$	614	$	13,504	$	533
Impaired mortgage loans with valuation allowance recorded	14,705		478		24,337		801
Total	$	29,561	$	1,092	$	37,841	$	1,334

(1) Average recorded investment represents the average loan balances as of the beginning of period and all subsequent quarterly end of period balances.

The Company did not acquire any impaired mortgage loans during the nine months ended September 30, 2014 and 2013. The Company had no mortgage loans that were on nonaccrual status at September 30, 2014 and December 31, 2013.

Policy Loans

Policy loans comprised approximately 3.5% and 3.8% of the Company’s total investments as of September 30, 2014 and December 31, 2013, respectively, substantially all of which are associated with one client. These policy loans present no credit risk because the amount of the loan cannot exceed the obligation due to the ceding company upon the death of the insured or surrender of the underlying policy. The provisions of the treaties in force and the underlying policies determine the policy loan interest rates. As policy loans represent premature distributions of policy liabilities, they have the effect of reducing future disintermediation risk. In addition, the Company earns a spread between the interest rate earned on policy loans and the interest rate credited to corresponding liabilities.

Funds Withheld at Interest

Funds withheld at interest comprised approximately 16.8% and 17.8% of the Company’s total investments as of September 30, 2014 and December 31, 2013, respectively. Of the $6.0 billion funds withheld at interest balance, net of embedded derivatives, as of September 30, 2014, $4.3 billion of the balance is associated with one client. For reinsurance agreements written on a modified coinsurance basis and certain agreements written on a coinsurance funds withheld basis, assets equal to the net statutory reserves are withheld and legally owned and managed by the ceding company and are reflected as funds withheld at interest on the Company’s condensed consolidated balance sheets. In the event of a ceding company’s insolvency, the Company would need to assert a claim on the assets supporting its reserve liabilities. However, the risk of loss to the Company is mitigated by its ability to offset amounts it owes the ceding company for claims or allowances with amounts owed to the Company from the ceding company. The Company is subject to the investment performance on the withheld assets, although it does not directly control them. These assets are primarily fixed maturity investment securities and pose risks similar to the fixed maturity securities the Company owns. To mitigate this risk, the Company helps set the investment guidelines followed by the ceding company and monitors compliance.

Other Invested Assets

Other invested assets include equity securities, limited partnership interests, real estate joint ventures, structured loans, derivative contracts, fair value option ("FVO") contractholder-directed unit-linked investments, Federal Home Loan Bank of Des Moines ("FHLB") common stock (included in other in the table below), and real estate held-for-investment (included in other in the table below). The fair value option was elected for contractholder-directed investments supporting unit-linked variable annuity type liabilities which do not qualify for presentation and reporting as separate accounts. Other invested assets represented approximately 3.3% and 4.1% of the Company’s total investments as of September 30, 2014 and December 31, 2013, respectively. Carrying values of these assets as of September 30, 2014 and December 31, 2013 are as follows (dollars in thousands):



	September 30, 2014		December 31, 2013
Equity securities	$	161,950	$	405,731
Limited partnerships and real estate joint ventures	439,695		411,456
Structured loans	182,977		223,549
Derivatives	163,554		75,227
FVO contractholder-directed unit-linked investments	142,125		138,892
Other	74,720		70,105
Total other invested assets	$	1,165,021	$	1,324,960

Investments Transferred to the Company

During the nine months ended September 30, 2014 the Company executed reinsurance transactions that resulted in the transfer of securities with an estimated fair value of $1,580.1 million at the date of transfer. There were no securities transferred to the Company for the nine months ended September 30, 2013. Securities transferred to the Company are considered non-cash transactions in the condensed consolidated statement of cash flows.