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Deferred Policy Acquisition Costs
 12 Months Ended
Dec. 31, 2014
Deferred Policy Acquisition Costs Disclosures [Abstract]  
Deferred Policy Acquisition Costs
DEFERRED POLICY ACQUISITION COSTS
The following reflects the amounts of policy acquisition costs deferred and amortized (dollars in thousands):
 
 
 
 
 
 
As of December 31,
 
2014
 
2013
Deferred policy acquisition costs:
 
 
 
 
Assumed
 
$
3,391,291

 
$
3,573,054

Retroceded
 
(48,716
)
 
(55,258
)
Net
 
$
3,342,575

 
$
3,517,796


Years ended December 31,
 
2014
 
2013
 
2012
Balance, beginning of year
 
$
3,517,796

 
$
3,619,274

 
$
3,543,925

Capitalized
 
 
 
 
 
 
Assumed
 
885,944

 
862,767

 
1,081,599

Retroceded
 
(8,335
)
 
(8,604
)
 
(11,814
)
Amortized (including interest):
 
 
 
 
 
 
Assumed
 
(882,498
)
 
(826,539
)
 
(975,844
)
Allocated to change in value of embedded derivatives
 
(111,744
)
 
(98,141
)
 
(42,183
)
Retroceded
 
14,877

 
11,877

 
14,970

Attributed to unrealized investment gains (losses)
 
(4,480
)
 
16,181

 
(14,938
)
Foreign currency changes
 
(68,985
)
 
(59,019
)
 
23,559

Balance, end of year
 
$
3,342,575

 
$
3,517,796

 
$
3,619,274


Some reinsurance agreements involve reimbursing the ceding company for allowances and commissions in excess of first-year premiums. These amounts represent acquisition costs and are capitalized to the extent deemed recoverable from the future premiums and amortized against future profits of the business. This type of agreement presents a risk to the extent that the business lapses faster than originally anticipated, resulting in future profits being insufficient to recover the Company’s investment.