10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number : 001-31911

American Equity Investment Life Holding Company

(Exact name of registrant as specified in its charter)

Iowa	42-1447959
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

6000 Westown Parkway

West Des Moines, Iowa 50266

(Address of principal executive offices, including zip code)

(515) 221-0002

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer," “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

APPLICABLE TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

As of July 31, 2014, there were 74,798,714 shares of the registrant's common stock, $1 par value, outstanding.

TABLE OF CONTENTS

	Page
PART I — FINANCIAL INFORMATION
Item 1: Financial Statements:	2
Consolidated Balance Sheets	2
Consolidated Statements of Operations	3
Consolidated Statements of Comprehensive Income (Loss)	4
Consolidated Statements of Changes in Stockholders’ Equity	5
Consolidated Statements of Cash Flows	6
Notes to Consolidated Financial Statements	8
Note 1: Significant Accounting Policies	8
Note 2: Fair Values of Financial Instruments	9
Note 3: Investments	14
Note 4: Mortgage Loans on Real Estate	21
Note 5: Derivative Instruments	26
Note 6: Notes Payable	29
Note 7: Commitments and Contingencies	30
Note 8: Earnings Per Share	31
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3: Quantitative and Qualitative Disclosures about Market Risk	50
Item 4: Controls and Procedures	52
PART II — OTHER INFORMATION
Item 1: Legal Proceedings	53
Item 1A: Risk Factors	53
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 6: Exhibits	54
Signatures	55

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share and per share data)

	June 30, 2014		December 31, 2013
	(Unaudited)
Assets
Investments:
Fixed maturity securities:
Available for sale, at fair value (amortized cost: 2014 - $27,540,945; 2013 - $26,527,730)	$	29,317,572	$	26,610,447
Held for investment, at amortized cost (fair value: 2014 - $66,571; 2013 - $60,840)	76,342		76,255
Equity securities, available for sale, at fair value (cost: 2014 - $7,506; 2013 - $7,503)	7,762		7,778
Mortgage loans on real estate	2,543,810		2,581,082
Derivative instruments	905,688		856,050
Other investments	221,459		215,042
Total investments	33,072,633		30,346,654
Cash and cash equivalents	1,464,533		897,529
Coinsurance deposits	3,085,340		2,999,618
Accrued investment income	304,041		301,641
Deferred policy acquisition costs	2,040,084		2,426,652
Deferred sales inducements	1,578,621		1,875,880
Deferred income taxes	73,564		301,856
Income taxes recoverable	26,934		—
Other assets	357,946		471,669
Total assets	$	42,003,696	$	39,621,499
Liabilities and Stockholders' Equity
Liabilities:
Policy benefit reserves	$	37,876,044	$	35,789,655
Other policy funds and contract claims	391,979		418,033
Notes payable	474,361		549,958
Subordinated debentures	246,145		246,050
Income taxes payable	—		10,153
Other liabilities	1,101,357		1,222,963
Total liabilities	40,089,886		38,236,812
Stockholders' equity:
Preferred stock, par value $1 per share, 2,000,000 shares authorized,   2014 and 2013 - no shares issued and outstanding	—		—
Common stock, par value $1 per share, 200,000,000 shares authorized; issued and outstanding:    2014 - 74,088,743 shares (excluding 4,527,167 treasury shares);    2013 - 70,535,404 shares (excluding 4,876,735 treasury shares)	74,089		70,535
Additional paid-in capital	538,472		550,400
Unallocated common stock held by ESOP; 2013 - 58,618 shares	—		(631		)
Accumulated other comprehensive income	556,071		46,196
Retained earnings	745,178		718,187
Total stockholders' equity	1,913,810		1,384,687
Total liabilities and stockholders' equity	$	42,003,696	$	39,621,499

See accompanying notes to unaudited consolidated financial statements.

2

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Revenues:
Premiums and other considerations	$	9,123		$	11,551		$	16,454		$	24,635
Annuity product charges	29,247			23,511			54,519			44,992
Net investment income	370,882			336,143			740,887			665,833
Change in fair value of derivatives	270,883			64,040			319,376			438,002
Net realized gains (losses) on investments, excluding other than temporary impairment ("OTTI") losses	(2,230		)	15,689			(2,944		)	26,274
OTTI losses on investments:
Total OTTI losses	—			(2,775		)	—			(4,964		)
Portion of OTTI losses recognized from other comprehensive income	(594		)	—			(1,499		)	(1,048		)
Net OTTI losses recognized in operations	(594		)	(2,775		)	(1,499		)	(6,012		)
Loss on extinguishment of debt	(6,574		)	(589		)	(10,551		)	(589		)
Total revenues	670,737			447,570			1,116,242			1,193,135
Benefits and expenses:
Insurance policy benefits and change in future policy benefits	10,987			13,768			21,082			28,528
Interest sensitive and index product benefits	367,774			333,001			684,966			556,171
Amortization of deferred sales inducements	55,349			120,536			56,015			149,367
Change in fair value of embedded derivatives	80,935			(408,409		)	173,554			(45,137		)
Interest expense on notes payable	9,121			6,780			19,385			14,028
Interest expense on subordinated debentures	3,024			3,018			6,032			6,027
Amortization of deferred policy acquisition costs	67,084			169,270			74,278			215,500
Other operating costs and expenses	20,887			24,851			39,972			44,371
Total benefits and expenses	615,161			262,815			1,075,284			968,855
Income before income taxes	55,576			184,755			40,958			224,280
Income tax expense	18,832			64,642			13,967			78,136
Net income	$	36,744		$	120,113		$	26,991		$	146,144
Earnings per common share	$	0.49		$	1.87		$	0.37		$	2.29
Earnings per common share - assuming dilution	$	0.46		$	1.71		$	0.34		$	2.09
Weighted average common shares outstanding (in thousands):
Earnings per common share	74,461			64,254			73,495			63,787
Earnings per common share - assuming dilution	79,518			70,382			79,583			69,882

See accompanying notes to unaudited consolidated financial statements.

3

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Dollars in thousands)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Net income	$	36,744		$	120,113		$	26,991		$	146,144
Other comprehensive income (loss):
Change in net unrealized investment gains/losses (1)	343,316			(634,688		)	784,004			(669,871		)
Noncredit component of OTTI losses (1)	286			—			694			347
Reclassification of unrealized investment gains/losses to net income (1)	454			(7,439		)	(276		)	(11,286		)
Other comprehensive income (loss) before income tax	344,056			(642,127		)	784,422			(680,810		)
Income tax effect related to other comprehensive income (loss)	(120,420		)	224,744			(274,547		)	238,283
Other comprehensive income (loss)	223,636			(417,383		)	509,875			(442,527		)
Comprehensive income (loss)	$	260,380		$	(297,270	)	$	536,866		$	(296,383	)

(1) Net of related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs.

See accompanying notes to unaudited consolidated financial statements.

4

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Dollars in thousands, except share data)

(Unaudited)

	Common Stock		Additional Paid-in Capital			Unallocated Common Stock Held by ESOP			Accumulated Other Comprehensive Income			Retained Earnings		Total Stockholders' Equity
Balance at December 31, 2013	$	70,535	$	550,400		$	(631	)	$	46,196		$	718,187	$	1,384,687
Net income for period	—		—			—			—			26,991		26,991
Other comprehensive income	—		—			—			509,875			—		509,875
Allocation of 58,618 shares of common stock by ESOP, including excess income tax benefits	—		721			631			—			—		1,352
Share-based compensation, including excess income tax benefits	—		3,607			—			—			—		3,607
Issuance of 1,109,882 shares of common stock under compensation plans, including excess income tax benefits	1,110		7,720			—			—			—		8,830
Extinguishment of convertible senior notes, net of tax, including 2,443,457 shares of common stock issued upon conversion	2,444		6,479			—			—			—		8,923
Warrants settled in cash	—		(30,455		)	—			—			—		(30,455		)
Balance at June 30, 2014	$	74,089	$	538,472		$	—		$	556,071		$	745,178	$	1,913,810
Balance at December 31, 2012	$	61,751	$	496,715		$	(2,583	)	$	686,807		$	477,547	$	1,720,237
Net income for period	—		—			—			—			146,144		146,144
Other comprehensive loss	—		—			—			(442,527		)	—		(442,527		)
Allocation of 53,314 shares of common stock by ESOP, including excess income tax benefits	—		134			574			—			—		708
Share-based compensation, including excess income tax benefits	—		3,193			—			—			—		3,193
Issuance of 1,533,603 shares of common stock under compensation plans, including excess income tax benefits	1,533		11,024			—			—			—		12,557
Extinguishment of convertible senior notes, net of tax, including 216,729 shares of common stock issued upon conversion	217		1,547			—			—			—		1,764
Balance at June 30, 2013	$	63,501	$	512,613		$	(2,009	)	$	244,280		$	623,691	$	1,442,076

See accompanying notes to unaudited consolidated financial statements.

5

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Six Months Ended June 30,
	2014			2013
Operating activities
Net income	$	26,991		$	146,144
Adjustments to reconcile net income to net cash provided by operating activities:
Interest sensitive and index product benefits	684,966			556,171
Amortization of deferred sales inducements	56,015			149,367
Annuity product charges	(54,519		)	(44,992		)
Change in fair value of embedded derivatives	173,554			(45,137		)
Change in traditional life and accident and health insurance reserves	1,323			9,487
Policy acquisition costs deferred	(199,978		)	(205,519		)
Amortization of deferred policy acquisition costs	74,278			215,500
Provision for depreciation and other amortization	5,398			9,356
Amortization of discounts and premiums on investments	(2,424		)	9,546
Realized gains/losses on investments and net OTTI losses recognized in operations	4,443			(20,262		)
Change in fair value of derivatives	(319,853		)	(438,002		)
Deferred income taxes	(42,918		)	38,781
Loss on extinguishment of debt	10,551			589
Share-based compensation	620			3,011
Change in accrued investment income	(2,400		)	(25,859		)
Change in income taxes recoverable/payable	(37,087		)	(8,483		)
Change in other assets	(80		)	(296		)
Change in other policy funds and contract claims	(30,857		)	(20,425		)
Change in collateral held for derivatives	81,341			164,269
Change in other liabilities	(32,286		)	475
Other	(1,697		)	(2,457		)
Net cash provided by operating activities	395,381			491,264
Investing activities
Sales, maturities, or repayments of investments:
Fixed maturity securities - available for sale	939,430			2,292,959
Equity securities - available for sale	—			44,829
Mortgage loans on real estate	217,785			266,539
Derivative instruments	532,867			409,050
Other investments	13,245			11,737
Acquisition of investments:
Fixed maturity securities - available for sale	(1,993,092		)	(4,962,314		)
Mortgage loans on real estate	(193,731		)	(228,735		)
Derivative instruments	(227,024		)	(190,997		)
Other investments	(5,598		)	(19,594		)
Purchases of property, furniture and equipment	(622		)	(288		)
Net cash used in investing activities	(716,740		)	(2,376,814		)

6

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS(Continued)

(Dollars in thousands)

(Unaudited)

	Six Months Ended June 30,
	2014			2013
Financing activities
Receipts credited to annuity and single premium universal life policyholder account balances	$	1,950,707		$	2,033,484
Coinsurance deposits	14,113			15,960
Return of annuity policyholder account balances	(944,679		)	(829,047		)
Financing fees incurred and deferred	(100		)	(1,153		)
Proceeds from notes payable	—			15,000
Repayment of notes payable	(119,677		)	(28,243		)
Net proceeds from settlement of notes hedges and warrants	10,401			—
Proceeds from amounts due under repurchase agreements	—			160,436
Excess tax benefits realized from share-based compensation plans	3,776			380
Proceeds from issuance of common stock	8,041			12,284
Change in checks in excess of cash balance	(34,219		)	(15,207		)
Net cash provided by financing activities	888,363			1,363,894
Increase (decrease) in cash and cash equivalents	567,004			(521,656		)
Cash and cash equivalents at beginning of period	897,529			1,268,545
Cash and cash equivalents at end of period	$	1,464,533		$	746,889
Supplemental disclosures of cash flow information
Cash paid during period for:
Interest expense	$	22,097		$	12,595
Income taxes	68,423			47,700
Non-cash operating activity:
Deferral of sales inducements	155,957			164,931
Non-cash investing activity:
Real estate acquired in satisfaction of mortgage loans	10,007			844
Non-cash financing activities:
Common stock issued in extinguishment of debt	56,292			3,367

See accompanying notes to unaudited consolidated financial statements.

7

AMERICAN EQUITY INVESTMENT LIFE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2014

(Unaudited)

1. Significant Accounting Policies

Consolidation and Basis of Presentation

The accompanying consolidated financial statements of American Equity Investment Life Holding Company (“we”, “us” or “our”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by GAAP for complete financial statements. The consolidated financial statements reflect all adjustments, consisting only of normal recurring items, which are necessary to present fairly our financial position and results of operations on a basis consistent with the prior audited consolidated financial statements. Operating results for the three and six month periods ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ended December 31, 2014. All significant intercompany accounts and transactions have been eliminated. The preparation of financial statements requires the use of management estimates. For further information related to a description of areas of judgment and estimates and other information necessary to understand our financial position and results of operations, refer to the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2013.

As previously reported in the notes to audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013, we identified certain classification errors related to the presentation of premiums and other considerations, insurance policy benefits and change in future policy benefits and interest sensitive and index product benefits related to life contingent immediate annuities in our audited consolidated statements of operations. Consistent with that presentation, we have revised the unaudited consolidated statements of operations for the three and six months ended June 30, 2013. The changes resulted in increases to premiums and other considerations of $8.6 million and $19.0 million and insurance policy benefits and change in future policy benefits of $11.6 million and $24.7 million, as well as decreases to interest sensitive and index product benefits of $3.0 million and $5.7 million for the three and six months ended June 30, 2013, respectively. These changes had no impact on the consolidated balance sheets, net income or stockholders' equity.

Reclassifications have been made to prior period unaudited consolidated financial statements to conform to the June 30, 2014 presentation.

Adopted Accounting Pronouncements

There were no accounting pronouncements that were adopted during the current period.

New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board ("FASB") issued an accounting standards update ("ASU") that requires that a performance target in a share based payment arrangement that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This ASU will be effective for us on January 1, 2016, and early adoption is permitted, but it is not expected to have a material impact on our consolidated financial statements.

8

2. Fair Values of Financial Instruments

The following sets forth a comparison of the carrying amounts and fair values of our financial instruments:

	June 30, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in thousands)
Assets
Fixed maturity securities:
Available for sale	$	29,317,572	$	29,317,572	$	26,610,447	$	26,610,447
Held for investment	76,342		66,571		76,255		60,840
Equity securities, available for sale	7,762		7,762		7,778		7,778
Mortgage loans on real estate	2,543,810		2,596,588		2,581,082		2,615,410
Derivative instruments	905,688		905,688		856,050		856,050
Other investments	196,853		198,293		192,198		193,343
Cash and cash equivalents	1,464,533		1,464,533		897,529		897,529
Coinsurance deposits	3,085,340		2,722,024		2,999,618		2,669,432
Interest rate caps	3,788		3,788		6,103		6,103
Interest rate swap	—		—		712		712
2015 notes hedges	45,884		45,884		107,041		107,041
Counterparty collateral	261,266		261,266		315,824		315,824
Liabilities
Policy benefit reserves	37,538,232		31,279,983		35,453,166		29,670,827
Single premium immediate annuity (SPIA) benefit reserves	391,651		404,561		417,625		430,835
Notes payable	474,361		564,118		549,958		699,435
Subordinated debentures	246,145		240,767		246,050		234,959
2015 notes embedded conversion derivative	45,884		45,884		107,041		107,041
Interest rate swap	1,983		1,983		—		—

Fair value is the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The objective of a fair value measurement is to determine that price for each financial instrument at each measurement date. We meet this objective using various methods of valuation that include market, income and cost approaches.

We categorize our financial instruments into three levels of fair value hierarchy based on the priority of inputs used in determining fair value. The hierarchy defines the highest priority inputs (Level 1) as quoted prices in active markets for identical assets or liabilities. The lowest priority inputs (Level 3) are our own assumptions about what a market participant would use in determining fair value such as estimated future cash flows. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. We categorize financial assets and liabilities recorded at fair value in the consolidated balance sheets as follows:

Level 1— Quoted prices are available in active markets for identical financial instruments as of the reporting date. We do not adjust the quoted price for these financial instruments, even in situations where we hold a large position and a sale could reasonably impact the quoted price.

Level 2— Quoted prices in active markets for similar financial instruments, quoted prices for identical or similar financial instruments in markets that are not active; and models and other valuation methodologies using inputs other than quoted prices that are observable.

Level 3— Models and other valuation methodologies using significant inputs that are unobservable for financial instruments and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in Level 3 are securities for which no market activity or data exists and for which we used discounted expected future cash flows with our own assumptions about what a market participant would use in determining fair value.

Transfers of securities among the levels occur at times and depend on the type of inputs used to determine fair value of each security. There were no transfers between levels during any period presented.

9

Our assets and liabilities which are measured at fair value on a recurring basis as of June 30, 2014 and December 31, 2013 are presented below based on the fair value hierarchy levels:

	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
June 30, 2014
Assets
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	38,483	$	4,074	$	34,409	$	—
United States Government sponsored agencies	1,185,341		—		1,185,341		—
United States municipalities, states and territories	3,506,198		—		3,506,198		—
Foreign government obligations	192,963		—		192,963		—
Corporate securities	19,187,375		27		19,187,348		—
Residential mortgage backed securities	1,870,565		—		1,869,897		668
Commercial mortgage backed securities	2,296,096		—		2,296,096		—
Other asset backed securities	1,040,551		—		1,040,551		—
Equity securities, available for sale: finance, insurance and real estate	7,762		—		7,762		—
Derivative instruments	905,688		—		905,688		—
Cash and cash equivalents	1,464,533		1,464,533		—		—
Interest rate caps	3,788		—		3,788		—
2015 notes hedges	45,884		—		45,884		—
Counterparty collateral	261,266		—		261,266		—
	$	32,006,493	$	1,468,634	$	30,537,191	$	668
Liabilities
2015 notes embedded conversion derivative	$	45,884	$	—	$	45,884	$	—
Interest rate swap	1,983		—		1,983		—
Fixed index annuities - embedded derivatives	5,119,823		—		—		5,119,823
	$	5,167,690	$	—	$	47,867	$	5,119,823
December 31, 2013
Assets
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	42,925	$	4,805	$	38,120	$	—
United States Government sponsored agencies	1,194,289		—		1,194,289		—
United States municipalities, states and territories	3,306,743		—		3,306,743		—
Foreign government obligations	91,557		—		91,557		—
Corporate securities	17,233,037		20		17,233,017		—
Residential mortgage backed securities	1,971,960		—		1,970,584		1,376
Commercial mortgage backed securities	1,735,460		—		1,735,460		—
Other asset backed securities	1,034,476		359		1,034,117		—
Equity securities, available for sale: finance, insurance and real estate	7,778		—		7,778		—
Derivative instruments	856,050		—		856,050		—
Cash and cash equivalents	897,529		897,529		—		—
Interest rate caps	6,103		—		6,103		—
Interest rate swap	712		—		712		—
2015 notes hedges	107,041		—		107,041		—
Counterparty collateral	315,824		—		315,824		—
	$	28,801,484	$	902,713	$	27,897,395	$	1,376
Liabilities
2015 notes embedded conversion derivative	$	107,041	$	—	$	107,041	$	—
Fixed index annuities - embedded derivatives	4,406,163		—		—		4,406,163
	$	4,513,204	$	—	$	107,041	$	4,406,163

10

The following methods and assumptions were used in estimating the fair values of financial instruments during the periods presented in these consolidated financial statements.

Fixed maturity securities and equity securities

The fair values of fixed maturity securities and equity securities in an active and orderly market are determined by utilizing independent pricing services. The independent pricing services incorporate a variety of observable market data in their valuation techniques, including:

• reported trading prices,

• benchmark yields,

• broker-dealer quotes,

• benchmark securities,

• bids and offers,

• credit ratings,

• relative credit information, and

• other reference data.

The independent pricing services also take into account perceived market movements and sector news, as well as a security's terms and conditions, including any features specific to that issue that may influence risk and marketability. Depending on the security, the priority of the use of observable market inputs may change as some observable market inputs may not be relevant or additional inputs may be necessary.

The independent pricing services provide quoted market prices when available. Quoted prices are not always available due to market inactivity. When quoted market prices are not available, the third parties use yield data and other factors relating to instruments or securities with similar characteristics to determine fair value for securities that are not actively traded. We generally obtain one value from our primary external pricing service. In situations where a price is not available from this service, we may obtain further quotes or prices from additional parties as needed. In addition, for our callable United States Government sponsored agencies, we obtain multiple broker quotes and take the average of the broker prices received. Market indices of similar rated asset class spreads are considered for valuations and broker indications of similar securities are compared. Inputs used by the broker include market information, such as yield data and other factors relating to instruments or securities with similar characteristics. Valuations and quotes obtained from third party commercial pricing services are non-binding and do not represent quotes on which one may execute the disposition of the assets.

We validate external valuations at least quarterly through a combination of procedures that include the evaluation of methodologies used by the pricing services, analytical reviews and performance analysis of the prices against trends, and maintenance of a securities watch list. Additionally, as needed we utilize discounted cash flow models or perform independent valuations on a case-by-case basis using inputs and assumptions similar to those used by the pricing services. Although we do identify differences from time to time as a result of these validation procedures, we did not make any significant adjustments as of June 30, 2014 and December 31, 2013.

Mortgage loans on real estate

Mortgage loans on real estate are not measured at fair value on a recurring basis. The fair values of mortgage loans on real estate are calculated using discounted expected cash flows using current competitive market interest rates currently being offered for similar loans. The fair values of impaired mortgage loans on real estate that we have considered to be collateral dependent are based on the fair value of the real estate collateral (based on appraised values) less estimated costs to sell. The inputs utilized to determine fair value of all mortgage loans are unobservable market data (competitive market interest rates and appraised property values); therefore, fair value of mortgage loans falls into Level 3 in the fair value hierarchy.

Derivative instruments

The fair values of derivative instruments, primarily call options, are based upon the amount of cash that we will receive to settle each derivative instrument on the reporting date. These amounts are determined by our investment team using industry accepted valuation models and are adjusted for the nonperformance risk of each counterparty net of any collateral held. Inputs include market volatility and risk free interest rates and are used in income valuation techniques in arriving at a fair value for each option contract. The nonperformance risk for each counterparty is based upon its credit default swap rate. We have no performance obligations related to the call options purchased to fund our fixed index annuity policy liabilities.

Other investments

None of the financial instruments included in other investments are measured at fair value on a recurring basis. Financial instruments included in other investments are policy loans, equity method investments and company owned life insurance (COLI). We have not attempted to determine the fair values associated with our policy loans, as we believe any differences between carrying value and the fair values afforded these instruments are immaterial to our consolidated financial position and, accordingly, the cost to provide such disclosure does not justify the benefit to be derived. The fair values of our equity method investments qualify as Level 3 fair values and were determined by calculating the present value of future cash flows discounted by a risk free rate, a risk spread and a liquidity discount. The risk spread and liquidity discount are rates determined by our investment professionals and are unobservable market inputs. The fair value of our COLI approximates the cash surrender value of the policies and falls within Level 2 of the fair value hierarchy.

11

Cash and cash equivalents

Amounts reported in the consolidated balance sheets for these instruments are reported at their historical cost which approximates fair value due to the nature of the assets assigned to this category.

Interest rate caps and swap

The fair values of our pay fixed/receive variable interest rate swap and our interest rate caps are obtained from third parties and are determined by discounting expected future cash flows using projected LIBOR rates for the term of the caps and swap.

2015 notes hedges

The fair value of these call options has been determined by a third party who applies market observable data such as our common stock price, its dividend yield and its volatility, as well as the time to expiration of the call options to determine a fair value of the buy side of these options.

Counterparty collateral

Amounts reported in other assets of the consolidated balance sheets for these instruments are reported at their historical cost which approximates fair value due to the nature of the assets assigned to this category.

Policy benefit reserves, coinsurance deposits and SPIA benefit reserves

The fair values of the liabilities under contracts not involving significant mortality or morbidity risks (principally deferred annuities), are stated at the cost we would incur to extinguish the liability (i.e., the cash surrender value) as these contracts are generally issued without an annuitization date. The coinsurance deposits related to the annuity benefit reserves have fair values determined in a similar fashion. For period-certain annuity benefit contracts, the fair value is determined by discounting the benefits at the interest rates currently in effect for newly purchased immediate annuity contracts. We are not required to and have not estimated the fair value of the liabilities under contracts that involve significant mortality or morbidity risks, as these liabilities fall within the definition of insurance contracts that are exceptions from financial instruments that require disclosures of fair value. Policy benefit reserves, coinsurance deposits and SPIA benefit reserves are not measured at fair value on a recurring basis. All of the fair values presented within these categories fall within Level 3 of the fair value hierarchy as most of the inputs are unobservable market data.

Notes payable

The fair values of our senior unsecured notes and convertible senior notes are based upon pricing matrices developed by a third party pricing service when quoted market prices are not available and are categorized as Level 2 within the fair value hierarchy. Notes payable are not remeasured at fair value on a recurring basis.

Subordinated debentures

Fair values for subordinated debentures are estimated using discounted cash flow calculations based principally on observable inputs including our incremental borrowing rates, which reflect our credit rating, for similar types of borrowings with maturities consistent with those remaining for the debt being valued. These fair values are categorized as Level 2 within the fair value hierarchy. Subordinated debentures are not measured at fair value on a recurring basis.

2015 notes embedded conversion derivative

The fair value of this embedded derivative is determined by pricing the call options that hedge this potential liability. The terms of the conversion option are identical to the 2015 notes hedges and the method of determining fair value of the call options is based upon observable market data.

Fixed index annuities - embedded derivatives

We estimate the fair value of the embedded derivative component of our fixed index annuity policy benefit reserves at each valuation date by (i) projecting policy contract values and minimum guaranteed contract values over the expected lives of the contracts and (ii) discounting the excess of the projected contract value amounts at the applicable risk free interest rates adjusted for our nonperformance risk related to those liabilities. The projections of policy contract values are based on our best estimate assumptions for future policy growth and future policy decrements. Our best estimate assumptions for future policy growth include assumptions for the expected index credit on the next policy anniversary date which are derived from the fair values of the underlying call options purchased to fund such index credits and the expected costs of annual call options we will purchase in the future to fund index credits beyond the next policy anniversary. The projections of minimum guaranteed contract values include the same best estimate assumptions for policy decrements as were used to project policy contract values.

12

The following tables provide a reconciliation of the beginning and ending balances for our Level 3 assets and liabilities, which are measured at fair value on a recurring basis using significant unobservable inputs for the three and six months ended June 30, 2014 and 2013:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Available for sale securities
Beginning balance	$	1,080		$	1,724		$	1,376		$	1,812
Principal returned	(114		)	(193		)	(192		)	(561		)
Amortization of premium/accretion of discount	(138		)	5			(165		)	134
Total gains (losses) (realized/unrealized):
Included in other comprehensive income (loss)	45			5			(146		)	156
Included in operations	(205		)	—			(205		)	—
Ending balance	$	668		$	1,541		$	668		$	1,541

The Level 3 assets included in the table above are not material to our financial position, results of operations or cash flows, and it is management's opinion that the sensitivity of the inputs used in determining the fair value of these assets is not material as well.

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Fixed index annuities - embedded derivatives
Beginning balance	$	4,755,913		$	3,848,902		$	4,406,163		$	3,337,556
Premiums less benefits	425,776			425,671			797,729			672,393
Change in fair value, net	(61,866		)	(527,521		)	(84,069		)	(262,897		)
Ending balance	$	5,119,823		$	3,747,052		$	5,119,823		$	3,747,052

Change in fair value, net for each period in our embedded derivatives are included in change in fair value of embedded derivatives in the unaudited consolidated statements of operations.

Certain derivatives embedded in our fixed index annuity contracts are our most significant financial instrument measured at fair value that are categorized as Level 3 in the fair value hierarchy. The contractual obligations for future annual index credits within our fixed index annuity contracts are treated as a "series of embedded derivatives" over the expected life of the applicable contracts. We estimate the fair value of these embedded derivatives at each valuation date by the method described above under fixed index annuities - embedded derivatives. The projections of minimum guaranteed contract values include the same best estimate assumptions for policy decrements as were used to project policy contract values.

The most sensitive assumption in determining policy liabilities for fixed index annuities is the rates used to discount the excess projected contract values. As indicated above, the discount rate reflects our nonperformance risk. If the discount rates used to discount the excess projected contract values at June 30, 2014, were to increase by 100 basis points, the fair value of the embedded derivatives would decrease by $350.0 million recorded through operations as a decrease in the change in fair value of embedded derivatives and there would be a corresponding decrease of $209.2 million to our combined balance for deferred policy acquisition costs and deferred sales inducements recorded through operations as an increase in amortization of deferred policy acquisition costs and deferred sales inducements. A decrease by 100 basis points in the discount rate used to discount the excess projected contract values would increase the fair value of the embedded derivatives by $391.7 million recorded through operations as an increase in the change in fair value of embedded derivatives and there would be a corresponding increase of $230.4 million to our combined balance for deferred policy acquisition costs and deferred sales inducements recorded through operations as a decrease in amortization of deferred policy acquisition costs and deferred sales inducements.

13

3. Investments

At June 30, 2014 and December 31, 2013, the amortized cost and fair value of fixed maturity securities and equity securities were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
June 30, 2014
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	38,590	$	310	$	(417	)	$	38,483
United States Government sponsored agencies	1,199,787		21,181		(35,627		)	1,185,341
United States municipalities, states and territories	3,188,026		324,759		(6,587		)	3,506,198
Foreign government obligations	181,120		13,335		(1,492		)	192,963
Corporate securities	17,916,567		1,371,622		(100,814		)	19,187,375
Residential mortgage backed securities	1,747,233		137,213		(13,881		)	1,870,565
Commercial mortgage backed securities	2,249,396		56,897		(10,197		)	2,296,096
Other asset backed securities	1,020,226		34,045		(13,720		)	1,040,551
	$	27,540,945	$	1,959,362	$	(182,735	)	$	29,317,572
Held for investment:
Corporate security	$	76,342	$	—	$	(9,771	)	$	66,571
Equity securities, available for sale:
Finance, insurance, and real estate	$	7,506	$	256	$	—		$	7,762
December 31, 2013
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	44,852	$	367	$	(2,294	)	$	42,925
United States Government sponsored agencies	1,313,776		1,875		(121,362		)	1,194,289
United States municipalities, states and territories	3,181,032		164,785		(39,074		)	3,306,743
Foreign government obligations	86,112		8,907		(3,462		)	91,557
Corporate securities	17,142,118		606,948		(516,029		)	17,233,037
Residential mortgage backed securities	1,895,913		119,230		(43,183		)	1,971,960
Commercial mortgage backed securities	1,821,988		3,287		(89,815		)	1,735,460
Other asset backed securities	1,041,939		23,300		(30,763		)	1,034,476
	$	26,527,730	$	928,699	$	(845,982	)	$	26,610,447
Held for investment:
Corporate security	$	76,255	$	—	$	(15,415	)	$	60,840
Equity securities, available for sale:
Finance, insurance, and real estate	$	7,503	$	275	$	—		$	7,778

At June 30, 2014, 31% of our fixed income securities have call features, of which 0.5% ($0.1 billion) were subject to call redemption and another 4% ($1.0 billion) will become subject to call redemption during the next twelve months. $0.5 billion of U.S. Government sponsored agency securities were called during April 2014.

14

The amortized cost and fair value of fixed maturity securities at June 30, 2014, by contractual maturity, are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. All of our mortgage and other asset backed securities provide for periodic payments throughout their lives and are shown below as separate lines.

	Available for sale				Held for investment
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Due in one year or less	$	54,110	$	55,291	$	—	$	—
Due after one year through five years	1,126,677		1,283,155		—		—
Due after five years through ten years	8,235,605		8,498,193		—		—
Due after ten years through twenty years	6,561,087		6,996,599		—		—
Due after twenty years	6,546,611		7,277,122		76,342		66,571
	22,524,090		24,110,360		76,342		66,571
Residential mortgage backed securities	1,747,233		1,870,565		—		—
Commercial mortgage backed securities	2,249,396		2,296,096		—		—
Other asset backed securities	1,020,226		1,040,551		—		—
	$	27,540,945	$	29,317,572	$	76,342	$	66,571

Net unrealized gains on available for sale fixed maturity securities and equity securities reported as a separate component of stockholders' equity were comprised of the following:

	June 30, 2014			December 31, 2013
	(Dollars in thousands)
Net unrealized gains on available for sale fixed maturity securities and equity securities	$	1,776,883		$	82,992
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements	(956,057		)	(46,588		)
Deferred income tax valuation allowance reversal	22,534			22,534
Deferred income tax expense	(287,289		)	(12,742		)
Net unrealized gains reported as accumulated other comprehensive income	$	556,071		$	46,196

The National Association of Insurance Commissioners (“NAIC”) assigns designations to fixed maturity securities. These designations range from Class 1 (highest quality) to Class 6 (lowest quality). In general, securities are assigned a designation based upon the ratings they are given by the Nationally Recognized Statistical Rating Organizations (“NRSRO’s”). The NAIC designations are utilized by insurers in preparing their annual statutory statements. NAIC Class 1 and 2 designations are considered “investment grade” while NAIC Class 3 through 6 designations are considered “non-investment grade.” Based on the NAIC designations, we had 98% of our fixed maturity portfolio rated investment grade at June 30, 2014 and December 31, 2013.

The following table summarizes the credit quality, as determined by NAIC designation, of our fixed maturity portfolio as of the dates indicated:

	June 30, 2014				December 31, 2013
NAIC Designation	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
1	$	17,311,646	$	18,519,001	$	16,394,654	$	16,531,250
2	9,739,539		10,305,239		9,630,251		9,598,399
3	497,545		493,350		502,822		474,165
4	67,353		65,857		74,493		66,078
5	—		—		—		—
6	1,204		696		1,765		1,395
	$	27,617,287	$	29,384,143	$	26,603,985	$	26,671,287

15

The following table shows our investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities (consisting of 450 and 1,047 securities, respectively) have been in a continuous unrealized loss position, at June 30, 2014 and December 31, 2013:

	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
June 30, 2014
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	—	$	—		$	33,569	$	(417	)	$	33,569	$	(417	)
United States Government sponsored agencies	1,441		(1		)	601,569		(35,626		)	603,010		(35,627		)
United States municipalities, states and territories	32,649		(147		)	185,877		(6,440		)	218,526		(6,587		)
Foreign government obligations	4,943		(32		)	12,984		(1,460		)	17,927		(1,492		)
Corporate securities:
Finance, insurance and real estate	46,685		(1,022		)	711,819		(25,301		)	758,504		(26,323		)
Manufacturing, construction and mining	100,820		(2,063		)	1,404,064		(33,103		)	1,504,884		(35,166		)
Utilities and related sectors	103,620		(1,397		)	602,031		(21,280		)	705,651		(22,677		)
Wholesale/retail trade	32,148		(633		)	102,446		(4,671		)	134,594		(5,304		)
Services, media and other	118,443		(1,623		)	338,878		(9,721		)	457,321		(11,344		)
Residential mortgage backed securities	89,639		(2,094		)	261,664		(11,787		)	351,303		(13,881		)
Commercial mortgage backed securities	47,869		(325		)	497,112		(9,872		)	544,981		(10,197		)
Other asset backed securities	61,023		(1,922		)	269,435		(11,798		)	330,458		(13,720		)
	$	639,280	$	(11,259	)	$	5,021,448	$	(171,476	)	$	5,660,728	$	(182,735	)
Held for investment:
Corporate security:
Insurance	$	—	$	—		$	66,571	$	(9,771	)	$	66,571	$	(9,771	)
December 31, 2013
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	32,969	$	(2,294	)	$	—	$	—		$	32,969	$	(2,294	)
United States Government sponsored agencies	692,320		(88,671		)	467,309		(32,691		)	1,159,629		(121,362		)
United States municipalities, states and territories	614,056		(39,074		)	—		—			614,056		(39,074		)
Foreign government obligations	26,298		(3,462		)	—		—			26,298		(3,462		)
Corporate securities:
Finance, insurance and real estate	1,690,846		(92,426		)	153,037		(12,873		)	1,843,883		(105,299		)
Manufacturing, construction and mining	3,370,775		(191,245		)	93,608		(16,088		)	3,464,383		(207,333		)
Utilities and related sectors	1,829,868		(102,758		)	83,550		(11,547		)	1,913,418		(114,305		)
Wholesale/retail trade	428,407		(25,189		)	17,687		(1,992		)	446,094		(27,181		)
Services, media and other	834,699		(51,508		)	107,242		(10,403		)	941,941		(61,911		)
Residential mortgage backed securities	309,599		(41,080		)	31,739		(2,103		)	341,338		(43,183		)
Commercial mortgage backed securities	1,450,143		(83,814		)	51,099		(6,001		)	1,501,242		(89,815		)
Other asset backed securities	356,018		(20,426		)	92,372		(10,337		)	448,390		(30,763		)
	$	11,635,998	$	(741,947	)	$	1,097,643	$	(104,035	)	$	12,733,641	$	(845,982	)
Held for investment:
Corporate security:
Insurance	$	—	$	—		$	60,840	$	(15,415	)	$	60,840	$	(15,415	)

16

The following is a description of the factors causing the temporary unrealized losses by investment category as of June 30, 2014:

United States Government sponsored agencies: These securities are relatively long in duration; however, they are callable in less than 12 months making the value of such securities sensitive to changes in market interest rates. The timing of when some of these securities were purchased gave rise to unrealized losses at June 30, 2014.

United States municipalities, states and territories: These securities are relatively long in duration and their fair values are sensitive to changes in market interest rates. The timing of the purchase of these securities have resulted in unrealized losses.

Corporate securities: The unrealized losses in these securities are due partially to the timing of purchases. These securities carry yields less than those available at June 30, 2014. In addition, a small number of securities have seen their credit spreads remain wide due to issuer or industry specific news while some financial and industrial sector credit spreads remain wide due to continued economic uncertainty and concerns of economic instability.

Residential mortgage backed securities: At June 30, 2014, we had no exposure to sub-prime residential mortgage backed securities. All of our residential mortgage backed securities are pools of first-lien residential mortgage loans. Substantially all of the securities that we own are in the most senior tranche of the securitization in which they are structured and are not subordinated to any other tranche. Our "Alt-A" residential mortgage backed securities are comprised of 35 securities with a total amortized cost basis of $265.4 million and a fair value of $294.7 million. Despite recent improvements in the capital markets, the fair values of RMBS with weaker borrower characteristics continue at prices below amortized cost. These RMBS prices will likely remain below our cost basis until the housing market is able to absorb current and future foreclosures.

Commercial mortgage backed securities: The unrealized losses in these securities are due partially to the timing of purchases. A number of purchases were at yields lower than what could be executed at the end of this quarter due to the increase in the treasury yield since the time of purchase. Yield spreads for commercial mortgage backed securities have narrowed but management believes remain attractive.

Other asset backed securities: The unrealized losses in these securities are predominantly assigned to financial sector capital trust securities which have longer maturity dates and have declined in price due to prolonged stress in the financial sector. No securities in an unrealized loss position are rated below investment grade.

Approximately 89% and 95% of the unrealized losses on fixed maturity securities shown in the above table for June 30, 2014 and December 31, 2013, respectively, are on securities that are rated investment grade, defined as being the highest two NAIC designations. All of the securities with unrealized losses are current with respect to the payment of principal and interest.

Changes in net unrealized gains on investments for the three and six months ended June 30, 2014 and 2013 are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Fixed maturity securities held for investment carried at amortized cost	$	1,607		$	(964	)	$	5,644		$	(353	)
Investments carried at fair value:
Fixed maturity securities, available for sale	$	716,779		$	(1,339,484	)	$	1,693,910		$	(1,458,554	)
Equity securities, available for sale	(6		)	(10,168		)	(19		)	(7,949		)
	716,773			(1,349,652		)	1,693,891			(1,466,503		)
Adjustment for effect on other balance sheet accounts:
Deferred policy acquisition costs and deferred sales inducements	(372,717		)	707,525			(909,469		)	785,693
Deferred income tax asset/liability	(120,420		)	224,744			(274,547		)	238,283
	(493,137		)	932,269			(1,184,016		)	1,023,976
Change in net unrealized gains on investments carried at fair value	$	223,636		$	(417,383	)	$	509,875		$	(442,527	)

Proceeds from sales of available for sale securities for the six months ended June 30, 2014 and 2013 were $130.4 million and $820.2 million, respectively. Scheduled principal repayments, calls and tenders for available for sale securities for the six months ended June 30, 2014 and 2013 were $809.0 million and $1.6 billion, respectively.

17

Realized gains and losses on sales are determined on the basis of specific identification of investments based on the trade date. Net realized gains (losses) on investments, excluding net OTTI losses for the three and six months ended June 30, 2014 and 2013, are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Available for sale fixed maturity securities:
Gross realized gains	$	1,173		$	7,628		$	1,357		$	20,643
Gross realized losses	(71		)	(823		)	(762		)	(3,010		)
	1,102			6,805			595			17,633
Available for sale equity securities:
Gross realized gains	—			9,571			—			9,571
Other investments:
Gain on sale of real estate	282			715			1,038			1,304
Loss on sale of real estate	(231		)	—			(231		)	(466		)
Impairment losses on real estate	—			(145		)	(799		)	(145		)
	51			570			8			693
Mortgage loans on real estate:
Increase in allowance for credit losses	(3,383		)	(1,257		)	(3,547		)	(1,623		)
	$	(2,230	)	$	15,689		$	(2,944	)	$	26,274

Losses on available for sale fixed maturity securities were realized primarily due to strategies in place to reposition the fixed maturity security portfolio that result in improved net investment income, risk or duration profiles as they pertain to our asset liability management.

We review and analyze all investments on an ongoing basis for changes in market interest rates and credit deterioration. This review process includes analyzing our ability to recover the amortized cost basis of each investment that has a fair value that is materially lower than its amortized cost and requires a high degree of management judgment and involves uncertainty. The evaluation of securities for other than temporary impairments is a quantitative and qualitative process, which is subject to risks and uncertainties.

We have a policy and process in place to identify securities that could potentially have impairments that are other than temporary. This process involves monitoring market events and other items that could impact issuers. The evaluation includes but is not limited to such factors as:

• the length of time and the extent to which the fair value has been less than amortized cost or cost;

• whether the issuer is current on all payments and all contractual payments have been made as agreed;

• the remaining payment terms and the financial condition and near-term prospects of the issuer;

• the lack of ability to refinance due to liquidity problems in the credit market;

• the fair value of any underlying collateral;

• the existence of any credit protection available;

• our intent to sell and whether it is more likely than not we would be required to sell prior to recovery for debt securities;

• our assessment in the case of equity securities including perpetual preferred stocks with credit deterioration that the security cannot recover to cost in a reasonable period of time;

• our intent and ability to retain equity securities for a period of time sufficient to allow for recovery;

• consideration of rating agency actions; and

• changes in estimated cash flows of mortgage and asset backed securities.

We determine whether other than temporary impairment losses should be recognized for debt and equity securities by assessing all facts and circumstances surrounding each security. Where the decline in fair value of debt securities is attributable to changes in market interest rates or to factors such as market volatility, liquidity and spread widening, and we anticipate recovery of all contractual or expected cash flows, we do not consider these investments to be other than temporarily impaired because we do not intend to sell these investments and it is not more likely than not we will be required to sell these investments before a recovery of amortized cost, which may be maturity. For equity securities, we recognize an impairment charge in the period in which we do not have the intent and ability to hold the securities until recovery of cost or we determine that the security will not recover to book value within a reasonable period of time. We determine what constitutes a reasonable period of time on a security-by-security basis by considering all the evidence available to us, including the magnitude of any unrealized loss and its duration. In any event, this period does not exceed 18 months from the date of impairment for perpetual preferred securities for which there is evidence of deterioration in credit of the issuer and common equity securities. For perpetual preferred securities absent evidence of a deterioration in credit of the issuer we apply an impairment model, including an anticipated recovery period, similar to a debt security.

Other than temporary impairment losses on equity securities are recognized in operations. If we intend to sell a debt security or if it is more likely than not that we will be required to sell a debt security before recovery of its amortized cost basis, other than temporary impairment has occurred and the difference between amortized cost and fair value will be recognized as a loss in operations.

18

If we do not intend to sell and it is not more likely than not we will be required to sell the debt security but also do not expect to recover the entire amortized cost basis of the security, an impairment loss would be recognized in operations in the amount of the expected credit loss. We determine the amount of expected credit loss by calculating the present value of the cash flows expected to be collected discounted at each security's acquisition yield based on our consideration of whether the security was of high credit quality at the time of acquisition. The difference between the present value of expected future cash flows and the amortized cost basis of the security is the amount of credit loss recognized in operations. The remaining amount of the other than temporary impairment is recognized in other comprehensive income (loss).

The determination of the credit loss component of a mortgage backed security is based on a number of factors. The primary consideration in this evaluation process is the issuer's ability to meet current and future interest and principal payments as contractually stated at time of purchase. Our review of these securities includes an analysis of the cash flow modeling under various default scenarios considering independent third party benchmarks, the seniority of the specific tranche within the structure of the security, the composition of the collateral and the actual default, loss severity and prepayment experience exhibited. With the input of third party assumptions for default projections, loss severity and prepayment expectations, we evaluate the cash flow projections to determine whether the security is performing in accordance with its contractual obligation.

We utilize the models from a leading structured product software specialist serving institutional investors. These models incorporate each security's seniority and cash flow structure. In circumstances where the analysis implies a potential for principal loss at some point in the future, we use the "best estimate" cash flow projection discounted at the security's effective yield at acquisition to determine the amount of our potential credit loss associated with this security. The discounted expected future cash flows equates to our expected recovery value. Any shortfall of the expected recovery when compared to the amortized cost of the security will be recorded as the credit loss component of other than temporary impairment.

The cash flow modeling is performed on a security-by-security basis and incorporates actual cash flows on the residential mortgage backed securities through the current period, as well as the projection of remaining cash flows using a number of assumptions including default rates, prepayment rates and loss severity rates. The default curves we use are tailored to the Prime or Alt-A residential mortgage backed securities that we own, which assume lower default rates and loss severity for Prime securities versus Alt-A securities. These default curves are scaled higher or lower depending on factors such as current underlying mortgage loan performance, rating agency loss projections, loan to value ratios, geographic diversity, as well as other appropriate considerations.

The following table presents the range of significant assumptions used to determine the credit loss component of other than temporary impairments we have recognized on residential mortgage backed securities for the six months ended June 30, 2014 and 2013, which are all senior level tranches within the structure of the securities:

		Discount Rate				Default Rate				Loss Severity
Sector	Vintage	Min		Max		Min		Max		Min		Max
Six months ended June 30, 2014
Prime	2005	7.5	%	7.5	%	15	%	15	%	50	%	50	%
	2006	6.5	%	7.4	%	11	%	12	%	50	%	50	%
Alt-A	2005	5.6	%	6.4	%	87	%	87	%	2	%	2	%
Six months ended June 30, 2013
Prime	2003	5.1	%	5.1	%	2	%	2	%	30	%	30	%
	2005	6.5	%	7.7	%	8	%	17	%	50	%	50	%
	2006	6.0	%	6.9	%	9	%	16	%	50	%	50	%
	2007	6.5	%	6.7	%	12	%	25	%	40	%	60	%
	2008	6.6	%	6.6	%	16	%	16	%	45	%	45	%
Alt-A	2005	5.6	%	8.7	%	15	%	25	%	5	%	65	%
	2007	6.2	%	6.9	%	38	%	52	%	60	%	65	%

The determination of the credit loss component of a corporate bond (including redeemable preferred stocks) is based on the underlying financial performance of the issuer and their ability to meet their contractual obligations. Considerations in our evaluation include, but are not limited to, credit rating changes, financial statement and ratio analysis, changes in management, significant changes in credit spreads, breaches of financial covenants and a review of the economic outlook for the industry and markets in which they trade. In circumstances where an issuer appears unlikely to meet its future obligation, or the security's price decline is deemed other than temporary, an estimate of credit loss is determined. Credit loss is calculated using default probabilities as derived from the credit default swaps markets in conjunction with recovery rates derived from independent third party analysis or a best estimate of credit loss. This credit loss rate is then incorporated into a present value calculation based on an expected principal loss in the future discounted at the yield at the date of purchase and compared to amortized cost to determine the amount of credit loss associated with the security.

19

In addition, for debt securities which we do not intend to sell and it is not more likely than not we will be required to sell, but our intent changes due to changes or events that could not have been reasonably anticipated, an other than temporary impairment charge is recognized. Once an impairment charge has been recorded, we then continue to review the other than temporarily impaired securities for appropriate valuation on an ongoing basis. Unrealized losses may be recognized in future periods through a charge to earnings, should we later conclude that the decline in fair value below amortized cost is other than temporary pursuant to our accounting policy described above. The use of different methodologies and assumptions to determine the fair value of investments and the timing and amount of impairments may have a material effect on the amounts presented in our consolidated financial statements.

The following table summarizes other than temporary impairments for the three and six months ended June 30, 2014 and 2013, by asset type:

	Number of Securities	Total OTTI Losses			Portion of OTTI Losses Recognized from Other Comprehensive Income			Net OTTI Losses Recognized in Operations
		(Dollars in thousands)
Three months ended June 30, 2014
Fixed maturity securities, available for sale:
Residential mortgage backed securities	3	$	—		$	(594	)	$	(594	)
Three months ended June 30, 2013
Fixed maturity securities, available for sale:
United States Government sponsored agencies	2	$	(2,775	)	$	—		$	(2,775	)
Six months ended June 30, 2014
Fixed maturity securities, available for sale:
Residential mortgage backed securities	5	$	—		$	(1,499	)	$	(1,499	)
Six months ended June 30, 2013
Fixed maturity securities, available for sale:
United States Government sponsored agencies	2	$	(2,775	)	$	—		$	(2,775	)
Corporate securities:
Industrial	1	(1,761		)	—			(1,761		)
Residential mortgage backed securities	5	—			(1,048		)	(1,048		)
Equity security, available for sale:
Industrial	1	(428		)	—			(428		)
	9	$	(4,964	)	$	(1,048	)	$	(6,012	)

The cumulative portion of other than temporary impairments determined to be credit losses which have been recognized in operations for debt securities are summarized as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Cumulative credit loss at beginning of period	$	(126,865	)	$	(129,813	)	$	(125,960	)	$	(134,027	)
Credit losses on securities for which OTTI has not previously been recognized	—			(2,775		)	—			(4,536		)
Additional credit losses on securities for which OTTI has previously been recognized	(594		)	—			(1,499		)	(1,048		)
Accumulated losses on securities that were disposed of during the period	—			4,075			—			11,098
Cumulative credit loss at end of period	$	(127,459	)	$	(128,513	)	$	(127,459	)	$	(128,513	)

20

The following table summarizes the cumulative noncredit portion of OTTI and the change in fair value since recognition of OTTI, both of which were recognized in other comprehensive income (loss), by major type of security, for securities that are part of our investment portfolio at June 30, 2014 and December 31, 2013:

	Amortized Cost		OTTI Recognized in Other Comprehensive Income			Change in Fair Value Since OTTI was Recognized		Fair Value
	(Dollars in thousands)
June 30, 2014
Fixed maturity securities, available for sale:
Corporate securities	$	—	$	—		$	27	$	27
Residential mortgage backed securities	625,765		(174,835		)	222,567		673,497
	$	625,765	$	(174,835	)	$	222,594	$	673,524
December 31, 2013
Fixed maturity securities, available for sale:
Corporate securities	$	—	$	—		$	20	$	20
Residential mortgage backed securities	679,265		(176,334		)	216,061		718,992
	$	679,265	$	(176,334	)	$	216,081	$	719,012

4. Mortgage Loans on Real Estate

Our mortgage loan portfolio, summarized in the following table, totaled $2.5 billion at June 30, 2014 and $2.6 billion at December 31, 2013, with commitments outstanding of $38.6 million at June 30, 2014.

	June 30, 2014			December 31, 2013
	(Dollars in thousands)
Principal outstanding	$	2,570,950		$	2,607,698
Loan loss allowance	(26,582		)	(26,047		)
Deferred prepayment fees	(558		)	(569		)
Carrying value	$	2,543,810		$	2,581,082

The portfolio consists of commercial mortgage loans collateralized by the related properties and diversified as to property type, location and loan size. Our mortgage lending policies establish limits on the amount that can be loaned to one borrower and other criteria to attempt to reduce the risk of default. The mortgage loan portfolio is summarized by geographic region and property type as follows:

	June 30, 2014				December 31, 2013
	Principal		Percent		Principal		Percent
	(Dollars in thousands)
Geographic distribution
East	$	774,014	30.1	%	$	765,717	29.4	%
Middle Atlantic	145,663		5.7	%	156,489		6.0	%
Mountain	328,284		12.8	%	356,246		13.7	%
New England	14,700		0.6	%	21,324		0.8	%
Pacific	303,922		11.8	%	317,431		12.2	%
South Atlantic	500,612		19.5	%	483,852		18.5	%
West North Central	338,343		13.1	%	351,794		13.5	%
West South Central	165,412		6.4	%	154,845		5.9	%
	$	2,570,950	100.0	%	$	2,607,698	100.0	%
Property type distribution
Office	$	533,472	20.8	%	$	590,414	22.6	%
Medical Office	104,025		4.0	%	125,703		4.8	%
Retail	729,497		28.4	%	711,364		27.3	%
Industrial/Warehouse	681,540		26.5	%	673,449		25.8	%
Hotel	43,784		1.7	%	61,574		2.4	%
Apartment	340,621		13.2	%	291,823		11.2	%
Mixed use/other	138,011		5.4	%	153,371		5.9	%
	$	2,570,950	100.0	%	$	2,607,698	100.0	%

21

We evaluate our mortgage loan portfolio for the establishment of a loan loss reserve by specific identification of impaired loans and the measurement of an estimated loss for each individual loan identified. A mortgage loan is impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. If we determine that the value of any specific mortgage loan is impaired, the carrying amount of the mortgage loan will be reduced to its fair value, based upon the present value of expected future cash flows from the loan discounted at the loan's effective interest rate, or the fair value of the underlying collateral less estimated costs to sell. In addition, we analyze the mortgage loan portfolio for the need of a general loan allowance for probable losses on all other loans. The amount of the general loan allowance is based upon management's evaluation of the collectability of the loan portfolio, historical loss experience, delinquencies, credit concentrations, underwriting standards and national and local economic conditions.

Our financing receivables currently consist of one portfolio segment which is our commercial mortgage loan portfolio. These are mortgage loans with collateral consisting of commercial real estate and borrowers consisting mostly of limited liability partnerships or limited liability corporations.

We rate the mortgage loans in our portfolio based on factors such as historical operating performance, loan to value ratio and economic outlook, among others. We calculate a loss factor to apply to each rating based on historical losses we have recognized in our mortgage loan portfolio. We apply the loss factors to the total principal outstanding within each rating category to determine an appropriate estimate of general loan loss allowance.

The following tables present a rollforward of our specific and general valuation allowances for mortgage loans on real estate:

	Three Months Ended June 30, 2014						Three Months Ended June 30, 2013
	Specific Allowance			General Allowance			Specific Allowance			General Allowance
	(Dollars in thousands)
Beginning allowance balance	$	(16,462	)	$	(8,800	)	$	(22,631	)	$	(10,400	)
Charge-offs	1,808			—			2,612			—
Recoveries	255			—			—			—
Provision for credit losses	(2,883		)	(500		)	(1,157		)	(100		)
Ending allowance balance	$	(17,282	)	$	(9,300	)	$	(21,176	)	$	(10,500	)
	Six Months Ended June 30, 2014						Six Months Ended June 30, 2013
	Specific Allowance			General Allowance			Specific Allowance			General Allowance
	(Dollars in thousands)
Beginning allowance balance	$	(16,847	)	$	(9,200	)	$	(23,134	)	$	(11,100	)
Charge-offs	2,757			—			4,181			—
Recoveries	255			—			—			—
Provision for credit losses	(3,447		)	(100		)	(2,223		)	600
Ending allowance balance	$	(17,282	)	$	(9,300	)	$	(21,176	)	$	(10,500	)

The specific allowance represents the total credit loss allowances on loans which are individually evaluated for impairment. The general allowance is for the group of loans discussed above which are collectively evaluated for impairment. The following table presents the total outstanding principal of loans evaluated for impairment by basis of impairment method:

	June 30, 2014		December 31, 2013
	(Dollars in thousands)
Individually evaluated for impairment	$	42,963	$	47,018
Collectively evaluated for impairment	2,527,987		2,560,680
Total loans evaluated for impairment	$	2,570,950	$	2,607,698

Charge-offs include allowances that have been established on loans that were satisfied by taking ownership of the collateral. When the property is taken it is recorded at the lower of the mortgage loan's carrying value or the property's fair value as a component of other investments and the mortgage loan is recorded as fully paid, with any allowance for credit loss that has been established charged off. Fair value of the real estate is determined by third party appraisal. Charge-offs also include situations where we have received a payment from the borrower in an amount greater than the carrying value of the loan (principal outstanding less specific allowance). We define collateral dependent loans as those mortgage loans for which we will depend on the value of the collateral real estate to satisfy the outstanding principal of the loan.

22

During the three months ended June 30, 2014, four mortgage loans were satisfied by taking ownership of any real estate serving as collateral and during the six months ended June 30, 2014, five mortgage loans were satisfied by taking ownership of the real estate serving as collateral compared to zero and one mortgage loan for the same periods in 2013. The following table summarizes the activity in the real estate owned which was obtained in satisfaction of mortgage loans on real estate:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Real estate owned at beginning of period	$	20,592		$	28,764		$	22,844		$	33,172
Real estate acquired in satisfaction of mortgage loans	8,294			—			10,007			844
Additions	—			480			—			480
Sales	(4,118		)	(2,333		)	(7,148		)	(7,413		)
Impairments	—			(145		)	(799		)	(145		)
Depreciation	(162		)	(157		)	(298		)	(329		)
Real estate owned at end of period	$	24,606		$	26,609		$	24,606		$	26,609

We analyze credit risk of our mortgage loans by analyzing all available evidence on loans that are delinquent and loans that are in a workout period.

	June 30, 2014		December 31, 2013
	(Dollars in thousands)
Credit Exposure--By Payment Activity
Performing	$	2,559,419	$	2,593,276
In workout	2,213		6,248
Delinquent	—		—
Collateral dependent	9,318		8,174
	$	2,570,950	$	2,607,698

The loans that are categorized as "in workout" consist of loans that we have agreed to lower or no mortgage payments for a period of time while the borrowers address cash flow and/or operational issues. The key features of these workouts have been determined on a loan-by-loan basis. Most of these loans are in a period of low cash flow due to tenants vacating their space or tenants requesting rent relief during difficult economic periods. Generally, we have allowed the borrower a six month interest only period and in some cases a twelve month period of interest only. Interest only workout loans are expected to return to their regular debt service payments after the interest only period. Interest only loans that are not fully amortizing will have a larger balance at their balloon date than originally contracted. Fully amortizing loans that are in interest only periods will have larger debt service payments for their remaining term due to lost principal payments during the interest only period. In limited circumstances we have allowed borrowers to pay the principal portion of their loan payment into an escrow account that can be used for capital and tenant improvements for a period of not more than twelve months. In these situations new loan amortization schedules are calculated based on the principal not collected during this twelve month workout period and larger payments are collected for the remaining term of each loan. In all cases, the original interest rate and maturity date have not been modified, and we have not forgiven any principal amounts.

Mortgage loans are considered delinquent when they become 60 days past due. When loans become 90 days past due, become collateral dependent or enter a period with no debt service payments required we place them on non-accrual status and discontinue recognizing interest income. If payments are received on a delinquent loan, interest income is recognized to the extent it would have been recognized if normal principal and interest would have been received timely. If payments are received to bring a delinquent loan back to current we will resume accruing interest income on that loan. Outstanding principal of loans in a non-accrual status at June 30, 2014 and December 31, 2013 totaled $9.3 million and $8.2 million, respectively.

All of our commercial mortgage loans depend on the cash flow of the borrower to be at a sufficient level to service the principal and interest payments as they come due. In general, cash inflows of the borrowers are generated by collecting monthly rent from tenants occupying space within the borrowers' properties. Our borrowers face collateral risks such as tenants going out of business, tenants struggling to make rent payments as they become due, and tenants canceling leases and moving to other locations. We have a number of loans where the real estate is occupied by a single tenant. Our borrowers sometimes face both a reduction in cash flow on their mortgage property as well as a reduction in the fair value of the real estate collateral. If borrowers are unable to replace lost rent revenue and increases in the fair value of their property do not materialize we could potentially incur more losses than what we have allowed for in our specific and general loan loss allowances.

23

Aging of financing receivables is summarized in the following table, with loans in a "workout" period as of the reporting date considered current if payments are current in accordance with agreed upon terms:

	30 - 59 Days		60 - 89 Days		90 Days and Over		Total Past Due		Current		Collateral Dependent Receivables		Total Financing Receivables
	(Dollars in thousands)
Commercial Mortgage Loans
June 30, 2014	$	1,045	$	—	$	—	$	1,045	$	2,560,587	$	9,318	$	2,570,950
December 31, 2013	$	—	$	—	$	—	$	—	$	2,599,524	$	8,174	$	2,607,698

Financing receivables summarized in the following two tables represent all loans that we are either not currently collecting, or those we feel it is probable we will not collect, all amounts due according to the contractual terms of the loan agreements (all loans that we have worked with the borrower to alleviate short-term cash flow issues, loans delinquent for more than 60 days at the reporting date, loans we have determined to be collateral dependent and loans that we have recorded specific impairments on that we feel may continue to have performance issues).

	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
June 30, 2014
Mortgage loans with an allowance	$	25,681	$	42,963	$	(17,282	)
Mortgage loans with no related allowance	2,656		2,656		—
	$	28,337	$	45,619	$	(17,282	)
December 31, 2013
Mortgage loans with an allowance	$	30,171	$	47,018	$	(16,847	)
Mortgage loans with no related allowance	3,264		3,264		—
	$	33,435	$	50,282	$	(16,847	)

	Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
Three months ended June 30, 2014
Mortgage loans with an allowance	$	27,054	$	600
Mortgage loans with no related allowance	2,656		13
	$	29,710	$	613
Three months ended June 30, 2013
Mortgage loans with an allowance	$	26,232	$	426
Mortgage loans with no related allowance	18,699		266
	$	44,931	$	692
Six months ended June 30, 2014
Mortgage loans with an allowance	$	27,236	$	1,235
Mortgage loans with no related allowance	2,656		—
	$	29,892	$	1,235
Six months ended June 30, 2013
Mortgage loans with an allowance	$	26,885	$	862
Mortgage loans with no related allowance	18,739		528
	$	45,624	$	1,390

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A Troubled Debt Restructuring ("TDR") is a situation where we have granted a concession to a borrower for economic or legal reasons related to the borrower's financial difficulties that we would not otherwise consider. A mortgage loan that has been granted new terms, including workout terms as described previously, would be considered a TDR if it meets conditions that would indicate a borrower is experiencing financial difficulty and the new terms constitute a concession on our part. We analyze all loans where we have agreed to workout terms and all loans that we have refinanced to determine if they meet the definition of a TDR. We consider the following factors in determining whether or not a borrower is experiencing financial difficulty:

• borrower is in default,

• borrower has declared bankruptcy,

• there is growing concern about the borrower's ability to continue as a going concern,

• borrower has insufficient cash flows to service debt,

• borrower's inability to obtain funds from other sources, and

• there is a breach of financial covenants by the borrower.

If the borrower is determined to be in financial difficulty, we consider the following conditions to determine if the borrower was granted a concession:

• assets used to satisfy debt are less than our recorded investment,

• interest rate is modified,

• maturity date extension at an interest rate less than market rate,

• capitalization of interest,

• delaying principal and/or interest for a period of three months or more, and

• partial forgiveness of the balance or charge-off.

Mortgage loan workouts, refinances or restructures that are classified as TDRs are individually evaluated and measured for impairment. A summary of mortgage loans on commercial real estate with outstanding principal at June 30, 2014 and December 31, 2013 that we determined to be TDRs are as follows:

Geographic Region	Number of TDRs	Principal Balance Outstanding		Specific Loan Loss Allowance			Net Carrying Amount
		(Dollars in thousands)
June 30, 2014
South Atlantic	7	14,537		(3,911		)	10,626
East North Central	1	2,213		(467		)	1,746
West North Central	1	1,908		(474		)	1,434
	9	$	18,658	$	(4,852	)	$	13,806
December 31, 2013
East	1	$	3,712	$	(949	)	$	2,763
Mountain	7	22,140		(329		)	21,811
South Atlantic	7	13,930		(4,177		)	9,753
East North Central	1	2,219		(467		)	1,752
West North Central	1	1,938		(475		)	1,463
West South Central	1	1,714		(256		)	1,458
	18	$	45,653	$	(6,653	)	$	39,000

25

5. Derivative Instruments

We recognize all derivative instruments as assets or liabilities in the consolidated balance sheets at fair value. None of our derivatives qualify for hedge accounting, thus, any change in the fair value of the derivatives is recognized immediately in the consolidated statements of operations. The fair value of our derivative instruments, including derivative instruments embedded in fixed index annuity contracts and derivative instruments embedded in a convertible debt issue, presented in the consolidated balance sheets are as follows:

	June 30, 2014		December 31, 2013
	(Dollars in thousands)
Assets
Derivative instruments
Call options	$	905,688	$	856,050
Other assets
2015 notes hedges	45,884		107,041
Interest rate caps	3,788		6,103
Interest rate swap	—		712
	$	955,360	$	969,906
Liabilities
Policy benefit reserves - annuity products
Fixed index annuities - embedded derivatives	$	5,119,823	$	4,406,163
Other liabilities
2015 notes embedded conversion derivative	45,884		107,041
Interest rate swap	1,983		—
	$	5,167,690	$	4,513,204

The changes in fair value of derivatives included in the unaudited consolidated statements of operations are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Change in fair value of derivatives:
Call options	$	273,769		$	58,200		$	345,242		$	402,854
2015 notes hedges	100			197			(20,301		)	28,295
Interest rate swap	(1,848		)	3,802			(3,250		)	4,535
Interest rate caps	(1,138		)	1,841			(2,315		)	2,318
	$	270,883		$	64,040		$	319,376		$	438,002
Change in fair value of embedded derivatives:
2015 notes embedded conversion derivative	$	(4,132	)	$	197		$	(24,533	)	$	28,295
Fixed index annuities—embedded derivatives	85,067			(408,606		)	198,087			(73,432		)
	$	80,935		$	(408,409	)	$	173,554		$	(45,137	)

We have fixed index annuity products that guarantee the return of principal to the policyholder and credit interest based on a percentage of the gain in a specified market index. When fixed index annuity deposits are received, a portion of the deposit is used to purchase derivatives consisting of call options on the applicable market indices to fund the index credits due to fixed index annuity policyholders. Substantially all such call options are one year options purchased to match the funding requirements of the underlying policies. The call options are marked to fair value with the change in fair value included as a component of revenues. The change in fair value of derivatives includes the gains or losses recognized at the expiration of the option term or upon early termination and the changes in fair value for open positions. On the respective anniversary dates of the index policies, the index used to compute the annual index credit is reset and we purchase new one-year call options to fund the next annual index credit. We manage the cost of these purchases through the terms of our fixed index annuities, which permit us to change caps, participation rates, and/or asset fees, subject to guaranteed minimums on each policy's anniversary date. By adjusting caps, participation rates, or asset fees, we can generally manage option costs except in cases where the contractual features would prevent further modifications.

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Our strategy attempts to mitigate any potential risk of loss under these agreements through a regular monitoring process which evaluates the program's effectiveness. We do not purchase call options that would require payment or collateral to another institution and our call options do not contain counterparty credit-risk-related contingent features. We are exposed to risk of loss in the event of nonperformance by the counterparties and, accordingly, we purchase our option contracts from multiple counterparties and evaluate the creditworthiness of all counterparties prior to purchase of the contracts. All of these options have been purchased from nationally recognized financial institutions with a Standard and Poor's credit rating of A- or higher at the time of purchase and the maximum credit exposure to any single counterparty is subject to concentration limits. We also have credit support agreements that allow us to request the counterparty to provide collateral to us when the fair value of our exposure to the counterparty exceeds specified amounts.

The notional amount and fair value of our call options by counterparty and each counterparty's current credit rating are as follows:

			June 30, 2014				December 31, 2013
Counterparty	Credit Rating (S&P)	Credit Rating (Moody's)	Notional Amount		Fair Value		Notional Amount		Fair Value
			(Dollars in thousands)
Bank of America	A	A2	$	1,903,168	$	77,824	$	1,683,911	$	73,836
Barclays	A	A2	2,845,414		88,512		2,396,839		113,513
BNP Paribas	A+	A1	1,399,032		52,262		1,382,661		38,849
Citibank, N.A.	A	A2	3,099,547		117,391		1,536,547		72,310
Credit Suisse	A	A1	2,648,174		141,755		4,060,352		193,304
Deutsche Bank	A	A2	1,428,366		51,512		747,587		41,074
HSBC	AA-	A1	131,837		7,468		200,011		10,518
J.P. Morgan	A+	Aa3	631,923		31,745		786,429		36,863
Morgan Stanley	A-	Baa2	3,605,771		190,421		3,546,487		150,437
Royal Bank of Canada	AA-	Aa3	1,201,172		46,183		714,941		25,140
Wells Fargo	AA-	Aa3	2,567,438		100,615		2,221,874		100,206
			$	21,461,842	$	905,688	$	19,277,639	$	856,050

As of June 30, 2014 and December 31, 2013, we held $849.7 million and $818.2 million, respectively, of cash and cash equivalents and other securities from counterparties for derivative collateral, which is included in other liabilities on our consolidated balance sheets. This derivative collateral limits the maximum amount of economic loss due to credit risk that we would incur if parties to the call options failed completely to perform according to the terms of the contracts to $80.2 million and $71.7 million at June 30, 2014 and December 31, 2013, respectively.

The future annual index credits on our fixed index annuities are treated as a "series of embedded derivatives" over the expected life of the applicable contract. We do not purchase call options to fund the index liabilities which may arise after the next policy anniversary date. We must value both the call options and the related forward embedded options in the policies at fair value. During the three months ended June 30, 2014, we revised future period assumptions for lapse rates and the expected costs of annual call options used in determining fixed index annuity embedded derivatives. These revisions decreased the change in fair value of embedded derivatives for the three and six months ended June 30, 2014 by $62.6 million, which after related adjustments to deferred sales inducements and deferred policy acquisition costs and income taxes, increased net income and earnings per common share - assuming dilution by $14.8 million and $0.19, respectively.

We entered into an interest rate swap and interest rate caps to manage interest rate risk associated with the floating rate component on certain of our subordinated debentures. See Note 10 in our Annual Report on Form 10-K for the year ended December 31, 2013 for more information on our subordinated debentures. The terms of the interest rate swap provide that we pay a fixed rate of interest and receive a floating rate of interest. The terms of the interest rate caps limit the three month London Interbank Offered Rate ("LIBOR") to 2.50%. The interest rate swap and caps are not effective hedges under accounting guidance for derivative instruments and hedging activities. Therefore, we record the interest rate swap and caps at fair value and any net cash payments received or paid are included in the change in fair value of derivatives in the unaudited consolidated statements of operations.

Details regarding the interest rate swap are as follows:

	Notional			Pay			June 30, 2014			December 31, 2013
Maturity Date	Amount		Receive Rate	Rate		Counterparty	Fair Value			Fair Value
							(Dollars in thousands)
March 15, 2021	$	85,500	LIBOR	2.415	%	SunTrust	$	(1,983	)	$	712

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Details regarding the interest rate caps are as follows:

	Notional			Cap			June 30, 2014		December 31, 2013
Maturity Date	Amount		Floating Rate	Rate		Counterparty	Fair Value		Fair Value
							(Dollars in thousands)
July 7, 2021	$	40,000	LIBOR	2.50	%	SunTrust	$	1,907	$	3,073
July 8, 2021	12,000		LIBOR	2.50	%	SunTrust	572		923
July 29, 2021	27,000		LIBOR	2.50	%	SunTrust	1,309		2,107
	$	79,000					$	3,788	$	6,103

The interest rate swap converts floating rates to fixed rates for seven years beginning March 2014. The interest rate caps have a forward starting date beginning in July 2014 and cap our interest rates for seven years. As of June 30, 2014, we held $2.0 million of cash and cash equivalents from the counterparty for derivative collateral related to the swap and caps, which is included in other liabilities on our consolidated balance sheets.

In September 2010, concurrently with the issuance of $200.0 million principal amount of 3.5% Convertible Senior Notes due September 15, 2015 (the "2015 notes"), we entered into hedge transactions (the "2015 notes hedges") with two counterparties whereby we will receive the cash equivalent of the conversion spread on 16.0 million shares of our common stock based upon a strike price of $12.50 per share, subject to certain conversion rate adjustments in the 2015 notes. The 2015 notes hedges expire on September 15, 2015, and must be settled in cash. The 2015 notes hedges are accounted for as derivative assets and are included in other assets in our consolidated balance sheets. The 2015 notes hedges and 2015 notes embedded conversion derivative are adjusted to fair value each reporting period and unrealized gains and losses are reflected in our unaudited consolidated statements of operations.

In separate transactions, we also sold warrants (the "2015 warrants") to two counterparties for the purchase of up to 16.0 million shares of our common stock at a price of $16.00 per share. We received $15.6 million in cash proceeds from the sale of the 2015 warrants, which was recorded as an increase in additional paid-in capital. The number of shares and strike price of the warrants are subject to adjustment based on dividends we pay subsequent to selling the warrants. The warrants expire on various dates from December 2015 through March 2016 and are intended to be settled in net shares. The total number of shares of common stock deliverable under the 2015 warrants is, however, currently limited to 11.7 million shares. Changes in the fair value of these warrants will not be recognized in our consolidated financial statements as long as the instruments remain classified as equity.

During the three months ended June 30, 2014, we entered into four separate partial unwind agreements with the two counterparties to the 2015 notes hedges and the 2015 warrants to coincide with the extinguishment of a portion of our 2015 notes (see Note 6) whereby we agreed to settle the related 2015 notes hedges and the 2015 warrants and received net cash from the counterparties totaling $10.4 million. Subsequent to the settlement of these unwind agreements and certain conversion rate adjustments due to dividends paid, 2015 notes hedges remain outstanding whereby we will receive the cash equivalent of the conversion spread on 3.7 million shares of our common stock based upon a strike price of $12.35 per share and warrants remain outstanding for the purchase of up to 3.7 million shares of our common stock at a strike price of $15.75 per share. At June 30, 2014, the remaining 2015 warrants were dilutive as the average price of our common stock exceeded the $15.75 strike price of the 2015 warrants and the effect has been included in diluted earnings per share for the three and six months ended June 30, 2014. The 2015 warrants were not dilutive for the three and six months ended June 30, 2013.

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6. Notes Payable

The 5.25% Contingent Convertible Senior Notes due December 15, 2029 (the "2029 notes") are accounted for separately as a liability component and an equity component in the consolidated balance sheets. The carrying amount of the 2015 notes and the 2029 notes, the carrying amount of the equity component of the 2029 notes and the amount by which the if-converted value exceeds the outstanding principal for both the 2015 notes and the 2029 notes are as follows:

	June 30, 2014						December 31, 2013
	September 2015 Notes			December 2029 Notes			September 2015 Notes			December 2029 Notes
	(Dollars in thousands)
Notes payable:
Principal amount of liability component	$	45,450		$	32,142		$	91,951		$	68,373
Unamortized discount	(2,367		)	(864		)	(6,623		)	(3,743		)
Net carrying amount of liability component	$	43,083		$	31,278		$	85,328		$	64,630
Additional paid-in capital:
Carrying amount of equity component				$	4,325					$	15,586
Amount by which the if-converted value exceeds principal	$	45,056		$	50,715		$	104,403		$	113,169

The discount is being amortized over the expected lives of the notes, which is the maturity date of September 15, 2015 for the 2015 notes and the first put/call date of December 15, 2014 for the 2029 notes. The effective interest rates during the discount amortization periods are 8.9% and 11.9% on the 2015 notes and the 2029 notes, respectively. The interest cost recognized in operations for the convertible notes, inclusive of the coupon and amortization of the discount and debt issue costs, was $2.3 million and $5.7 million for the three and six months ended June 30, 2014 compared to $6.8 million and $14.0 million for the same periods in 2013.

We are required to include the dilutive effect of the 2029 notes in our diluted earnings per share calculation. Because these notes include a mandatory cash settlement feature for the principal amount, incremental dilutive shares will only exist when the fair value of our common stock at the end of the reporting period exceeds the conversion price per share of $9.57. At June 30, 2014 and 2013, the conversion premium of the 2029 notes was dilutive and the effect has been included in diluted earnings per share for the three and six months ended June 30, 2014 and 2013. The 2015 notes and the 2015 notes hedges are excluded from the dilutive effect in our diluted earnings per share calculation as they are currently to be settled only in cash.

During the six months ended June 30, 2014, we extinguished $36.2 million principal amount of our 2029 notes and $46.5 million principal amount of our 2015 notes. Total consideration paid to holders of the 2029 notes consisted of $66.8 million in cash and and $23.2 million in shares of our common stock (946,793 shares). The carrying value of the 2029 notes at extinguishment was $34.6 million which resulted in a loss of $2.5 million on extinguishment of debt, net of income taxes. Total consideration paid to holders of the 2015 notes consisted of $52.9 million in cash and $33.1 million in shares of our common stock (1,496,664 shares). The carrying value of the 2015 notes at extinguishment was $43.8 million which resulted in a loss of $5.4 million, net of income taxes.

Under our $140 millionfour year unsecured revolving line of credit agreement, we are required to maintain a minimum risk-based capital ratio at our subsidiary, American Equity Investment Life Insurance Company ("American Equity Life"), of at least 275%, a maximum ratio of adjusted debt to total adjusted capital of 0.35, and a minimum level of statutory surplus at American Equity Life equal to the sum of 1) 80% of statutory surplus at September 30, 2013, 2) 50% of the statutory net income for each fiscal quarter ending after September 30, 2013, and 3) 50% of all capital contributed to American Equity Life after September 30, 2013. The agreement contains an accordion feature that allows us, on up to three occasions and subject to credit availability, to increase the credit facility by an additional $50 million in the aggregate. We also have the ability to extend the maturity date by an additional one year past the initial maturity date of November 22, 2017 with the consent of the extending banks. There are currently no guarantors of the credit facility, but certain of our subsidiaries must guarantee our obligations under the credit agreement if such subsidiaries guarantee other material amounts of our debt. No amounts were outstanding at June 30, 2014 and December 31, 2013.

As part of our investment strategy, we enter into securities repurchase agreements (short-term collateralized borrowings). The maximum amount borrowed was $138.7 million and $160.4 million during the six months ended June 30, 2014 and 2013, respectively. When we do borrow cash on these repurchase agreements, we pledge collateral in the form of debt securities with fair values approximately equal to the amount due and we use the cash to purchase debt securities ahead of the time we collect the cash from selling annuity policies to avoid a lag between the investment of funds and the obligation to credit interest to policyholders. We earn investment income on the securities purchased with these borrowings at a rate in excess of the cost of these borrowings. Such borrowings averaged $13.7 million for the six months ended June 30, 2014 compared to $10.0 million and $5.0 million for the three and six months ended June 30, 2013. We had no borrowings under repurchase agreements during the three months ended June 30, 2014. The weighted average interest rate on amounts due under repurchase agreements was 0.15% for the six months ended June 30, 2014 compared to 0.32% for both the three and six months ended June 30, 2013.

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7. Commitments and Contingencies

We are occasionally involved in litigation, both as a defendant and as a plaintiff. In addition, state regulatory bodies, such as state insurance departments, the SEC, FINRA, the Department of Labor, and other regulatory bodies regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, the Employee Retirement Income Security Act of 1974, as amended, and laws governing the activities of broker-dealers.

In accordance with applicable accounting guidelines, we establish an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. As a litigation or regulatory matter is developing we, in conjunction with outside counsel, evaluate on an ongoing basis whether the matter presents a loss contingency that meets conditions indicating the need for accrual and/or disclosure, and if not the matter will continue to be monitored for further developments. If and when the loss contingency related to litigation or regulatory matters is deemed to be both probable and estimable, we will establish an accrued liability with respect to that matter and will continue to monitor the matter for further developments that may affect the amount of the accrued liability.

In recent years, companies in the life insurance and annuity business have faced litigation, including class action lawsuits, alleging improper product design, improper sales practices and similar claims. We were a defendant in a purported class action, McCormack, et al. v. American Equity Investment Life Insurance Company, et al., in the United States District Court for the Central District of California, Western Division and Anagnostis v. American Equity, et al., coordinated in the Central District, entitled, In Re: American Equity Annuity Practices and Sales Litigation (complaint filed September 7, 2005) (the "Los Angeles Case"), involving allegations of improper sales practices and similar claims as described below.

The Los Angeles Case was a consolidated action involving several lawsuits filed by putative class members seeking class action status for a national class of purchasers of annuities issued by us. The allegations generally attacked the suitability of sales of deferred annuity products to persons over the age of 65. The plaintiffs sought rescission and injunctive relief including restitution and disgorgement of profits on behalf of all class members under California Business & Professions Code section 17200 et seq. and Racketeer Influenced and Corrupt Organizations Act; compensatory damages for breach of fiduciary duty and aiding and abetting of breach of fiduciary duty; unjust enrichment and constructive trust; and other pecuniary damages under California Civil Code section 1750 and California Welfare & Institutions Codes section 15600 et seq. On July 30, 2013, the parties entered into a settlement agreement and stipulated to certification of the case as a class action for settlement purposes only. Notice of the terms of the settlement was mailed to the members of the class on October 7, 2013 and settlement claim forms were due from members of the class on or before December 6, 2013. On January 27, 2014, a hearing was held regarding the fairness of the settlement. On January 29, 2014, the District Court signed a final order approving the settlement and finding the settlement is fair and represents a complete resolution of all claims asserted on behalf of the class. On January 30, 2014, a final judgment was entered dismissing the case on the merits and with prejudice. On February 28, 2014, a member of the class filed an appeal of the District Court's approval of the terms of the settlement agreement with the United States Court of Appeals for the Ninth Circuit.

We recorded an estimated litigation liability of $17.5 million during the third quarter of 2012 related to the Los Angeles Case. We increased our estimated litigation liability for this matter to $21.2 million during the fourth quarter of 2013 following the passage of the deadline for submission of claims by class members in the lawsuit and based upon information available at that time. However, we decreased the liability by $2.3 million in the first quarter of 2014 as additional information became available concerning the nature and magnitude of the claims received. In addition, during the first quarter of 2014, we paid $7.8 million in legal fees to the plaintiffs' counsel. The estimated litigation liability at June 30, 2014 is $11.1 million. While review of the claim forms has been stayed due to the appeal and it is difficult to predict the amount of the liabilities that will ultimately result from the completion of the claims process, the $11.1 million litigation liability represents our best estimate of probable loss with respect to this litigation. In light of the inherent uncertainties involved in the matter described above, there can be no assurance that such litigation, or any other pending or future litigation, will not have a material adverse effect on our business, financial condition, or results of operations.

In addition to our commitments to fund mortgage loans, we have unfunded commitments at June 30, 2014 to limited partnerships of $20.6 million and to secured bank loans of $2.4 million.

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8. Earnings Per Share

The following table sets forth the computation of earnings per common share and earnings per common share - assuming dilution:

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	(Dollars in thousands, except per share data)
Numerator:
Net income - numerator for earnings per common share	$	36,744	$	120,113	$	26,991	$	146,144
Denominator:
Weighted average common shares outstanding (1)	74,461,264		64,254,387		73,495,286		63,786,577
Effect of dilutive securities:
Convertible senior notes	2,259,425		5,009,622		2,843,987		5,082,208
2015 warrants	1,595,519		—		1,981,815		—
Stock options and deferred compensation agreements	1,154,726		1,118,056		1,220,996		1,013,455
Restricted stock units	46,870		—		40,679		—
Denominator for earnings per common share - assuming dilution	79,517,804		70,382,065		79,582,763		69,882,240
Earnings per common share	$	0.49	$	1.87	$	0.37	$	2.29
Earnings per common share - assuming dilution	$	0.46	$	1.71	$	0.34	$	2.09

(1) Weighted average common shares outstanding include shares vested under the NMO Deferred Compensation Plan and exclude unallocated shares held by the ESOP.

Options to purchase shares of our common stock that were outstanding during the respective periods indicated but were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the common shares are as follows:

Period	Number of Shares	Range of Exercise Prices
		Minimum	Maximum
Three months ended June 30, 2014	1,277,650	$24.79	$24.79
Three months ended June 30, 2013	—	$—	$—
Six months ended June 30, 2014	1,277,650	$24.79	$24.79
Six months ended June 30, 2013	—	$—	$—

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's discussion and analysis reviews our unaudited consolidated financial position at June 30, 2014, and the unaudited consolidated results of operations for the three and six month periods ended June 30, 2014 and 2013, and where appropriate, factors that may affect future financial performance. This analysis should be read in conjunction with our unaudited consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q, and the audited consolidated financial statements, notes thereto and selected consolidated financial data appearing in our Annual Report on Form 10-K for the year ended December 31, 2013.

Cautionary Statement Regarding Forward-Looking Information

All statements, trend analyses and other information contained in this report and elsewhere (such as in filings by us with the Securities and Exchange Commission ("SEC"), press releases, presentations by us or our management or oral statements) relative to markets for our products and trends in our operations or financial results, as well as other statements including words such as "anticipate", "believe", "plan", "estimate", "expect", "intend", and other similar expressions, constitute forward-looking statements. We caution that these statements may and often do vary from actual results and the differences between these statements and actual results can be material. Accordingly, we cannot assure you that actual results will not differ materially from those expressed or implied by the forward-looking statements. Factors that could contribute to these differences include, among other things:

• general economic conditions and other factors, including prevailing interest rate levels and stock and credit market performance which may affect (among other things) our ability to sell our products, our ability to access capital resources and the costs associated therewith, the fair value of our investments, which could result in impairments and other than temporary impairments, and certain liabilities, and the lapse rate and profitability of policies;

• customer response to new products and marketing initiatives;

• changes in Federal income tax laws and regulations which may affect the relative income tax advantages of our products;

• increasing competition in the sale of annuities;

• regulatory changes or actions, including those relating to regulation of financial services affecting (among other things) bank sales and underwriting of insurance products and regulation of the sale, underwriting and pricing of products; and

• the risk factors or uncertainties listed from time to time in our filings with the SEC.

For a detailed discussion of these and other factors that might affect our performance, see Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2013.

Overview

We specialize in the sale of individual annuities (primarily deferred annuities) and, to a lesser extent, we also sell life insurance policies. Under U.S. generally accepted accounting principles ("GAAP"), premium collections for deferred annuities are reported as deposit liabilities instead of as revenues. Similarly, cash payments to policyholders are reported as decreases in the liabilities for policyholder account balances and not as expenses. Sources of revenues for products accounted for as deposit liabilities are net investment income, surrender and other charges deducted from the account balances of policyholders, net realized gains (losses) on investments and changes in fair value of derivatives. Components of expenses for products accounted for as deposit liabilities are interest sensitive and index product benefits (primarily interest credited to account balances), changes in fair value of embedded derivatives, amortization of deferred sales inducements and deferred policy acquisition costs, other operating costs and expenses and income taxes.

Our business model contemplates continued growth in invested assets and operating income while maintaining a high quality investment portfolio that will not experience significant losses from impairments of invested assets. Growth in invested assets is predicated on a continuation of our high sales while at the same time maintaining a high level of retention of the funds received. The economic and personal investing environments continue to be conducive for high sales levels as retirees and others look to put their money in instruments that will protect their principal and provide them with consistent cash flow sources in their retirement years. We are committed to maintaining a high quality investment portfolio with limited exposure to below investment grade securities and other riskier assets.

Earnings from products accounted for as deposit liabilities are primarily generated from the excess of net investment income earned over the interest credited or the cost of providing index credits to the policyholder, or the "investment spread." Our investment spread is summarized as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2014	2013	2014	2013
Average yield on invested assets	4.83%	4.94%	4.89%	4.98%
Aggregate cost of money	2.13%	2.24%	2.15%	2.28%
Aggregate investment spread	2.70%	2.70%	2.74%	2.70%
Impact of:
Investment yield - additional prepayment income	0.01%	0.05%	0.03%	0.06%
Cost of money benefit of over hedging	0.03%	0.06%	0.01%	0.04%

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Our investment spread has been impacted by shortfalls in investment income from excess liquidity resulting from a lag in the reinvestment of proceeds of government agency bonds called for redemption. See Results of Operations - Net investment income for additional information regarding our excess liquidity.

The cost of money for fixed index annuities and average crediting rates for fixed rate annuities are computed based upon policyholder account balances and do not include the impact of amortization of deferred sales inducements. See Critical Accounting Policies - Deferred Policy Acquisition Costs and Deferred Sales Inducements included in Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2013. With respect to our fixed index annuities, the cost of money includes the average crediting rate on amounts allocated to the fixed rate strategy, costs we incur to fund the annual index credits (primarily costs to purchase call options) and where applicable, minimum guaranteed interest credited. Proceeds received upon expiration or early termination of call options purchased to fund annual index credits are recorded as part of the change in fair value of derivatives, and are largely offset by an expense for interest credited to annuity policyholder account balances. See Critical Accounting Policies - Policy Liabilities for Fixed Index Annuities and Financial Condition - Derivative Instruments included in Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2013.

As reported in previous filings, in response to the persistent low interest rate environment, we have been reducing policyholder crediting rates for new annuities and existing annuities since the fourth quarter of 2011. Spread results for the 2014 and 2013 periods reflect the benefit from these reductions; however, the reductions in cost of money were offset by continued lower yields available on investments including those purchased with the reinvestment of proceeds from calls of callable bonds in our investment portfolio. In 2014, we have initiated additional renewal crediting rate reductions for policies issued prior to July 20, 2010. These rate reductions will occur on policy anniversary dates over a fifteen month period that began on April 14, 2014, with the majority of the rate reductions completed by May 15, 2015. When fully implemented, we estimate that the cost of money for approximately $15 billion of policyholder funds will be reduced by 0.20%.

The current interest rate environment with low yields for investments with the credit quality we prefer presents a strong headwind to restoring our investment spread to the 3.00% target rate. With our portfolio yield still under pressure from lower rates on benchmark U.S. Treasury securities and narrower credit spreads, further adjustments to new and renewal crediting rates will be considered. We have on average 0.59% of room to reduce rates before we would reach guaranteed rates on the entire June 30, 2014 in force book of business. Our most recent new money rates adjustments were a year ago in the third quarter of 2013 when we increased rates in response to rising investment yields at that time. However, investment yields no longer support those rates. While we have been reluctant to reduce new money rates so far this year for competitive reasons, we remain aware of our spread and return on average equity objectives. Reductions in new money rates are likely should current interest rate conditions continue.

Our profitability depends in large part upon the amount of assets under our management, investment spreads we earn on our policyholder account balances, our ability to manage our investment portfolio to maximize returns and minimize risks such as interest rate changes and defaults or impairment of investments, our ability to manage interest rates credited to policyholders and costs of the options purchased to fund the annual index credits on our fixed index annuities, our ability to manage the costs of acquiring new business (principally commissions to agents and bonuses credited to policyholders) and our ability to manage our operating expenses.

Results of Operations for the Three and Six Months Ended June 30, 2014 and 2013

Annuity deposits by product type collected during the three and six months ended June 30, 2014 and 2013, were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
Product Type	2014		2013		2014		2013
	(Dollars in thousands)
Fixed index annuities:
Index strategies	$	781,238	$	764,437	$	1,423,504	$	1,369,078
Fixed strategy	214,615		285,416		418,153		528,545
	995,853		1,049,853		1,841,657		1,897,623
Fixed rate annuities:
Single-year rate guaranteed	17,160		20,404		32,400		40,314
Multi-year rate guaranteed	22,063		48,291		76,650		95,547
Single premium immediate annuities	7,140		16,824		12,426		31,804
	46,363		85,519		121,476		167,665
Total before coinsurance ceded	1,042,216		1,135,372		1,963,133		2,065,288
Coinsurance ceded	32,165		44,572		82,391		87,179
Net after coinsurance ceded	$	1,010,051	$	1,090,800	$	1,880,742	$	1,978,109

Annuity deposits before coinsurance ceded decreased 8% during the second quarter of 2014 and 5% during the six months ended June 30, 2014 compared to the same periods in 2013. We attribute these decreases to certain competitive factors in the market. In August 2014, we will launch three initiatives intended to enhance our competitive position: a new index crediting strategy, revisions to the payouts under our lifetime income benefit rider and a new option for payment of commissions to independent agents. These three initiatives should enhance our competitiveness in the fixed index annuity market, and we are optimistic that they will result in stronger sales in the second half of 2014.

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Net income, in general, has been positively impacted by the growth in the volume of business in force and the investment spread earned on this business. The average amount of annuity liabilities outstanding (net of annuity liabilities ceded under coinsurance agreements) increased 13% to $32.8 billion for the second quarter of 2014 and increased 13% to $32.4 billion for the six months ended June 30, 2014 compared to $29.0 billion and $28.5 billion for the same periods in 2013. Our investment spread measured in dollars was $190.9 million for the second quarter of 2014 and $381.1 million for the six months ended June 30, 2014 compared to $168.0 million and $329.1 million for the same periods in 2013. As previously mentioned, our investment spread has been negatively impacted by the extended low interest rate environment (see Net investment income).

Net income is also impacted by the change in fair value of derivatives and embedded derivatives which fluctuates from period to period based upon changes in fair values of call options purchased to fund the annual index credits for fixed index annuities and changes in interest rates used to discount the embedded derivative liability. Net income for the three and six months ended June 30, 2014 was negatively impacted by decreases in the discount rates used to estimate our embedded derivative liabilities. Net income for the three and six months ended June 30, 2013 was positively impacted by increases in the discount rates used to estimate our embedded derivative liabilities. The negative effect on net income for the 2014 periods due to the decrease in discount rates was offset by revisions of assumptions used in determining fixed index annuity embedded derivatives that were made in the second quarter of 2014. These revisions, which consisted of changes in the lapse and expected costs of annual call options assumptions, decreased the change in fair value of embedded derivatives for the three and six months ended June 30, 2014 by $62.6 million, which after related adjustments to deferred sales inducements and deferred policy acquisition costs and income taxes, increased net income for the three and six months ended June 30, 2014 by $14.8 million. See Change in fair value of embedded derivatives.

Operating income (a non-GAAP financial measure) increased 27% to $38.5 million in the second quarter of 2014 and increased 19% to $76.0 million for the six months ended June 30, 2014 compared to $30.3 million and $63.7 million for the same periods in 2013. In the 2013 periods, we incurred $8.5 million of guaranty fund assessments related to the insolvency of Executive Life Insurance Company of New York, which had a $5.6 million negative after tax effect on operating income and net income.

In addition to net income, we have consistently utilized operating income, a non-GAAP financial measure commonly used in the life insurance industry, as an economic measure to evaluate our financial performance. Operating income equals net income adjusted to eliminate the impact of net realized gains (losses) on investments including net OTTI losses recognized in operations, fair value changes in derivatives and embedded derivatives, losses on extinguishment of debt and changes in litigation reserves. Because these items fluctuate from year to year in a manner unrelated to core operations, we believe measures excluding their impact are useful in analyzing operating trends. We believe the combined presentation and evaluation of operating income together with net income provides information that may enhance an investor's understanding of our underlying results and profitability.

Operating income is not a substitute for net income determined in accordance with GAAP. The adjustments made to derive operating income are important to understanding our overall results from operations and, if evaluated without proper context, operating income possesses material limitations. As an example, we could produce a low level of net income in a given period, despite strong operating performance, if in that period we experience significant net realized losses from our investment portfolio. We could also produce a high level of net income in a given period, despite poor operating performance, if in that period we generate significant net realized gains from our investment portfolio. As an example of another limitation of operating income, it does not include the decrease in cash flows expected to be collected as a result of credit loss OTTI. Therefore, our management reviews net realized investment gains (losses) and analyses of our net investment income, including impacts related to OTTI write-downs, in connection with their review of our investment portfolio. In addition, our management examines net income as part of their review of our overall financial results.

The adjustments made to net income to arrive at operating income for the three and six months ended June 30, 2014 and 2013 are set forth in the table that follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Reconciliation of net income to operating income:
Net income	$	36,744		$	120,113		$	26,991		$	146,144
Net realized (gains) losses and net OTTI losses on investments, net of offsets	1,361			(3,574		)	1,925			(6,378		)
Change in fair value of derivatives and embedded derivatives - index annuities, net of offsets	(4,115		)	(81,351		)	39,593			(70,378		)
Change in fair value of derivatives and embedded derivatives - debt, net of income taxes	(1,053		)	(3,302		)	456			(4,038		)
Extinguishment of debt, net of income taxes	5,518			345			7,912			345
Litigation reserve, net of offsets	—			(1,969		)	(916		)	(1,969		)
Operating income	$	38,455		$	30,262		$	75,961		$	63,726

The amounts disclosed in the reconciliation above are net of related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs and income taxes.

34

Premiums and other considerations decreased 21% to $9.1 million in the second quarter of 2014 and decreased 33% to $16.5 million for the six months ended June 30, 2014 compared to $11.6 million and $24.6 million for the same periods in 2013. These revenues are comprised of life insurance premiums and premiums from life contingent single premium immediate annuities including life contingent supplemental contracts issued upon annuitization of deferred annuities. Life insurance premiums have remained consistent while premiums from life contingent single premium immediate annuities ($6.3 million and $8.6 million for the second quarter of 2014 and 2013, respectively, and $10.8 million and $19.0 million for the six months ended June 30, 2014 and 2013, respectively) have decreased because we have adjusted the rates offered on these products to be less competitive in the low interest rate environment.

Annuity product charges (surrender charges assessed against policy withdrawals and fees deducted from policyholder account balances for lifetime income benefit riders) increased 24% to $29.2 million in the second quarter of 2014 and increased 21% to $54.5 million for the six months ended June 30, 2014 compared to $23.5 million and $45.0 million for the same periods in 2013. The components of annuity product charges are set forth in the table that follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Surrender charges	$	12,942		$	11,292		$	25,365		$	22,794
Lifetime income benefit riders (LIBR) fees	16,305			12,219			29,154			22,198
	$	29,247		$	23,511		$	54,519		$	44,992
Withdrawals from annuity policies subject to surrender charges	$	104,159		$	81,305		$	186,517		$	159,310
Average surrender charge collected on withdrawals subject to surrender charges	12.4		%	13.9		%	13.6		%	14.3		%
Fund values on policies subject to LIBR fees	$	3,054,530		$	2,423,891		$	5,428,046		$	4,311,461
Weighted average per policy LIBR fee	0.53		%	0.50		%	0.54		%	0.52		%

The increases in fees assessed for lifetime income benefit riders were primarily due to a larger volume of business in force subject to the fee. See Interest sensitive and index product benefits below for corresponding expense recognized on lifetime income benefit riders.

Net investment income increased 10% to $370.9 million in the second quarter of 2014 and increased 11% to $740.9 million for the six months ended June 30, 2014 compared to $336.1 million and $665.8 million for the same periods in 2013. These increases were principally attributable to the growth in our annuity business and a corresponding increase in our invested assets. Average invested assets excluding derivative instruments (on an amortized cost basis) increased 13% to $30.8 billion for the second quarter of 2014 and increased 13% to $30.4 billion for the six months ended June 30, 2014 compared to $27.3 billion and $26.8 billion for the same periods in 2013. The average yield earned on average invested assets was 4.83% for second quarter of 2014 and 4.89% for the six months ended June 30, 2014 compared to 4.94% and 4.98% for the same periods in 2013.

The decrease in yield earned on average invested assets was attributable to yields on investments purchased in 2014 and 2013 being lower than the overall portfolio yield. In addition, net investment income and average yield in the second quarter of 2014 and the first two quarters of 2013 were negatively impacted by a lag in reinvestment of proceeds from bonds called for redemption during the period and earlier periods into new assets causing excess liquidity held in low yielding cash and other short-term investments. The average balance held in cash and short-term investments was $0.6 billion for the three months ended June 30, 2014, and $1.7 billion and $1.8 billion for the three and six months ended June 30, 2013. The average yield on our cash and short-term investments for the three months ended June 30, 2014 was 0.07% and for the three and six months ended June 30, 2013 was 0.47% and 0.40%. Additionally, net investment income and average yield was positively impacted by prepayment and fee income received resulting in additional net investment income of $1.1 million and $5.0 million for the three and six months ended June 30, 2014 and $3.1 million and $8.0 million for the same periods in 2013, respectively.

35

Change in fair value of derivatives consists primarily of call options purchased to fund annual index credits on fixed index annuities, the 2015 notes hedges related to our 2015 notes and an interest rate swap and interest rate caps that hedge our floating rate subordinated debentures. The components of change in fair value of derivatives are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Call options:
Gain on option expiration	$	176,184		$	150,874		$	327,431		$	209,700
Change in unrealized gains/losses	97,585			(92,674		)	17,811			193,154
2015 notes hedges	100			197			(20,301		)	28,295
Interest rate swap	(1,848		)	3,802			(3,250		)	4,535
Interest rate caps	(1,138		)	1,841			(2,315		)	2,318
	$	270,883		$	64,040		$	319,376		$	438,002

The differences between the change in fair value of derivatives between periods for call options are primarily due to the performance of the indices upon which our call options are based. A substantial portion of our call options are based upon the S&P 500 Index with the remainder based upon other equity and bond market indices. The range of index appreciation (after applicable caps, participation rates and asset fees) for options expiring during the three and six months ended June 30, 2014 and 2013 is as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2014	2013	2014	2013
S&P 500 Index
Point-to-point strategy	1.0% - 11.5%	1.5% - 11.5%	1.0% - 11.5%	1.5% - 11.5%
Monthly average strategy	0.9% - 10.9%	0.0% - 11.7%	0.9% - 11.1%	0.0% - 11.7%
Monthly point-to-point strategy	0.0% - 16.8%	0.0% - 19.0%	0.0% - 19.9%	0.0% - 19.0%
Fixed income (bond index) strategies	0.0% - 3.7%	0.0% - 8.0%	0.0% - 3.7%	0.0% - 8.0%

The change in fair value of derivatives is also influenced by the aggregate costs of options purchased. The aggregate cost of options has increased primarily due to an increased amount of fixed index annuities in force. The aggregate cost of options is also influenced by the amount of policyholder funds allocated to the various indices and market volatility which affects option pricing. See Critical Accounting Policies - Policy Liabilities for Fixed Index Annuities included in Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2013.

The fair value of the 2015 notes hedges changes based upon changes in the price of our common stock, interest rates, stock price volatility, dividend yield and the time to expiration of the 2015 notes hedges. Similarly, the fair value of the conversion option obligation to the holders of the 2015 notes changes based upon these same factors and the conversion option obligation is accounted for as an embedded derivative liability with changes in fair value reported in the Change in fair value of embedded derivatives. The amount of the change in fair value of the 2015 notes hedges has historically been equal to the amount of the change in the related embedded derivative liability and there has been an offsetting expense in the change in fair value of embedded derivatives. Due to the partial unwind agreements we entered into in the second quarter of 2014, the decrease in the change in fair value of 2015 notes embedded conversion derivative liability exceeded the decrease in the change in fair value of the 2015 notes hedges by $4.2 million for the three and six months ended June 30, 2014. See Note 5 to our unaudited consolidated financial statements for a discussion of 2015 notes hedges and the 2015 warrants.

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Net realized gains (losses) on investments, excluding OTTI losses include gains and losses on the sale of securities and impairment losses on mortgage loans on real estate which fluctuate from year to year due to changes in the interest rate and economic environment and the timing of the sale of investments, as well as gains (losses) recognized on real estate owned due to any sales and impairments on long-lived assets. The components of net realized gains (losses) on investments are set forth in the table that follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Available for sale fixed maturity securities:
Gross realized gains	$	1,173		$	7,628		$	1,357		$	20,643
Gross realized losses	(71		)	(823		)	(762		)	(3,010		)
	1,102			6,805			595			17,633
Available for sale equity securities:
Gross realized gains	—			9,571			—			9,571
Other investments:
Gain on sale of real estate	282			715			1,038			1,304
Loss on sale of real estate	(231		)	—			(231		)	(466		)
Impairment losses on real estate	—			(145		)	(799		)	(145		)
	51			570			8			693
Mortgage loans on real estate:
Increase in allowance for credit losses	(3,383		)	(1,257		)	(3,547		)	(1,623		)
	$	(2,230	)	$	15,689		$	(2,944	)	$	26,274

Losses on available for sale fixed maturity securities were realized primarily due to strategies in place to reposition the fixed maturity security portfolio that result in improved net investment income, risk or duration profiles as they pertain to our asset liability management. See Financial Condition - Investments and Note 4 to our unaudited consolidated financial statements for additional discussion of allowance for credit losses on mortgage loans on real estate.

Net OTTI losses recognized in operations decreased to $0.6 million in the second quarter of 2014 and decreased to $1.5 million for the six months ended June 30, 2014 compared to $2.8 million and $6.0 million for the same periods in 2013. See Financial Condition - Investments and Note 3 to our unaudited consolidated financial statements for additional discussion of write downs of securities for other than temporary impairments.

Insurance policy benefits and changes in future policy benefits decreased 20% to $11.0 million in the second quarter of 2014 and decreased 26% to $21.1 million for the six months ended June 30, 2014 compared to $13.8 million and $28.5 million for the same periods in 2013. These expenses include amounts for life insurance policies and life contingent single premium immediate annuities including life contingent supplemental contracts issued upon annuitization of deferred annuities. Amounts for life insurance policies have remained consistent while amounts related to life contingent single premium immediate annuities ($9.2 million and $11.7 million for the second quarter of 2014 and 2013, respectively, and $17.1 million and $24.7 million for the three and six months ended June 30, 2014 and 2013, respectively) have decreased primarily because the related premiums have decreased as discussed above under Premiums and other considerations.

Interest sensitive and index product benefits increased 10% to $367.8 million in the second quarter of 2014 and increased 23% to $685.0 million for the six months ended June 30, 2014 compared to $333.0 million and $556.2 million for the same periods in 2013. The components of interest sensitive and index product benefits are summarized as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	(Dollars in thousands)
Index credits on index policies	$	277,464	$	241,801	$	507,842	$	377,142
Interest credited (including changes in minimum guaranteed interest for fixed index annuities)	72,094		78,576		144,100		155,555
Lifetime income benefit riders	18,216		12,624		33,024		23,474
	$	367,774	$	333,001	$	684,966	$	556,171

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The increases in index credits were attributable to changes in the appreciation of the underlying indices (see discussion above under Change in fair value of derivatives) and the amount of funds allocated by policyholders to the respective index options. Total proceeds received upon expiration of the call options purchased to fund the annual index credits were $278.8 million and $506.7 million for the three and six months ended June 30, 2014, compared to $244.8 million and $380.0 million for the same periods in 2013. The decreases in interest credited were primarily due to decreases in the average rate credited to the annuity liabilities outstanding receiving a fixed rate of interest. The average amount of annuity liabilities outstanding (net of annuity liabilities ceded under coinsurance agreements) increased 13% to $32.8 billion during the second quarter of 2014 and increased 13% to $32.4 billion for the six months ended June 30, 2014 compared $29.0 billion and $28.5 billion for the same periods in 2013. The increases in benefits recognized for living income benefit rider were due to increases in the number of policies with lifetime income benefit riders and correlates to the increases in fees discussed in Annuity product charges.

Amortization of deferred sales inducements, in general, has been increasing each period due to growth in our annuity business and the deferral of sales inducements incurred with respect to sales of premium bonus annuity products. Bonus products represented 96% of our net annuity deposits during the three and six months ended June 30, 2014 compared to 97% during the same periods in 2013. The increase in amortization from these factors has been affected by amortization associated with fair value accounting for derivatives and embedded derivatives utilized in our fixed index annuity business, amortization associated with net realized gains (losses) on investments and net OTTI losses recognized in operations and, for the six months ended June 30, 2014 and the three and six months ended June 30, 2013, amortization associated with changes in litigation liabilities. Fair value accounting for derivatives and embedded derivatives utilized in our fixed index annuity business creates differences in the recognition of revenues and expenses from derivative instruments including the embedded derivative liabilities in our fixed index annuity contracts. The change in fair value of the embedded derivatives will not correspond to the change in fair value of the derivatives (purchased call options), because the purchased call options are one-year options while the options valued in the fair value of embedded derivatives cover the expected lives of the contracts which typically exceed ten years. Amortization of deferred sales inducements is summarized as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2014			2013		2014			2013
	(Dollars in thousands)
Amortization of deferred sales inducements before gross profit adjustments	$	44,600		$	37,953	$	88,701		$	74,231
Gross profit adjustments:
Fair value accounting for derivatives and embedded derivatives	10,995			79,558		(32,458		)	70,787
Net realized gains (losses) on investments and net OTTI losses recognized in operations and changes in litigation liabilities	(246		)	3,025		(228		)	4,349
Amortization of deferred sales inducements after gross profit adjustments	$	55,349		$	120,536	$	56,015		$	149,367

Change in fair value of embedded derivatives includes changes in the fair value of our fixed index annuity embedded derivatives and changes in the fair value of the embedded derivative related to the conversion option of our 2015 notes (see Note 5 to our unaudited consolidated financial statements and Note 9 to our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2013). The components of change in fair value of embedded derivatives are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Fixed index annuities - embedded derivatives	$	85,067		$	(408,606	)	$	198,087		$	(73,432	)
2015 notes embedded conversion derivative	(4,132		)	197			(24,533		)	28,295
	$	85,067		$	(408,606	)	$	198,087		$	(73,432	)

The change in fair value of the fixed index annuity embedded derivatives resulted from (i) changes in the expected index credits on the next policy anniversary dates, which are related to the change in fair value of the call options acquired to fund those index credits discussed above in Change in fair value of derivatives; (ii) changes in discount rates used in estimating our embedded derivative liabilities; and (iii) the growth in the host component of the policy liability. See Critical Accounting Policies - Policy Liabilities for Fixed Index Annuities included in Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2013. The primary reasons for the increases in the change in fair value of the fixed index annuity embedded derivatives during the three and six months ended June 30, 2014 were decreases in the discount rates used in estimating our liability and increases in the expected index credits resulting from increases in the fair value of the call options acquired to fund these index credits. The three and six months ended June 30, 2013 were positively impacted by increases in the discount rates used in estimating our liability and decreases in the expected index credits resulting from decreases in the fair value of the the call options acquired to fund these index credits.

See Net income above for discussion of the impact of assumption changes on the fixed index annuity embedded derivatives for the three and six month periods ended June 30, 2014. See Critical Accounting Policies - Policy Liabilities for Fixed Index Annuities included in Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2013.

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As discussed above under Change in fair value of derivatives, the fair value of the 2015 notes embedded conversion derivative changes based upon the same factors effecting the changes in the 2015 notes hedges. The changes in the fair value of the 2015 notes embedded conversion derivative were offset by a comparable increase or decrease in the change in fair value of the 2015 notes hedges.

Interest expense on notes payable increased 35% to $9.1 million in the second quarter of 2014 and increased 38% to $19.4 million for the six months ended June 30, 2014 compared to $6.8 million and $14.0 million for the same periods in 2013. The increases are primarily attributable to interest expense on the $400 million of 6.625% senior unsecured notes we issued on July 17, 2013. The increases were offset by lower interest expense on our convertible senior notes as we extinguished $155.5 million principal amount of convertible senior notes during the fourth quarter of 2013, $31.3 million principal amount of convertible senior notes in the first quarter of 2014 and $51.4 million principal amount of convertible senior notes in the second quarter of 2014. In addition, convertible senior notes totaling $28.2 million principal amount were called in the second quarter of 2013.

Amortization of deferred policy acquisition costs, in general, has been increasing each period due to the growth in our annuity business and the deferral of policy acquisition costs incurred with respect to sales of annuity products. The increase in amortization from these factors has been affected by amortization associated with fair value accounting for derivatives and embedded derivatives utilized in our fixed index annuity business, amortization associated with net realized gains (losses) on investments and net OTTI losses recognized in operations and, for the six months ended June 30, 2014 and the three and six months ended June 30, 2013, amortization associated with changes in litigation liabilities. As discussed above, fair value accounting for derivatives and embedded derivatives utilized in our fixed index annuity business creates differences in the recognition of revenues and expenses from derivative instruments including the embedded derivative liabilities in our fixed index annuity contracts. Amortization of deferred policy acquisition costs is summarized as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2014			2013		2014			2013
	(Dollars in thousands)
Amortization of deferred policy acquisition costs before gross profit adjustments	$	65,842		$	57,701	$	131,355		$	113,631
Gross profit adjustments:
Fair value accounting for derivatives and embedded derivatives	1,716			107,174		(56,634		)	95,705
Net realized gains (losses) on investments and net OTTI losses recognized in operations and changes in litigation liabilities	(474		)	4,395		(443		)	6,164
Amortization of deferred policy acquisition costs after gross profit adjustments	$	67,084		$	169,270	$	74,278		$	215,500

Other operating costs and expenses decreased 16% to $20.9 million in the second quarter of 2014 and decreased 10% to $40.0 million for the six months ended June 30, 2014 compared to $24.9 million and $44.4 million for the same periods in 2013. The three and six months ended June 30, 2014 reflect increases in salaries and benefits and increased risk charges related to a financing reinsurance agreement as compared to the same periods in 2013. These increases were offset by decreases of $8.5 million in guaranty fund assessments related to the insolvency of Executive Life Insurance Company of New York which was offset by a $3.2 million decrease in a litigation reserve associated with a previous lawsuit settlement which were both recognized during the three and six months ended June 30, 2013. In addition, the six months ended June 30, 2014, reflects a decrease in an estimated litigation liability of $2.3 million (see Note 7 to our unaudited consolidated financial statements).

Income tax expense decreased to $18.8 million in the second quarter of 2014 and decreased to $14.0 million for the six months ended June 30, 2014 compared to $64.6 million and $78.1 million for the same periods in 2013. The decreases in income tax expense was primarily due to decreases in income before income taxes. Income tax expense and the resulting effective tax rate are based upon two components of income before income taxes ("pretax income") that are taxed at different tax rates. Life insurance income is generally taxed at an effective rate of approximately 35.4% reflecting the absence of state income taxes for substantially all of the states that the life insurance subsidiaries do business in. The income/loss for the parent company and other non-life insurance subsidiaries is generally taxed at an effective tax rate of 41.5% reflecting the combined federal / state income tax rates. The effective tax rates resulting from the combination of the income tax provisions for the life / non-life sources of income vary from period to period based primarily on the relative size of pretax income from the two sources. The effective tax rate for the three and six months ended June 30, 2014 was 33.9% and 34.1%, respectively, and 35.0% and 34.8% for the same periods in 2013, respectively. The lower effective tax rate for the three and six months ended June 30, 2014 was primarily due to increases in sources of net investment income that are exempt from federal income tax.

Financial Condition

Investments

Our investment strategy is to maintain a predominantly investment grade fixed income portfolio, provide adequate liquidity to meet our cash obligations to policyholders and others and maximize current income and total investment return through active investment management. Consistent with this strategy, our investments principally consist of fixed maturity securities and mortgage loans on real estate.

Insurance statutes regulate the type of investments that our life subsidiaries are permitted to make and limit the amount of funds that may be used for any one type of investment. In light of these statutes and regulations and our business and investment strategy, we generally seek to invest in United States government and government-sponsored agency securities, corporate securities, residential and commercial mortgage backed securities, other asset backed securities and United States municipalities, states and territories securities rated investment grade by

39

established nationally recognized statistical rating organizations ("NRSRO's") or in securities of comparable investment quality, if not rated, and commercial mortgage loans on real estate.

The composition of our investment portfolio is summarized as follows:

	June 30, 2014				December 31, 2013
	Carrying Amount		Percent		Carrying Amount		Percent
	(Dollars in thousands)
Fixed maturity securities:
United States Government full faith and credit	$	38,483	0.1	%	$	42,925	0.2	%
United States Government sponsored agencies	1,185,341		3.6	%	1,194,289		3.9	%
United States municipalities, states and territories	3,506,198		10.6	%	3,306,743		10.9	%
Foreign government obligations	192,963		0.6	%	91,557		0.3	%
Corporate securities	19,263,717		58.3	%	17,309,292		57.1	%
Residential mortgage backed securities	1,870,565		5.7	%	1,971,960		6.5	%
Commercial mortgage backed securities	2,296,096		6.9	%	1,735,460		5.7	%
Other asset backed securities	1,040,551		3.1	%	1,034,476		3.4	%
Total fixed maturity securities	29,393,914		88.9	%	26,686,702		88.0	%
Equity securities	7,762		—	%	7,778		—	%
Mortgage loans on real estate	2,543,810		7.7	%	2,581,082		8.5	%
Derivative instruments	905,688		2.7	%	856,050		2.8	%
Other investments	221,459		0.7	%	215,042		0.7	%
	$	33,072,633	100.0	%	$	30,346,654	100.0	%

Fixed Maturity Securities

Our fixed maturity security portfolio is managed to minimize risks such as interest rate changes and defaults or impairments while earning a sufficient and stable return on our investments. The largest portion of our fixed maturity securities are investment grade (NAIC designation 1 or 2) publicly traded or privately placed corporate securities. We also have a portfolio of residential mortgage backed securities ("RMBS") that provide our investment portfolio a source of regular cash flow and higher yielding assets than our agency securities. In addition, we have a portfolio of taxable bonds issued by municipalities, states and territories of the United States that provide us with attractive yields while being consistent with our credit risk parameters. Beginning in 2012, we increased our position in other asset backed securities as well as establishing a position in commercial mortgage backed securities (“CMBS”).

A summary of our fixed maturity securities by NRSRO ratings is as follows:

	June 30, 2014				December 31, 2013
Rating Agency Rating	Carrying Amount		Percent of Fixed Maturity Securities		Carrying Amount		Percent of Fixed Maturity Securities
	(Dollars in thousands)
Aaa/Aa/A	$	18,072,679	61.5	%	$	16,122,487	60.4	%
Baa	10,000,688		34.0	%	9,147,584		34.3	%
Total investment grade	28,073,367		95.5	%	25,270,071		94.7	%
Ba	466,331		1.6	%	477,477		1.8	%
B	100,947		0.3	%	128,488		0.5	%
Caa and lower	553,210		1.9	%	617,900		2.3	%
In or near default	200,059		0.7	%	192,766		0.7	%
Total below investment grade	1,320,547		4.5	%	1,416,631		5.3	%
	$	29,393,914	100.0	%	$	26,686,702	100.0	%

40

The National Association of Insurance Commissioner's ("NAIC") Securities Valuation Office ("SVO") is responsible for the the day-to-day credit quality assessment and the valuation of fixed maturity securities owned by state regulated insurance companies. The purpose of such assessment and valuation is for determining regulatory capital requirements and regulatory reporting. Insurance companies report ownership to the SVO when such securities are eligible for regulatory filings. The SVO conducts credit analysis on these securities for the purpose of assigning a NAIC designation and/or unit price. Typically, if a security has been rated by a NRSRO, the SVO utilizes that rating and assigns a NAIC designation based upon the following system:

NAIC Designation	NRSRO Equivalent Rating
1	Aaa/Aa/A
2	Baa
3	Ba
4	B
5	Caa and lower
6	In or near default

For most of the bonds held in our portfolio the NAIC designation matches the NRSRO equivalent rating. However, for certain loan-backed and structured securities, as defined by the NAIC, the NAIC rating is not always equivalent to the NRSRO rating presented in the previous table. The NAIC has adopted revised rating methodologies for certain loan-backed and structured securities comprised of non-agency RMBS and CMBS. The NAIC’s objective with the revised rating methodologies for these structured securities is to increase the accuracy in assessing expected losses and use the improved assessment to determine a more appropriate capital requirement for such structured securities. The revised methodologies reduce regulatory reliance on rating agencies and allow for greater regulatory input into the assumptions used to estimate expected losses from structured securities.

The use of this process by the SVO may result in certain non-agency RMBS and CMBS being assigned a NAIC designation that is higher than the equivalent NRSRO rating. The NAIC designations for non-agency RMBS and CMBS are based on security level expected losses as modeled by an independent third party (engaged by the NAIC) and the statutory carrying value of the security, including any purchase discounts or impairment charges previously recognized. Evaluation of non-agency RMBS and CMBS held by insurers using the revised NAIC rating methodologies is performed on an annual basis.

As stated previously, our fixed maturity security portfolio is managed to minimize risks such as defaults or impairments while earning a sufficient and stable return on our investments. Our strategy has been to invest primarily in investment grade fixed maturity securities. Investment grade is NAIC 1 and 2 securities and Baa3/BBB- and better securities on the NRSRO scale. This strategy meets the objective of minimizing risk while also managing asset capital charges on a regulatory capital basis.

A summary of our fixed maturity securities by NAIC designation is as follows:

	June 30, 2014								December 31, 2013
NAIC Designation	Amortized Cost		Fair Value		Carrying Amount		Percent of Total Carrying Amount		Amortized Cost		Fair Value		Carrying Amount		Percent of Total Carrying Amount
	(Dollars in thousands)								(Dollars in thousands)
1	$	17,311,646	$	18,519,001	$	18,519,001	63.0	%	$	16,394,654	$	16,531,250	$	16,531,250	62.0	%
2	9,739,539		10,305,239		10,305,239		35.1	%	9,630,251		9,598,399		9,598,399		36.0	%
3	497,545		493,350		503,121		1.7	%	502,822		474,165		489,579		1.8	%
4	67,353		65,857		65,857		0.2	%	74,493		66,078		66,078		0.2	%
5	—		—		—		—	%	—		—		—		—	%
6	1,204		696		696		—	%	1,765		1,395		1,396		—	%
	$	27,617,287	$	29,384,143	$	29,393,914	100.0	%	$	26,603,985	$	26,671,287	$	26,686,702	100.0	%

The amortized cost and fair value of fixed maturity securities at June 30, 2014, by contractual maturity, are presented in Note 3 to our unaudited consolidated financial statements in this form 10-Q, which is incorporated by reference in this Item 2.

41

Unrealized Losses

The amortized cost and fair value of fixed maturity securities that were in an unrealized loss position were as follows:

	Number of Securities	Amortized Cost		Unrealized Losses			Fair Value
		(Dollars in thousands)
June 30, 2014
Fixed maturity securities, available for sale:
United States Government full faith and credit	3	$	33,986	$	(417	)	$	33,569
United States Government sponsored agencies	9	638,637		(35,627		)	603,010
United States municipalities, states and territories	68	225,113		(6,587		)	218,526
Foreign government obligations	2	19,419		(1,492		)	17,927
Corporate securities:
Finance, insurance and real estate	51	784,827		(26,323		)	758,504
Manufacturing, construction and mining	92	1,540,050		(35,166		)	1,504,884
Utilities and related sectors	60	728,328		(22,677		)	705,651
Wholesale/retail trade	12	139,898		(5,304		)	134,594
Services, media and other	31	468,665		(11,344		)	457,321
Residential mortgage backed securities	51	365,184		(13,881		)	351,303
Commercial mortgage backed securities	49	555,178		(10,197		)	544,981
Other asset backed securities	21	344,178		(13,720		)	330,458
	449	$	5,843,463	$	(182,735	)	$	5,660,728
Fixed maturity securities, held for investment:
Corporate security:
Insurance	1	$	76,342	$	(9,771	)	$	66,571
December 31, 2013
Fixed maturity securities, available for sale:
United States Government full faith and credit	4	$	35,263	$	(2,294	)	$	32,969
United States Government sponsored agencies	27	1,280,991		(121,362		)	1,159,629
United States municipalities, states and territories	151	653,130		(39,074		)	614,056
Foreign government obligations	3	29,760		(3,462		)	26,298
Corporate securities:
Finance, insurance and real estate	124	1,949,182		(105,299		)	1,843,883
Manufacturing, construction and mining	249	3,671,716		(207,333		)	3,464,383
Utilities and related sectors	167	2,027,723		(114,305		)	1,913,418
Wholesale/retail trade	38	473,275		(27,181		)	446,094
Services, media and other	74	1,003,852		(61,911		)	941,941
Residential mortgage backed securities	52	384,521		(43,183		)	341,338
Commercial mortgage backed securities	123	1,591,057		(89,815		)	1,501,242
Other asset backed securities	34	479,153		(30,763		)	448,390
	1,046	$	13,579,623	$	(845,982	)	$	12,733,641
Fixed maturity securities, held for investment:
Corporate security:
Insurance	1	$	76,255	$	(15,415	)	$	60,840

Unrealized losses decreased $668.9 million from $861.4 million at December 31, 2013 to $192.5 million at June 30, 2014. The decrease in unrealized losses was primarily due to a decrease in market interest rates during the six months ended June 30, 2014.

42

The following table sets forth the composition by credit quality (NAIC designation) of fixed maturity securities with gross unrealized losses:

NAIC Designation	Carrying Value of Securities with Gross Unrealized Losses		Percent of Total		Gross Unrealized Losses			Percent of Total
	(Dollars in thousands)
June 30, 2014
1	$	3,494,509	60.9	%	$	(113,702	)	59.0	%
2	2,030,060		35.4	%	(58,275		)	30.3	%
3	184,965		3.2	%	(16,314		)	8.5	%
4	26,868		0.5	%	(3,680		)	1.9	%
5	—		—	%	—			—	%
6	668		—	%	(535		)	0.3	%
	$	5,737,070	100.0	%	$	(192,506	)	100.0	%
December 31, 2013
1	$	7,214,149	56.3	%	$	(511,245	)	59.3	%
2	5,278,699		41.2	%	(306,659		)	35.6	%
3	258,516		2.0	%	(34,036		)	4.0	%
4	57,156		0.5	%	(9,068		)	1.1	%
5	—		—	%	—			—	%
6	1,376		—	%	(389		)	—	%
	$	12,809,896	100.0	%	$	(861,397	)	100.0	%

43

Our investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities (consisting of 450 and 1,047 securities, respectively) have been in a continuous unrealized loss position at June 30, 2014 and December 31, 2013, along with a description of the factors causing the unrealized losses is presented in Note 3 to our unaudited consolidated financial statements in this Form 10-Q, which is incorporated by reference in the Item 2.

The amortized cost and fair value of fixed maturity securities in an unrealized loss position and the number of months in a continuous unrealized loss position (fixed maturity securities that carry an NRSRO rating of BBB/Baa or higher are considered investment grade) were as follows:

	Number of Securities	Amortized Cost		Fair Value		Gross Unrealized Losses
		(Dollars in thousands)
June 30, 2014
Fixed maturity securities:
Investment grade:
Less than six months	35	$	342,170	$	337,704	$	(4,466	)
Six months or more and less than twelve months	15	180,799		175,796		(5,003		)
Twelve months or greater	360	5,100,846		4,940,678		(160,168		)
Total investment grade	410	5,623,815		5,454,178		(169,637		)
Below investment grade:
Less than six months	21	118,045		116,416		(1,629		)
Six months or more and less than twelve months	5	9,525		9,364		(161		)
Twelve months or greater	14	168,420		147,341		(21,079		)
Total below investment grade	40	295,990		273,121		(22,869		)
	450	$	5,919,805	$	5,727,299	$	(192,506	)
December 31, 2013
Fixed maturity securities:
Investment grade:
Less than six months	329	$	3,700,588	$	3,627,962	$	(72,626	)
Six months or more and less than twelve months	630	8,499,453		7,842,391		(657,062		)
Twelve months or greater	43	1,102,199		1,011,904		(90,295		)
Total investment grade	1,002	13,302,240		12,482,257		(819,983		)
Below investment grade:
Less than six months	19	101,690		99,509		(2,181		)
Six months or more and less than twelve months	11	76,214		66,136		(10,078		)
Twelve months or greater	15	175,734		146,579		(29,155		)
Total below investment grade	45	353,638		312,224		(41,414		)
	1,047	$	13,655,878	$	12,794,481	$	(861,397	)

44

The amortized cost and fair value of fixed maturity securities (excluding United States Government and United States Government sponsored agency securities) segregated by investment grade (NRSRO rating of BBB/Baa or higher) and below investment grade that had unrealized losses greater than 20% and the number of months in a continuous unrealized loss position were as follows:

	Number of Securities	Amortized Cost		Fair Value		Gross Unrealized Losses
		(Dollars in thousands)
June 30, 2014
Investment grade:
Less than six months	—	$	—	$	—	$	—
Six months or more and less than twelve months	—	—		—		—
Twelve months or greater	1	20,000		15,411		(4,589		)
Total investment grade	1	20,000		15,411		(4,589		)
Below investment grade:
Less than six months	—	—		—		—
Six months or more and less than twelve months	—	—		—		—
Twelve months or greater	1	1,175		645		(530		)
Total below investment grade	1	1,175		645		(530		)
	2	$	21,175	$	16,056	$	(5,119	)
December 31, 2013
Investment grade:
Less than six months	2	$	14,516	$	11,368	$	(3,148	)
Six months or more and less than twelve months	1	4,465		3,419		(1,046		)
Twelve months or greater	1	20,000		14,513		(5,487		)
Total investment grade	4	38,981		29,300		(9,681		)
Below investment grade:
Less than six months	1	25,043		18,813		(6,230		)
Six months or more and less than twelve months	4	101,244		77,350		(23,894		)
Twelve months or greater	2	1,765		1,376		(389		)
Total below investment grade	7	128,052		97,539		(30,513		)
	11	$	167,033	$	126,839	$	(40,194	)

45

The amortized cost and fair value of fixed maturity securities, by contractual maturity, that were in an unrealized loss position are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. All of our mortgage and other asset backed securities provide for periodic payments throughout their lives, and are shown below as a separate line.

	Available for sale				Held for investment
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
June 30, 2014
Due in one year or less	$	—	$	—	$	—	$	—
Due after one year through five years	13,226		13,212		—		—
Due after five years through ten years	2,547,194		2,497,424		—		—
Due after ten years through twenty years	1,472,364		1,402,910		—		—
Due after twenty years	546,139		520,440		76,342		66,571
	4,578,923		4,433,986		76,342		66,571
Residential mortgage backed securities	365,184		351,303		—		—
Commercial mortgage backed securities	555,178		544,981		—		—
Other asset backed securities	344,178		330,458		—		—
	$	5,843,463	$	5,660,728	$	76,342	$	66,571
December 31, 2013
Due in one year or less	$	—	$	—	$	—	$	—
Due after one year through five years	7,227		7,213		—		—
Due after five years through ten years	5,328,034		5,055,734		—		—
Due after ten years through twenty years	3,337,145		3,086,150		—		—
Due after twenty years	2,452,486		2,293,574		76,255		60,840
	11,124,892		10,442,671		76,255		60,840
Residential mortgage backed securities	384,521		341,338		—		—
Commercial mortgage backed securities	1,591,057		1,501,242		—		—
Other asset backed securities	479,153		448,390		—		—
	$	13,579,623	$	12,733,641	$	76,255	$	60,840

46

International Exposure

We hold fixed maturity securities with international exposure. As of June 30, 2014, 16% of the carrying value of our fixed maturity securities was comprised of corporate debt securities of issuers based outside of the United States and debt securities of foreign governments. All of these securities are denominated in U.S. dollars and all are investment grade (NAIC designation of either 1 or 2), except for fifteen securities with a total fair value of $83.3 million which have a NAIC 3 designation. Our investment professionals analyze each holding for credit risk by economic and other factors of each country and industry. The following table presents our international exposure in our fixed maturity portfolio by country or region:

	June 30, 2014
	Amortized Cost		Carrying Amount/Fair Value		Percent of Total Carrying Amount
	(Dollars in thousands)
GIIPS (1)	$	243,511	$	265,773	0.9%
Asia/Pacific	248,115		255,682		0.9%
Non-GIIPS Europe	2,073,387		2,170,937		7.4%
Latin America	194,676		200,261		0.7%
Non-U.S. North America	874,130		933,564		3.2%
Australia & New Zealand	404,731		422,897		1.4%
Other	375,917		409,235		1.4%
	$	4,414,467	$	4,658,349	15.9%

(1) Greece, Ireland, Italy, Portugal and Spain continue to cause credit risk as economic conditions in these countries continue to be volatile, especially within the financial and banking sectors. All of our exposure in GIIPS are corporate securities with issuers domiciled in these countries. None of our foreign government obligations were held in any of these countries.

Watch List

At each balance sheet date, we identify invested assets which have characteristics (i.e. significant unrealized losses compared to amortized cost and industry trends) creating uncertainty as to our future assessment of an other than temporary impairment. As part of this assessment, we review not only a change in current price relative to its amortized cost but the issuer's current credit rating and the probability of full recovery of principal based upon the issuer's financial strength. Specifically for corporate issues we evaluate the financial stability and quality of asset coverage for the securities relative to the term to maturity for the issues we own. A security which has a 25% or greater change in market price relative to its amortized cost and a possibility of a loss of principal will be included on a list which is referred to as our watch list. We exclude from this list securities with unrealized losses which are related to market movements in interest rates and which have no factors indicating that such unrealized losses may be other than temporary as we do not intend to sell these securities and it is more likely than not we will not have to sell these securities before a recovery is realized. In addition, we exclude our RMBS as we monitor all of our RMBS on a quarterly basis for changes in default rates, loss severities and expected cash flows for the purpose of assessing potential other than temporary impairments and related credit losses to be recognized in operations. At June 30, 2014, the amortized cost and fair value of securities on the watch list are as follows:

General Description	Number of Securities	Amortized Cost		Unrealized Gains (Losses)			Fair Value		Months in Continuous Unrealized Loss Position	Months Unrealized Losses Greater Than 20%
		(Dollars in thousands)
Investment grade
Corporate fixed maturity securities:
Finance	1	$	20,000	$	(4,589	)	$	15,411	34	32
Below investment grade
Corporate fixed maturity securities:
Industrial	2	22,350		(3,615		)	18,735		20 - 46	0 - 13
Industrial	2	15,843		1,151			16,994
	4	38,193		(2,464		)	35,729
	5	$	58,193	$	(7,053	)	$	51,140

47

Four of the securities, including the investment grade security, on the watch list have Eurozone exposure that has contributed to either their current depressed fair values or the uncertainty involved in the recovery of their fair value in the recent year. Our analysis of the securities in an unrealized loss position on the watch list that we have determined are temporarily impaired and their credit performance at June 30, 2014 is as follows:

Finance:  The decline in value of this security which is rated investment grade is due to the continued wide spreads as a result of the ongoing concerns relating to capital, asset quality and earnings stability due to the financial events of the past three years and the ongoing events in the Eurozone. While this issuer has had its financial position and profitability weakened by the credit and liquidity crisis, we have determined that this security was not other than temporarily impaired due to our evaluation of the operating performance and the credit worthiness of the issuer.

Industrial:  The decline in value of these securities relates to ongoing operational issues or recent corporate actions. These issues have caused the price for these securities to decline; however, the companies have strong liquidity and ample time to strengthen their credit profile. We have determined that these securities were not other than temporarily impaired due to the issuers' very strong market positions, restructuring actions that are expected to favorably impact future profitability and a history of strong, reliable operating performance, improving economic conditions and rising security prices.

Other Than Temporary Impairments

We have a policy and process in place to identify securities in our investment portfolio for which we should recognize impairments. See Critical Accounting Policies—Evaluation of Other Than Temporary Impairments included in Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2013. Several factors led us to believe that full recovery of amortized cost will not be expected on the securities for which we recognized credit losses. A discussion of these factors, our policy and process in place to identify securities that could potentially have impairment that is other than temporary and a summary of OTTI is presented in Note 3 to our unaudited consolidated financial statements in this Form 10-Q, which is incorporated by reference in this Item 2.

Mortgage Loans on Real Estate

Our commercial mortgage loan portfolio consists of mortgage loans collateralized by the related properties and diversified as to property type, location and loan size. Our mortgage lending policies establish limits on the amount that can be loaned to one borrower and other criteria to attempt to reduce the risk of default. Our commercial mortgage loans on real estate are reported at cost, adjusted for amortization of premiums and accrual of discounts net of valuation allowances. At June 30, 2014 and December 31, 2013 the largest principal amount outstanding for any single mortgage loan was $16.0 million and $14.6 million, respectively, and the average loan size was $2.6 million and $2.5 million as of June 30, 2014 and December 31, 2013, respectively. We have the contractual ability to pursue full personal recourse on 7.9% of the loans and partial personal recourse on 22.9% of the loans. In addition, the average loan to value ratio for the overall portfolio was 54.2% and 54.3% at June 30, 2014 and December 31, 2013, respectively, based upon the underwriting and appraisal at the time the loan was made. This loan to value is indicative of our conservative underwriting policies and practices for making commercial mortgage loans and may not be indicative of collateral values at the current reporting date. Our current practice is to only obtain market value appraisals of the underlying collateral at the inception of the loan unless we identify indicators of impairment in our ongoing analysis of the portfolio, in which case, we either calculate a value of the collateral using a capitalization method or obtain a current appraisal of the underlying collateral. The commercial mortgage loan portfolio is summarized by geographic region and property type in Note 4 to our unaudited consolidated financial statements, incorporated by reference in this Item 2.

In the normal course of business, we commit to fund commercial mortgage loans up to 90 days in advance. At June 30, 2014, we had commitments to fund commercial mortgage loans totaling $38.6 million, with fixed interest rates ranging from 4.50% to 4.97%. During 2014 and 2013, due to historically low interest rates, the commercial mortgage loan industry has been very competitive. This competition has resulted in a number of borrowers refinancing with other lenders. For the six months ended June 30, 2014, we received $168.2 million in cash for loans being paid in full compared to $224.3 million for the six months ended June 30, 2013. Some of the loans being paid off have either reached their maturity or are nearing maturity; however, some borrowers are paying the prepayment fee and refinancing at a lower rate.

See Note 4 to our unaudited consolidated financial statements, incorporated by reference for a presentation of our specific and general loan loss allowances, impaired loans, foreclosure activity and troubled debt restructure analysis.

We recorded impairment losses of $2.9 million on four mortgage loans with outstanding principal due totaling $14.5 million and impairment losses of $3.4 million on five mortgage loans with outstanding principal due totaling $16.6 million during the three and six months ended June 30, 2014, respectively. Two of these five loans with outstanding principal due totaling $6.4 million have been foreclosed upon as of June 30, 2014. We recorded impairment losses of $1.2 million on three mortgage loans with outstanding principal due totaling $5.9 million and impairment losses of $2.2 million on four mortgage loan with outstanding principal due totaling $9.5 million during the three and six months ended June 30, 2013.

We have a process by which we evaluate the credit quality of each of our commercial mortgage loans. This process utilizes each loan's debt service coverage ratio as a primary metric. A summary of our portfolio by debt service coverage ratio follows:

48

	June 30, 2014				December 31, 2013
	Principal Outstanding		Percent of Total Principal Outstanding		Principal Outstanding		Percent of Total Principal Outstanding
	(Dollars in thousands)
Debt Service Coverage Ratio:
Greater than or equal to 1.5	$	1,615,285	62.8	%	$	1,572,241	60.3	%
Greater than or equal to 1.2 and less than 1.5	577,415		22.5	%	595,786		22.9	%
Greater than or equal to 1.0 and less than 1.2	168,239		6.5	%	209,717		8.0	%
Less than 1.0	210,011		8.2	%	229,954		8.8	%
	$	2,570,950	100.0	%	$	2,607,698	100.0	%

At June 30, 2014, we have three mortgage loans that are in the process of being satisfied by our taking ownership of the real estate serving as collateral on the loan. These loans have a total outstanding principal balance of $9.3 million and we have recorded specific loan loss allowances totaling $2.1 million, of which $1.2 million was recognized during the three and six months ended June 30, 2014. We also have one commercial mortgage loan at June 30, 2014 with an outstanding principal balance of $2.2 million that have been given "workout" terms which generally allow for interest only payments or the capitalization of interest for a specified period of time. We have recorded a specific loan loss allowance on this loan of $0.5 million, all of which was recognized prior to 2014. At June 30, 2014, we had no commercial mortgage loans that were delinquent (60 days or more past due at the reporting date). The total outstanding principal balance of these four loans is $11.5 million, which represents less than 1% of our total mortgage loan portfolio.

Mortgage loans summarized in the following table represent all loans that we are either not currently collecting or those we feel it is probable we will not collect all amounts due according to the contractual terms of the loan agreements (all loans that we have worked with the borrower to alleviate short-term cash flow issues, loans delinquent for 60 days or more at the reporting date, loans we have determined to be collateral dependent and loans that we have recorded specific impairments on that we feel may continue to have performance issues).

	June 30, 2014			December 31, 2013
	(Dollars in thousands)
Mortgage loans with allowances	$	42,963		$	47,018
Mortgage loans with no allowance for losses	2,656			3,264
Allowance for probable loan losses	(17,282		)	(16,847		)
Net carrying value of impaired mortgage loans	$	28,337		$	33,435

Derivative Instruments

Our derivative instruments primarily consist of call options purchased to provide the income needed to fund the annual index credits on our fixed index annuity products. The fair value of the call options is based upon the amount of cash that would be required to settle the call options obtained from the counterparties adjusted for the nonperformance risk of the counterparty. The nonperformance risk for each counterparty is based upon its credit default swap rate. We have no performance obligations related to the call options.

We recognize all derivative instruments as assets or liabilities in the consolidated balance sheets at fair value. None of our derivatives qualify for hedge accounting, thus, any change in the fair value of the derivatives is recognized immediately in the consolidated statements of operations. A presentation of our derivative instruments along with a discussion of the business strategy involved with our derivatives is included in Note 5 to our unaudited consolidated financial statements in this Form 10-Q, which is incorporated by reference in this Item 2.

Liquidity and Capital Resources

Our insurance subsidiaries continue to have adequate cash flows from annuity deposits and investment income to meet their policyholder and other obligations. Net cash flows from annuity deposits and funds returned to policyholders as surrenders, withdrawals and death claims were $1.0 billion for the six months ended June 30, 2014 compared to $1.2 billion for the six months ended June 30, 2013, with the decrease primarily attributable to a $78.0 million decrease in net annuity deposits after coinsurance and a $122.2 million (after coinsurance) increase in funds returned to policyholders. We continue to invest the net proceeds from policyholder transactions and investment activities in high quality fixed maturity securities and fixed rate commercial mortgage loans.

We, as the parent company, are a legal entity separate and distinct from our subsidiaries, and have no business operations. We need liquidity primarily to service our debt, including the senior notes, convertible senior notes and subordinated debentures issued to subsidiary trusts, pay operating expenses and pay dividends to stockholders. Our assets consist primarily of the capital stock and surplus notes of our subsidiaries. Accordingly, our future cash flows depend upon the availability of dividends, surplus note interest payments and other statutorily permissible payments from our subsidiaries, such as payments under our investment advisory agreements and tax allocation agreement with our subsidiaries. These sources provide adequate cash flow to us to meet our current and reasonably foreseeable future obligations.

The ability of our life insurance subsidiaries to pay dividends or distributions, including surplus note payments, will be limited by applicable laws and regulations of the states in which our life insurance subsidiaries are domiciled, which subject our life insurance subsidiaries to significant

49

regulatory restrictions. These laws and regulations require, among other things, our insurance subsidiaries to maintain minimum solvency requirements and limit the amount of dividends these subsidiaries can pay.

Currently, American Equity Life may pay dividends or make other distributions without the prior approval of the Iowa Insurance Commissioner, unless such payments, together with all other such payments within the preceding twelve months, exceed the greater of (1) American Equity Life's net gain from operations for the preceding calendar year, or (2) 10% of American Equity Life's statutory capital and surplus at the preceding December 31. For 2014, up to $195.0 million can be distributed as dividends by American Equity Life without prior approval of the Iowa Insurance Commissioner. In addition, dividends and surplus note payments may be made only out of statutory earned surplus, and all surplus note payments are subject to prior approval by regulatory authorities in the life subsidiary's state of domicile. American Equity Life had $1.0 billion of statutory earned surplus at June 30, 2014.

The maximum distribution permitted by law or contract is not necessarily indicative of an insurer's actual ability to pay such distributions, which may be constrained by business and regulatory considerations, such as the impact of such distributions on surplus, which could affect the insurer's ratings or competitive position, the amount of premiums that can be written and the ability to pay future dividends or make other distributions. Further, state insurance laws and regulations require that the statutory surplus of our life subsidiaries following any dividend or distribution must be reasonable in relation to their outstanding liabilities and adequate for their financial needs. Along with solvency regulations, the primary driver in determining the amount of capital used for dividends is the level of capital needed to maintain desired financial strength ratings from A.M. Best. Both regulators and rating agencies could become more conservative in their methodology and criteria, including increasing capital requirements for our insurance subsidiaries which, in turn, could negatively affect the cash available to us from insurance subsidiaries. As of June 30, 2014, we estimate American Equity Life has sufficient statutory capital and surplus, combined with capital available to the holding company, to meet this rating objective. However, this capital may not be sufficient if significant future losses are incurred or A.M. Best modifies its rating criteria and access to additional capital could be limited.

The transfer of funds by American Equity Life is also restricted by a covenant in our line of credit agreement which requires American Equity Life to maintain a minimum risk-based capital ratio of 275% and a minimum level of statutory surplus equal to the sum of 1) 80% of statutory surplus at September 30, 2013, 2) 50% of the statutory net income for each fiscal quarter ending after September 30, 2013, and 3) 50% of all capital contributed to American Equity Life after September 30, 2013. American Equity Life's risk-based capital ratio was 344% at December 31, 2013. Under this agreement we are also required to maintain a maximum ratio of adjusted debt to total adjusted capital of 0.35.

Cash and cash equivalents of the parent holding company at June 30, 2014, was $152.8 million, which includes approximately $96.5 million in remaining net proceeds from the $400 million senior unsecured notes issue described below. In addition, we have a $140 million line of credit, with no borrowings outstanding, available through November 2017 for general corporate purposes of the parent company and its subsidiaries. We also have the ability to issue equity, debt or other types of securities through one or more methods of distribution under a currently effective shelf registration statement on Form S-3. The terms of any offering would be established at the time of the offering, subject to market conditions.

On July 17, 2013, we issued $400 million aggregate principal amount of senior unsecured notes due 2021 which bear interest at 6.625% per year and will mature on July 15, 2021. We used $15 million of the net proceeds from the issuance to repay the entire amount outstanding under our revolving credit facility and, $278 million of the net proceeds to pay a portion of the cash consideration component of the convertible note exchange offers discussed in Note 6 to our unaudited consolidated financial statements and Note 9 to our audited consolidated financial statements of our of our 2013 Annual Report on Form 10-K. We intend to use $96.5 million of remaining net proceeds from the notes issuance to tender for, redeem or repurchase the $77.6 million aggregate principal amount of convertible notes that were outstanding at June 30, 2014. The form and timing of any additional such activity will be dependent upon market conditions and other factors and there can be no assurance that any such transactions can be completed prior to the December 2014 call date for the 2029 notes or the September 2015 maturity date for the 2015 notes.

New Accounting Pronouncements

See Note 1 to our unaudited consolidated financial statements, which is incorporated by reference in this Item 2, for new accounting pronouncement disclosures that supplements the disclosure in Note 1 to the audited consolidated financial statements of our 2013 Annual Report on Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We seek to invest our available funds in a manner that will maximize shareholder value and fund future obligations to policyholders and debtors, subject to appropriate risk considerations. We seek to meet this objective through investments that: (i) consist substantially of investment grade fixed maturity securities; (ii) have projected returns which satisfy our spread targets; and (iii) have characteristics which support the underlying liabilities. Many of our products incorporate surrender charges, market interest rate adjustments or other features to encourage persistency.

We seek to maximize the total return on our available for sale investments through active investment management. Accordingly, we have determined that our available for sale portfolio of fixed maturity securities is available to be sold in response to: (i) changes in market interest rates; (ii) changes in relative values of individual securities and asset sectors; (iii) changes in prepayment risks; (iv) changes in credit quality outlook for certain securities; (v) liquidity needs: and (vi) other factors. An OTTI shall be considered to have occurred when we have an intention to sell available for sale securities in an unrealized loss position. If we do not intend to sell a debt security, we consider all available evidence to make an assessment of whether it is more likely than not that we will be required to sell the security before the recovery of its amortized cost basis. If it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis, an OTTI will be considered to have occurred.

50

Interest rate risk is our primary market risk exposure. Substantial and sustained increases and decreases in market interest rates can affect the profitability of our products, the fair value of our investments, and the amount of interest we pay on our floating rate subordinated debentures. Our floating rate trust preferred securities bear interest at the three month LIBOR plus 3.50% - 4.00%. Our outstanding balance of floating rate trust preferred securities was$164.5 millionat June 30, 2014, of which $85.5 million has been swapped to a fixed rate and $79.0 million has been capped for a term of seven years beginning March or July 2014 (see Note 5 to our unaudited consolidated financial statements). The profitability of most of our products depends on the spreads between interest yield on investments and rates credited on insurance liabilities. We have the ability to adjust crediting rates (caps, participation rates or asset fee rates for index annuities) on substantially all of our annuity liabilities at least annually (subject to minimum guaranteed values). In addition, substantially all of our annuity products have surrender and withdrawal penalty provisions designed to encourage persistency and to help ensure targeted spreads are earned. However, competitive factors, including the impact of the level of surrenders and withdrawals, may limit our ability to adjust or maintain crediting rates at levels necessary to avoid narrowing of spreads under certain market conditions.

A major component of our interest rate risk management program is structuring the investment portfolio with cash flow characteristics consistent with the cash flow characteristics of our insurance liabilities. We use models to simulate cash flows expected from our existing business under various interest rate scenarios. These simulations enable us to measure the potential gain or loss in fair value of our interest rate-sensitive financial instruments to evaluate the adequacy of expected cash flows from our assets to meet the expected cash requirements of our liabilities and to determine if it is necessary to lengthen or shorten the average life and duration of our investment portfolio. The "duration" of a security is the time weighted present value of the security's expected cash flows and is used to measure a security's sensitivity to changes in interest rates. When the durations of assets and liabilities are similar, exposure to interest rate risk is minimized because a change in value of assets should be largely offset by a change in the value of liabilities.

If interest rates were to increase 10% (34 basis points) from levels at June 30, 2014, we estimate that the fair value of our fixed maturity securities would decrease by approximately $871.5 million. The impact on stockholders' equity of such decrease (net of income taxes and certain adjustments for changes in amortization of deferred policy acquisition costs and deferred sales inducements) would be a decrease of $253.7 million in accumulated other comprehensive income and a decrease in stockholders' equity. The models used to estimate the impact of a 10% change in market interest rates incorporate numerous assumptions, require significant estimates and assume an immediate and parallel change in interest rates without any management of the investment portfolio in reaction to such change. Consequently, potential changes in value of our financial instruments indicated by the simulations will likely be different from the actual changes experienced under given interest rate scenarios, and the differences may be material. Because we actively manage our investments and liabilities, our net exposure to interest rates can vary over time. However, any such decreases in the fair value of our fixed maturity securities (unless related to credit concerns of the issuer requiring recognition of an other than temporary impairment) would generally be realized only if we were required to sell such securities at losses prior to their maturity to meet our liquidity needs, which we manage using the surrender and withdrawal provisions of our annuity contracts and through other means. See Financial Condition - Liquidity for Insurance Operations included in Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2013.

At June 30, 2014, 31% of our fixed income securities have call features of which, 0.5% ($0.1 billion) were subject to call redemption. Another 4% ($1.0 billion) will become subject to call redemption during the next twelve months. We have reinvestment risk related to these potential redemptions to the extent we cannot reinvest the net proceeds in assets with credit quality and yield characteristics similar to the redeemed bonds. Such reinvestment risk typically occurs in a declining rate environment. Should rates decline to levels which tighten the spread between our average portfolio yield and average cost of interest credited on annuity liabilities, we have the ability to reduce crediting rates (caps, participation rates or asset fees for index annuities) on most of our annuity liabilities to maintain the spread at our targeted level. At June 30, 2014, approximately 99% of our annuity liabilities were subject to annual adjustment of the applicable crediting rates at our discretion, limited by minimum guaranteed crediting rates specified in the policies.

We purchase call options on the applicable indices to fund the annual index credits on our fixed index annuities. These options are primarily one-year instruments purchased to match the funding requirements of the underlying policies. Fair value changes associated with those investments are substantially offset by an increase or decrease in the amounts added to policyholder account balances for fixed index products. For the six months ended June 30, 2014 and 2013, the annual index credits to policyholders on their anniversaries were $507.8 million and $377.1 million, respectively. Proceeds received at expiration of these options related to such credits were $506.7 million and $380.0 million for the six months ended June 30, 2014 and 2013, respectively.

Within our hedging process we purchase options out of the money to the extent of anticipated minimum guaranteed interest on index policies. On the anniversary dates of the index policies, we purchase new one-year call options to fund the next annual index credits. The risk associated with these prospective purchases is the uncertainty of the cost, which will determine whether we are able to earn our spread on our index business. We manage this risk through the terms of our fixed index annuities, which permit us to change caps, participation rates and asset fees, subject to contractual features. By modifying caps, participation rates or asset fees, we can limit option costs to budgeted amounts, except in cases where the contractual features would prevent further modifications. Based upon actuarial testing which we conduct as a part of the design of our index products and on an ongoing basis, we believe the risk that contractual features would prevent us from controlling option costs is not material.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In accordance with the Securities Exchange Act Rules 13a-15 and 15d-15, our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were effective as of June 30, 2014 in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act.

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2014 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See Note 7 - Commitments and Contingencies to the unaudited consolidated financial statements, which is incorporated by reference in this Item 1, for litigation and regulatory disclosures that supplements the disclosure in Note 13 - Commitments and Contingencies to the audited consolidated financial statements of our 2013 Annual Report on Form 10-K.

Item 1A. Risk Factors

Our 2013 Annual Report on Form 10-K described our Risk Factors. There have been no material changes to the Risk Factors during the six months ended June 30, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no issuer purchases of equity securities for the quarter ended June 30, 2014.

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Item 6. Exhibits

Exhibit No.	Description	Method of Filing
12.1	Ratio of Earnings to Fixed Charges	Filed herewith
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
101.INS	XBRL Instance Document	*
101.SCH	XBRL Taxonomy Extension Schema Document	*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	*
*	Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities and Exchange Act of 1934, as amended and otherwise are not subject to liability under those sections.

54

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 7, 2014	AMERICAN EQUITY INVESTMENT LIFE
	HOLDING COMPANY
	By:	/s/ John M. Matovina
		John M. Matovina, Chief Executive Officer and President
		(Principal Executive Officer)
	By:	/s/ Ted M. Johnson
		Ted M. Johnson, Chief Financial Officer and Treasurer
		(Principal Financial Officer)
	By:	/s/ Scott A. Samuelson
		Scott A. Samuelson, Vice President - Controller
		(Principal Accounting Officer)

55

EX-12.1

Exhibit 12.1

Ratio of Earnings to Fixed Charges

	Six Months Ended		Year Ended December 31,
	June 30, 2014		2013		2012		2011		2010		2009
	(Dollars in thousands)
Consolidated income before income taxes	$	40,958	$	389,332	$	85,989	$	132,914	$	65,266	$	86,164
Interest sensitive and index product benefits and amortization of deferred sales inducements	740,981		1,525,980		895,636		846,878		794,803		382,771
Interest expense on notes payable	19,385		38,870		28,479		31,633		22,125		14,853
Interest expense on subordinated debentures	6,032		12,088		13,458		13,977		14,906		15,819
Interest expense on amounts due under repurchase agreements and other interest expense	10		139		—		30		—		534
Interest portion of rental expense	422		797		697		665		648		570
Consolidated earnings	$	807,788	$	1,967,206	$	1,024,259	$	1,026,097	$	897,748	$	500,711
Interest sensitive and index product benefits and amortization of deferred sales inducements	$	740,981	$	1,525,980	$	895,636	$	846,878	$	794,803	$	382,771
Interest expense on notes payable	19,385		38,870		28,479		31,633		22,125		14,853
Interest expense on subordinated debentures	6,032		12,088		13,458		13,977		14,906		15,819
Interest expense on amounts due under repurchase agreements and other interest expense	10		139		—		30		—		534
Interest portion of rental expense	422		797		697		665		648		570
Combined fixed charges	$	766,830	$	1,577,874	$	938,270	$	893,183	$	832,482	$	414,547
Ratio of consolidated earnings to fixed charges	1.1		1.2		1.1		1.1		1.1		1.2
Ratio of consolidated earnings to fixed charges, both excluding interest sensitive and index product benefits and amortization of deferred sales inducements	2.6		8.5		3.0		3.9		2.7		3.7

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John M. Matovina, certify that:

1. I have reviewed this quarterly report on Form 10-Q of American Equity Investment Life Holding Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 7, 2014	By:	/s/ JOHN M. MATOVINA
			John M. Matovina, Chief Executive Officer and President (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ted M. Johnson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of American Equity Investment Life Holding Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	August 7, 2014	By:	/s/ TED M. JOHNSON
			Ted M. Johnson, Chief Financial Officer and Treasurer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of American Equity Investment Life Holding Company (the "Company") on Form 10-Q for the period ended June 30, 2014 as filed with the Securities and Exchange Commission on or about the date hereof (the "Report"), I, John M. Matovina, Chief Executive Officer and President of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;

and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 7, 2014	By:	/s/ JOHN M. MATOVINA
			John M. Matovina, Chief Executive Officer and President (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of American Equity Investment Life Holding Company (the "Company") on Form 10-Q for the period ended June 30, 2014 as filed with the Securities and Exchange Commission on or about the date hereof (the "Report"), I, Ted M. Johnson, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;

and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 7, 2014	By:	/s/ TED M. JOHNSON
			Ted M. Johnson, Chief Financial Officer and Treasurer (Principal Financial Officer)

XML

Investments (Other Than Temporary Impairments by Asset Type) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013 Securities
Other than Temporary Impairment Losses, Investments [Abstract]
Other than temporary impairment, number of securities				9
Total OTTI losses	$ 0	$ (2,775)	$ 0	$ (4,964)
Portion of OTTI losses recognized from other comprehensive income	(594)	0	(1,499)	(1,048)
Net OTTI losses recognized in operations	(594)	(2,775)	(1,499)	(6,012)
Residential Mortgage Backed Securities [Member]
Other than Temporary Impairment Losses, Investments [Abstract]
Other than temporary impairment, number of securities	3		5	5
Total OTTI losses	0		0	0
Portion of OTTI losses recognized from other comprehensive income	(594)		(1,499)	(1,048)
Net OTTI losses recognized in operations	(594)		(1,499)	(1,048)
United States Government Sponsored Agencies [Member]
Other than Temporary Impairment Losses, Investments [Abstract]
Other than temporary impairment, number of securities		2		2
Total OTTI losses		(2,775)		(2,775)
Portion of OTTI losses recognized from other comprehensive income		0		0
Net OTTI losses recognized in operations		(2,775)		(2,775)
Corporate Securities [Member] | Industrial [Member]
Other than Temporary Impairment Losses, Investments [Abstract]
Other than temporary impairment, number of securities				1
Total OTTI losses				(1,761)
Portion of OTTI losses recognized from other comprehensive income				0
Net OTTI losses recognized in operations				(1,761)
Equity Securities [Member] | Industrial [Member]
Other than Temporary Impairment Losses, Investments [Abstract]
Other than temporary impairment, number of securities				1
Total OTTI losses				(428)
Portion of OTTI losses recognized from other comprehensive income				0
Net OTTI losses recognized in operations				$ (428)

XML

Derivative Instruments (Change in Fair Value of Derivatives Included in the Consolidated Statement of Operations) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Derivative Instruments, Gain (Loss) [Line Items]
Change in fair value of derivatives	$ 270,883	$ 64,040	$ 319,376	$ 438,002
Change in fair value of embedded derivatives	80,935	(408,409)	173,554	(45,137)
Call Options [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Change in fair value of derivatives	273,769	58,200	345,242	402,854
2015 Notes Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Change in fair value of derivatives	100	197	(20,301)	28,295
Interest Rate Swap [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Change in fair value of derivatives	(1,848)	3,802	(3,250)	4,535
Interest Rate Caps [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Change in fair value of derivatives	(1,138)	1,841	(2,315)	2,318
2015 Notes Embedded Conversion Derivative [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Change in fair value of embedded derivatives	(4,132)	197	(24,533)	28,295
Fixed Index Annuities - Embedded Derivatives [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Change in fair value of embedded derivatives	$ 85,067	$ (408,606)	$ 198,087	$ (73,432)

XML

Mortgage Loans on Real Estate (Mortgage Loans by Credit Quality Indicator) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Mortgage Loans on Real Estate [Abstract]
Performing	$ 2,559,419	$ 2,593,276
In workout	2,213	6,248
Delinquent	0	0
Collateral dependent	9,318	8,174
Principal outstanding	$ 2,570,950	$ 2,607,698

XML

Mortgage Loans on Real Estate (Impaired Mortgage Loans on Real Estate by Basis of Impairment) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Mortgage Loans on Real Estate [Abstract]
Individually evaluated for impairment	$ 42,963	$ 47,018
Collectively evaluated for impairment	2,527,987	2,560,680
Principal outstanding	$ 2,570,950	$ 2,607,698

XML

Investments (Net Unrealized Gains on Available for Sale Fixed Maturity Securities and Equity Securities Reported as a Separate Component of Stockholders' Equity) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Investments [Abstract]
Net unrealized gains on available for sale fixed maturity securities and equity securities	$ 1,776,883	$ 82,992
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements	(956,057)	(46,588)
Deferred income tax valuation allowance reversal	22,534	22,534
Deferred income tax expense	(287,289)	(12,742)
Net unrealized gains reported as accumulated other comprehensive income	$ 556,071	$ 46,196

XML

Derivative Instruments (Interest Rate Caps) (Details) (Interest Rate Caps [Member], SunTrust [Member], Not Designated as Hedging Instrument [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Derivative [Line Items]
Notional amount	$ 79,000
Derivative assets	3,788	6,103
Interest Rate Caps, Maturity Date, July 7, 2021, 2.50% [Member]
Derivative [Line Items]
Notional amount	40,000
Cap rate	2.50%
Derivative assets	1,907	3,073
Interest Rate Caps, Maturity Date, July 8, 2021, 2.50% [Member]
Derivative [Line Items]
Notional amount	12,000
Cap rate	2.50%
Derivative assets	572	923
Interest Rate Caps, Maturity Date, July 29, 2021, 2.50% [Member]
Derivative [Line Items]
Notional amount	27,000
Cap rate	2.50%
Derivative assets	$ 1,309	$ 2,107

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Fair Values of Financial Instruments (Narrative) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Level 1 to Level 2 transfers, amount	$ 0		$ 0		$ 0
Liabilities, Level 1 to Level 2 transfers, amount	0		0		0
Assets, Level 2 to Level 1 transfers, amount	0		0		0
Liabilities, Level 2 to Level 1 transfers, amount	0		0		0
Assets, transfers into Level 3, amount	0	0	0	0
Liabilities, transfers into Level 3, amount	0	0	0	0
Assets, transfers out of Level 3, amount	0	0	0	0
Liabilities, transfers out of Level 3, amount	0	0	0	0
Other investments	221,459,000		221,459,000		215,042,000
Fair Value, Sensitivity, Increase in Discount Rate by 10 Percent [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value, sensitivity, discount rate adjustment (basis points)	100		100
Fixed index annuities embedded derivative, adjustment due to change in discount rate			(350,000,000)
Deferred policy scquisition costs and deferred sales inducements, combined balance, adjustment due to change in discount rate			(209,200,000)
Fair Value, Sensitivity, Decrease in Discount Rate by 10 Percent [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value, sensitivity, discount rate adjustment (basis points)	100		100
Fixed index annuities embedded derivative, adjustment due to change in discount rate			391,700,000
Deferred policy scquisition costs and deferred sales inducements, combined balance, adjustment due to change in discount rate			230,400,000
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other investments	$ 0		$ 0

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Mortgage Loans on Real Estate (Schedule of Impaired Financing Receivables) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Mortgage loans with an allowance, recorded investment	$ 25,681		$ 25,681		$ 30,171
Mortgage loans with no related allowance, recorded investment	2,656		2,656		3,264
Impaired mortgage loans, recorded investment	28,337		28,337		33,435
Mortgage loans with an allowance, unpaid principal balance	42,963		42,963		47,018
Mortgage loans with no related allowance, unpaid principal balance	2,656		2,656		3,264
Impaired mortgage loans, unpaid principal balance	45,619		45,619		50,282
Mortgage loans with an allowance, related allowance	(17,282)		(17,282)		(16,847)
Mortgage loans with an allowance, average recorded investment	27,054	26,232	27,236	26,885
Mortgage loans with no related allowance, average recorded investment	2,656	18,699	2,656	18,739
Impaired mortgage loans, average recorded investment	29,710	44,931	29,892	45,624
Mortgage loans with an allowance, interest income recognized	600	426	1,235	862
Mortgage loans with no related allowance, interest income recognized	13	266	0	528
Impaired mortgage loans, interest income reoognized	$ 613	$ 692	$ 1,235	$ 1,390

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Mortgage Loans on Real Estate (Narrative) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014 loans portfolio_segment	Jun. 30, 2013 loans	Jun. 30, 2014 loans portfolio_segment	Jun. 30, 2013 loans	Dec. 31, 2013
Mortgage Loans on Real Estate [Abstract]
Mortgage loans on real estate	$ 2,543,810,000		$ 2,543,810,000		$ 2,581,082,000
Commitments outstanding	38,600,000		38,600,000
Number of portfolio segments that make up financing receivables	1		1
Number of mortgage loans satisfied by foreclosure	4	0	5	1
Impaired mortgage loans, workout terms, interest only payments, six month terms			6 months
Impaired mortgage loans, workout terms, interest only payments, twelve month terms			12 months
Impaired mortgage loans, workout terms, cash flow sweep, number of months			12 months
Number of days past due, delinquent status			60 days
Number of days past due, non-accrual status			90 days
Outstanding principal of loans in a non-accrual status	$ 9,300,000		$ 9,300,000		$ 8,200,000

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Investments (Net Realized Gains (Losses) on Invesments, Excluding Other Than Temporary Impairments) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Gain (Loss) on Investments [Line Items]
Net realized gains (losses) on investments, excluding other than temporary impairment (OTTI) losses	$ (2,230)	$ 15,689	$ (2,944)	$ 26,274
Fixed Maturity Securities [Member]
Gain (Loss) on Investments [Line Items]
Gross realized gains	1,173	7,628	1,357	20,643
Gross realized losses	(71)	(823)	(762)	(3,010)
Gross realized gains (losses), excluding other than temporary impairments	1,102	6,805	595	17,633
Equity Securities [Member]
Gain (Loss) on Investments [Line Items]
Gross realized gains	0	9,571	0	9,571
Other Investments [Member]
Gain (Loss) on Investments [Line Items]
Gain on sale of real estate	282	715	1,038	1,304
Loss on sale of real estate	(231)	0	(231)	(466)
Impairment losses on real estate	0	(145)	(799)	(145)
Gain (loss) on other investments	51	570	8	693
Mortgage Loans on Real Estate [Member]
Gain (Loss) on Investments [Line Items]
Increase in allowance for credit losses	$ (3,383)	$ (1,257)	$ (3,547)	$ (1,623)

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Derivative Instruments (Narrative) (Details) (USD $) Share data in Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended			1 Months Ended	6 Months Ended			6 Months Ended		6 Months Ended	3 Months Ended	6 Months Ended
	Jun. 30, 2014 counterparties partial_unwind_agreement	Jun. 30, 2013	Jun. 30, 2014 counterparties partial_unwind_agreement	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 2015 Notes Hedges [Member]	Sep. 30, 2010 2015 Notes Hedges [Member] counterparties	Sep. 30, 2010 2015 Warrants [Member] counterparties	Jun. 30, 2014 2015 Warrants [Member]	Jun. 30, 2014 September 2015 Notes [Member]	Sep. 30, 2010 September 2015 Notes [Member]	Jun. 30, 2014 SunTrust [Member] Not Designated as Hedging Instrument [Member]	Jun. 30, 2014 SunTrust [Member] Three Month London Interbank Offered Rate (LIBOR) [Member] Not Designated as Hedging Instrument [Member]	Jun. 30, 2014 Call Options [Member]	Jun. 30, 2014 Change in Assumptions for Fair Value [Member]	Jun. 30, 2014 Change in Assumptions for Fair Value [Member]
Derivative [Line Items]
Investment maturity period														1 year
Derivative collateral	$ 849,700,000		$ 849,700,000		$ 818,200,000							$ 2,000,000
Credit risk, maximum exposure			80,200,000		71,700,000
Change in fair value of embedded derivatives	(80,935,000)	408,409,000	(173,554,000)	45,137,000											(62,600,000)	(62,600,000)
Net income	36,744,000	120,113,000	26,991,000	146,144,000											14,800,000	14,800,000
Earnings per common share - assuming dilution	$ 0.46	$ 1.71	$ 0.34	$ 2.09											$ 0.19	$ 0.19
Derivative, cap interest rate													2.50%
Interest rate swaps and caps, duration												7 years
Principal amount of convertible senior notes payable at issuance											200,000,000
Debt instrument, interest rate, stated percentage										3.50%
Number of counterparties							2	2
Derivative, conversion spread, shares of common stock						3.7	16.0
Derivative asset, strike price						$ 12.35	$ 12.50
Warrants, number of securities called by warrants								16.0	3.7
Warrants, strike price								$ 16.00	$ 15.75
Proceeds from issuance of warrants								15,600,000
Warrants, deliverable								11.7
Number of partial unwind agreements	4		4
Number of counterparties, partial unwind agreements	2		2
Net cash received from counterparties for settlement of call options and warrants	$ 10,400,000

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Notes Payable (Line of Credit Narrative) (Details) (2013 Line of Credit [Member], USD $)	6 Months Ended
	Jun. 30, 2014 occasions guarantor	Dec. 31, 2013
2013 Line of Credit [Member]
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity	$ 140,000,000
Line of credit, length of credit agreement, years	4 years
Minimum risk-based capital ratio	275.00%
Maximum debt to capital ratio	0.35
Minimum capital to be retained	80.00%
Minimum portion of net income to be retained	50.00%
Minimum capital contributions to be retained	50.00%
Line of credit, number of occasions borrowing capacity can be increased	3
Line of credit, additional borrowing capacity, aggregate amount	50,000,000
Line of credit, maturity date extension available, years	1 year
Line of credit, number of guarantors	0
Line of credit, amount outstanding	$ 0	$ 0

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Mortgage Loans on Real Estate (Real Estate Owned) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Real Estate Owned [Roll Forward]
Real estate owned at beginning of period	$ 20,592	$ 28,764	$ 22,844	$ 33,172
Real estate acquired in satisfaction of mortgage loans	8,294	0	10,007	844
Additions	0	480	0	480
Sales	(4,118)	(2,333)	(7,148)	(7,413)
Impairments	0	(145)	(799)	(145)
Depreciation	(162)	(157)	(298)	(329)
Real estate owned at end of period	$ 24,606	$ 26,609	$ 24,606	$ 26,609

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Significant Accounting Policies

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Consolidation and Basis of Presentation

The accompanying consolidated financial statements of American Equity Investment Life Holding Company (“we”, “us” or “our”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by GAAP for complete financial statements. The consolidated financial statements reflect all adjustments, consisting only of normal recurring items, which are necessary to present fairly our financial position and results of operations on a basis consistent with the prior audited consolidated financial statements. Operating results for the three and six month periods ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ended December 31, 2014. All significant intercompany accounts and transactions have been eliminated. The preparation of financial statements requires the use of management estimates. For further information related to a description of areas of judgment and estimates and other information necessary to understand our financial position and results of operations, refer to the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2013.

As previously reported in the notes to audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013, we identified certain classification errors related to the presentation of premiums and other considerations, insurance policy benefits and change in future policy benefits and interest sensitive and index product benefits related to life contingent immediate annuities in our audited consolidated statements of operations. Consistent with that presentation, we have revised the unaudited consolidated statements of operations for the three and six months ended June 30, 2013. The changes resulted in increases to premiums and other considerations of $8.6 million and $19.0 million and insurance policy benefits and change in future policy benefits of $11.6 million and $24.7 million, as well as decreases to interest sensitive and index product benefits of $3.0 million and $5.7 million for the three and six months ended June 30, 2013, respectively. These changes had no impact on the consolidated balance sheets, net income or stockholders' equity.

Reclassifications have been made to prior period unaudited consolidated financial statements to conform to the June 30, 2014 presentation.

Adopted Accounting Pronouncements

There were no accounting pronouncements that were adopted during the current period.

New Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board ("FASB") issued an accounting standards update ("ASU") that requires that a performance target in a share based payment arrangement that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This ASU will be effective for us on January 1, 2016, and early adoption is permitted, but it is not expected to have a material impact on our consolidated financial statements.

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Notes Payable (Repurchase Agreements Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Debt Disclosure [Abstract]
Repurchase agreement, maximum amount borrowed			$ 138.7	$ 160.4
Repurchase agreement, average borrowings	$ 0	$ 10.0	$ 13.7	$ 5.0
Repurchase agreement, weighted average interest rate		0.32%	0.15%	0.32%

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Mortgage Loans on Real Estate (Summary of Mortgage Loan Portfolio) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Mortgage Loans on Real Estate [Abstract]
Principal outstanding	$ 2,570,950	$ 2,607,698
Loan loss allowance	(26,582)	(26,047)
Deferred prepayment fees	(558)	(569)
Mortgage loans on real estate	$ 2,543,810	$ 2,581,082

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Fair Values of Financial Instruments (Reconciliation of Beginning and Ending Balances of Level 3 Liabilities) (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Fair Value, Measurements, Recurring [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 4,755,913	$ 3,848,902	$ 4,406,163	$ 3,337,556
Premiums less benefits	425,776	425,671	797,729	672,393
Change in fair value, net	(61,866)	(527,521)	(84,069)	(262,897)
Ending balance	$ 5,119,823	$ 3,747,052	$ 5,119,823	$ 3,747,052

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Fair Values of Financial Instruments (Reconciliation of Beginning and Ending Balances of Level 3 Assets) (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 1,080	$ 1,724	$ 1,376	$ 1,812
Principal returned	(114)	(193)	(192)	(561)
Amortization of premium/accretion of discount	(138)	5	(165)	134
Total gains (losses) (realized/unrealized): included in other comprehensive income (loss)	45	5	(146)	156
Total gains (losses) (realized/unrealized): included in operations	(205)	0	(205)	0
Ending balance	$ 668	$ 1,541	$ 668	$ 1,541

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Derivative Instruments (Interest Rate Swap) (Details) (Interest Rate Swap [Member], Interest Rate Swap, Maturity Date, March 15, 2021, 2.415% [Member], SunTrust [Member], Not Designated as Hedging Instrument [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Interest Rate Swap [Member] | Interest Rate Swap, Maturity Date, March 15, 2021, 2.415% [Member] | SunTrust [Member] | Not Designated as Hedging Instrument [Member]
Derivative [Line Items]
Notional amount	$ 85,500
Pay rate	2.415%
Derivative liabilities	(1,983)
Derivative assets		$ 712

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Mortgage Loans on Real Estate (Mortgage Loan Portfolio Summarized by Geographic Region and Property Type) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Mortgage Loans on Real Estate [Line Items]
Principal outstanding	$ 2,570,950	$ 2,607,698
Percent	100.00%	100.00%
Office [Member]
Mortgage Loans on Real Estate [Line Items]
Principal outstanding	533,472	590,414
Percent	20.80%	22.60%
Medical Office [Member]
Mortgage Loans on Real Estate [Line Items]
Principal outstanding	104,025	125,703
Percent	4.00%	4.80%
Retail [Member]
Mortgage Loans on Real Estate [Line Items]
Principal outstanding	729,497	711,364
Percent	28.40%	27.30%
Industrial/Warehouse [Member]
Mortgage Loans on Real Estate [Line Items]
Principal outstanding	681,540	673,449
Percent	26.50%	25.80%
Hotel [Member]
Mortgage Loans on Real Estate [Line Items]
Principal outstanding	43,784	61,574
Percent	1.70%	2.40%
Apartment [Member]
Mortgage Loans on Real Estate [Line Items]
Principal outstanding	340,621	291,823
Percent	13.20%	11.20%
Mixed Use/Other [Member]
Mortgage Loans on Real Estate [Line Items]
Principal outstanding	138,011	153,371
Percent	5.40%	5.90%
East [Member]
Mortgage Loans on Real Estate [Line Items]
Principal outstanding	774,014	765,717
Percent	30.10%	29.40%
Middle Atlantic [Member]
Mortgage Loans on Real Estate [Line Items]
Principal outstanding	145,663	156,489
Percent	5.70%	6.00%
Mountain [Member]
Mortgage Loans on Real Estate [Line Items]
Principal outstanding	328,284	356,246
Percent	12.80%	13.70%
New England [Member]
Mortgage Loans on Real Estate [Line Items]
Principal outstanding	14,700	21,324
Percent	0.60%	0.80%
Pacific [Member]
Mortgage Loans on Real Estate [Line Items]
Principal outstanding	303,922	317,431
Percent	11.80%	12.20%
South Atlantic [Member]
Mortgage Loans on Real Estate [Line Items]
Principal outstanding	500,612	483,852
Percent	19.50%	18.50%
West North Central [Member]
Mortgage Loans on Real Estate [Line Items]
Principal outstanding	338,343	351,794
Percent	13.10%	13.50%
West South Central [Member]
Mortgage Loans on Real Estate [Line Items]
Principal outstanding	$ 165,412	$ 154,845
Percent	6.40%	5.90%

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Investments (Narrative) (Details) (USD $)	1 Months Ended	6 Months Ended
	Apr. 30, 2014	Jun. 30, 2014 Securities	Jun. 30, 2013	Dec. 31, 2013 Securities
Investments [Abstract]
Fixed income securities with call features, percentage		31.00%
Fixed income securities with call features, currently callable, percentage		0.50%
Fixed income securities with call features, currently callable, amount		$ 100,000,000
Fixed income securities with call features, callable during next 12 months, percentage		4.00%
Fixed income securities with call features, callable during next 12 months, amount		1,000,000,000
Proceeds from calls of United States Government securities	500,000,000
Percentage of fixed maturity portfolio rated investment grade based on NAIC designations		98.00%		98.00%
Number of individual securities with unrealized losses		450		1,047
Percentage of unrealized losses on fixed maturity securities where securities are rated investment grade		89.00%		95.00%
Investment Holdings [Line Items]
Available for sale securities, amortized cost		27,540,945,000		26,527,730,000
Scheduled principal repayments, calls and tenders for available for sale securities		939,430,000	2,292,959,000
Fixed Maturity Securities [Member]
Investment Holdings [Line Items]
Scheduled principal repayments, calls and tenders for available for sale securities		809,000,000	1,600,000,000
Other Asset Backed Securities [Member] | Investments, External Credit Rating, Non Investment Grade [Member]
Investment Holdings [Line Items]
Available for sale securities, number of securities in unrealized loss positions		0
Residential Mortgage Backed Securities, Alt-A Sector [Member] | Residential Mortgage Backed Securities [Member]
Investment Holdings [Line Items]
Available for sale securities, number of securities in unrealized loss positions		35
Available for sale securities, amortized cost		265,400,000
Available for sale securities, fair value		294,700,000
Available For Sale Securities [Member]
Investment Holdings [Line Items]
Proceeds from sales of available for sale securities		130,400,000	820,200,000
Available For Sale Securities [Member] | Fixed Maturity Securities [Member]
Investment Holdings [Line Items]
Available for sale securities, fair value		29,317,572,000		26,610,447,000
Available For Sale Securities [Member] | Residential Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member]
Investment Holdings [Line Items]
Available for sale securities, fair value		1,870,565,000		1,971,960,000
Available For Sale Securities [Member] | Other Asset Backed Securities [Member] | Fixed Maturity Securities [Member]
Investment Holdings [Line Items]
Available for sale securities, fair value		$ 1,040,551,000		$ 1,034,476,000

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Investments (Schedule of Amortized Cost and Fair Value of Fixed Maturity and Equity Securities) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Investment Holdings [Line Items]
Held for investment, amortized cost	$ 76,342	$ 76,255
Held for investment	66,571	60,840
Fixed Maturity Securities [Member] | Available For Sale Securities [Member]
Investment Holdings [Line Items]
Available for sale, amortized cost	27,540,945	26,527,730
Available for sale, gross unrealized gains	1,959,362	928,699
Available for sale, gross unrealized losses	(182,735)	(845,982)
Available for sale securities, fair value	29,317,572	26,610,447
Equity Securities, Available For Sale [Member] | Available For Sale Securities [Member]
Investment Holdings [Line Items]
Available for sale, amortized cost	7,506	7,503
Available for sale, gross unrealized gains	256	275
Available for sale, gross unrealized losses	0	0
Available for sale securities, fair value	7,762	7,778
United States Government Full Faith and Credit [Member] | Fixed Maturity Securities [Member] | Available For Sale Securities [Member]
Investment Holdings [Line Items]
Available for sale, amortized cost	38,590	44,852
Available for sale, gross unrealized gains	310	367
Available for sale, gross unrealized losses	(417)	(2,294)
Available for sale securities, fair value	38,483	42,925
United States Government Sponsored Agencies [Member] | Fixed Maturity Securities [Member] | Available For Sale Securities [Member]
Investment Holdings [Line Items]
Available for sale, amortized cost	1,199,787	1,313,776
Available for sale, gross unrealized gains	21,181	1,875
Available for sale, gross unrealized losses	(35,627)	(121,362)
Available for sale securities, fair value	1,185,341	1,194,289
United States Municipalities, States and Territories [Member] | Fixed Maturity Securities [Member] | Available For Sale Securities [Member]
Investment Holdings [Line Items]
Available for sale, amortized cost	3,188,026	3,181,032
Available for sale, gross unrealized gains	324,759	164,785
Available for sale, gross unrealized losses	(6,587)	(39,074)
Available for sale securities, fair value	3,506,198	3,306,743
Foreign Government Obligations [Member] | Fixed Maturity Securities [Member] | Available For Sale Securities [Member]
Investment Holdings [Line Items]
Available for sale, amortized cost	181,120	86,112
Available for sale, gross unrealized gains	13,335	8,907
Available for sale, gross unrealized losses	(1,492)	(3,462)
Available for sale securities, fair value	192,963	91,557
Corporate Securities [Member] | Fixed Maturity Securities [Member] | Available For Sale Securities [Member]
Investment Holdings [Line Items]
Available for sale, amortized cost	17,916,567	17,142,118
Available for sale, gross unrealized gains	1,371,622	606,948
Available for sale, gross unrealized losses	(100,814)	(516,029)
Available for sale securities, fair value	19,187,375	17,233,037
Corporate Securities [Member] | Fixed Maturity Securities [Member] | Held For Investment Securities [Member]
Investment Holdings [Line Items]
Held for investment, amortized cost	76,342	76,255
Held for investment, gross unrealized gains	0	0
Held for investment, gross unrealized losses	(9,771)	(15,415)
Held for investment	66,571	60,840
Residential Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member] | Available For Sale Securities [Member]
Investment Holdings [Line Items]
Available for sale, amortized cost	1,747,233	1,895,913
Available for sale, gross unrealized gains	137,213	119,230
Available for sale, gross unrealized losses	(13,881)	(43,183)
Available for sale securities, fair value	1,870,565	1,971,960
Commercial Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member] | Available For Sale Securities [Member]
Investment Holdings [Line Items]
Available for sale, amortized cost	2,249,396	1,821,988
Available for sale, gross unrealized gains	56,897	3,287
Available for sale, gross unrealized losses	(10,197)	(89,815)
Available for sale securities, fair value	2,296,096	1,735,460
Other Asset Backed Securities [Member] | Fixed Maturity Securities [Member] | Available For Sale Securities [Member]
Investment Holdings [Line Items]
Available for sale, amortized cost	1,020,226	1,041,939
Available for sale, gross unrealized gains	34,045	23,300
Available for sale, gross unrealized losses	(13,720)	(30,763)
Available for sale securities, fair value	$ 1,040,551	$ 1,034,476

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Operating activities
Net income	$ 26,991	$ 146,144
Adjustments to reconcile net income to net cash provided by operating activities:
Interest sensitive and index product benefits	684,966	556,171
Amortization of deferred sales inducements	56,015	149,367
Annuity product charges	(54,519)	(44,992)
Change in fair value of embedded derivatives	173,554	(45,137)
Change in traditional life and accident and health insurance reserves	1,323	9,487
Policy acquisition costs deferred	(199,978)	(205,519)
Amortization of deferred policy acquisition costs	74,278	215,500
Provision for depreciation and other amortization	5,398	9,356
Amortization of discounts and premiums on investments	(2,424)	9,546
Realized gains/losses on investments and net OTTI losses recognized in operations	4,443	(20,262)
Change in fair value of derivatives	(319,853)	(438,002)
Deferred income taxes	(42,918)	38,781
Loss on extinguishment of debt	10,551	589
Share-based compensation	620	3,011
Change in accrued investment income	(2,400)	(25,859)
Change in income taxes recoverable/payable	(37,087)	(8,483)
Change in other assets	(80)	(296)
Change in other policy funds and contract claims	(30,857)	(20,425)
Change in collateral held for derivatives	81,341	164,269
Change in other liabilities	(32,286)	475
Other	(1,697)	(2,457)
Net cash provided by operating activities	395,381	491,264
Sales, maturities, or repayments of investments:
Fixed maturity securities - available for sale	939,430	2,292,959
Equity securities - available for sale	0	44,829
Mortgage loans on real estate	217,785	266,539
Derivative instruments	532,867	409,050
Other investments	13,245	11,737
Acquisition of investments:
Fixed maturity securities - available for sale	(1,993,092)	(4,962,314)
Mortgage loans on real estate	(193,731)	(228,735)
Derivative instruments	(227,024)	(190,997)
Other investments	(5,598)	(19,594)
Purchases of property, furniture and equipment	(622)	(288)
Net cash used in investing activities	(716,740)	(2,376,814)
Financing activities
Receipts credited to annuity and single premium universal life policyholder account balances	1,950,707	2,033,484
Coinsurance deposits	14,113	15,960
Return of annuity policyholder account balances	(944,679)	(829,047)
Financing fees incurred and deferred	(100)	(1,153)
Proceeds from notes payable	0	15,000
Repayment of notes payable	(119,677)	(28,243)
Net proceeds from settlement of notes hedges and warrants	10,401	0
Proceeds from amounts due under repurchase agreements	0	160,436
Excess tax benefits realized from share-based compensation plans	3,776	380
Proceeds from issuance of common stock	8,041	12,284
Change in checks in excess of cash balance	(34,219)	(15,207)
Net cash provided by financing activities	888,363	1,363,894
Increase (decrease) in cash and cash equivalents	567,004	(521,656)
Cash and cash equivalents at beginning of period	897,529	1,268,545
Cash and cash equivalents at end of period	1,464,533	746,889
Cash paid during period for interest:
Interest expense	22,097	12,595
Cash paid during period for income taxes:
Income taxes	68,423	47,700
Non-cash operating activity:
Deferral of sales inducements	155,957	164,931
Non-cash investing and financing activities:
Real estate acquired in satisfaction of mortgage loans	10,007	844
Common stock issued in extinguishment of debt	$ 56,292	$ 3,367

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Investments (Fixed Maturity Securities by Contractual Maturity) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Available for sale securities, due in one year or less, amortized cost	$ 54,110
Available for sale securities, due after one year through five years, amortized cost	1,126,677
Available for sale securities, due after five years through ten years, amortized cost	8,235,605
Available for sale securities, due after ten years through twenty years, amortized cost	6,561,087
Available for sale securities, due after twenty years, amortized cost	6,546,611
Available for sale securities, securities with a single maturity date, amortized cost	22,524,090
Available for sale securities, amortized cost	27,540,945
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Available for sale securities, due in one year or less, fair value	55,291
Available for sale securities, due after one year through five years, fair value	1,283,155
Available for sale securities, due after five years through ten years, fair value	8,498,193
Available for sale securities, due after ten years through twenty years, fair value	6,996,599
Available for sale securities, due after twenty years, fair value	7,277,122
Available for sale securities, securities with a single maturity date, fair value	24,110,360
Available for sale securities, fair value	29,317,572	26,610,447
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract]
Held for investment securities, due in one year or less, amortized cost	0
Held for investment securities, due after one year through five years, amortized cost	0
Held for investment securities, due after five years through ten years, amortized cost	0
Held for investment securities, due after ten years through twenty years, amortized cost	0
Held for investment securities, due after twenty years, amortized cost	76,342
Held for investment securities, securities with a single maturity date, amortized cost	76,342
Held for investment, amortized cost	76,342	76,255
Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Held for investment securities, due in one year or less, fair value	0
Held for investment securities, due after one year through five years, fair value	0
Held for investment securities, due after five years through ten years, fair value	0
Held for investment securities, due after ten years through twenty years, fair value	0
Held for investment securities, due after twenty years, fair value	66,571
Held for investment securities, securities with a single maturity date, fair value	66,571
Held for investment	66,571	60,840
Residential Mortgage Backed Securities [Member]
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Available for sale securities, securities without a single maturity date, amortized cost	1,747,233
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Available for sale securities, securities without a single maturity date, fair value	1,870,565
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract]
Held for investment securities, securities without a single maturity date, amortized cost	0
Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Held for investment securities, securities without a single maturity date, fair value	0
Commercial Mortgage Backed Securities [Member]
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Available for sale securities, securities without a single maturity date, amortized cost	2,249,396
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Available for sale securities, securities without a single maturity date, fair value	2,296,096
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract]
Held for investment securities, securities without a single maturity date, amortized cost	0
Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Held for investment securities, securities without a single maturity date, fair value	0
Other Asset Backed Securities [Member]
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis [Abstract]
Available for sale securities, securities without a single maturity date, amortized cost	1,020,226
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Available for sale securities, securities without a single maturity date, fair value	1,040,551
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract]
Held for investment securities, securities without a single maturity date, amortized cost	0
Held-to-maturity Securities, Debt Maturities, Fair Value [Abstract]
Held for investment securities, securities without a single maturity date, fair value	$ 0

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Investments (Cumulative Credit Loss Portion of Other Than Temporary Impairment Recognized in Operations) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Investments [Abstract]
Cumulative credit loss at beginning of period	$ (126,865)	$ (129,813)	$ (125,960)	$ (134,027)
Credit losses on securities for which OTTI has not previously been recognized	0	(2,775)	0	(4,536)
Additional credit losses on securities for which OTTI has previously been recognized	(594)	0	(1,499)	(1,048)
Accumulated losses on securities that were disposed of during the period	0	4,075	0	11,098
Cumulative credit loss at end of period	$ (127,459)	$ (128,513)	$ (127,459)	$ (128,513)

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Derivative Instruments (Fair Value of Derivative Instruments as Presented in the Consolidated Balance Sheets) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Derivatives, Fair Value [Line Items]
Derivative assets	$ 905,688	$ 856,050
Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative assets	955,360	969,906
Derivative liabilities	5,167,690	4,513,204
Call Options [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative assets	905,688	856,050
2015 Notes Hedges [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative assets	45,884	107,041
Interest Rate Caps [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative assets	3,788	6,103
Interest Rate Swap [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative assets	0	712
Derivative liabilities	1,983	0
Fixed Index Annuities - Embedded Derivatives [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative liabilities	5,119,823	4,406,163
2015 Notes Embedded Conversion Derivative [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative liabilities	$ 45,884	$ 107,041

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Fixed maturity securities:
Available for sale, at fair value (amortized cost: 2014 - $27,540,945; 2013 - $26,527,730)	$ 29,317,572	$ 26,610,447
Held for investment, at amortized cost (fair value: 2014 - $66,571; 2013 - $60,840)	76,342	76,255
Equity securities, available for sale, at fair value (cost: 2014 - $7,506; 2013 - $7,503)	7,762	7,778
Mortgage loans on real estate	2,543,810	2,581,082
Derivative instruments	905,688	856,050
Other investments	221,459	215,042
Total investments	33,072,633	30,346,654
Cash and cash equivalents	1,464,533	897,529
Coinsurance deposits	3,085,340	2,999,618
Accrued investment income	304,041	301,641
Deferred policy acquisition costs	2,040,084	2,426,652
Deferred sales inducements	1,578,621	1,875,880
Deferred income taxes	73,564	301,856
Income taxes recoverable	26,934	0
Other assets	357,946	471,669
Total assets	42,003,696	39,621,499
Liabilities:
Policy benefit reserves	37,876,044	35,789,655
Other policy funds and contract claims	391,979	418,033
Notes payable	474,361	549,958
Subordinated debentures	246,145	246,050
Income taxes payable	0	10,153
Other liabilities	1,101,357	1,222,963
Total liabilities	40,089,886	38,236,812
Stockholders' equity:
Preferred stock, par value $1 per share, 2,000,000 shares authorized, 2014 and 2013 - no shares issued and outstanding	0	0
Common stock, par value $1 per share, 200,000,000 shares authorized; issued and outstanding: 2014 - 74,088,743 shares (excluding 4,527,167 treasury shares); 2013 - 70,535,404 shares (excluding 4,876,735 treasury shares)	74,089	70,535
Additional paid-in capital	538,472	550,400
Unallocated common stock held by ESOP; 2013 - 58,618 shares	0	(631)
Accumulated other comprehensive income	556,071	46,196
Retained earnings	745,178	718,187
Total stockholders' equity	1,913,810	1,384,687
Total liabilities and stockholders' equity	$ 42,003,696	$ 39,621,499

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Mortgage Loans on Real Estate (Allowance for Loan Losses Rollforward) (Details) (USD $) In Thousands, unless otherwise specified			3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Specific Allowance [Member]	Jun. 30, 2013 Specific Allowance [Member]	Jun. 30, 2014 Specific Allowance [Member]	Jun. 30, 2013 Specific Allowance [Member]	Jun. 30, 2014 General Allowance [Member]	Jun. 30, 2013 General Allowance [Member]	Jun. 30, 2014 General Allowance [Member]	Jun. 30, 2013 General Allowance [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning allowance balance	$ (26,582)	$ (26,047)	$ (16,462)	$ (22,631)	$ (16,847)	$ (23,134)	$ (8,800)	$ (10,400)	$ (9,200)	$ (11,100)
Charge-offs			1,808	2,612	2,757	4,181	0	0	0	0
Recoveries			255	0	255	0	0	0	0	0
Provision for credit losses			(2,883)	(1,157)	(3,447)	(2,223)	(500)	(100)	(100)	600
Ending allowance balance	$ (26,582)	$ (26,047)	$ (17,282)	$ (21,176)	$ (17,282)	$ (21,176)	$ (9,300)	$ (10,500)	$ (9,300)	$ (10,500)

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Consolidated Statements of Changes in Stockholders' Equity (USD $) In Thousands, unless otherwise specified	Total	Common Stock [Member]	Additional Paid-In Capital [Member]	Unallocated Common Stock Held By ESOP [Member]	Accumulated Other Comprehensive Income [Member]	Retained Earnings [Member]
Stockholders' equity at beginning of period at Dec. 31, 2012	$ 1,720,237	$ 61,751	$ 496,715	$ (2,583)	$ 686,807	$ 477,547
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	146,144					146,144
Other comprehensive income (loss)	(442,527)				(442,527)
Allocation of common stock by ESOP, including excess income tax benefits	708		134	574
Share-based compensation, including excess income tax benefits	3,193		3,193
Issuance of common stock under compensation plans, including excess income tax benefits	12,557	1,533	11,024
Extinguishment of convertible senior notes, net of tax, including shares of common stock issued upon conversion	1,764	217	1,547
Stockholders' equity at end of period at Jun. 30, 2013	1,442,076	63,501	512,613	(2,009)	244,280	623,691
Stockholders' equity at beginning of period at Dec. 31, 2013	1,384,687	70,535	550,400	(631)	46,196	718,187
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	26,991					26,991
Other comprehensive income (loss)	509,875				509,875
Allocation of common stock by ESOP, including excess income tax benefits	1,352		721	631
Share-based compensation, including excess income tax benefits	3,607		3,607
Issuance of common stock under compensation plans, including excess income tax benefits	8,830	1,110	7,720
Extinguishment of convertible senior notes, net of tax, including shares of common stock issued upon conversion	8,923	2,444	6,479
Warrants to be settled in cash	(30,455)		(30,455)
Stockholders' equity at end of period at Jun. 30, 2014	$ 1,913,810	$ 74,089	$ 538,472	$ 0	$ 556,071	$ 745,178

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Notes Payable (2029 Notes Narrative) (Details) (December 2029 Notes [Member], USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
December 2029 Notes [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate, stated percentage	5.25%
Debt instrument, convertible, conversion price per share	$ 9.57
Extinguishment of debt, amount	$ 36.2
Extinguishment of debt, cash paid	66.8
Extinguishment of debt, cash paid for shares of common stock	23.2
Extinguishment of debt, shares issued	946,793
Extinguishment of debt, carrying value at extinguishment	34.6
Extinguishment of debt, loss, net of tax	$ (2.5)

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Investments (Gross Unrealized Losses and Fair Value by Investment Category) (Details) (Fixed Maturity Securities [Member], USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value	$ 639,280	$ 11,635,998
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses	(11,259)	(741,947)
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value	5,021,448	1,097,643
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses	(171,476)	(104,035)
Available for sale securities, continuous unrealized loss position, total, fair value	5,660,728	12,733,641
Available for sale securities, continuous unrealized loss position, total, unrealized losses	(182,735)	(845,982)
United States Government Full Faith and Credit [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value	0	32,969
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses	0	(2,294)
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value	33,569	0
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses	(417)	0
Available for sale securities, continuous unrealized loss position, total, fair value	33,569	32,969
Available for sale securities, continuous unrealized loss position, total, unrealized losses	(417)	(2,294)
United States Government Sponsored Agencies [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value	1,441	692,320
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses	(1)	(88,671)
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value	601,569	467,309
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses	(35,626)	(32,691)
Available for sale securities, continuous unrealized loss position, total, fair value	603,010	1,159,629
Available for sale securities, continuous unrealized loss position, total, unrealized losses	(35,627)	(121,362)
United States Municipalities, States and Territories [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value	32,649	614,056
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses	(147)	(39,074)
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value	185,877	0
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses	(6,440)	0
Available for sale securities, continuous unrealized loss position, total, fair value	218,526	614,056
Available for sale securities, continuous unrealized loss position, total, unrealized losses	(6,587)	(39,074)
Foreign Government Obligations [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value	4,943	26,298
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses	(32)	(3,462)
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value	12,984	0
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses	(1,460)	0
Available for sale securities, continuous unrealized loss position, total, fair value	17,927	26,298
Available for sale securities, continuous unrealized loss position, total, unrealized losses	(1,492)	(3,462)
Corporate Securities [Member] | Finance, Insurance and Real Estate [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value	46,685	1,690,846
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses	(1,022)	(92,426)
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value	711,819	153,037
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses	(25,301)	(12,873)
Available for sale securities, continuous unrealized loss position, total, fair value	758,504	1,843,883
Available for sale securities, continuous unrealized loss position, total, unrealized losses	(26,323)	(105,299)
Corporate Securities [Member] | Manufacturing, Construction and Mining [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value	100,820	3,370,775
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses	(2,063)	(191,245)
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value	1,404,064	93,608
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses	(33,103)	(16,088)
Available for sale securities, continuous unrealized loss position, total, fair value	1,504,884	3,464,383
Available for sale securities, continuous unrealized loss position, total, unrealized losses	(35,166)	(207,333)
Corporate Securities [Member] | Utilities and Related Sectors [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value	103,620	1,829,868
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses	(1,397)	(102,758)
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value	602,031	83,550
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses	(21,280)	(11,547)
Available for sale securities, continuous unrealized loss position, total, fair value	705,651	1,913,418
Available for sale securities, continuous unrealized loss position, total, unrealized losses	(22,677)	(114,305)
Corporate Securities [Member] | Wholesale/Retail Trade [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value	32,148	428,407
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses	(633)	(25,189)
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value	102,446	17,687
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses	(4,671)	(1,992)
Available for sale securities, continuous unrealized loss position, total, fair value	134,594	446,094
Available for sale securities, continuous unrealized loss position, total, unrealized losses	(5,304)	(27,181)
Corporate Securities [Member] | Services, Media and Other [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value	118,443	834,699
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses	(1,623)	(51,508)
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value	338,878	107,242
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses	(9,721)	(10,403)
Available for sale securities, continuous unrealized loss position, total, fair value	457,321	941,941
Available for sale securities, continuous unrealized loss position, total, unrealized losses	(11,344)	(61,911)
Corporate Securities [Member] | Insurance [Member]
Held-to-maturity Securities, Continuous Unrealized Loss Position [Abstract]
Held for investment securities, continuous unrealized loss position, less than 12 months, fair value	0	0
Held for investment securities, continuous unrealized loss position, less than 12 months, unrealized losses	0	0
Held for investment securities, continuous unrealized loss position, 12 months or longer, fair value	66,571	60,840
Held for investment securities, continuous unrealized loss position, 12 months or longer, unrealized losses	(9,771)	(15,415)
Held for investment securities, continuous unrealized loss position, total, fair value	66,571	60,840
Held for investment securities, continuous unrealized loss position, total, unrealized losses	(9,771)	(15,415)
Residential Mortgage Backed Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value	89,639	309,599
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses	(2,094)	(41,080)
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value	261,664	31,739
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses	(11,787)	(2,103)
Available for sale securities, continuous unrealized loss position, total, fair value	351,303	341,338
Available for sale securities, continuous unrealized loss position, total, unrealized losses	(13,881)	(43,183)
Commercial Mortgage Backed Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value	47,869	1,450,143
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses	(325)	(83,814)
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value	497,112	51,099
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses	(9,872)	(6,001)
Available for sale securities, continuous unrealized loss position, total, fair value	544,981	1,501,242
Available for sale securities, continuous unrealized loss position, total, unrealized losses	(10,197)	(89,815)
Other Asset Backed Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Available for sale securities, continuous unrealized loss position, less than 12 months, fair value	61,023	356,018
Available for sale securities, continuous unrealized loss position, less than 12 months, unrealized losses	(1,922)	(20,426)
Available for sale securities, continuous unrealized loss position, 12 months or longer, fair value	269,435	92,372
Available for sale securities, continuous unrealized loss position, 12 months or longer, unrealized losses	(11,798)	(10,337)
Available for sale securities, continuous unrealized loss position, total, fair value	330,458	448,390
Available for sale securities, continuous unrealized loss position, total, unrealized losses	$ (13,720)	$ (30,763)

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Earnings Per Share (Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share) (Details) (Stock Options [Member], USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of shares	1,277,650	0	1,277,650	0
Minimum [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Range of exercise prices	$ 24.79	$ 0	$ 24.79	$ 0
Maximum [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Range of exercise prices	$ 24.79	$ 0	$ 24.79	$ 0

XML

Notes Payable (Tables)

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Liability and Equity Components of Convertible Senior Notes

The 5.25% Contingent Convertible Senior Notes due December 15, 2029 (the "2029 notes") are accounted for separately as a liability component and an equity component in the consolidated balance sheets. The carrying amount of the 2015 notes and the 2029 notes, the carrying amount of the equity component of the 2029 notes and the amount by which the if-converted value exceeds the outstanding principal for both the 2015 notes and the 2029 notes are as follows:

	June 30, 2014						December 31, 2013
	September 2015 Notes			December 2029 Notes			September 2015 Notes			December 2029 Notes
	(Dollars in thousands)
Notes payable:
Principal amount of liability component	$	45,450		$	32,142		$	91,951		$	68,373
Unamortized discount	(2,367		)	(864		)	(6,623		)	(3,743		)
Net carrying amount of liability component	$	43,083		$	31,278		$	85,328		$	64,630
Additional paid-in capital:
Carrying amount of equity component				$	4,325					$	15,586
Amount by which the if-converted value exceeds principal	$	45,056		$	50,715		$	104,403		$	113,169

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Investments (Changes in Net Unrealized Gains on Investments) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Investment Holdings [Line Items]
Fixed maturity securities held for investment carried at amortized cost	$ 1,607	$ (964)	$ 5,644	$ (353)
Investments carried at fair value	716,773	(1,349,652)	1,693,891	(1,466,503)
Adjustment for effect on other balance sheet accounts:
Deferred policy acquisition costs and deferred sales inducements	(372,717)	707,525	(909,469)	785,693
Deferred income tax asset/liability	(120,420)	224,744	(274,547)	238,283
Total adjustment for effect on other balance sheet accounts	(493,137)	932,269	(1,184,016)	1,023,976
Change in net unrealized gains on investments carried at fair value	223,636	(417,383)	509,875	(442,527)
Fixed Maturity Securities [Member]
Investment Holdings [Line Items]
Investments carried at fair value	716,779	(1,339,484)	1,693,910	(1,458,554)
Equity Securities, Available For Sale [Member]
Investment Holdings [Line Items]
Investments carried at fair value	$ (6)	$ (10,168)	$ (19)	$ (7,949)

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Significant Accounting Policies (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Premiums and other considerations	$ 9,123	$ 11,551	$ 16,454	$ 24,635
Insurance policy benefits and change in future policy benefits	10,987	13,768	21,082	28,528
Interest sensitive and index product benefits	367,774	333,001	684,966	556,171
Restatement Adjustment [Member]
Premiums and other considerations		8,600		19,000
Insurance policy benefits and change in future policy benefits		11,600		24,700
Interest sensitive and index product benefits		$ (3,000)		$ (5,700)

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Consolidated Statements of Changes in Stockholders' Equity (Parentheticals)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Shares of common stock allocated by ESOP, including excess income tax benefits	58,618	53,314
Shares of common stock issued under compensation plans, including excess income tax benefits	1,109,882	1,533,603
Shares of common stock issued upon extinguishment of convertible senior notes	2,443,457	216,729

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Consolidated Balance Sheets (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Fixed maturity securities:
Available for sale, at fair value, amortized cost	$ 27,540,945	$ 26,527,730
Held for investment, at amortized cost, fair value	66,571	60,840
Equity securities, available for sale, at fair value, cost	$ 7,506	$ 7,503
Stockholders' equity:
Preferred stock, par value (dollars per share)	$ 1	$ 1
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (dollars per share)	$ 1	$ 1
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	74,088,743	70,535,404
Common stock, shares outstanding	74,088,743	70,535,404
Common stock, shares held in treasury	4,527,167	4,876,735
Unallocated common stock, shares held by ESOP		58,618

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy

Adopted Accounting Pronouncements

There were no accounting pronouncements that were adopted during the current period.

Fair Values of Financial Instruments, Policy

Fair value is the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The objective of a fair value measurement is to determine that price for each financial instrument at each measurement date. We meet this objective using various methods of valuation that include market, income and cost approaches.

We categorize our financial instruments into three levels of fair value hierarchy based on the priority of inputs used in determining fair value. The hierarchy defines the highest priority inputs (Level 1) as quoted prices in active markets for identical assets or liabilities. The lowest priority inputs (Level 3) are our own assumptions about what a market participant would use in determining fair value such as estimated future cash flows. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. We categorize financial assets and liabilities recorded at fair value in the consolidated balance sheets as follows:

Level 1— Quoted prices are available in active markets for identical financial instruments as of the reporting date. We do not adjust the quoted price for these financial instruments, even in situations where we hold a large position and a sale could reasonably impact the quoted price.

Level 2— Quoted prices in active markets for similar financial instruments, quoted prices for identical or similar financial instruments in markets that are not active; and models and other valuation methodologies using inputs other than quoted prices that are observable.

Level 3— Models and other valuation methodologies using significant inputs that are unobservable for financial instruments and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in Level 3 are securities for which no market activity or data exists and for which we used discounted expected future cash flows with our own assumptions about what a market participant would use in determining fair value.

Investments, Policy

The determination of the credit loss component of a corporate bond (including redeemable preferred stocks) is based on the underlying financial performance of the issuer and their ability to meet their contractual obligations. Considerations in our evaluation include, but are not limited to, credit rating changes, financial statement and ratio analysis, changes in management, significant changes in credit spreads, breaches of financial covenants and a review of the economic outlook for the industry and markets in which they trade. In circumstances where an issuer appears unlikely to meet its future obligation, or the security's price decline is deemed other than temporary, an estimate of credit loss is determined. Credit loss is calculated using default probabilities as derived from the credit default swaps markets in conjunction with recovery rates derived from independent third party analysis or a best estimate of credit loss. This credit loss rate is then incorporated into a present value calculation based on an expected principal loss in the future discounted at the yield at the date of purchase and compared to amortized cost to determine the amount of credit loss associated with the security.

In addition, for debt securities which we do not intend to sell and it is not more likely than not we will be required to sell, but our intent changes due to changes or events that could not have been reasonably anticipated, an other than temporary impairment charge is recognized. Once an impairment charge has been recorded, we then continue to review the other than temporarily impaired securities for appropriate valuation on an ongoing basis. Unrealized losses may be recognized in future periods through a charge to earnings, should we later conclude that the decline in fair value below amortized cost is other than temporary pursuant to our accounting policy described above. The use of different methodologies and assumptions to determine the fair value of investments and the timing and amount of impairments may have a material effect on the amounts presented in our consolidated financial statements.

We review and analyze all investments on an ongoing basis for changes in market interest rates and credit deterioration. This review process includes analyzing our ability to recover the amortized cost basis of each investment that has a fair value that is materially lower than its amortized cost and requires a high degree of management judgment and involves uncertainty. The evaluation of securities for other than temporary impairments is a quantitative and qualitative process, which is subject to risks and uncertainties.

We have a policy and process in place to identify securities that could potentially have impairments that are other than temporary. This process involves monitoring market events and other items that could impact issuers. The evaluation includes but is not limited to such factors as:

• the length of time and the extent to which the fair value has been less than amortized cost or cost;

• whether the issuer is current on all payments and all contractual payments have been made as agreed;

• the remaining payment terms and the financial condition and near-term prospects of the issuer;

• the lack of ability to refinance due to liquidity problems in the credit market;

• the fair value of any underlying collateral;

• the existence of any credit protection available;

• our intent to sell and whether it is more likely than not we would be required to sell prior to recovery for debt securities;

• our assessment in the case of equity securities including perpetual preferred stocks with credit deterioration that the security cannot recover to cost in a reasonable period of time;

• our intent and ability to retain equity securities for a period of time sufficient to allow for recovery;

• consideration of rating agency actions; and

• changes in estimated cash flows of mortgage and asset backed securities.

We determine whether other than temporary impairment losses should be recognized for debt and equity securities by assessing all facts and circumstances surrounding each security. Where the decline in fair value of debt securities is attributable to changes in market interest rates or to factors such as market volatility, liquidity and spread widening, and we anticipate recovery of all contractual or expected cash flows, we do not consider these investments to be other than temporarily impaired because we do not intend to sell these investments and it is not more likely than not we will be required to sell these investments before a recovery of amortized cost, which may be maturity. For equity securities, we recognize an impairment charge in the period in which we do not have the intent and ability to hold the securities until recovery of cost or we determine that the security will not recover to book value within a reasonable period of time. We determine what constitutes a reasonable period of time on a security-by-security basis by considering all the evidence available to us, including the magnitude of any unrealized loss and its duration. In any event, this period does not exceed 18 months from the date of impairment for perpetual preferred securities for which there is evidence of deterioration in credit of the issuer and common equity securities. For perpetual preferred securities absent evidence of a deterioration in credit of the issuer we apply an impairment model, including an anticipated recovery period, similar to a debt security.

Other than temporary impairment losses on equity securities are recognized in operations. If we intend to sell a debt security or if it is more likely than not that we will be required to sell a debt security before recovery of its amortized cost basis, other than temporary impairment has occurred and the difference between amortized cost and fair value will be recognized as a loss in operations.

If we do not intend to sell and it is not more likely than not we will be required to sell the debt security but also do not expect to recover the entire amortized cost basis of the security, an impairment loss would be recognized in operations in the amount of the expected credit loss. We determine the amount of expected credit loss by calculating the present value of the cash flows expected to be collected discounted at each security's acquisition yield based on our consideration of whether the security was of high credit quality at the time of acquisition. The difference between the present value of expected future cash flows and the amortized cost basis of the security is the amount of credit loss recognized in operations. The remaining amount of the other than temporary impairment is recognized in other comprehensive income (loss).

The determination of the credit loss component of a mortgage backed security is based on a number of factors. The primary consideration in this evaluation process is the issuer's ability to meet current and future interest and principal payments as contractually stated at time of purchase. Our review of these securities includes an analysis of the cash flow modeling under various default scenarios considering independent third party benchmarks, the seniority of the specific tranche within the structure of the security, the composition of the collateral and the actual default, loss severity and prepayment experience exhibited. With the input of third party assumptions for default projections, loss severity and prepayment expectations, we evaluate the cash flow projections to determine whether the security is performing in accordance with its contractual obligation.

We utilize the models from a leading structured product software specialist serving institutional investors. These models incorporate each security's seniority and cash flow structure. In circumstances where the analysis implies a potential for principal loss at some point in the future, we use the "best estimate" cash flow projection discounted at the security's effective yield at acquisition to determine the amount of our potential credit loss associated with this security. The discounted expected future cash flows equates to our expected recovery value. Any shortfall of the expected recovery when compared to the amortized cost of the security will be recorded as the credit loss component of other than temporary impairment.

The cash flow modeling is performed on a security-by-security basis and incorporates actual cash flows on the residential mortgage backed securities through the current period, as well as the projection of remaining cash flows using a number of assumptions including default rates, prepayment rates and loss severity rates. The default curves we use are tailored to the Prime or Alt-A residential mortgage backed securities that we own, which assume lower default rates and loss severity for Prime securities versus Alt-A securities. These default curves are scaled higher or lower depending on factors such as current underlying mortgage loan performance, rating agency loss projections, loan to value ratios, geographic diversity, as well as other appropriate considerations.

Mortgage Loans on Real Estate, Allowance for Loan Losses, Policy

We evaluate our mortgage loan portfolio for the establishment of a loan loss reserve by specific identification of impaired loans and the measurement of an estimated loss for each individual loan identified. A mortgage loan is impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. If we determine that the value of any specific mortgage loan is impaired, the carrying amount of the mortgage loan will be reduced to its fair value, based upon the present value of expected future cash flows from the loan discounted at the loan's effective interest rate, or the fair value of the underlying collateral less estimated costs to sell. In addition, we analyze the mortgage loan portfolio for the need of a general loan allowance for probable losses on all other loans. The amount of the general loan allowance is based upon management's evaluation of the collectability of the loan portfolio, historical loss experience, delinquencies, credit concentrations, underwriting standards and national and local economic conditions.

Our financing receivables currently consist of one portfolio segment which is our commercial mortgage loan portfolio. These are mortgage loans with collateral consisting of commercial real estate and borrowers consisting mostly of limited liability partnerships or limited liability corporations.

We rate the mortgage loans in our portfolio based on factors such as historical operating performance, loan to value ratio and economic outlook, among others. We calculate a loss factor to apply to each rating based on historical losses we have recognized in our mortgage loan portfolio. We apply the loss factors to the total principal outstanding within each rating category to determine an appropriate estimate of general loan loss allowance.

Mortgage Loans on Real Estate, Real Estate Acquired Through Foreclosure, Policy

Charge-offs include allowances that have been established on loans that were satisfied by taking ownership of the collateral. When the property is taken it is recorded at the lower of the mortgage loan's carrying value or the property's fair value as a component of other investments and the mortgage loan is recorded as fully paid, with any allowance for credit loss that has been established charged off. Fair value of the real estate is determined by third party appraisal. Charge-offs also include situations where we have received a payment from the borrower in an amount greater than the carrying value of the loan (principal outstanding less specific allowance). We define collateral dependent loans as those mortgage loans for which we will depend on the value of the collateral real estate to satisfy the outstanding principal of the loan.

Mortgage Loans on Real Estate, Non-Accrual Loan Status, Policy

The loans that are categorized as "in workout" consist of loans that we have agreed to lower or no mortgage payments for a period of time while the borrowers address cash flow and/or operational issues. The key features of these workouts have been determined on a loan-by-loan basis. Most of these loans are in a period of low cash flow due to tenants vacating their space or tenants requesting rent relief during difficult economic periods. Generally, we have allowed the borrower a six month interest only period and in some cases a twelve month period of interest only. Interest only workout loans are expected to return to their regular debt service payments after the interest only period. Interest only loans that are not fully amortizing will have a larger balance at their balloon date than originally contracted. Fully amortizing loans that are in interest only periods will have larger debt service payments for their remaining term due to lost principal payments during the interest only period. In limited circumstances we have allowed borrowers to pay the principal portion of their loan payment into an escrow account that can be used for capital and tenant improvements for a period of not more than twelve months. In these situations new loan amortization schedules are calculated based on the principal not collected during this twelve month workout period and larger payments are collected for the remaining term of each loan. In all cases, the original interest rate and maturity date have not been modified, and we have not forgiven any principal amounts.

Mortgage loans are considered delinquent when they become 60 days past due. When loans become 90 days past due, become collateral dependent or enter a period with no debt service payments required we place them on non-accrual status and discontinue recognizing interest income. If payments are received on a delinquent loan, interest income is recognized to the extent it would have been recognized if normal principal and interest would have been received timely. If payments are received to bring a delinquent loan back to current we will resume accruing interest income on that loan.

Mortgage Loans on Real Estate, Troubled Debt Restructuring, Policy

A Troubled Debt Restructuring ("TDR") is a situation where we have granted a concession to a borrower for economic or legal reasons related to the borrower's financial difficulties that we would not otherwise consider. A mortgage loan that has been granted new terms, including workout terms as described previously, would be considered a TDR if it meets conditions that would indicate a borrower is experiencing financial difficulty and the new terms constitute a concession on our part. We analyze all loans where we have agreed to workout terms and all loans that we have refinanced to determine if they meet the definition of a TDR. We consider the following factors in determining whether or not a borrower is experiencing financial difficulty:

• borrower is in default,

• borrower has declared bankruptcy,

• there is growing concern about the borrower's ability to continue as a going concern,

• borrower has insufficient cash flows to service debt,

• borrower's inability to obtain funds from other sources, and

• there is a breach of financial covenants by the borrower.

If the borrower is determined to be in financial difficulty, we consider the following conditions to determine if the borrower was granted a concession:

• assets used to satisfy debt are less than our recorded investment,

• interest rate is modified,

• maturity date extension at an interest rate less than market rate,

• capitalization of interest,

• delaying principal and/or interest for a period of three months or more, and

• partial forgiveness of the balance or charge-off.

Mortgage loan workouts, refinances or restructures that are classified as TDRs are individually evaluated and measured for impairment.

Commitments and Contingencies, Policy

In accordance with applicable accounting guidelines, we establish an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. As a litigation or regulatory matter is developing we, in conjunction with outside counsel, evaluate on an ongoing basis whether the matter presents a loss contingency that meets conditions indicating the need for accrual and/or disclosure, and if not the matter will continue to be monitored for further developments. If and when the loss contingency related to litigation or regulatory matters is deemed to be both probable and estimable, we will establish an accrued liability with respect to that matter and will continue to monitor the matter for further developments that may affect the amount of the accrued liability.

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Document and Entity Information Document	6 Months Ended
	Jun. 30, 2014	Jul. 31, 2014
Document Information [Line Items]
Entity Registrant Name	AMERICAN EQUITY INVESTMENT LIFE HOLDING CO
Entity Central Index Key	0001039828
Document Type	10-Q
Document Period End Date	Jun. 30, 2014
Amendment Flag	false
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		74,798,714

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Fair Values of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Carrying Amounts and Fair Values of Financial Instruments

The following sets forth a comparison of the carrying amounts and fair values of our financial instruments:

	June 30, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in thousands)
Assets
Fixed maturity securities:
Available for sale	$	29,317,572	$	29,317,572	$	26,610,447	$	26,610,447
Held for investment	76,342		66,571		76,255		60,840
Equity securities, available for sale	7,762		7,762		7,778		7,778
Mortgage loans on real estate	2,543,810		2,596,588		2,581,082		2,615,410
Derivative instruments	905,688		905,688		856,050		856,050
Other investments	196,853		198,293		192,198		193,343
Cash and cash equivalents	1,464,533		1,464,533		897,529		897,529
Coinsurance deposits	3,085,340		2,722,024		2,999,618		2,669,432
Interest rate caps	3,788		3,788		6,103		6,103
Interest rate swap	—		—		712		712
2015 notes hedges	45,884		45,884		107,041		107,041
Counterparty collateral	261,266		261,266		315,824		315,824
Liabilities
Policy benefit reserves	37,538,232		31,279,983		35,453,166		29,670,827
Single premium immediate annuity (SPIA) benefit reserves	391,651		404,561		417,625		430,835
Notes payable	474,361		564,118		549,958		699,435
Subordinated debentures	246,145		240,767		246,050		234,959
2015 notes embedded conversion derivative	45,884		45,884		107,041		107,041
Interest rate swap	1,983		1,983		—		—

Assets and Liabilities Measured at Fair Value on a Recurring Basis, By Fair Value Hierarchy Level

Our assets and liabilities which are measured at fair value on a recurring basis as of June 30, 2014 and December 31, 2013 are presented below based on the fair value hierarchy levels:

	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
June 30, 2014
Assets
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	38,483	$	4,074	$	34,409	$	—
United States Government sponsored agencies	1,185,341		—		1,185,341		—
United States municipalities, states and territories	3,506,198		—		3,506,198		—
Foreign government obligations	192,963		—		192,963		—
Corporate securities	19,187,375		27		19,187,348		—
Residential mortgage backed securities	1,870,565		—		1,869,897		668
Commercial mortgage backed securities	2,296,096		—		2,296,096		—
Other asset backed securities	1,040,551		—		1,040,551		—
Equity securities, available for sale: finance, insurance and real estate	7,762		—		7,762		—
Derivative instruments	905,688		—		905,688		—
Cash and cash equivalents	1,464,533		1,464,533		—		—
Interest rate caps	3,788		—		3,788		—
2015 notes hedges	45,884		—		45,884		—
Counterparty collateral	261,266		—		261,266		—
	$	32,006,493	$	1,468,634	$	30,537,191	$	668
Liabilities
2015 notes embedded conversion derivative	$	45,884	$	—	$	45,884	$	—
Interest rate swap	1,983		—		1,983		—
Fixed index annuities - embedded derivatives	5,119,823		—		—		5,119,823
	$	5,167,690	$	—	$	47,867	$	5,119,823
December 31, 2013
Assets
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	42,925	$	4,805	$	38,120	$	—
United States Government sponsored agencies	1,194,289		—		1,194,289		—
United States municipalities, states and territories	3,306,743		—		3,306,743		—
Foreign government obligations	91,557		—		91,557		—
Corporate securities	17,233,037		20		17,233,017		—
Residential mortgage backed securities	1,971,960		—		1,970,584		1,376
Commercial mortgage backed securities	1,735,460		—		1,735,460		—
Other asset backed securities	1,034,476		359		1,034,117		—
Equity securities, available for sale: finance, insurance and real estate	7,778		—		7,778		—
Derivative instruments	856,050		—		856,050		—
Cash and cash equivalents	897,529		897,529		—		—
Interest rate caps	6,103		—		6,103		—
Interest rate swap	712		—		712		—
2015 notes hedges	107,041		—		107,041		—
Counterparty collateral	315,824		—		315,824		—
	$	28,801,484	$	902,713	$	27,897,395	$	1,376
Liabilities
2015 notes embedded conversion derivative	$	107,041	$	—	$	107,041	$	—
Fixed index annuities - embedded derivatives	4,406,163		—		—		4,406,163
	$	4,513,204	$	—	$	107,041	$	4,406,163

Assets Measured at Fair Value on Recurring Basis, Level 3 Reconciliation

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Available for sale securities
Beginning balance	$	1,080		$	1,724		$	1,376		$	1,812
Principal returned	(114		)	(193		)	(192		)	(561		)
Amortization of premium/accretion of discount	(138		)	5			(165		)	134
Total gains (losses) (realized/unrealized):
Included in other comprehensive income (loss)	45			5			(146		)	156
Included in operations	(205		)	—			(205		)	—
Ending balance	$	668		$	1,541		$	668		$	1,541

Liabilities Measured at Fair Value on Recurring Basis, Level 3 Reconciliation

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Fixed index annuities - embedded derivatives
Beginning balance	$	4,755,913		$	3,848,902		$	4,406,163		$	3,337,556
Premiums less benefits	425,776			425,671			797,729			672,393
Change in fair value, net	(61,866		)	(527,521		)	(84,069		)	(262,897		)
Ending balance	$	5,119,823		$	3,747,052		$	5,119,823		$	3,747,052

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Consolidated Statements of Operations (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Revenues:
Premiums and other considerations	$ 9,123		$ 11,551		$ 16,454		$ 24,635
Annuity product charges	29,247		23,511		54,519		44,992
Net investment income	370,882		336,143		740,887		665,833
Change in fair value of derivatives	270,883		64,040		319,376		438,002
Net realized gains (losses) on investments, excluding other than temporary impairment (OTTI) losses	(2,230)		15,689		(2,944)		26,274
OTTI losses on investments:
Total OTTI losses	0		(2,775)		0		(4,964)
Portion of OTTI losses recognized from other comprehensive income	(594)		0		(1,499)		(1,048)
Net OTTI losses recognized in operations	(594)		(2,775)		(1,499)		(6,012)
Loss on extinguishment of debt	(6,574)		(589)		(10,551)		(589)
Total revenues	670,737		447,570		1,116,242		1,193,135
Benefits and expenses:
Insurance policy benefits and change in future policy benefits	10,987		13,768		21,082		28,528
Interest sensitive and index product benefits	367,774		333,001		684,966		556,171
Amortization of deferred sales inducements	55,349		120,536		56,015		149,367
Change in fair value of embedded derivatives	80,935		(408,409)		173,554		(45,137)
Interest expense on notes payable	9,121		6,780		19,385		14,028
Interest expense on subordinated debentures	3,024		3,018		6,032		6,027
Amortization of deferred policy acquisition costs	67,084		169,270		74,278		215,500
Other operating costs and expenses	20,887		24,851		39,972		44,371
Total benefits and expenses	615,161		262,815		1,075,284		968,855
Income before income taxes	55,576		184,755		40,958		224,280
Income tax expense	18,832		64,642		13,967		78,136
Net income	$ 36,744		$ 120,113		$ 26,991		$ 146,144
Earnings per common share	$ 0.49		$ 1.87		$ 0.37		$ 2.29
Earnings per common share - assuming dilution	$ 0.46		$ 1.71		$ 0.34		$ 2.09
Weighted average common shares outstanding: earnings per common share	74,461,264	[1]	64,254,387	[1]	73,495,286	[1]	63,786,577	[1]
Weighted average common shares outstanding: earnings per common share - assuming dilution	79,517,804		70,382,065		79,582,763		69,882,240

[1] Weighted average common shares outstanding include shares vested under the NMO Deferred Compensation Plan and exclude unallocated shares held by the ESOP.

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Mortgage Loans on Real Estate

6 Months Ended

Jun. 30, 2014

Mortgage Loans on Real Estate [Abstract]

Mortgage Loans on Real Estate

Mortgage Loans on Real Estate

Our mortgage loan portfolio, summarized in the following table, totaled $2.5 billion at June 30, 2014 and $2.6 billion at December 31, 2013, with commitments outstanding of $38.6 million at June 30, 2014.

	June 30, 2014			December 31, 2013
	(Dollars in thousands)
Principal outstanding	$	2,570,950		$	2,607,698
Loan loss allowance	(26,582		)	(26,047		)
Deferred prepayment fees	(558		)	(569		)
Carrying value	$	2,543,810		$	2,581,082

The portfolio consists of commercial mortgage loans collateralized by the related properties and diversified as to property type, location and loan size. Our mortgage lending policies establish limits on the amount that can be loaned to one borrower and other criteria to attempt to reduce the risk of default. The mortgage loan portfolio is summarized by geographic region and property type as follows:

	June 30, 2014				December 31, 2013
	Principal		Percent		Principal		Percent
	(Dollars in thousands)
Geographic distribution
East	$	774,014	30.1	%	$	765,717	29.4	%
Middle Atlantic	145,663		5.7	%	156,489		6.0	%
Mountain	328,284		12.8	%	356,246		13.7	%
New England	14,700		0.6	%	21,324		0.8	%
Pacific	303,922		11.8	%	317,431		12.2	%
South Atlantic	500,612		19.5	%	483,852		18.5	%
West North Central	338,343		13.1	%	351,794		13.5	%
West South Central	165,412		6.4	%	154,845		5.9	%
	$	2,570,950	100.0	%	$	2,607,698	100.0	%
Property type distribution
Office	$	533,472	20.8	%	$	590,414	22.6	%
Medical Office	104,025		4.0	%	125,703		4.8	%
Retail	729,497		28.4	%	711,364		27.3	%
Industrial/Warehouse	681,540		26.5	%	673,449		25.8	%
Hotel	43,784		1.7	%	61,574		2.4	%
Apartment	340,621		13.2	%	291,823		11.2	%
Mixed use/other	138,011		5.4	%	153,371		5.9	%
	$	2,570,950	100.0	%	$	2,607,698	100.0	%

We evaluate our mortgage loan portfolio for the establishment of a loan loss reserve by specific identification of impaired loans and the measurement of an estimated loss for each individual loan identified. A mortgage loan is impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. If we determine that the value of any specific mortgage loan is impaired, the carrying amount of the mortgage loan will be reduced to its fair value, based upon the present value of expected future cash flows from the loan discounted at the loan's effective interest rate, or the fair value of the underlying collateral less estimated costs to sell. In addition, we analyze the mortgage loan portfolio for the need of a general loan allowance for probable losses on all other loans. The amount of the general loan allowance is based upon management's evaluation of the collectability of the loan portfolio, historical loss experience, delinquencies, credit concentrations, underwriting standards and national and local economic conditions.

Our financing receivables currently consist of one portfolio segment which is our commercial mortgage loan portfolio. These are mortgage loans with collateral consisting of commercial real estate and borrowers consisting mostly of limited liability partnerships or limited liability corporations.

We rate the mortgage loans in our portfolio based on factors such as historical operating performance, loan to value ratio and economic outlook, among others. We calculate a loss factor to apply to each rating based on historical losses we have recognized in our mortgage loan portfolio. We apply the loss factors to the total principal outstanding within each rating category to determine an appropriate estimate of general loan loss allowance.

The following tables present a rollforward of our specific and general valuation allowances for mortgage loans on real estate:

	Three Months Ended June 30, 2014						Three Months Ended June 30, 2013
	Specific Allowance			General Allowance			Specific Allowance			General Allowance
	(Dollars in thousands)
Beginning allowance balance	$	(16,462	)	$	(8,800	)	$	(22,631	)	$	(10,400	)
Charge-offs	1,808			—			2,612			—
Recoveries	255			—			—			—
Provision for credit losses	(2,883		)	(500		)	(1,157		)	(100		)
Ending allowance balance	$	(17,282	)	$	(9,300	)	$	(21,176	)	$	(10,500	)
	Six Months Ended June 30, 2014						Six Months Ended June 30, 2013
	Specific Allowance			General Allowance			Specific Allowance			General Allowance
	(Dollars in thousands)
Beginning allowance balance	$	(16,847	)	$	(9,200	)	$	(23,134	)	$	(11,100	)
Charge-offs	2,757			—			4,181			—
Recoveries	255			—			—			—
Provision for credit losses	(3,447		)	(100		)	(2,223		)	600
Ending allowance balance	$	(17,282	)	$	(9,300	)	$	(21,176	)	$	(10,500	)

The specific allowance represents the total credit loss allowances on loans which are individually evaluated for impairment. The general allowance is for the group of loans discussed above which are collectively evaluated for impairment. The following table presents the total outstanding principal of loans evaluated for impairment by basis of impairment method:

	June 30, 2014		December 31, 2013
	(Dollars in thousands)
Individually evaluated for impairment	$	42,963	$	47,018
Collectively evaluated for impairment	2,527,987		2,560,680
Total loans evaluated for impairment	$	2,570,950	$	2,607,698

Charge-offs include allowances that have been established on loans that were satisfied by taking ownership of the collateral. When the property is taken it is recorded at the lower of the mortgage loan's carrying value or the property's fair value as a component of other investments and the mortgage loan is recorded as fully paid, with any allowance for credit loss that has been established charged off. Fair value of the real estate is determined by third party appraisal. Charge-offs also include situations where we have received a payment from the borrower in an amount greater than the carrying value of the loan (principal outstanding less specific allowance). We define collateral dependent loans as those mortgage loans for which we will depend on the value of the collateral real estate to satisfy the outstanding principal of the loan.

During the three months ended June 30, 2014, four mortgage loans were satisfied by taking ownership of any real estate serving as collateral and during the six months ended June 30, 2014, five mortgage loans were satisfied by taking ownership of the real estate serving as collateral compared to zero and one mortgage loan for the same periods in 2013. The following table summarizes the activity in the real estate owned which was obtained in satisfaction of mortgage loans on real estate:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Real estate owned at beginning of period	$	20,592		$	28,764		$	22,844		$	33,172
Real estate acquired in satisfaction of mortgage loans	8,294			—			10,007			844
Additions	—			480			—			480
Sales	(4,118		)	(2,333		)	(7,148		)	(7,413		)
Impairments	—			(145		)	(799		)	(145		)
Depreciation	(162		)	(157		)	(298		)	(329		)
Real estate owned at end of period	$	24,606		$	26,609		$	24,606		$	26,609

We analyze credit risk of our mortgage loans by analyzing all available evidence on loans that are delinquent and loans that are in a workout period.

	June 30, 2014		December 31, 2013
	(Dollars in thousands)
Credit Exposure--By Payment Activity
Performing	$	2,559,419	$	2,593,276
In workout	2,213		6,248
Delinquent	—		—
Collateral dependent	9,318		8,174
	$	2,570,950	$	2,607,698

The loans that are categorized as "in workout" consist of loans that we have agreed to lower or no mortgage payments for a period of time while the borrowers address cash flow and/or operational issues. The key features of these workouts have been determined on a loan-by-loan basis. Most of these loans are in a period of low cash flow due to tenants vacating their space or tenants requesting rent relief during difficult economic periods. Generally, we have allowed the borrower a six month interest only period and in some cases a twelve month period of interest only. Interest only workout loans are expected to return to their regular debt service payments after the interest only period. Interest only loans that are not fully amortizing will have a larger balance at their balloon date than originally contracted. Fully amortizing loans that are in interest only periods will have larger debt service payments for their remaining term due to lost principal payments during the interest only period. In limited circumstances we have allowed borrowers to pay the principal portion of their loan payment into an escrow account that can be used for capital and tenant improvements for a period of not more than twelve months. In these situations new loan amortization schedules are calculated based on the principal not collected during this twelve month workout period and larger payments are collected for the remaining term of each loan. In all cases, the original interest rate and maturity date have not been modified, and we have not forgiven any principal amounts.

Mortgage loans are considered delinquent when they become 60 days past due. When loans become 90 days past due, become collateral dependent or enter a period with no debt service payments required we place them on non-accrual status and discontinue recognizing interest income. If payments are received on a delinquent loan, interest income is recognized to the extent it would have been recognized if normal principal and interest would have been received timely. If payments are received to bring a delinquent loan back to current we will resume accruing interest income on that loan. Outstanding principal of loans in a non-accrual status at June 30, 2014 and December 31, 2013 totaled $9.3 million and $8.2 million, respectively.

All of our commercial mortgage loans depend on the cash flow of the borrower to be at a sufficient level to service the principal and interest payments as they come due. In general, cash inflows of the borrowers are generated by collecting monthly rent from tenants occupying space within the borrowers' properties. Our borrowers face collateral risks such as tenants going out of business, tenants struggling to make rent payments as they become due, and tenants canceling leases and moving to other locations. We have a number of loans where the real estate is occupied by a single tenant. Our borrowers sometimes face both a reduction in cash flow on their mortgage property as well as a reduction in the fair value of the real estate collateral. If borrowers are unable to replace lost rent revenue and increases in the fair value of their property do not materialize we could potentially incur more losses than what we have allowed for in our specific and general loan loss allowances.

Aging of financing receivables is summarized in the following table, with loans in a "workout" period as of the reporting date considered current if payments are current in accordance with agreed upon terms:

	30 - 59 Days		60 - 89 Days		90 Days and Over		Total Past Due		Current		Collateral Dependent Receivables		Total Financing Receivables
	(Dollars in thousands)
Commercial Mortgage Loans
June 30, 2014	$	1,045	$	—	$	—	$	1,045	$	2,560,587	$	9,318	$	2,570,950
December 31, 2013	$	—	$	—	$	—	$	—	$	2,599,524	$	8,174	$	2,607,698

Financing receivables summarized in the following two tables represent all loans that we are either not currently collecting, or those we feel it is probable we will not collect, all amounts due according to the contractual terms of the loan agreements (all loans that we have worked with the borrower to alleviate short-term cash flow issues, loans delinquent for more than 60 days at the reporting date, loans we have determined to be collateral dependent and loans that we have recorded specific impairments on that we feel may continue to have performance issues).

	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
June 30, 2014
Mortgage loans with an allowance	$	25,681	$	42,963	$	(17,282	)
Mortgage loans with no related allowance	2,656		2,656		—
	$	28,337	$	45,619	$	(17,282	)
December 31, 2013
Mortgage loans with an allowance	$	30,171	$	47,018	$	(16,847	)
Mortgage loans with no related allowance	3,264		3,264		—
	$	33,435	$	50,282	$	(16,847	)

	Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
Three months ended June 30, 2014
Mortgage loans with an allowance	$	27,054	$	600
Mortgage loans with no related allowance	2,656		13
	$	29,710	$	613
Three months ended June 30, 2013
Mortgage loans with an allowance	$	26,232	$	426
Mortgage loans with no related allowance	18,699		266
	$	44,931	$	692
Six months ended June 30, 2014
Mortgage loans with an allowance	$	27,236	$	1,235
Mortgage loans with no related allowance	2,656		—
	$	29,892	$	1,235
Six months ended June 30, 2013
Mortgage loans with an allowance	$	26,885	$	862
Mortgage loans with no related allowance	18,739		528
	$	45,624	$	1,390

A Troubled Debt Restructuring ("TDR") is a situation where we have granted a concession to a borrower for economic or legal reasons related to the borrower's financial difficulties that we would not otherwise consider. A mortgage loan that has been granted new terms, including workout terms as described previously, would be considered a TDR if it meets conditions that would indicate a borrower is experiencing financial difficulty and the new terms constitute a concession on our part. We analyze all loans where we have agreed to workout terms and all loans that we have refinanced to determine if they meet the definition of a TDR. We consider the following factors in determining whether or not a borrower is experiencing financial difficulty:

• borrower is in default,

• borrower has declared bankruptcy,

• there is growing concern about the borrower's ability to continue as a going concern,

• borrower has insufficient cash flows to service debt,

• borrower's inability to obtain funds from other sources, and

• there is a breach of financial covenants by the borrower.

If the borrower is determined to be in financial difficulty, we consider the following conditions to determine if the borrower was granted a concession:

• assets used to satisfy debt are less than our recorded investment,

• interest rate is modified,

• maturity date extension at an interest rate less than market rate,

• capitalization of interest,

• delaying principal and/or interest for a period of three months or more, and

• partial forgiveness of the balance or charge-off.

Mortgage loan workouts, refinances or restructures that are classified as TDRs are individually evaluated and measured for impairment. A summary of mortgage loans on commercial real estate with outstanding principal at June 30, 2014 and December 31, 2013 that we determined to be TDRs are as follows:

Geographic Region	Number of TDRs	Principal Balance Outstanding		Specific Loan Loss Allowance			Net Carrying Amount
		(Dollars in thousands)
June 30, 2014
South Atlantic	7	14,537		(3,911		)	10,626
East North Central	1	2,213		(467		)	1,746
West North Central	1	1,908		(474		)	1,434
	9	$	18,658	$	(4,852	)	$	13,806
December 31, 2013
East	1	$	3,712	$	(949	)	$	2,763
Mountain	7	22,140		(329		)	21,811
South Atlantic	7	13,930		(4,177		)	9,753
East North Central	1	2,219		(467		)	1,752
West North Central	1	1,938		(475		)	1,463
West South Central	1	1,714		(256		)	1,458
	18	$	45,653	$	(6,653	)	$	39,000

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Investments

6 Months Ended

Jun. 30, 2014

Investments [Abstract]

Investments

Investments

At June 30, 2014 and December 31, 2013, the amortized cost and fair value of fixed maturity securities and equity securities were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
June 30, 2014
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	38,590	$	310	$	(417	)	$	38,483
United States Government sponsored agencies	1,199,787		21,181		(35,627		)	1,185,341
United States municipalities, states and territories	3,188,026		324,759		(6,587		)	3,506,198
Foreign government obligations	181,120		13,335		(1,492		)	192,963
Corporate securities	17,916,567		1,371,622		(100,814		)	19,187,375
Residential mortgage backed securities	1,747,233		137,213		(13,881		)	1,870,565
Commercial mortgage backed securities	2,249,396		56,897		(10,197		)	2,296,096
Other asset backed securities	1,020,226		34,045		(13,720		)	1,040,551
	$	27,540,945	$	1,959,362	$	(182,735	)	$	29,317,572
Held for investment:
Corporate security	$	76,342	$	—	$	(9,771	)	$	66,571
Equity securities, available for sale:
Finance, insurance, and real estate	$	7,506	$	256	$	—		$	7,762
December 31, 2013
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	44,852	$	367	$	(2,294	)	$	42,925
United States Government sponsored agencies	1,313,776		1,875		(121,362		)	1,194,289
United States municipalities, states and territories	3,181,032		164,785		(39,074		)	3,306,743
Foreign government obligations	86,112		8,907		(3,462		)	91,557
Corporate securities	17,142,118		606,948		(516,029		)	17,233,037
Residential mortgage backed securities	1,895,913		119,230		(43,183		)	1,971,960
Commercial mortgage backed securities	1,821,988		3,287		(89,815		)	1,735,460
Other asset backed securities	1,041,939		23,300		(30,763		)	1,034,476
	$	26,527,730	$	928,699	$	(845,982	)	$	26,610,447
Held for investment:
Corporate security	$	76,255	$	—	$	(15,415	)	$	60,840
Equity securities, available for sale:
Finance, insurance, and real estate	$	7,503	$	275	$	—		$	7,778

At June 30, 2014, 31% of our fixed income securities have call features, of which 0.5% ($0.1 billion) were subject to call redemption and another 4% ($1.0 billion) will become subject to call redemption during the next twelve months. $0.5 billion of U.S. Government sponsored agency securities were called during April 2014.

The amortized cost and fair value of fixed maturity securities at June 30, 2014, by contractual maturity, are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. All of our mortgage and other asset backed securities provide for periodic payments throughout their lives and are shown below as separate lines.

	Available for sale				Held for investment
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Due in one year or less	$	54,110	$	55,291	$	—	$	—
Due after one year through five years	1,126,677		1,283,155		—		—
Due after five years through ten years	8,235,605		8,498,193		—		—
Due after ten years through twenty years	6,561,087		6,996,599		—		—
Due after twenty years	6,546,611		7,277,122		76,342		66,571
	22,524,090		24,110,360		76,342		66,571
Residential mortgage backed securities	1,747,233		1,870,565		—		—
Commercial mortgage backed securities	2,249,396		2,296,096		—		—
Other asset backed securities	1,020,226		1,040,551		—		—
	$	27,540,945	$	29,317,572	$	76,342	$	66,571

Net unrealized gains on available for sale fixed maturity securities and equity securities reported as a separate component of stockholders' equity were comprised of the following:

	June 30, 2014			December 31, 2013
	(Dollars in thousands)
Net unrealized gains on available for sale fixed maturity securities and equity securities	$	1,776,883		$	82,992
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements	(956,057		)	(46,588		)
Deferred income tax valuation allowance reversal	22,534			22,534
Deferred income tax expense	(287,289		)	(12,742		)
Net unrealized gains reported as accumulated other comprehensive income	$	556,071		$	46,196

The National Association of Insurance Commissioners (“NAIC”) assigns designations to fixed maturity securities. These designations range from Class 1 (highest quality) to Class 6 (lowest quality). In general, securities are assigned a designation based upon the ratings they are given by the Nationally Recognized Statistical Rating Organizations (“NRSRO’s”). The NAIC designations are utilized by insurers in preparing their annual statutory statements. NAIC Class 1 and 2 designations are considered “investment grade” while NAIC Class 3 through 6 designations are considered “non-investment grade.” Based on the NAIC designations, we had 98% of our fixed maturity portfolio rated investment grade at June 30, 2014 and December 31, 2013.

The following table summarizes the credit quality, as determined by NAIC designation, of our fixed maturity portfolio as of the dates indicated:

	June 30, 2014				December 31, 2013
NAIC Designation	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
1	$	17,311,646	$	18,519,001	$	16,394,654	$	16,531,250
2	9,739,539		10,305,239		9,630,251		9,598,399
3	497,545		493,350		502,822		474,165
4	67,353		65,857		74,493		66,078
5	—		—		—		—
6	1,204		696		1,765		1,395
	$	27,617,287	$	29,384,143	$	26,603,985	$	26,671,287

The following table shows our investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities (consisting of 450 and 1,047 securities, respectively) have been in a continuous unrealized loss position, at June 30, 2014 and December 31, 2013:

	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
June 30, 2014
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	—	$	—		$	33,569	$	(417	)	$	33,569	$	(417	)
United States Government sponsored agencies	1,441		(1		)	601,569		(35,626		)	603,010		(35,627		)
United States municipalities, states and territories	32,649		(147		)	185,877		(6,440		)	218,526		(6,587		)
Foreign government obligations	4,943		(32		)	12,984		(1,460		)	17,927		(1,492		)
Corporate securities:
Finance, insurance and real estate	46,685		(1,022		)	711,819		(25,301		)	758,504		(26,323		)
Manufacturing, construction and mining	100,820		(2,063		)	1,404,064		(33,103		)	1,504,884		(35,166		)
Utilities and related sectors	103,620		(1,397		)	602,031		(21,280		)	705,651		(22,677		)
Wholesale/retail trade	32,148		(633		)	102,446		(4,671		)	134,594		(5,304		)
Services, media and other	118,443		(1,623		)	338,878		(9,721		)	457,321		(11,344		)
Residential mortgage backed securities	89,639		(2,094		)	261,664		(11,787		)	351,303		(13,881		)
Commercial mortgage backed securities	47,869		(325		)	497,112		(9,872		)	544,981		(10,197		)
Other asset backed securities	61,023		(1,922		)	269,435		(11,798		)	330,458		(13,720		)
	$	639,280	$	(11,259	)	$	5,021,448	$	(171,476	)	$	5,660,728	$	(182,735	)
Held for investment:
Corporate security:
Insurance	$	—	$	—		$	66,571	$	(9,771	)	$	66,571	$	(9,771	)
December 31, 2013
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	32,969	$	(2,294	)	$	—	$	—		$	32,969	$	(2,294	)
United States Government sponsored agencies	692,320		(88,671		)	467,309		(32,691		)	1,159,629		(121,362		)
United States municipalities, states and territories	614,056		(39,074		)	—		—			614,056		(39,074		)
Foreign government obligations	26,298		(3,462		)	—		—			26,298		(3,462		)
Corporate securities:
Finance, insurance and real estate	1,690,846		(92,426		)	153,037		(12,873		)	1,843,883		(105,299		)
Manufacturing, construction and mining	3,370,775		(191,245		)	93,608		(16,088		)	3,464,383		(207,333		)
Utilities and related sectors	1,829,868		(102,758		)	83,550		(11,547		)	1,913,418		(114,305		)
Wholesale/retail trade	428,407		(25,189		)	17,687		(1,992		)	446,094		(27,181		)
Services, media and other	834,699		(51,508		)	107,242		(10,403		)	941,941		(61,911		)
Residential mortgage backed securities	309,599		(41,080		)	31,739		(2,103		)	341,338		(43,183		)
Commercial mortgage backed securities	1,450,143		(83,814		)	51,099		(6,001		)	1,501,242		(89,815		)
Other asset backed securities	356,018		(20,426		)	92,372		(10,337		)	448,390		(30,763		)
	$	11,635,998	$	(741,947	)	$	1,097,643	$	(104,035	)	$	12,733,641	$	(845,982	)
Held for investment:
Corporate security:
Insurance	$	—	$	—		$	60,840	$	(15,415	)	$	60,840	$	(15,415	)

The following is a description of the factors causing the temporary unrealized losses by investment category as of June 30, 2014:

United States Government sponsored agencies: These securities are relatively long in duration; however, they are callable in less than 12 months making the value of such securities sensitive to changes in market interest rates. The timing of when some of these securities were purchased gave rise to unrealized losses at June 30, 2014.

United States municipalities, states and territories: These securities are relatively long in duration and their fair values are sensitive to changes in market interest rates. The timing of the purchase of these securities have resulted in unrealized losses.

Corporate securities: The unrealized losses in these securities are due partially to the timing of purchases. These securities carry yields less than those available at June 30, 2014. In addition, a small number of securities have seen their credit spreads remain wide due to issuer or industry specific news while some financial and industrial sector credit spreads remain wide due to continued economic uncertainty and concerns of economic instability.

Residential mortgage backed securities: At June 30, 2014, we had no exposure to sub-prime residential mortgage backed securities. All of our residential mortgage backed securities are pools of first-lien residential mortgage loans. Substantially all of the securities that we own are in the most senior tranche of the securitization in which they are structured and are not subordinated to any other tranche. Our "Alt-A" residential mortgage backed securities are comprised of 35 securities with a total amortized cost basis of $265.4 million and a fair value of $294.7 million. Despite recent improvements in the capital markets, the fair values of RMBS with weaker borrower characteristics continue at prices below amortized cost. These RMBS prices will likely remain below our cost basis until the housing market is able to absorb current and future foreclosures.

Commercial mortgage backed securities: The unrealized losses in these securities are due partially to the timing of purchases. A number of purchases were at yields lower than what could be executed at the end of this quarter due to the increase in the treasury yield since the time of purchase. Yield spreads for commercial mortgage backed securities have narrowed but management believes remain attractive.

Other asset backed securities: The unrealized losses in these securities are predominantly assigned to financial sector capital trust securities which have longer maturity dates and have declined in price due to prolonged stress in the financial sector. No securities in an unrealized loss position are rated below investment grade.

Approximately 89% and 95% of the unrealized losses on fixed maturity securities shown in the above table for June 30, 2014 and December 31, 2013, respectively, are on securities that are rated investment grade, defined as being the highest two NAIC designations. All of the securities with unrealized losses are current with respect to the payment of principal and interest.

Changes in net unrealized gains on investments for the three and six months ended June 30, 2014 and 2013 are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Fixed maturity securities held for investment carried at amortized cost	$	1,607		$	(964	)	$	5,644		$	(353	)
Investments carried at fair value:
Fixed maturity securities, available for sale	$	716,779		$	(1,339,484	)	$	1,693,910		$	(1,458,554	)
Equity securities, available for sale	(6		)	(10,168		)	(19		)	(7,949		)
	716,773			(1,349,652		)	1,693,891			(1,466,503		)
Adjustment for effect on other balance sheet accounts:
Deferred policy acquisition costs and deferred sales inducements	(372,717		)	707,525			(909,469		)	785,693
Deferred income tax asset/liability	(120,420		)	224,744			(274,547		)	238,283
	(493,137		)	932,269			(1,184,016		)	1,023,976
Change in net unrealized gains on investments carried at fair value	$	223,636		$	(417,383	)	$	509,875		$	(442,527	)

Proceeds from sales of available for sale securities for the six months ended June 30, 2014 and 2013 were $130.4 million and $820.2 million, respectively. Scheduled principal repayments, calls and tenders for available for sale securities for the six months ended June 30, 2014 and 2013 were $809.0 million and $1.6 billion, respectively.

Realized gains and losses on sales are determined on the basis of specific identification of investments based on the trade date. Net realized gains (losses) on investments, excluding net OTTI losses for the three and six months ended June 30, 2014 and 2013, are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Available for sale fixed maturity securities:
Gross realized gains	$	1,173		$	7,628		$	1,357		$	20,643
Gross realized losses	(71		)	(823		)	(762		)	(3,010		)
	1,102			6,805			595			17,633
Available for sale equity securities:
Gross realized gains	—			9,571			—			9,571
Other investments:
Gain on sale of real estate	282			715			1,038			1,304
Loss on sale of real estate	(231		)	—			(231		)	(466		)
Impairment losses on real estate	—			(145		)	(799		)	(145		)
	51			570			8			693
Mortgage loans on real estate:
Increase in allowance for credit losses	(3,383		)	(1,257		)	(3,547		)	(1,623		)
	$	(2,230	)	$	15,689		$	(2,944	)	$	26,274

Losses on available for sale fixed maturity securities were realized primarily due to strategies in place to reposition the fixed maturity security portfolio that result in improved net investment income, risk or duration profiles as they pertain to our asset liability management.

We review and analyze all investments on an ongoing basis for changes in market interest rates and credit deterioration. This review process includes analyzing our ability to recover the amortized cost basis of each investment that has a fair value that is materially lower than its amortized cost and requires a high degree of management judgment and involves uncertainty. The evaluation of securities for other than temporary impairments is a quantitative and qualitative process, which is subject to risks and uncertainties.

We have a policy and process in place to identify securities that could potentially have impairments that are other than temporary. This process involves monitoring market events and other items that could impact issuers. The evaluation includes but is not limited to such factors as:

• the length of time and the extent to which the fair value has been less than amortized cost or cost;

• whether the issuer is current on all payments and all contractual payments have been made as agreed;

• the remaining payment terms and the financial condition and near-term prospects of the issuer;

• the lack of ability to refinance due to liquidity problems in the credit market;

• the fair value of any underlying collateral;

• the existence of any credit protection available;

• our intent to sell and whether it is more likely than not we would be required to sell prior to recovery for debt securities;

• our assessment in the case of equity securities including perpetual preferred stocks with credit deterioration that the security cannot recover to cost in a reasonable period of time;

• our intent and ability to retain equity securities for a period of time sufficient to allow for recovery;

• consideration of rating agency actions; and

• changes in estimated cash flows of mortgage and asset backed securities.

We determine whether other than temporary impairment losses should be recognized for debt and equity securities by assessing all facts and circumstances surrounding each security. Where the decline in fair value of debt securities is attributable to changes in market interest rates or to factors such as market volatility, liquidity and spread widening, and we anticipate recovery of all contractual or expected cash flows, we do not consider these investments to be other than temporarily impaired because we do not intend to sell these investments and it is not more likely than not we will be required to sell these investments before a recovery of amortized cost, which may be maturity. For equity securities, we recognize an impairment charge in the period in which we do not have the intent and ability to hold the securities until recovery of cost or we determine that the security will not recover to book value within a reasonable period of time. We determine what constitutes a reasonable period of time on a security-by-security basis by considering all the evidence available to us, including the magnitude of any unrealized loss and its duration. In any event, this period does not exceed 18 months from the date of impairment for perpetual preferred securities for which there is evidence of deterioration in credit of the issuer and common equity securities. For perpetual preferred securities absent evidence of a deterioration in credit of the issuer we apply an impairment model, including an anticipated recovery period, similar to a debt security.

Other than temporary impairment losses on equity securities are recognized in operations. If we intend to sell a debt security or if it is more likely than not that we will be required to sell a debt security before recovery of its amortized cost basis, other than temporary impairment has occurred and the difference between amortized cost and fair value will be recognized as a loss in operations.

If we do not intend to sell and it is not more likely than not we will be required to sell the debt security but also do not expect to recover the entire amortized cost basis of the security, an impairment loss would be recognized in operations in the amount of the expected credit loss. We determine the amount of expected credit loss by calculating the present value of the cash flows expected to be collected discounted at each security's acquisition yield based on our consideration of whether the security was of high credit quality at the time of acquisition. The difference between the present value of expected future cash flows and the amortized cost basis of the security is the amount of credit loss recognized in operations. The remaining amount of the other than temporary impairment is recognized in other comprehensive income (loss).

The determination of the credit loss component of a mortgage backed security is based on a number of factors. The primary consideration in this evaluation process is the issuer's ability to meet current and future interest and principal payments as contractually stated at time of purchase. Our review of these securities includes an analysis of the cash flow modeling under various default scenarios considering independent third party benchmarks, the seniority of the specific tranche within the structure of the security, the composition of the collateral and the actual default, loss severity and prepayment experience exhibited. With the input of third party assumptions for default projections, loss severity and prepayment expectations, we evaluate the cash flow projections to determine whether the security is performing in accordance with its contractual obligation.

We utilize the models from a leading structured product software specialist serving institutional investors. These models incorporate each security's seniority and cash flow structure. In circumstances where the analysis implies a potential for principal loss at some point in the future, we use the "best estimate" cash flow projection discounted at the security's effective yield at acquisition to determine the amount of our potential credit loss associated with this security. The discounted expected future cash flows equates to our expected recovery value. Any shortfall of the expected recovery when compared to the amortized cost of the security will be recorded as the credit loss component of other than temporary impairment.

The cash flow modeling is performed on a security-by-security basis and incorporates actual cash flows on the residential mortgage backed securities through the current period, as well as the projection of remaining cash flows using a number of assumptions including default rates, prepayment rates and loss severity rates. The default curves we use are tailored to the Prime or Alt-A residential mortgage backed securities that we own, which assume lower default rates and loss severity for Prime securities versus Alt-A securities. These default curves are scaled higher or lower depending on factors such as current underlying mortgage loan performance, rating agency loss projections, loan to value ratios, geographic diversity, as well as other appropriate considerations.

The following table presents the range of significant assumptions used to determine the credit loss component of other than temporary impairments we have recognized on residential mortgage backed securities for the six months ended June 30, 2014 and 2013, which are all senior level tranches within the structure of the securities:

		Discount Rate				Default Rate				Loss Severity
Sector	Vintage	Min		Max		Min		Max		Min		Max
Six months ended June 30, 2014
Prime	2005	7.5	%	7.5	%	15	%	15	%	50	%	50	%
	2006	6.5	%	7.4	%	11	%	12	%	50	%	50	%
Alt-A	2005	5.6	%	6.4	%	87	%	87	%	2	%	2	%
Six months ended June 30, 2013
Prime	2003	5.1	%	5.1	%	2	%	2	%	30	%	30	%
	2005	6.5	%	7.7	%	8	%	17	%	50	%	50	%
	2006	6.0	%	6.9	%	9	%	16	%	50	%	50	%
	2007	6.5	%	6.7	%	12	%	25	%	40	%	60	%
	2008	6.6	%	6.6	%	16	%	16	%	45	%	45	%
Alt-A	2005	5.6	%	8.7	%	15	%	25	%	5	%	65	%
	2007	6.2	%	6.9	%	38	%	52	%	60	%	65	%

The determination of the credit loss component of a corporate bond (including redeemable preferred stocks) is based on the underlying financial performance of the issuer and their ability to meet their contractual obligations. Considerations in our evaluation include, but are not limited to, credit rating changes, financial statement and ratio analysis, changes in management, significant changes in credit spreads, breaches of financial covenants and a review of the economic outlook for the industry and markets in which they trade. In circumstances where an issuer appears unlikely to meet its future obligation, or the security's price decline is deemed other than temporary, an estimate of credit loss is determined. Credit loss is calculated using default probabilities as derived from the credit default swaps markets in conjunction with recovery rates derived from independent third party analysis or a best estimate of credit loss. This credit loss rate is then incorporated into a present value calculation based on an expected principal loss in the future discounted at the yield at the date of purchase and compared to amortized cost to determine the amount of credit loss associated with the security.

In addition, for debt securities which we do not intend to sell and it is not more likely than not we will be required to sell, but our intent changes due to changes or events that could not have been reasonably anticipated, an other than temporary impairment charge is recognized. Once an impairment charge has been recorded, we then continue to review the other than temporarily impaired securities for appropriate valuation on an ongoing basis. Unrealized losses may be recognized in future periods through a charge to earnings, should we later conclude that the decline in fair value below amortized cost is other than temporary pursuant to our accounting policy described above. The use of different methodologies and assumptions to determine the fair value of investments and the timing and amount of impairments may have a material effect on the amounts presented in our consolidated financial statements.

The following table summarizes other than temporary impairments for the three and six months ended June 30, 2014 and 2013, by asset type:

	Number of Securities	Total OTTI Losses			Portion of OTTI Losses Recognized from Other Comprehensive Income			Net OTTI Losses Recognized in Operations
		(Dollars in thousands)
Three months ended June 30, 2014
Fixed maturity securities, available for sale:
Residential mortgage backed securities	3	$	—		$	(594	)	$	(594	)
Three months ended June 30, 2013
Fixed maturity securities, available for sale:
United States Government sponsored agencies	2	$	(2,775	)	$	—		$	(2,775	)
Six months ended June 30, 2014
Fixed maturity securities, available for sale:
Residential mortgage backed securities	5	$	—		$	(1,499	)	$	(1,499	)
Six months ended June 30, 2013
Fixed maturity securities, available for sale:
United States Government sponsored agencies	2	$	(2,775	)	$	—		$	(2,775	)
Corporate securities:
Industrial	1	(1,761		)	—			(1,761		)
Residential mortgage backed securities	5	—			(1,048		)	(1,048		)
Equity security, available for sale:
Industrial	1	(428		)	—			(428		)
	9	$	(4,964	)	$	(1,048	)	$	(6,012	)

The cumulative portion of other than temporary impairments determined to be credit losses which have been recognized in operations for debt securities are summarized as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Cumulative credit loss at beginning of period	$	(126,865	)	$	(129,813	)	$	(125,960	)	$	(134,027	)
Credit losses on securities for which OTTI has not previously been recognized	—			(2,775		)	—			(4,536		)
Additional credit losses on securities for which OTTI has previously been recognized	(594		)	—			(1,499		)	(1,048		)
Accumulated losses on securities that were disposed of during the period	—			4,075			—			11,098
Cumulative credit loss at end of period	$	(127,459	)	$	(128,513	)	$	(127,459	)	$	(128,513	)

The following table summarizes the cumulative noncredit portion of OTTI and the change in fair value since recognition of OTTI, both of which were recognized in other comprehensive income (loss), by major type of security, for securities that are part of our investment portfolio at June 30, 2014 and December 31, 2013:

	Amortized Cost		OTTI Recognized in Other Comprehensive Income			Change in Fair Value Since OTTI was Recognized		Fair Value
	(Dollars in thousands)
June 30, 2014
Fixed maturity securities, available for sale:
Corporate securities	$	—	$	—		$	27	$	27
Residential mortgage backed securities	625,765		(174,835		)	222,567		673,497
	$	625,765	$	(174,835	)	$	222,594	$	673,524
December 31, 2013
Fixed maturity securities, available for sale:
Corporate securities	$	—	$	—		$	20	$	20
Residential mortgage backed securities	679,265		(176,334		)	216,061		718,992
	$	679,265	$	(176,334	)	$	216,081	$	719,012

XML

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table sets forth the computation of earnings per common share and earnings per common share - assuming dilution:

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	(Dollars in thousands, except per share data)
Numerator:
Net income - numerator for earnings per common share	$	36,744	$	120,113	$	26,991	$	146,144
Denominator:
Weighted average common shares outstanding (1)	74,461,264		64,254,387		73,495,286		63,786,577
Effect of dilutive securities:
Convertible senior notes	2,259,425		5,009,622		2,843,987		5,082,208
2015 warrants	1,595,519		—		1,981,815		—
Stock options and deferred compensation agreements	1,154,726		1,118,056		1,220,996		1,013,455
Restricted stock units	46,870		—		40,679		—
Denominator for earnings per common share - assuming dilution	79,517,804		70,382,065		79,582,763		69,882,240
Earnings per common share	$	0.49	$	1.87	$	0.37	$	2.29
Earnings per common share - assuming dilution	$	0.46	$	1.71	$	0.34	$	2.09

(1) Weighted average common shares outstanding include shares vested under the NMO Deferred Compensation Plan and exclude unallocated shares held by the ESOP.

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

Options to purchase shares of our common stock that were outstanding during the respective periods indicated but were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the common shares are as follows:

Period	Number of Shares	Range of Exercise Prices
		Minimum	Maximum
Three months ended June 30, 2014	1,277,650	$24.79	$24.79
Three months ended June 30, 2013	—	$—	$—
Six months ended June 30, 2014	1,277,650	$24.79	$24.79
Six months ended June 30, 2013	—	$—	$—

XML

Investments (Tables)

6 Months Ended

Jun. 30, 2014

Investments [Abstract]

Schedule of Fixed Maturity and Equity Securities

At June 30, 2014 and December 31, 2013, the amortized cost and fair value of fixed maturity securities and equity securities were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
June 30, 2014
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	38,590	$	310	$	(417	)	$	38,483
United States Government sponsored agencies	1,199,787		21,181		(35,627		)	1,185,341
United States municipalities, states and territories	3,188,026		324,759		(6,587		)	3,506,198
Foreign government obligations	181,120		13,335		(1,492		)	192,963
Corporate securities	17,916,567		1,371,622		(100,814		)	19,187,375
Residential mortgage backed securities	1,747,233		137,213		(13,881		)	1,870,565
Commercial mortgage backed securities	2,249,396		56,897		(10,197		)	2,296,096
Other asset backed securities	1,020,226		34,045		(13,720		)	1,040,551
	$	27,540,945	$	1,959,362	$	(182,735	)	$	29,317,572
Held for investment:
Corporate security	$	76,342	$	—	$	(9,771	)	$	66,571
Equity securities, available for sale:
Finance, insurance, and real estate	$	7,506	$	256	$	—		$	7,762
December 31, 2013
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	44,852	$	367	$	(2,294	)	$	42,925
United States Government sponsored agencies	1,313,776		1,875		(121,362		)	1,194,289
United States municipalities, states and territories	3,181,032		164,785		(39,074		)	3,306,743
Foreign government obligations	86,112		8,907		(3,462		)	91,557
Corporate securities	17,142,118		606,948		(516,029		)	17,233,037
Residential mortgage backed securities	1,895,913		119,230		(43,183		)	1,971,960
Commercial mortgage backed securities	1,821,988		3,287		(89,815		)	1,735,460
Other asset backed securities	1,041,939		23,300		(30,763		)	1,034,476
	$	26,527,730	$	928,699	$	(845,982	)	$	26,610,447
Held for investment:
Corporate security	$	76,255	$	—	$	(15,415	)	$	60,840
Equity securities, available for sale:
Finance, insurance, and real estate	$	7,503	$	275	$	—		$	7,778

Schedule of Fixed Maturity Securities by Contractual Maturity Date

The amortized cost and fair value of fixed maturity securities at June 30, 2014, by contractual maturity, are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. All of our mortgage and other asset backed securities provide for periodic payments throughout their lives and are shown below as separate lines.

	Available for sale				Held for investment
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Due in one year or less	$	54,110	$	55,291	$	—	$	—
Due after one year through five years	1,126,677		1,283,155		—		—
Due after five years through ten years	8,235,605		8,498,193		—		—
Due after ten years through twenty years	6,561,087		6,996,599		—		—
Due after twenty years	6,546,611		7,277,122		76,342		66,571
	22,524,090		24,110,360		76,342		66,571
Residential mortgage backed securities	1,747,233		1,870,565		—		—
Commercial mortgage backed securities	2,249,396		2,296,096		—		—
Other asset backed securities	1,020,226		1,040,551		—		—
	$	27,540,945	$	29,317,572	$	76,342	$	66,571

Schedule of Components of Net Unrealized Gains on Available for Sale Fixed Maturity and Equity Securities Reported as Separate Component of Stockholders' Equity

Net unrealized gains on available for sale fixed maturity securities and equity securities reported as a separate component of stockholders' equity were comprised of the following:

	June 30, 2014			December 31, 2013
	(Dollars in thousands)
Net unrealized gains on available for sale fixed maturity securities and equity securities	$	1,776,883		$	82,992
Adjustments for assumed changes in amortization of deferred policy acquisition costs and deferred sales inducements	(956,057		)	(46,588		)
Deferred income tax valuation allowance reversal	22,534			22,534
Deferred income tax expense	(287,289		)	(12,742		)
Net unrealized gains reported as accumulated other comprehensive income	$	556,071		$	46,196

Schedule of Credit Quality of Fixed Maturity Security Portfolio by NAIC Designation

The following table summarizes the credit quality, as determined by NAIC designation, of our fixed maturity portfolio as of the dates indicated:

	June 30, 2014				December 31, 2013
NAIC Designation	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
1	$	17,311,646	$	18,519,001	$	16,394,654	$	16,531,250
2	9,739,539		10,305,239		9,630,251		9,598,399
3	497,545		493,350		502,822		474,165
4	67,353		65,857		74,493		66,078
5	—		—		—		—
6	1,204		696		1,765		1,395
	$	27,617,287	$	29,384,143	$	26,603,985	$	26,671,287

Schedule of Gross Unrealized Losses on Investments, By Category and Length of Time

The following table shows our investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities (consisting of 450 and 1,047 securities, respectively) have been in a continuous unrealized loss position, at June 30, 2014 and December 31, 2013:

	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
June 30, 2014
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	—	$	—		$	33,569	$	(417	)	$	33,569	$	(417	)
United States Government sponsored agencies	1,441		(1		)	601,569		(35,626		)	603,010		(35,627		)
United States municipalities, states and territories	32,649		(147		)	185,877		(6,440		)	218,526		(6,587		)
Foreign government obligations	4,943		(32		)	12,984		(1,460		)	17,927		(1,492		)
Corporate securities:
Finance, insurance and real estate	46,685		(1,022		)	711,819		(25,301		)	758,504		(26,323		)
Manufacturing, construction and mining	100,820		(2,063		)	1,404,064		(33,103		)	1,504,884		(35,166		)
Utilities and related sectors	103,620		(1,397		)	602,031		(21,280		)	705,651		(22,677		)
Wholesale/retail trade	32,148		(633		)	102,446		(4,671		)	134,594		(5,304		)
Services, media and other	118,443		(1,623		)	338,878		(9,721		)	457,321		(11,344		)
Residential mortgage backed securities	89,639		(2,094		)	261,664		(11,787		)	351,303		(13,881		)
Commercial mortgage backed securities	47,869		(325		)	497,112		(9,872		)	544,981		(10,197		)
Other asset backed securities	61,023		(1,922		)	269,435		(11,798		)	330,458		(13,720		)
	$	639,280	$	(11,259	)	$	5,021,448	$	(171,476	)	$	5,660,728	$	(182,735	)
Held for investment:
Corporate security:
Insurance	$	—	$	—		$	66,571	$	(9,771	)	$	66,571	$	(9,771	)
December 31, 2013
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	32,969	$	(2,294	)	$	—	$	—		$	32,969	$	(2,294	)
United States Government sponsored agencies	692,320		(88,671		)	467,309		(32,691		)	1,159,629		(121,362		)
United States municipalities, states and territories	614,056		(39,074		)	—		—			614,056		(39,074		)
Foreign government obligations	26,298		(3,462		)	—		—			26,298		(3,462		)
Corporate securities:
Finance, insurance and real estate	1,690,846		(92,426		)	153,037		(12,873		)	1,843,883		(105,299		)
Manufacturing, construction and mining	3,370,775		(191,245		)	93,608		(16,088		)	3,464,383		(207,333		)
Utilities and related sectors	1,829,868		(102,758		)	83,550		(11,547		)	1,913,418		(114,305		)
Wholesale/retail trade	428,407		(25,189		)	17,687		(1,992		)	446,094		(27,181		)
Services, media and other	834,699		(51,508		)	107,242		(10,403		)	941,941		(61,911		)
Residential mortgage backed securities	309,599		(41,080		)	31,739		(2,103		)	341,338		(43,183		)
Commercial mortgage backed securities	1,450,143		(83,814		)	51,099		(6,001		)	1,501,242		(89,815		)
Other asset backed securities	356,018		(20,426		)	92,372		(10,337		)	448,390		(30,763		)
	$	11,635,998	$	(741,947	)	$	1,097,643	$	(104,035	)	$	12,733,641	$	(845,982	)
Held for investment:
Corporate security:
Insurance	$	—	$	—		$	60,840	$	(15,415	)	$	60,840	$	(15,415	)

Schedule of Changes in Net Unrealized Gains/Losses on Investments

Changes in net unrealized gains on investments for the three and six months ended June 30, 2014 and 2013 are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Fixed maturity securities held for investment carried at amortized cost	$	1,607		$	(964	)	$	5,644		$	(353	)
Investments carried at fair value:
Fixed maturity securities, available for sale	$	716,779		$	(1,339,484	)	$	1,693,910		$	(1,458,554	)
Equity securities, available for sale	(6		)	(10,168		)	(19		)	(7,949		)
	716,773			(1,349,652		)	1,693,891			(1,466,503		)
Adjustment for effect on other balance sheet accounts:
Deferred policy acquisition costs and deferred sales inducements	(372,717		)	707,525			(909,469		)	785,693
Deferred income tax asset/liability	(120,420		)	224,744			(274,547		)	238,283
	(493,137		)	932,269			(1,184,016		)	1,023,976
Change in net unrealized gains on investments carried at fair value	$	223,636		$	(417,383	)	$	509,875		$	(442,527	)

Net Realized Gains (Losses) on Investments

Net realized gains (losses) on investments, excluding net OTTI losses for the three and six months ended June 30, 2014 and 2013, are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Available for sale fixed maturity securities:
Gross realized gains	$	1,173		$	7,628		$	1,357		$	20,643
Gross realized losses	(71		)	(823		)	(762		)	(3,010		)
	1,102			6,805			595			17,633
Available for sale equity securities:
Gross realized gains	—			9,571			—			9,571
Other investments:
Gain on sale of real estate	282			715			1,038			1,304
Loss on sale of real estate	(231		)	—			(231		)	(466		)
Impairment losses on real estate	—			(145		)	(799		)	(145		)
	51			570			8			693
Mortgage loans on real estate:
Increase in allowance for credit losses	(3,383		)	(1,257		)	(3,547		)	(1,623		)
	$	(2,230	)	$	15,689		$	(2,944	)	$	26,274

Significant Assumptions Used to Determine the Credit Loss Component of Other Than Temporary Impairment on Residential Mortgage Backed Securities

The following table presents the range of significant assumptions used to determine the credit loss component of other than temporary impairments we have recognized on residential mortgage backed securities for the six months ended June 30, 2014 and 2013, which are all senior level tranches within the structure of the securities:

		Discount Rate				Default Rate				Loss Severity
Sector	Vintage	Min		Max		Min		Max		Min		Max
Six months ended June 30, 2014
Prime	2005	7.5	%	7.5	%	15	%	15	%	50	%	50	%
	2006	6.5	%	7.4	%	11	%	12	%	50	%	50	%
Alt-A	2005	5.6	%	6.4	%	87	%	87	%	2	%	2	%
Six months ended June 30, 2013
Prime	2003	5.1	%	5.1	%	2	%	2	%	30	%	30	%
	2005	6.5	%	7.7	%	8	%	17	%	50	%	50	%
	2006	6.0	%	6.9	%	9	%	16	%	50	%	50	%
	2007	6.5	%	6.7	%	12	%	25	%	40	%	60	%
	2008	6.6	%	6.6	%	16	%	16	%	45	%	45	%
Alt-A	2005	5.6	%	8.7	%	15	%	25	%	5	%	65	%
	2007	6.2	%	6.9	%	38	%	52	%	60	%	65	%

Other Than Temporary Impairment by Asset Type

The following table summarizes other than temporary impairments for the three and six months ended June 30, 2014 and 2013, by asset type:

	Number of Securities	Total OTTI Losses			Portion of OTTI Losses Recognized from Other Comprehensive Income			Net OTTI Losses Recognized in Operations
		(Dollars in thousands)
Three months ended June 30, 2014
Fixed maturity securities, available for sale:
Residential mortgage backed securities	3	$	—		$	(594	)	$	(594	)
Three months ended June 30, 2013
Fixed maturity securities, available for sale:
United States Government sponsored agencies	2	$	(2,775	)	$	—		$	(2,775	)
Six months ended June 30, 2014
Fixed maturity securities, available for sale:
Residential mortgage backed securities	5	$	—		$	(1,499	)	$	(1,499	)
Six months ended June 30, 2013
Fixed maturity securities, available for sale:
United States Government sponsored agencies	2	$	(2,775	)	$	—		$	(2,775	)
Corporate securities:
Industrial	1	(1,761		)	—			(1,761		)
Residential mortgage backed securities	5	—			(1,048		)	(1,048		)
Equity security, available for sale:
Industrial	1	(428		)	—			(428		)
	9	$	(4,964	)	$	(1,048	)	$	(6,012	)

Other Than Temporary Impairment, Credit Losses Recognized in Earnings

The cumulative portion of other than temporary impairments determined to be credit losses which have been recognized in operations for debt securities are summarized as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Cumulative credit loss at beginning of period	$	(126,865	)	$	(129,813	)	$	(125,960	)	$	(134,027	)
Credit losses on securities for which OTTI has not previously been recognized	—			(2,775		)	—			(4,536		)
Additional credit losses on securities for which OTTI has previously been recognized	(594		)	—			(1,499		)	(1,048		)
Accumulated losses on securities that were disposed of during the period	—			4,075			—			11,098
Cumulative credit loss at end of period	$	(127,459	)	$	(128,513	)	$	(127,459	)	$	(128,513	)

Schedule of Other Than Temporary Impairment Losses, Investments

The following table summarizes the cumulative noncredit portion of OTTI and the change in fair value since recognition of OTTI, both of which were recognized in other comprehensive income (loss), by major type of security, for securities that are part of our investment portfolio at June 30, 2014 and December 31, 2013:

	Amortized Cost		OTTI Recognized in Other Comprehensive Income			Change in Fair Value Since OTTI was Recognized		Fair Value
	(Dollars in thousands)
June 30, 2014
Fixed maturity securities, available for sale:
Corporate securities	$	—	$	—		$	27	$	27
Residential mortgage backed securities	625,765		(174,835		)	222,567		673,497
	$	625,765	$	(174,835	)	$	222,594	$	673,524
December 31, 2013
Fixed maturity securities, available for sale:
Corporate securities	$	—	$	—		$	20	$	20
Residential mortgage backed securities	679,265		(176,334		)	216,061		718,992
	$	679,265	$	(176,334	)	$	216,081	$	719,012

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

We are occasionally involved in litigation, both as a defendant and as a plaintiff. In addition, state regulatory bodies, such as state insurance departments, the SEC, FINRA, the Department of Labor, and other regulatory bodies regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, the Employee Retirement Income Security Act of 1974, as amended, and laws governing the activities of broker-dealers.

In accordance with applicable accounting guidelines, we establish an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. As a litigation or regulatory matter is developing we, in conjunction with outside counsel, evaluate on an ongoing basis whether the matter presents a loss contingency that meets conditions indicating the need for accrual and/or disclosure, and if not the matter will continue to be monitored for further developments. If and when the loss contingency related to litigation or regulatory matters is deemed to be both probable and estimable, we will establish an accrued liability with respect to that matter and will continue to monitor the matter for further developments that may affect the amount of the accrued liability.

In recent years, companies in the life insurance and annuity business have faced litigation, including class action lawsuits, alleging improper product design, improper sales practices and similar claims. We were a defendant in a purported class action, McCormack, et al. v. American Equity Investment Life Insurance Company, et al., in the United States District Court for the Central District of California, Western Division and Anagnostis v. American Equity, et al., coordinated in the Central District, entitled, In Re: American Equity Annuity Practices and Sales Litigation (complaint filed September 7, 2005) (the "Los Angeles Case"), involving allegations of improper sales practices and similar claims as described below.

The Los Angeles Case was a consolidated action involving several lawsuits filed by putative class members seeking class action status for a national class of purchasers of annuities issued by us. The allegations generally attacked the suitability of sales of deferred annuity products to persons over the age of 65. The plaintiffs sought rescission and injunctive relief including restitution and disgorgement of profits on behalf of all class members under California Business & Professions Code section 17200 et seq. and Racketeer Influenced and Corrupt Organizations Act; compensatory damages for breach of fiduciary duty and aiding and abetting of breach of fiduciary duty; unjust enrichment and constructive trust; and other pecuniary damages under California Civil Code section 1750 and California Welfare & Institutions Codes section 15600 et seq. On July 30, 2013, the parties entered into a settlement agreement and stipulated to certification of the case as a class action for settlement purposes only. Notice of the terms of the settlement was mailed to the members of the class on October 7, 2013 and settlement claim forms were due from members of the class on or before December 6, 2013. On January 27, 2014, a hearing was held regarding the fairness of the settlement. On January 29, 2014, the District Court signed a final order approving the settlement and finding the settlement is fair and represents a complete resolution of all claims asserted on behalf of the class. On January 30, 2014, a final judgment was entered dismissing the case on the merits and with prejudice. On February 28, 2014, a member of the class filed an appeal of the District Court's approval of the terms of the settlement agreement with the United States Court of Appeals for the Ninth Circuit.

We recorded an estimated litigation liability of $17.5 million during the third quarter of 2012 related to the Los Angeles Case. We increased our estimated litigation liability for this matter to $21.2 million during the fourth quarter of 2013 following the passage of the deadline for submission of claims by class members in the lawsuit and based upon information available at that time. However, we decreased the liability by $2.3 million in the first quarter of 2014 as additional information became available concerning the nature and magnitude of the claims received. In addition, during the first quarter of 2014, we paid $7.8 million in legal fees to the plaintiffs' counsel. The estimated litigation liability at June 30, 2014 is $11.1 million. While review of the claim forms has been stayed due to the appeal and it is difficult to predict the amount of the liabilities that will ultimately result from the completion of the claims process, the $11.1 million litigation liability represents our best estimate of probable loss with respect to this litigation. In light of the inherent uncertainties involved in the matter described above, there can be no assurance that such litigation, or any other pending or future litigation, will not have a material adverse effect on our business, financial condition, or results of operations.

In addition to our commitments to fund mortgage loans, we have unfunded commitments at June 30, 2014 to limited partnerships of $20.6 million and to secured bank loans of $2.4 million.

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Notes Payable (2015 Notes Narrative) (Details) (September 2015 Notes [Member], USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
September 2015 Notes [Member]
Debt Instrument [Line Items]
Extinguishment of debt, amount	$ 46.5
Extinguishment of debt, cash paid	52.9
Extinguishment of debt, cash paid for shares of common stock	33.1
Extinguishment of debt, shares issued	1,496,664
Extinguishment of debt, carrying value at extinguishment	43.8
Extinguishment of debt, loss, net of tax	$ (5.4)

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Derivative Instruments

6 Months Ended

Jun. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

We recognize all derivative instruments as assets or liabilities in the consolidated balance sheets at fair value. None of our derivatives qualify for hedge accounting, thus, any change in the fair value of the derivatives is recognized immediately in the consolidated statements of operations. The fair value of our derivative instruments, including derivative instruments embedded in fixed index annuity contracts and derivative instruments embedded in a convertible debt issue, presented in the consolidated balance sheets are as follows:

	June 30, 2014		December 31, 2013
	(Dollars in thousands)
Assets
Derivative instruments
Call options	$	905,688	$	856,050
Other assets
2015 notes hedges	45,884		107,041
Interest rate caps	3,788		6,103
Interest rate swap	—		712
	$	955,360	$	969,906
Liabilities
Policy benefit reserves - annuity products
Fixed index annuities - embedded derivatives	$	5,119,823	$	4,406,163
Other liabilities
2015 notes embedded conversion derivative	45,884		107,041
Interest rate swap	1,983		—
	$	5,167,690	$	4,513,204

The changes in fair value of derivatives included in the unaudited consolidated statements of operations are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Change in fair value of derivatives:
Call options	$	273,769		$	58,200		$	345,242		$	402,854
2015 notes hedges	100			197			(20,301		)	28,295
Interest rate swap	(1,848		)	3,802			(3,250		)	4,535
Interest rate caps	(1,138		)	1,841			(2,315		)	2,318
	$	270,883		$	64,040		$	319,376		$	438,002
Change in fair value of embedded derivatives:
2015 notes embedded conversion derivative	$	(4,132	)	$	197		$	(24,533	)	$	28,295
Fixed index annuities—embedded derivatives	85,067			(408,606		)	198,087			(73,432		)
	$	80,935		$	(408,409	)	$	173,554		$	(45,137	)

We have fixed index annuity products that guarantee the return of principal to the policyholder and credit interest based on a percentage of the gain in a specified market index. When fixed index annuity deposits are received, a portion of the deposit is used to purchase derivatives consisting of call options on the applicable market indices to fund the index credits due to fixed index annuity policyholders. Substantially all such call options are one year options purchased to match the funding requirements of the underlying policies. The call options are marked to fair value with the change in fair value included as a component of revenues. The change in fair value of derivatives includes the gains or losses recognized at the expiration of the option term or upon early termination and the changes in fair value for open positions. On the respective anniversary dates of the index policies, the index used to compute the annual index credit is reset and we purchase new one-year call options to fund the next annual index credit. We manage the cost of these purchases through the terms of our fixed index annuities, which permit us to change caps, participation rates, and/or asset fees, subject to guaranteed minimums on each policy's anniversary date. By adjusting caps, participation rates, or asset fees, we can generally manage option costs except in cases where the contractual features would prevent further modifications.

Our strategy attempts to mitigate any potential risk of loss under these agreements through a regular monitoring process which evaluates the program's effectiveness. We do not purchase call options that would require payment or collateral to another institution and our call options do not contain counterparty credit-risk-related contingent features. We are exposed to risk of loss in the event of nonperformance by the counterparties and, accordingly, we purchase our option contracts from multiple counterparties and evaluate the creditworthiness of all counterparties prior to purchase of the contracts. All of these options have been purchased from nationally recognized financial institutions with a Standard and Poor's credit rating of A- or higher at the time of purchase and the maximum credit exposure to any single counterparty is subject to concentration limits. We also have credit support agreements that allow us to request the counterparty to provide collateral to us when the fair value of our exposure to the counterparty exceeds specified amounts.

The notional amount and fair value of our call options by counterparty and each counterparty's current credit rating are as follows:

			June 30, 2014				December 31, 2013
Counterparty	Credit Rating (S&P)	Credit Rating (Moody's)	Notional Amount		Fair Value		Notional Amount		Fair Value
			(Dollars in thousands)
Bank of America	A	A2	$	1,903,168	$	77,824	$	1,683,911	$	73,836
Barclays	A	A2	2,845,414		88,512		2,396,839		113,513
BNP Paribas	A+	A1	1,399,032		52,262		1,382,661		38,849
Citibank, N.A.	A	A2	3,099,547		117,391		1,536,547		72,310
Credit Suisse	A	A1	2,648,174		141,755		4,060,352		193,304
Deutsche Bank	A	A2	1,428,366		51,512		747,587		41,074
HSBC	AA-	A1	131,837		7,468		200,011		10,518
J.P. Morgan	A+	Aa3	631,923		31,745		786,429		36,863
Morgan Stanley	A-	Baa2	3,605,771		190,421		3,546,487		150,437
Royal Bank of Canada	AA-	Aa3	1,201,172		46,183		714,941		25,140
Wells Fargo	AA-	Aa3	2,567,438		100,615		2,221,874		100,206
			$	21,461,842	$	905,688	$	19,277,639	$	856,050

As of June 30, 2014 and December 31, 2013, we held $849.7 million and $818.2 million, respectively, of cash and cash equivalents and other securities from counterparties for derivative collateral, which is included in other liabilities on our consolidated balance sheets. This derivative collateral limits the maximum amount of economic loss due to credit risk that we would incur if parties to the call options failed completely to perform according to the terms of the contracts to $80.2 million and $71.7 million at June 30, 2014 and December 31, 2013, respectively.

The future annual index credits on our fixed index annuities are treated as a "series of embedded derivatives" over the expected life of the applicable contract. We do not purchase call options to fund the index liabilities which may arise after the next policy anniversary date. We must value both the call options and the related forward embedded options in the policies at fair value. During the three months ended June 30, 2014, we revised future period assumptions for lapse rates and the expected costs of annual call options used in determining fixed index annuity embedded derivatives. These revisions decreased the change in fair value of embedded derivatives for the three and six months ended June 30, 2014 by $62.6 million, which after related adjustments to deferred sales inducements and deferred policy acquisition costs and income taxes, increased net income and earnings per common share - assuming dilution by $14.8 million and $0.19, respectively.

We entered into an interest rate swap and interest rate caps to manage interest rate risk associated with the floating rate component on certain of our subordinated debentures. See Note 10 in our Annual Report on Form 10-K for the year ended December 31, 2013 for more information on our subordinated debentures. The terms of the interest rate swap provide that we pay a fixed rate of interest and receive a floating rate of interest. The terms of the interest rate caps limit the three month London Interbank Offered Rate ("LIBOR") to 2.50%. The interest rate swap and caps are not effective hedges under accounting guidance for derivative instruments and hedging activities. Therefore, we record the interest rate swap and caps at fair value and any net cash payments received or paid are included in the change in fair value of derivatives in the unaudited consolidated statements of operations.

Details regarding the interest rate swap are as follows:

	Notional			Pay			June 30, 2014			December 31, 2013
Maturity Date	Amount		Receive Rate	Rate		Counterparty	Fair Value			Fair Value
							(Dollars in thousands)
March 15, 2021	$	85,500	LIBOR	2.415	%	SunTrust	$	(1,983	)	$	712

Details regarding the interest rate caps are as follows:

	Notional			Cap			June 30, 2014		December 31, 2013
Maturity Date	Amount		Floating Rate	Rate		Counterparty	Fair Value		Fair Value
							(Dollars in thousands)
July 7, 2021	$	40,000	LIBOR	2.50	%	SunTrust	$	1,907	$	3,073
July 8, 2021	12,000		LIBOR	2.50	%	SunTrust	572		923
July 29, 2021	27,000		LIBOR	2.50	%	SunTrust	1,309		2,107
	$	79,000					$	3,788	$	6,103

The interest rate swap converts floating rates to fixed rates for seven years beginning March 2014. The interest rate caps have a forward starting date beginning in July 2014 and cap our interest rates for seven years. As of June 30, 2014, we held $2.0 million of cash and cash equivalents from the counterparty for derivative collateral related to the swap and caps, which is included in other liabilities on our consolidated balance sheets.

In September 2010, concurrently with the issuance of $200.0 million principal amount of 3.5% Convertible Senior Notes due September 15, 2015 (the "2015 notes"), we entered into hedge transactions (the "2015 notes hedges") with two counterparties whereby we will receive the cash equivalent of the conversion spread on 16.0 million shares of our common stock based upon a strike price of $12.50 per share, subject to certain conversion rate adjustments in the 2015 notes. The 2015 notes hedges expire on September 15, 2015, and must be settled in cash. The 2015 notes hedges are accounted for as derivative assets and are included in other assets in our consolidated balance sheets. The 2015 notes hedges and 2015 notes embedded conversion derivative are adjusted to fair value each reporting period and unrealized gains and losses are reflected in our unaudited consolidated statements of operations.

In separate transactions, we also sold warrants (the "2015 warrants") to two counterparties for the purchase of up to 16.0 million shares of our common stock at a price of $16.00 per share. We received $15.6 million in cash proceeds from the sale of the 2015 warrants, which was recorded as an increase in additional paid-in capital. The number of shares and strike price of the warrants are subject to adjustment based on dividends we pay subsequent to selling the warrants. The warrants expire on various dates from December 2015 through March 2016 and are intended to be settled in net shares. The total number of shares of common stock deliverable under the 2015 warrants is, however, currently limited to 11.7 million shares. Changes in the fair value of these warrants will not be recognized in our consolidated financial statements as long as the instruments remain classified as equity.

During the three months ended June 30, 2014, we entered into four separate partial unwind agreements with the two counterparties to the 2015 notes hedges and the 2015 warrants to coincide with the extinguishment of a portion of our 2015 notes (see Note 6) whereby we agreed to settle the related 2015 notes hedges and the 2015 warrants and received net cash from the counterparties totaling $10.4 million. Subsequent to the settlement of these unwind agreements and certain conversion rate adjustments due to dividends paid, 2015 notes hedges remain outstanding whereby we will receive the cash equivalent of the conversion spread on 3.7 million shares of our common stock based upon a strike price of $12.35 per share and warrants remain outstanding for the purchase of up to 3.7 million shares of our common stock at a strike price of $15.75 per share. At June 30, 2014, the remaining 2015 warrants were dilutive as the average price of our common stock exceeded the $15.75 strike price of the 2015 warrants and the effect has been included in diluted earnings per share for the three and six months ended June 30, 2014. The 2015 warrants were not dilutive for the three and six months ended June 30, 2013.

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Notes Payable

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Notes Payable

Notes Payable

The 5.25% Contingent Convertible Senior Notes due December 15, 2029 (the "2029 notes") are accounted for separately as a liability component and an equity component in the consolidated balance sheets. The carrying amount of the 2015 notes and the 2029 notes, the carrying amount of the equity component of the 2029 notes and the amount by which the if-converted value exceeds the outstanding principal for both the 2015 notes and the 2029 notes are as follows:

	June 30, 2014						December 31, 2013
	September 2015 Notes			December 2029 Notes			September 2015 Notes			December 2029 Notes
	(Dollars in thousands)
Notes payable:
Principal amount of liability component	$	45,450		$	32,142		$	91,951		$	68,373
Unamortized discount	(2,367		)	(864		)	(6,623		)	(3,743		)
Net carrying amount of liability component	$	43,083		$	31,278		$	85,328		$	64,630
Additional paid-in capital:
Carrying amount of equity component				$	4,325					$	15,586
Amount by which the if-converted value exceeds principal	$	45,056		$	50,715		$	104,403		$	113,169

The discount is being amortized over the expected lives of the notes, which is the maturity date of September 15, 2015 for the 2015 notes and the first put/call date of December 15, 2014 for the 2029 notes. The effective interest rates during the discount amortization periods are 8.9% and 11.9% on the 2015 notes and the 2029 notes, respectively. The interest cost recognized in operations for the convertible notes, inclusive of the coupon and amortization of the discount and debt issue costs, was $2.3 million and $5.7 million for the three and six months ended June 30, 2014 compared to $6.8 million and $14.0 million for the same periods in 2013.

We are required to include the dilutive effect of the 2029 notes in our diluted earnings per share calculation. Because these notes include a mandatory cash settlement feature for the principal amount, incremental dilutive shares will only exist when the fair value of our common stock at the end of the reporting period exceeds the conversion price per share of $9.57. At June 30, 2014 and 2013, the conversion premium of the 2029 notes was dilutive and the effect has been included in diluted earnings per share for the three and six months ended June 30, 2014 and 2013. The 2015 notes and the 2015 notes hedges are excluded from the dilutive effect in our diluted earnings per share calculation as they are currently to be settled only in cash.

During the six months ended June 30, 2014, we extinguished $36.2 million principal amount of our 2029 notes and $46.5 million principal amount of our 2015 notes. Total consideration paid to holders of the 2029 notes consisted of $66.8 million in cash and and $23.2 million in shares of our common stock (946,793 shares). The carrying value of the 2029 notes at extinguishment was $34.6 million which resulted in a loss of $2.5 million on extinguishment of debt, net of income taxes. Total consideration paid to holders of the 2015 notes consisted of $52.9 million in cash and $33.1 million in shares of our common stock (1,496,664 shares). The carrying value of the 2015 notes at extinguishment was $43.8 million which resulted in a loss of $5.4 million, net of income taxes.

Under our $140 millionfour year unsecured revolving line of credit agreement, we are required to maintain a minimum risk-based capital ratio at our subsidiary, American Equity Investment Life Insurance Company ("American Equity Life"), of at least 275%, a maximum ratio of adjusted debt to total adjusted capital of 0.35, and a minimum level of statutory surplus at American Equity Life equal to the sum of 1) 80% of statutory surplus at September 30, 2013, 2) 50% of the statutory net income for each fiscal quarter ending after September 30, 2013, and 3) 50% of all capital contributed to American Equity Life after September 30, 2013. The agreement contains an accordion feature that allows us, on up to three occasions and subject to credit availability, to increase the credit facility by an additional $50 million in the aggregate. We also have the ability to extend the maturity date by an additional one year past the initial maturity date of November 22, 2017 with the consent of the extending banks. There are currently no guarantors of the credit facility, but certain of our subsidiaries must guarantee our obligations under the credit agreement if such subsidiaries guarantee other material amounts of our debt. No amounts were outstanding at June 30, 2014 and December 31, 2013.

As part of our investment strategy, we enter into securities repurchase agreements (short-term collateralized borrowings). The maximum amount borrowed was $138.7 million and $160.4 million during the six months ended June 30, 2014 and 2013, respectively. When we do borrow cash on these repurchase agreements, we pledge collateral in the form of debt securities with fair values approximately equal to the amount due and we use the cash to purchase debt securities ahead of the time we collect the cash from selling annuity policies to avoid a lag between the investment of funds and the obligation to credit interest to policyholders. We earn investment income on the securities purchased with these borrowings at a rate in excess of the cost of these borrowings. Such borrowings averaged $13.7 million for the six months ended June 30, 2014 compared to $10.0 million and $5.0 million for the three and six months ended June 30, 2013. We had no borrowings under repurchase agreements during the three months ended June 30, 2014. The weighted average interest rate on amounts due under repurchase agreements was 0.15% for the six months ended June 30, 2014 compared to 0.32% for both the three and six months ended June 30, 2013.

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Earnings Per Share

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

The following table sets forth the computation of earnings per common share and earnings per common share - assuming dilution:

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
	(Dollars in thousands, except per share data)
Numerator:
Net income - numerator for earnings per common share	$	36,744	$	120,113	$	26,991	$	146,144
Denominator:
Weighted average common shares outstanding (1)	74,461,264		64,254,387		73,495,286		63,786,577
Effect of dilutive securities:
Convertible senior notes	2,259,425		5,009,622		2,843,987		5,082,208
2015 warrants	1,595,519		—		1,981,815		—
Stock options and deferred compensation agreements	1,154,726		1,118,056		1,220,996		1,013,455
Restricted stock units	46,870		—		40,679		—
Denominator for earnings per common share - assuming dilution	79,517,804		70,382,065		79,582,763		69,882,240
Earnings per common share	$	0.49	$	1.87	$	0.37	$	2.29
Earnings per common share - assuming dilution	$	0.46	$	1.71	$	0.34	$	2.09

(1) Weighted average common shares outstanding include shares vested under the NMO Deferred Compensation Plan and exclude unallocated shares held by the ESOP.

Options to purchase shares of our common stock that were outstanding during the respective periods indicated but were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the common shares are as follows:

Period	Number of Shares	Range of Exercise Prices
		Minimum	Maximum
Three months ended June 30, 2014	1,277,650	$24.79	$24.79
Three months ended June 30, 2013	—	$—	$—
Six months ended June 30, 2014	1,277,650	$24.79	$24.79
Six months ended June 30, 2013	—	$—	$—

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Earnings Per Share (Schedule of Earnings Per Share, Basic and Diluted) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Earnings Per Share, Basic and Dilutive [Line Items]
Net income	$ 36,744		$ 120,113		$ 26,991		$ 146,144
Weighted average common shares outstanding (shares)	74,461,264	[1]	64,254,387	[1]	73,495,286	[1]	63,786,577	[1]
Effect of dilutive securities: 2015 warrants (shares)	1,595,519		0		1,981,815		0
Denominator for earnings per common share - assuming dilution (shares)	79,517,804		70,382,065		79,582,763		69,882,240
Earnings per common share	$ 0.49		$ 1.87		$ 0.37		$ 2.29
Earnings per common share - assuming dilution	$ 0.46		$ 1.71		$ 0.34		$ 2.09
Stock Options and Deferred Compensation Agreements [Member]
Earnings Per Share, Basic and Dilutive [Line Items]
Effect of dilutive securities: share-based payment arrangements (shares)	1,154,726		1,118,056		1,220,996		1,013,455
Restricted Stock Units [Member]
Earnings Per Share, Basic and Dilutive [Line Items]
Effect of dilutive securities: share-based payment arrangements (shares)	46,870		0		40,679		0
Convertible Senior Notes [Member]
Earnings Per Share, Basic and Dilutive [Line Items]
Effect of dilutive securities: convertible senior notes (shares)	2,259,425		5,009,622		2,843,987		5,082,208

[1] Weighted average common shares outstanding include shares vested under the NMO Deferred Compensation Plan and exclude unallocated shares held by the ESOP.

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Commitments and Contingencies (Narrative) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Jun. 30, 2014	Dec. 31, 2013	Sep. 30, 2012
Commitments and Contingencies Disclosure [Abstract]
Estimated litigation liability		$ 11.1	$ 21.2	$ 17.5
Change in estimated litigation liability	(2.3)
Legal fees paid	7.8
Unfunded commitments to limited partnerships		20.6
Unfunded commitments to secured bank loans		$ 2.4

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Investments (Schedule of Credit Quality of Fixed Maturity Portfolio by NAIC Designation) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Investment Holdings [Line Items]
Amortized cost	$ 27,617,287	$ 26,603,985
Fair value	29,384,143	26,671,287
NAIC, Class 1 Designation [Member] | Investments, External Credit Rating, Investment Grade [Member]
Investment Holdings [Line Items]
Amortized cost	17,311,646	16,394,654
Fair value	18,519,001	16,531,250
NAIC, Class 2 Designation [Member] | Investments, External Credit Rating, Investment Grade [Member]
Investment Holdings [Line Items]
Amortized cost	9,739,539	9,630,251
Fair value	10,305,239	9,598,399
NAIC, Class 3 Designation [Member] | Investments, External Credit Rating, Non Investment Grade [Member]
Investment Holdings [Line Items]
Amortized cost	497,545	502,822
Fair value	493,350	474,165
NAIC, Class 4 Designation [Member] | Investments, External Credit Rating, Non Investment Grade [Member]
Investment Holdings [Line Items]
Amortized cost	67,353	74,493
Fair value	65,857	66,078
NAIC, Class 5 Designation [Member] | Investments, External Credit Rating, Non Investment Grade [Member]
Investment Holdings [Line Items]
Amortized cost	0	0
Fair value	0	0
NAIC, Class 6 Designation [Member] | Investments, External Credit Rating, Non Investment Grade [Member]
Investment Holdings [Line Items]
Amortized cost	1,204	1,765
Fair value	$ 696	$ 1,395

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Mortgage Loans on Real Estate (Troubled Debt Restructurings) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2014 loans	Dec. 31, 2013 loans
Financing Receivable, Modifications [Line Items]
Number of TDRs	9	18
Principal balance outstanding	$ 18,658	$ 45,653
Specific loan loss allowance	(4,852)	(6,653)
Net carrying amount	13,806	39,000
East [Member]
Financing Receivable, Modifications [Line Items]
Number of TDRs		1
Principal balance outstanding		3,712
Specific loan loss allowance		(949)
Net carrying amount		2,763
Mountain [Member]
Financing Receivable, Modifications [Line Items]
Number of TDRs		7
Principal balance outstanding		22,140
Specific loan loss allowance		(329)
Net carrying amount		21,811
South Atlantic [Member]
Financing Receivable, Modifications [Line Items]
Number of TDRs	7	7
Principal balance outstanding	14,537	13,930
Specific loan loss allowance	(3,911)	(4,177)
Net carrying amount	10,626	9,753
East North Central [Member]
Financing Receivable, Modifications [Line Items]
Number of TDRs	1	1
Principal balance outstanding	2,213	2,219
Specific loan loss allowance	(467)	(467)
Net carrying amount	1,746	1,752
West North Central [Member]
Financing Receivable, Modifications [Line Items]
Number of TDRs	1	1
Principal balance outstanding	1,908	1,938
Specific loan loss allowance	(474)	(475)
Net carrying amount	1,434	1,463
West South Central [Member]
Financing Receivable, Modifications [Line Items]
Number of TDRs		1
Principal balance outstanding		1,714
Specific loan loss allowance		(256)
Net carrying amount		$ 1,458

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Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value of Derivative Instruments as Presented in the Consolidated Balance Sheets

The fair value of our derivative instruments, including derivative instruments embedded in fixed index annuity contracts and derivative instruments embedded in a convertible debt issue, presented in the consolidated balance sheets are as follows:

	June 30, 2014		December 31, 2013
	(Dollars in thousands)
Assets
Derivative instruments
Call options	$	905,688	$	856,050
Other assets
2015 notes hedges	45,884		107,041
Interest rate caps	3,788		6,103
Interest rate swap	—		712
	$	955,360	$	969,906
Liabilities
Policy benefit reserves - annuity products
Fixed index annuities - embedded derivatives	$	5,119,823	$	4,406,163
Other liabilities
2015 notes embedded conversion derivative	45,884		107,041
Interest rate swap	1,983		—
	$	5,167,690	$	4,513,204

Schedule of Changes in Fair Value of Derivative Instruments

The changes in fair value of derivatives included in the unaudited consolidated statements of operations are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Change in fair value of derivatives:
Call options	$	273,769		$	58,200		$	345,242		$	402,854
2015 notes hedges	100			197			(20,301		)	28,295
Interest rate swap	(1,848		)	3,802			(3,250		)	4,535
Interest rate caps	(1,138		)	1,841			(2,315		)	2,318
	$	270,883		$	64,040		$	319,376		$	438,002
Change in fair value of embedded derivatives:
2015 notes embedded conversion derivative	$	(4,132	)	$	197		$	(24,533	)	$	28,295
Fixed index annuities—embedded derivatives	85,067			(408,606		)	198,087			(73,432		)
	$	80,935		$	(408,409	)	$	173,554		$	(45,137	)

Schedule of Call Options by Counterparty

The notional amount and fair value of our call options by counterparty and each counterparty's current credit rating are as follows:

			June 30, 2014				December 31, 2013
Counterparty	Credit Rating (S&P)	Credit Rating (Moody's)	Notional Amount		Fair Value		Notional Amount		Fair Value
			(Dollars in thousands)
Bank of America	A	A2	$	1,903,168	$	77,824	$	1,683,911	$	73,836
Barclays	A	A2	2,845,414		88,512		2,396,839		113,513
BNP Paribas	A+	A1	1,399,032		52,262		1,382,661		38,849
Citibank, N.A.	A	A2	3,099,547		117,391		1,536,547		72,310
Credit Suisse	A	A1	2,648,174		141,755		4,060,352		193,304
Deutsche Bank	A	A2	1,428,366		51,512		747,587		41,074
HSBC	AA-	A1	131,837		7,468		200,011		10,518
J.P. Morgan	A+	Aa3	631,923		31,745		786,429		36,863
Morgan Stanley	A-	Baa2	3,605,771		190,421		3,546,487		150,437
Royal Bank of Canada	AA-	Aa3	1,201,172		46,183		714,941		25,140
Wells Fargo	AA-	Aa3	2,567,438		100,615		2,221,874		100,206
			$	21,461,842	$	905,688	$	19,277,639	$	856,050

Schedule of Interest Rate Derivatives

Details regarding the interest rate swap are as follows:

	Notional			Pay			June 30, 2014			December 31, 2013
Maturity Date	Amount		Receive Rate	Rate		Counterparty	Fair Value			Fair Value
							(Dollars in thousands)
March 15, 2021	$	85,500	LIBOR	2.415	%	SunTrust	$	(1,983	)	$	712

Details regarding the interest rate caps are as follows:

	Notional			Cap			June 30, 2014		December 31, 2013
Maturity Date	Amount		Floating Rate	Rate		Counterparty	Fair Value		Fair Value
							(Dollars in thousands)
July 7, 2021	$	40,000	LIBOR	2.50	%	SunTrust	$	1,907	$	3,073
July 8, 2021	12,000		LIBOR	2.50	%	SunTrust	572		923
July 29, 2021	27,000		LIBOR	2.50	%	SunTrust	1,309		2,107
	$	79,000					$	3,788	$	6,103

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Fair Values of Financial Instruments (Fair Values and Carrying Amounts of Financial Instruments) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Assets
Held for investment	$ 66,571	$ 60,840
Equity securities, available for sale	7,762	7,778
Mortgage loans on real estate	2,543,810	2,581,082
Other investments	221,459	215,042
Coinsurance deposits	3,085,340	2,999,618
Liabilities
Policy benefit reserves	37,876,044	35,789,655
Carrying Amount [Member]
Assets
Mortgage loans on real estate	2,543,810	2,581,082
Derivative instruments	905,688	856,050
Other investments	196,853	192,198
Cash and cash equivalents	1,464,533	897,529
Coinsurance deposits	3,085,340	2,999,618
Counterparty collateral	261,266	315,824
Liabilities
Policy benefit reserves	37,538,232	35,453,166
Single premium immediate annuity (SPIA) benefit reserves	391,651	417,625
Notes payable	474,361	549,958
Subordinated debentures	246,145	246,050
Carrying Amount [Member] | Interest Rate Caps [Member]
Assets
Derivative assets	3,788	6,103
Carrying Amount [Member] | Interest Rate Swap [Member]
Assets
Derivative assets	0	712
Liabilities
Interest rate swap	1,983	0
Carrying Amount [Member] | 2015 Notes Hedges [Member]
Assets
2015 notes hedges	45,884	107,041
Carrying Amount [Member] | 2015 Notes Embedded Conversion Derivative [Member]
Liabilities
2015 notes embedded conversion derivative	45,884	107,041
Carrying Amount [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	29,317,572	26,610,447
Held for investment	76,342	76,255
Carrying Amount [Member] | Equity Securities, Available For Sale [Member]
Assets
Equity securities, available for sale	7,762	7,778
Fair Value [Member]
Assets
Mortgage loans on real estate	2,596,588	2,615,410
Derivative instruments	905,688	856,050
Other investments	198,293	193,343
Cash and cash equivalents	1,464,533	897,529
Coinsurance deposits	2,722,024	2,669,432
Counterparty collateral	261,266	315,824
Liabilities
Policy benefit reserves	31,279,983	29,670,827
Single premium immediate annuity (SPIA) benefit reserves	404,561	430,835
Notes payable	564,118	699,435
Subordinated debentures	240,767	234,959
Fair Value [Member] | Interest Rate Caps [Member]
Assets
Derivative assets	3,788	6,103
Fair Value [Member] | Interest Rate Swap [Member]
Assets
Derivative assets	0	712
Liabilities
Interest rate swap	1,983	0
Fair Value [Member] | 2015 Notes Hedges [Member]
Assets
2015 notes hedges	45,884	107,041
Fair Value [Member] | 2015 Notes Embedded Conversion Derivative [Member]
Liabilities
2015 notes embedded conversion derivative	45,884	107,041
Fair Value [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	29,317,572	26,610,447
Held for investment	66,571	60,840
Fair Value [Member] | Equity Securities, Available For Sale [Member]
Assets
Equity securities, available for sale	$ 7,762	$ 7,778

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Mortgage Loans on Real Estate (Schedule of Financing Receivables Past Due) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Mortgage Loans on Real Estate [Abstract]
30 - 59 days	$ 1,045	$ 0
60 to 89 days	0	0
90 days and over	0	0
Total past due	1,045	0
Current	2,560,587	2,599,524
Collateral dependent receivables	9,318	8,174
Principal outstanding	$ 2,570,950	$ 2,607,698

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Investments (Cumulative Noncredit Portion of Other Than Temporary Impairment Recognized in Other Comprehensive Income and Change in Fair Value Since Other Than Temporary Impairment) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Investment Holdings [Line Items]
Amortized cost	$ 625,765	$ 679,265
OTTI recognized in other comprehensive income	(174,835)	(176,334)
Change in fair value since OTTI was recognized	222,594	216,081
Fair value	673,524	719,012
Fixed Maturity Securities [Member] | Corporate Securities [Member]
Investment Holdings [Line Items]
Amortized cost	0	0
OTTI recognized in other comprehensive income	0	0
Change in fair value since OTTI was recognized	27	20
Fair value	27	20
Fixed Maturity Securities [Member] | Residential Mortgage Backed Securities [Member]
Investment Holdings [Line Items]
Amortized cost	625,765	679,265
OTTI recognized in other comprehensive income	(174,835)	(176,334)
Change in fair value since OTTI was recognized	222,567	216,061
Fair value	$ 673,497	$ 718,992

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Consolidated Statements of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
Net income	$ 36,744		$ 120,113		$ 26,991		$ 146,144
Other comprehensive income (loss):
Change in net unrealized investment gains/losses (1)	343,316	[1]	(634,688)	[1]	784,004	[1]	(669,871)	[1]
Noncredit component of OTTI losses (1)	286	[1]	0	[1]	694	[1]	347	[1]
Reclassification of unrealized investment gains/losses to net income (1)	454	[1]	(7,439)	[1]	(276)	[1]	(11,286)	[1]
Other comprehensive income (loss) before income tax	344,056		(642,127)		784,422		(680,810)
Income tax effect related to other comprehensive income (loss)	(120,420)		224,744		(274,547)		238,283
Other comprehensive income (loss)	223,636		(417,383)		509,875		(442,527)
Comprehensive income (loss)	$ 260,380		$ (297,270)		$ 536,866		$ (296,383)

[1] Net of related adjustments to amortization of deferred sales inducements and deferred policy acquisition costs.

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Fair Values of Financial Instruments

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Fair Values of Financial Instruments

Fair Values of Financial Instruments

The following sets forth a comparison of the carrying amounts and fair values of our financial instruments:

	June 30, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in thousands)
Assets
Fixed maturity securities:
Available for sale	$	29,317,572	$	29,317,572	$	26,610,447	$	26,610,447
Held for investment	76,342		66,571		76,255		60,840
Equity securities, available for sale	7,762		7,762		7,778		7,778
Mortgage loans on real estate	2,543,810		2,596,588		2,581,082		2,615,410
Derivative instruments	905,688		905,688		856,050		856,050
Other investments	196,853		198,293		192,198		193,343
Cash and cash equivalents	1,464,533		1,464,533		897,529		897,529
Coinsurance deposits	3,085,340		2,722,024		2,999,618		2,669,432
Interest rate caps	3,788		3,788		6,103		6,103
Interest rate swap	—		—		712		712
2015 notes hedges	45,884		45,884		107,041		107,041
Counterparty collateral	261,266		261,266		315,824		315,824
Liabilities
Policy benefit reserves	37,538,232		31,279,983		35,453,166		29,670,827
Single premium immediate annuity (SPIA) benefit reserves	391,651		404,561		417,625		430,835
Notes payable	474,361		564,118		549,958		699,435
Subordinated debentures	246,145		240,767		246,050		234,959
2015 notes embedded conversion derivative	45,884		45,884		107,041		107,041
Interest rate swap	1,983		1,983		—		—

Fair value is the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The objective of a fair value measurement is to determine that price for each financial instrument at each measurement date. We meet this objective using various methods of valuation that include market, income and cost approaches.

We categorize our financial instruments into three levels of fair value hierarchy based on the priority of inputs used in determining fair value. The hierarchy defines the highest priority inputs (Level 1) as quoted prices in active markets for identical assets or liabilities. The lowest priority inputs (Level 3) are our own assumptions about what a market participant would use in determining fair value such as estimated future cash flows. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. We categorize financial assets and liabilities recorded at fair value in the consolidated balance sheets as follows:

Level 1— Quoted prices are available in active markets for identical financial instruments as of the reporting date. We do not adjust the quoted price for these financial instruments, even in situations where we hold a large position and a sale could reasonably impact the quoted price.

Level 2— Quoted prices in active markets for similar financial instruments, quoted prices for identical or similar financial instruments in markets that are not active; and models and other valuation methodologies using inputs other than quoted prices that are observable.

Level 3— Models and other valuation methodologies using significant inputs that are unobservable for financial instruments and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in Level 3 are securities for which no market activity or data exists and for which we used discounted expected future cash flows with our own assumptions about what a market participant would use in determining fair value.

Transfers of securities among the levels occur at times and depend on the type of inputs used to determine fair value of each security. There were no transfers between levels during any period presented.

Our assets and liabilities which are measured at fair value on a recurring basis as of June 30, 2014 and December 31, 2013 are presented below based on the fair value hierarchy levels:

	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
June 30, 2014
Assets
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	38,483	$	4,074	$	34,409	$	—
United States Government sponsored agencies	1,185,341		—		1,185,341		—
United States municipalities, states and territories	3,506,198		—		3,506,198		—
Foreign government obligations	192,963		—		192,963		—
Corporate securities	19,187,375		27		19,187,348		—
Residential mortgage backed securities	1,870,565		—		1,869,897		668
Commercial mortgage backed securities	2,296,096		—		2,296,096		—
Other asset backed securities	1,040,551		—		1,040,551		—
Equity securities, available for sale: finance, insurance and real estate	7,762		—		7,762		—
Derivative instruments	905,688		—		905,688		—
Cash and cash equivalents	1,464,533		1,464,533		—		—
Interest rate caps	3,788		—		3,788		—
2015 notes hedges	45,884		—		45,884		—
Counterparty collateral	261,266		—		261,266		—
	$	32,006,493	$	1,468,634	$	30,537,191	$	668
Liabilities
2015 notes embedded conversion derivative	$	45,884	$	—	$	45,884	$	—
Interest rate swap	1,983		—		1,983		—
Fixed index annuities - embedded derivatives	5,119,823		—		—		5,119,823
	$	5,167,690	$	—	$	47,867	$	5,119,823
December 31, 2013
Assets
Fixed maturity securities:
Available for sale:
United States Government full faith and credit	$	42,925	$	4,805	$	38,120	$	—
United States Government sponsored agencies	1,194,289		—		1,194,289		—
United States municipalities, states and territories	3,306,743		—		3,306,743		—
Foreign government obligations	91,557		—		91,557		—
Corporate securities	17,233,037		20		17,233,017		—
Residential mortgage backed securities	1,971,960		—		1,970,584		1,376
Commercial mortgage backed securities	1,735,460		—		1,735,460		—
Other asset backed securities	1,034,476		359		1,034,117		—
Equity securities, available for sale: finance, insurance and real estate	7,778		—		7,778		—
Derivative instruments	856,050		—		856,050		—
Cash and cash equivalents	897,529		897,529		—		—
Interest rate caps	6,103		—		6,103		—
Interest rate swap	712		—		712		—
2015 notes hedges	107,041		—		107,041		—
Counterparty collateral	315,824		—		315,824		—
	$	28,801,484	$	902,713	$	27,897,395	$	1,376
Liabilities
2015 notes embedded conversion derivative	$	107,041	$	—	$	107,041	$	—
Fixed index annuities - embedded derivatives	4,406,163		—		—		4,406,163
	$	4,513,204	$	—	$	107,041	$	4,406,163

The following methods and assumptions were used in estimating the fair values of financial instruments during the periods presented in these consolidated financial statements.

Fixed maturity securities and equity securities

The fair values of fixed maturity securities and equity securities in an active and orderly market are determined by utilizing independent pricing services. The independent pricing services incorporate a variety of observable market data in their valuation techniques, including:

• reported trading prices,

• benchmark yields,

• broker-dealer quotes,

• benchmark securities,

• bids and offers,

• credit ratings,

• relative credit information, and

• other reference data.

The independent pricing services also take into account perceived market movements and sector news, as well as a security's terms and conditions, including any features specific to that issue that may influence risk and marketability. Depending on the security, the priority of the use of observable market inputs may change as some observable market inputs may not be relevant or additional inputs may be necessary.

The independent pricing services provide quoted market prices when available. Quoted prices are not always available due to market inactivity. When quoted market prices are not available, the third parties use yield data and other factors relating to instruments or securities with similar characteristics to determine fair value for securities that are not actively traded. We generally obtain one value from our primary external pricing service. In situations where a price is not available from this service, we may obtain further quotes or prices from additional parties as needed. In addition, for our callable United States Government sponsored agencies, we obtain multiple broker quotes and take the average of the broker prices received. Market indices of similar rated asset class spreads are considered for valuations and broker indications of similar securities are compared. Inputs used by the broker include market information, such as yield data and other factors relating to instruments or securities with similar characteristics. Valuations and quotes obtained from third party commercial pricing services are non-binding and do not represent quotes on which one may execute the disposition of the assets.

We validate external valuations at least quarterly through a combination of procedures that include the evaluation of methodologies used by the pricing services, analytical reviews and performance analysis of the prices against trends, and maintenance of a securities watch list. Additionally, as needed we utilize discounted cash flow models or perform independent valuations on a case-by-case basis using inputs and assumptions similar to those used by the pricing services. Although we do identify differences from time to time as a result of these validation procedures, we did not make any significant adjustments as of June 30, 2014 and December 31, 2013.

Mortgage loans on real estate

Mortgage loans on real estate are not measured at fair value on a recurring basis. The fair values of mortgage loans on real estate are calculated using discounted expected cash flows using current competitive market interest rates currently being offered for similar loans. The fair values of impaired mortgage loans on real estate that we have considered to be collateral dependent are based on the fair value of the real estate collateral (based on appraised values) less estimated costs to sell. The inputs utilized to determine fair value of all mortgage loans are unobservable market data (competitive market interest rates and appraised property values); therefore, fair value of mortgage loans falls into Level 3 in the fair value hierarchy.

Derivative instruments

The fair values of derivative instruments, primarily call options, are based upon the amount of cash that we will receive to settle each derivative instrument on the reporting date. These amounts are determined by our investment team using industry accepted valuation models and are adjusted for the nonperformance risk of each counterparty net of any collateral held. Inputs include market volatility and risk free interest rates and are used in income valuation techniques in arriving at a fair value for each option contract. The nonperformance risk for each counterparty is based upon its credit default swap rate. We have no performance obligations related to the call options purchased to fund our fixed index annuity policy liabilities.

Other investments

None of the financial instruments included in other investments are measured at fair value on a recurring basis. Financial instruments included in other investments are policy loans, equity method investments and company owned life insurance (COLI). We have not attempted to determine the fair values associated with our policy loans, as we believe any differences between carrying value and the fair values afforded these instruments are immaterial to our consolidated financial position and, accordingly, the cost to provide such disclosure does not justify the benefit to be derived. The fair values of our equity method investments qualify as Level 3 fair values and were determined by calculating the present value of future cash flows discounted by a risk free rate, a risk spread and a liquidity discount. The risk spread and liquidity discount are rates determined by our investment professionals and are unobservable market inputs. The fair value of our COLI approximates the cash surrender value of the policies and falls within Level 2 of the fair value hierarchy.

Cash and cash equivalents

Amounts reported in the consolidated balance sheets for these instruments are reported at their historical cost which approximates fair value due to the nature of the assets assigned to this category.

Interest rate caps and swap

The fair values of our pay fixed/receive variable interest rate swap and our interest rate caps are obtained from third parties and are determined by discounting expected future cash flows using projected LIBOR rates for the term of the caps and swap.

2015 notes hedges

The fair value of these call options has been determined by a third party who applies market observable data such as our common stock price, its dividend yield and its volatility, as well as the time to expiration of the call options to determine a fair value of the buy side of these options.

Counterparty collateral

Amounts reported in other assets of the consolidated balance sheets for these instruments are reported at their historical cost which approximates fair value due to the nature of the assets assigned to this category.

Policy benefit reserves, coinsurance deposits and SPIA benefit reserves

The fair values of the liabilities under contracts not involving significant mortality or morbidity risks (principally deferred annuities), are stated at the cost we would incur to extinguish the liability (i.e., the cash surrender value) as these contracts are generally issued without an annuitization date. The coinsurance deposits related to the annuity benefit reserves have fair values determined in a similar fashion. For period-certain annuity benefit contracts, the fair value is determined by discounting the benefits at the interest rates currently in effect for newly purchased immediate annuity contracts. We are not required to and have not estimated the fair value of the liabilities under contracts that involve significant mortality or morbidity risks, as these liabilities fall within the definition of insurance contracts that are exceptions from financial instruments that require disclosures of fair value. Policy benefit reserves, coinsurance deposits and SPIA benefit reserves are not measured at fair value on a recurring basis. All of the fair values presented within these categories fall within Level 3 of the fair value hierarchy as most of the inputs are unobservable market data.

Notes payable

The fair values of our senior unsecured notes and convertible senior notes are based upon pricing matrices developed by a third party pricing service when quoted market prices are not available and are categorized as Level 2 within the fair value hierarchy. Notes payable are not remeasured at fair value on a recurring basis.

Subordinated debentures

Fair values for subordinated debentures are estimated using discounted cash flow calculations based principally on observable inputs including our incremental borrowing rates, which reflect our credit rating, for similar types of borrowings with maturities consistent with those remaining for the debt being valued. These fair values are categorized as Level 2 within the fair value hierarchy. Subordinated debentures are not measured at fair value on a recurring basis.

2015 notes embedded conversion derivative

The fair value of this embedded derivative is determined by pricing the call options that hedge this potential liability. The terms of the conversion option are identical to the 2015 notes hedges and the method of determining fair value of the call options is based upon observable market data.

Fixed index annuities - embedded derivatives

We estimate the fair value of the embedded derivative component of our fixed index annuity policy benefit reserves at each valuation date by (i) projecting policy contract values and minimum guaranteed contract values over the expected lives of the contracts and (ii) discounting the excess of the projected contract value amounts at the applicable risk free interest rates adjusted for our nonperformance risk related to those liabilities. The projections of policy contract values are based on our best estimate assumptions for future policy growth and future policy decrements. Our best estimate assumptions for future policy growth include assumptions for the expected index credit on the next policy anniversary date which are derived from the fair values of the underlying call options purchased to fund such index credits and the expected costs of annual call options we will purchase in the future to fund index credits beyond the next policy anniversary. The projections of minimum guaranteed contract values include the same best estimate assumptions for policy decrements as were used to project policy contract values.

The following tables provide a reconciliation of the beginning and ending balances for our Level 3 assets and liabilities, which are measured at fair value on a recurring basis using significant unobservable inputs for the three and six months ended June 30, 2014 and 2013:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Available for sale securities
Beginning balance	$	1,080		$	1,724		$	1,376		$	1,812
Principal returned	(114		)	(193		)	(192		)	(561		)
Amortization of premium/accretion of discount	(138		)	5			(165		)	134
Total gains (losses) (realized/unrealized):
Included in other comprehensive income (loss)	45			5			(146		)	156
Included in operations	(205		)	—			(205		)	—
Ending balance	$	668		$	1,541		$	668		$	1,541

The Level 3 assets included in the table above are not material to our financial position, results of operations or cash flows, and it is management's opinion that the sensitivity of the inputs used in determining the fair value of these assets is not material as well.

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Fixed index annuities - embedded derivatives
Beginning balance	$	4,755,913		$	3,848,902		$	4,406,163		$	3,337,556
Premiums less benefits	425,776			425,671			797,729			672,393
Change in fair value, net	(61,866		)	(527,521		)	(84,069		)	(262,897		)
Ending balance	$	5,119,823		$	3,747,052		$	5,119,823		$	3,747,052

Change in fair value, net for each period in our embedded derivatives are included in change in fair value of embedded derivatives in the unaudited consolidated statements of operations.

Certain derivatives embedded in our fixed index annuity contracts are our most significant financial instrument measured at fair value that are categorized as Level 3 in the fair value hierarchy. The contractual obligations for future annual index credits within our fixed index annuity contracts are treated as a "series of embedded derivatives" over the expected life of the applicable contracts. We estimate the fair value of these embedded derivatives at each valuation date by the method described above under fixed index annuities - embedded derivatives. The projections of minimum guaranteed contract values include the same best estimate assumptions for policy decrements as were used to project policy contract values.

The most sensitive assumption in determining policy liabilities for fixed index annuities is the rates used to discount the excess projected contract values. As indicated above, the discount rate reflects our nonperformance risk. If the discount rates used to discount the excess projected contract values at June 30, 2014, were to increase by 100 basis points, the fair value of the embedded derivatives would decrease by $350.0 million recorded through operations as a decrease in the change in fair value of embedded derivatives and there would be a corresponding decrease of $209.2 million to our combined balance for deferred policy acquisition costs and deferred sales inducements recorded through operations as an increase in amortization of deferred policy acquisition costs and deferred sales inducements. A decrease by 100 basis points in the discount rate used to discount the excess projected contract values would increase the fair value of the embedded derivatives by $391.7 million recorded through operations as an increase in the change in fair value of embedded derivatives and there would be a corresponding increase of $230.4 million to our combined balance for deferred policy acquisition costs and deferred sales inducements recorded through operations as a decrease in amortization of deferred policy acquisition costs and deferred sales inducements.

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Notes Payable (Liability and Equity Components of Convertible Senior Notes) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended			12 Months Ended	6 Months Ended	12 Months Ended	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 September 2015 Notes [Member]	Dec. 31, 2013 September 2015 Notes [Member]	Jun. 30, 2014 December 2029 Notes [Member]	Dec. 31, 2013 December 2029 Notes [Member]	Jun. 30, 2014 Convertible Debt [Member]	Jun. 30, 2013 Convertible Debt [Member]	Jun. 30, 2014 Convertible Debt [Member]	Jun. 30, 2013 Convertible Debt [Member]
Debt Instrument [Line Items]
Principal amount of liability component					$ 45,450	$ 91,951	$ 32,142	$ 68,373
Unamortized discount					(2,367)	(6,623)	(864)	(3,743)
Net carrying amount of liability component					43,083	85,328	31,278	64,630
Carrying amount of equity component							4,325	15,586
Amount by which the if-converted value exceeds principal					45,056	104,403	50,715	113,169
Interest rate, effective percentage					8.90%		11.90%
Interest expense on convertible notes	$ 9,121	$ 6,780	$ 19,385	$ 14,028					$ 2,300	$ 6,800	$ 5,700	$ 14,000

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Fair Values of Financial Instruments (Assets and Liabilities Measured on a Recurring Basis by Fair Value Hierarchy) (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Total Fair Value [Member]
Assets
Derivative assets	$ 905,688	$ 856,050
Cash and cash equivalents	1,464,533	897,529
Counterparty collateral	261,266	315,824
Assets	32,006,493	28,801,484
Liabilities
Fixed index annuities - embedded derivatives	5,119,823	4,406,163
Liabilities	5,167,690	4,513,204
Total Fair Value [Member] | Interest Rate Caps [Member]
Assets
Interest rate derivative assets	3,788	6,103
Total Fair Value [Member] | Interest Rate Swap [Member]
Assets
Interest rate derivative assets		712
Liabilities
Interest rate derivative liabilities	1,983
Total Fair Value [Member] | 2015 Notes Hedges [Member]
Assets
2015 notes hedges	45,884	107,041
Total Fair Value [Member] | 2015 Notes Embedded Conversion Derivative [Member]
Liabilities
2015 notes embedded conversion derivative	45,884	107,041
Total Fair Value [Member] | Equity Securities, Available For Sale [Member]
Assets
Available for sale securities	7,762	7,778
Total Fair Value [Member] | United States Government Full Faith and Credit [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	38,483	42,925
Total Fair Value [Member] | United States Government Sponsored Agencies [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	1,185,341	1,194,289
Total Fair Value [Member] | United States Municipalities, States and Territories [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	3,506,198	3,306,743
Total Fair Value [Member] | Foreign Government Obligations [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	192,963	91,557
Total Fair Value [Member] | Corporate Securities [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	19,187,375	17,233,037
Total Fair Value [Member] | Residential Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	1,870,565	1,971,960
Total Fair Value [Member] | Commercial Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	2,296,096	1,735,460
Total Fair Value [Member] | Other Asset Backed Securities [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	1,040,551	1,034,476
Quoted Prices in Active Markets (Level 1) [Member]
Assets
Derivative assets	0	0
Cash and cash equivalents	1,464,533	897,529
Counterparty collateral	0	0
Assets	1,468,634	902,713
Liabilities
Fixed index annuities - embedded derivatives	0	0
Liabilities	0	0
Quoted Prices in Active Markets (Level 1) [Member] | Interest Rate Caps [Member]
Assets
Interest rate derivative assets	0	0
Quoted Prices in Active Markets (Level 1) [Member] | Interest Rate Swap [Member]
Assets
Interest rate derivative assets		0
Liabilities
Interest rate derivative liabilities	0
Quoted Prices in Active Markets (Level 1) [Member] | 2015 Notes Hedges [Member]
Assets
2015 notes hedges	0	0
Quoted Prices in Active Markets (Level 1) [Member] | 2015 Notes Embedded Conversion Derivative [Member]
Liabilities
2015 notes embedded conversion derivative	0	0
Quoted Prices in Active Markets (Level 1) [Member] | Equity Securities, Available For Sale [Member]
Assets
Available for sale securities	0	0
Quoted Prices in Active Markets (Level 1) [Member] | United States Government Full Faith and Credit [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	4,074	4,805
Quoted Prices in Active Markets (Level 1) [Member] | United States Government Sponsored Agencies [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	0	0
Quoted Prices in Active Markets (Level 1) [Member] | United States Municipalities, States and Territories [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	0	0
Quoted Prices in Active Markets (Level 1) [Member] | Foreign Government Obligations [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	0	0
Quoted Prices in Active Markets (Level 1) [Member] | Corporate Securities [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	27	20
Quoted Prices in Active Markets (Level 1) [Member] | Residential Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	0	0
Quoted Prices in Active Markets (Level 1) [Member] | Commercial Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	0	0
Quoted Prices in Active Markets (Level 1) [Member] | Other Asset Backed Securities [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	0	359
Significant Other Observable Inputs (Level 2) [Member]
Assets
Derivative assets	905,688	856,050
Cash and cash equivalents	0	0
Counterparty collateral	261,266	315,824
Assets	30,537,191	27,897,395
Liabilities
Fixed index annuities - embedded derivatives	0	0
Liabilities	47,867	107,041
Significant Other Observable Inputs (Level 2) [Member] | Interest Rate Caps [Member]
Assets
Interest rate derivative assets	3,788	6,103
Significant Other Observable Inputs (Level 2) [Member] | Interest Rate Swap [Member]
Assets
Interest rate derivative assets		712
Liabilities
Interest rate derivative liabilities	1,983
Significant Other Observable Inputs (Level 2) [Member] | 2015 Notes Hedges [Member]
Assets
2015 notes hedges	45,884	107,041
Significant Other Observable Inputs (Level 2) [Member] | 2015 Notes Embedded Conversion Derivative [Member]
Liabilities
2015 notes embedded conversion derivative	45,884	107,041
Significant Other Observable Inputs (Level 2) [Member] | Equity Securities, Available For Sale [Member]
Assets
Available for sale securities	7,762	7,778
Significant Other Observable Inputs (Level 2) [Member] | United States Government Full Faith and Credit [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	34,409	38,120
Significant Other Observable Inputs (Level 2) [Member] | United States Government Sponsored Agencies [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	1,185,341	1,194,289
Significant Other Observable Inputs (Level 2) [Member] | United States Municipalities, States and Territories [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	3,506,198	3,306,743
Significant Other Observable Inputs (Level 2) [Member] | Foreign Government Obligations [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	192,963	91,557
Significant Other Observable Inputs (Level 2) [Member] | Corporate Securities [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	19,187,348	17,233,017
Significant Other Observable Inputs (Level 2) [Member] | Residential Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	1,869,897	1,970,584
Significant Other Observable Inputs (Level 2) [Member] | Commercial Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	2,296,096	1,735,460
Significant Other Observable Inputs (Level 2) [Member] | Other Asset Backed Securities [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	1,040,551	1,034,117
Significant Unobservable Inputs (Level 3) [Member]
Assets
Derivative assets	0	0
Cash and cash equivalents	0	0
Counterparty collateral	0	0
Assets	668	1,376
Liabilities
Fixed index annuities - embedded derivatives	5,119,823	4,406,163
Liabilities	5,119,823	4,406,163
Significant Unobservable Inputs (Level 3) [Member] | Interest Rate Caps [Member]
Assets
Interest rate derivative assets	0	0
Significant Unobservable Inputs (Level 3) [Member] | Interest Rate Swap [Member]
Assets
Interest rate derivative assets		0
Liabilities
Interest rate derivative liabilities	0
Significant Unobservable Inputs (Level 3) [Member] | 2015 Notes Hedges [Member]
Assets
2015 notes hedges	0	0
Significant Unobservable Inputs (Level 3) [Member] | 2015 Notes Embedded Conversion Derivative [Member]
Liabilities
2015 notes embedded conversion derivative	0	0
Significant Unobservable Inputs (Level 3) [Member] | Equity Securities, Available For Sale [Member]
Assets
Available for sale securities	0	0
Significant Unobservable Inputs (Level 3) [Member] | United States Government Full Faith and Credit [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	0	0
Significant Unobservable Inputs (Level 3) [Member] | United States Government Sponsored Agencies [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	0	0
Significant Unobservable Inputs (Level 3) [Member] | United States Municipalities, States and Territories [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	0	0
Significant Unobservable Inputs (Level 3) [Member] | Foreign Government Obligations [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	0	0
Significant Unobservable Inputs (Level 3) [Member] | Corporate Securities [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	0	0
Significant Unobservable Inputs (Level 3) [Member] | Residential Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	668	1,376
Significant Unobservable Inputs (Level 3) [Member] | Commercial Mortgage Backed Securities [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	0	0
Significant Unobservable Inputs (Level 3) [Member] | Other Asset Backed Securities [Member] | Fixed Maturity Securities [Member]
Assets
Available for sale securities	$ 0	$ 0

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Investments (Significant Assumptions in Determining Credit Loss Component of Other Than Temporary Impairment on Residential Mortgage Backed Securities) (Details) (Residential Mortgage Backed Securities [Member])	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2003 [Member] | Minimum [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Discount rate		5.10%
Default rate		2.00%
Loss severity		30.00%
Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2003 [Member] | Maximum [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Discount rate		5.10%
Default rate		2.00%
Loss severity		30.00%
Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2005 [Member] | Minimum [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Discount rate	7.50%	6.50%
Default rate	15.00%	8.00%
Loss severity	50.00%	50.00%
Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2005 [Member] | Maximum [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Discount rate	7.50%	7.70%
Default rate	15.00%	17.00%
Loss severity	50.00%	50.00%
Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2006 [Member] | Minimum [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Discount rate	6.50%	6.00%
Default rate	11.00%	9.00%
Loss severity	50.00%	50.00%
Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2006 [Member] | Maximum [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Discount rate	7.40%	6.90%
Default rate	12.00%	16.00%
Loss severity	50.00%	50.00%
Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2007 [Member] | Minimum [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Discount rate		6.50%
Default rate		12.00%
Loss severity		40.00%
Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2007 [Member] | Maximum [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Discount rate		6.70%
Default rate		25.00%
Loss severity		60.00%
Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2008 [Member] | Minimum [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Discount rate		6.60%
Default rate		16.00%
Loss severity		45.00%
Residential Mortgage Backed Securities, Prime Sector [Member] | Vintage Year 2008 [Member] | Maximum [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Discount rate		6.60%
Default rate		16.00%
Loss severity		45.00%
Residential Mortgage Backed Securities, Alt-A Sector [Member] | Vintage Year 2005 [Member] | Minimum [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Discount rate	5.60%	5.60%
Default rate	87.00%	15.00%
Loss severity	2.00%	5.00%
Residential Mortgage Backed Securities, Alt-A Sector [Member] | Vintage Year 2005 [Member] | Maximum [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Discount rate	6.40%	8.70%
Default rate	87.00%	25.00%
Loss severity	2.00%	65.00%
Residential Mortgage Backed Securities, Alt-A Sector [Member] | Vintage Year 2007 [Member] | Minimum [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Discount rate		6.20%
Default rate		38.00%
Loss severity		60.00%
Residential Mortgage Backed Securities, Alt-A Sector [Member] | Vintage Year 2007 [Member] | Maximum [Member]
Residential Mortgage Backed Securities, Vintage Year [Line Items]
Discount rate		6.90%
Default rate		52.00%
Loss severity		65.00%

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Mortgage Loans on Real Estate (Tables)

6 Months Ended

Jun. 30, 2014

Mortgage Loans on Real Estate [Abstract]

Summary of Mortgage Loan Portfolio

Our mortgage loan portfolio, summarized in the following table, totaled $2.5 billion at June 30, 2014 and $2.6 billion at December 31, 2013, with commitments outstanding of $38.6 million at June 30, 2014.

	June 30, 2014			December 31, 2013
	(Dollars in thousands)
Principal outstanding	$	2,570,950		$	2,607,698
Loan loss allowance	(26,582		)	(26,047		)
Deferred prepayment fees	(558		)	(569		)
Carrying value	$	2,543,810		$	2,581,082

Mortgage Loan Portfolio Summarized by Geographic Region and Property Type

The mortgage loan portfolio is summarized by geographic region and property type as follows:

	June 30, 2014				December 31, 2013
	Principal		Percent		Principal		Percent
	(Dollars in thousands)
Geographic distribution
East	$	774,014	30.1	%	$	765,717	29.4	%
Middle Atlantic	145,663		5.7	%	156,489		6.0	%
Mountain	328,284		12.8	%	356,246		13.7	%
New England	14,700		0.6	%	21,324		0.8	%
Pacific	303,922		11.8	%	317,431		12.2	%
South Atlantic	500,612		19.5	%	483,852		18.5	%
West North Central	338,343		13.1	%	351,794		13.5	%
West South Central	165,412		6.4	%	154,845		5.9	%
	$	2,570,950	100.0	%	$	2,607,698	100.0	%
Property type distribution
Office	$	533,472	20.8	%	$	590,414	22.6	%
Medical Office	104,025		4.0	%	125,703		4.8	%
Retail	729,497		28.4	%	711,364		27.3	%
Industrial/Warehouse	681,540		26.5	%	673,449		25.8	%
Hotel	43,784		1.7	%	61,574		2.4	%
Apartment	340,621		13.2	%	291,823		11.2	%
Mixed use/other	138,011		5.4	%	153,371		5.9	%
	$	2,570,950	100.0	%	$	2,607,698	100.0	%

Rollforward of Allowance for Credit Losses

The following tables present a rollforward of our specific and general valuation allowances for mortgage loans on real estate:

	Three Months Ended June 30, 2014						Three Months Ended June 30, 2013
	Specific Allowance			General Allowance			Specific Allowance			General Allowance
	(Dollars in thousands)
Beginning allowance balance	$	(16,462	)	$	(8,800	)	$	(22,631	)	$	(10,400	)
Charge-offs	1,808			—			2,612			—
Recoveries	255			—			—			—
Provision for credit losses	(2,883		)	(500		)	(1,157		)	(100		)
Ending allowance balance	$	(17,282	)	$	(9,300	)	$	(21,176	)	$	(10,500	)
	Six Months Ended June 30, 2014						Six Months Ended June 30, 2013
	Specific Allowance			General Allowance			Specific Allowance			General Allowance
	(Dollars in thousands)
Beginning allowance balance	$	(16,847	)	$	(9,200	)	$	(23,134	)	$	(11,100	)
Charge-offs	2,757			—			4,181			—
Recoveries	255			—			—			—
Provision for credit losses	(3,447		)	(100		)	(2,223		)	600
Ending allowance balance	$	(17,282	)	$	(9,300	)	$	(21,176	)	$	(10,500	)

Impaired Mortgage Loans on Real Estate by Basis of Impairment

The following table presents the total outstanding principal of loans evaluated for impairment by basis of impairment method:

	June 30, 2014		December 31, 2013
	(Dollars in thousands)
Individually evaluated for impairment	$	42,963	$	47,018
Collectively evaluated for impairment	2,527,987		2,560,680
Total loans evaluated for impairment	$	2,570,950	$	2,607,698

Real Estate Acquired Via Foreclosure or Deed In Lieu

The following table summarizes the activity in the real estate owned which was obtained in satisfaction of mortgage loans on real estate:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Dollars in thousands)
Real estate owned at beginning of period	$	20,592		$	28,764		$	22,844		$	33,172
Real estate acquired in satisfaction of mortgage loans	8,294			—			10,007			844
Additions	—			480			—			480
Sales	(4,118		)	(2,333		)	(7,148		)	(7,413		)
Impairments	—			(145		)	(799		)	(145		)
Depreciation	(162		)	(157		)	(298		)	(329		)
Real estate owned at end of period	$	24,606		$	26,609		$	24,606		$	26,609

Mortgage Loans By Credit Quality Indicator

We analyze credit risk of our mortgage loans by analyzing all available evidence on loans that are delinquent and loans that are in a workout period.

	June 30, 2014		December 31, 2013
	(Dollars in thousands)
Credit Exposure--By Payment Activity
Performing	$	2,559,419	$	2,593,276
In workout	2,213		6,248
Delinquent	—		—
Collateral dependent	9,318		8,174
	$	2,570,950	$	2,607,698

Aging of Financing Receivables

Aging of financing receivables is summarized in the following table, with loans in a "workout" period as of the reporting date considered current if payments are current in accordance with agreed upon terms:

	30 - 59 Days		60 - 89 Days		90 Days and Over		Total Past Due		Current		Collateral Dependent Receivables		Total Financing Receivables
	(Dollars in thousands)
Commercial Mortgage Loans
June 30, 2014	$	1,045	$	—	$	—	$	1,045	$	2,560,587	$	9,318	$	2,570,950
December 31, 2013	$	—	$	—	$	—	$	—	$	2,599,524	$	8,174	$	2,607,698

Impaired Financing Receivables

Financing receivables summarized in the following two tables represent all loans that we are either not currently collecting, or those we feel it is probable we will not collect, all amounts due according to the contractual terms of the loan agreements (all loans that we have worked with the borrower to alleviate short-term cash flow issues, loans delinquent for more than 60 days at the reporting date, loans we have determined to be collateral dependent and loans that we have recorded specific impairments on that we feel may continue to have performance issues).

	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
June 30, 2014
Mortgage loans with an allowance	$	25,681	$	42,963	$	(17,282	)
Mortgage loans with no related allowance	2,656		2,656		—
	$	28,337	$	45,619	$	(17,282	)
December 31, 2013
Mortgage loans with an allowance	$	30,171	$	47,018	$	(16,847	)
Mortgage loans with no related allowance	3,264		3,264		—
	$	33,435	$	50,282	$	(16,847	)

	Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
Three months ended June 30, 2014
Mortgage loans with an allowance	$	27,054	$	600
Mortgage loans with no related allowance	2,656		13
	$	29,710	$	613
Three months ended June 30, 2013
Mortgage loans with an allowance	$	26,232	$	426
Mortgage loans with no related allowance	18,699		266
	$	44,931	$	692
Six months ended June 30, 2014
Mortgage loans with an allowance	$	27,236	$	1,235
Mortgage loans with no related allowance	2,656		—
	$	29,892	$	1,235
Six months ended June 30, 2013
Mortgage loans with an allowance	$	26,885	$	862
Mortgage loans with no related allowance	18,739		528
	$	45,624	$	1,390

Troubled Debt Restructurings on Financing Receivables

Mortgage loan workouts, refinances or restructures that are classified as TDRs are individually evaluated and measured for impairment. A summary of mortgage loans on commercial real estate with outstanding principal at June 30, 2014 and December 31, 2013 that we determined to be TDRs are as follows:

Geographic Region	Number of TDRs	Principal Balance Outstanding		Specific Loan Loss Allowance			Net Carrying Amount
		(Dollars in thousands)
June 30, 2014
South Atlantic	7	14,537		(3,911		)	10,626
East North Central	1	2,213		(467		)	1,746
West North Central	1	1,908		(474		)	1,434
	9	$	18,658	$	(4,852	)	$	13,806
December 31, 2013
East	1	$	3,712	$	(949	)	$	2,763
Mountain	7	22,140		(329		)	21,811
South Atlantic	7	13,930		(4,177		)	9,753
East North Central	1	2,219		(467		)	1,752
West North Central	1	1,938		(475		)	1,463
West South Central	1	1,714		(256		)	1,458
	18	$	45,653	$	(6,653	)	$	39,000