FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2013

FAIR VALUE OF FINANCIAL INSTRUMENTS

Schedule of assets and liabilities measured at fair value on a recurring basis

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of September 30, 2013:

	Level 1		Level 2		Level 3		Total
	(Dollars In Thousands)
Assets:
Fixed maturity securities - available-for-sale
Residential mortgage-backed securities	$	—	$	1,463,989	$	38	$	1,464,027
Commercial mortgage-backed securities	—		911,607		—		911,607
Other asset-backed securities	—		328,393		548,771		877,164
U.S. government-related securities	1,063,584		149,852		—		1,213,436
State, municipalities, and political subdivisions	—		1,296,046		4,275		1,300,321
Other government-related securities	—		41,128		—		41,128
Corporate bonds	107		19,526,553		187,488		19,714,148
Total fixed maturity securities - available-for-sale	1,063,691		23,717,568		740,572		25,521,831
Fixed maturity securities - trading
Residential mortgage-backed securities	—		308,356		—		308,356
Commercial mortgage-backed securities	—		169,046		—		169,046
Other asset-backed securities	—		90,726		170,967		261,693
U.S. government-related securities	198,717		5,147		—		203,864
State, municipalities, and political subdivisions	—		262,036		—		262,036
Other government-related securities	—		57,525		—		57,525
Corporate bonds	—		1,515,167		5,092		1,520,259
Total fixed maturity securities - trading	198,717		2,408,003		176,059		2,782,779
Total fixed maturity securities	1,262,408		26,125,571		916,631		28,304,610
Equity securities	311,637		43,341		65,527		420,505
Other long-term investments (1)	58,567		54,600		83,005		196,172
Short-term investments	212,816		2,300		—		215,116
Total investments	1,845,428		26,225,812		1,065,163		29,136,403
Cash	229,747		—		—		229,747
Assets related to separate accounts
Variable annuity	11,921,925		—		—		11,921,925
Variable universal life	663,380		—		—		663,380
Total assets measured at fair value on a recurring basis	$	14,660,480	$	26,225,812	$	1,065,163	$	41,951,455
Liabilities:
Annuity account balances(2)	$	—	$	—	$	110,590	$	110,590
Other liabilities (1)	11,304		185,443		230,723		427,470
Total liabilities measured at fair value on a recurring basis	$	11,304	$	185,443	$	341,313	$	538,060

(1)Includes certain freestanding and embedded derivatives.

(2)Represents liabilities related to fixed indexed annuities.

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of December 31, 2012:

	Level 1		Level 2		Level 3		Total
	(Dollars In Thousands)
Assets:
Fixed maturity securities - available-for-sale
Residential mortgage-backed securities	$	—	$	1,839,326	$	4	$	1,839,330
Commercial mortgage-backed securities	—		869,823		—		869,823
Other asset-backed securities	—		378,870		596,143		975,013
U.S. government-related securities	909,988		258,458		—		1,168,446
State, municipalities, and political subdivisions	—		1,439,378		4,275		1,443,653
Other government-related securities	—		80,767		20,011		100,778
Corporate bonds	207		20,197,528		167,892		20,365,627
Total fixed maturity securities - available-for-sale	910,195		25,064,150		788,325		26,762,670
Fixed maturity securities - trading
Residential mortgage-backed securities	—		357,803		—		357,803
Commercial mortgage-backed securities	—		171,073		—		171,073
Other asset-backed securities	—		87,395		70,535		157,930
U.S. government-related securities	304,704		1,169		—		305,873
State, municipalities, and political subdivisions	—		278,898		—		278,898
Other government-related securities	—		63,444		—		63,444
Corporate bonds	—		1,672,172		115		1,672,287
Total fixed maturity securities - trading	304,704		2,631,954		70,650		3,007,308
Total fixed maturity securities	1,214,899		27,696,104		858,975		29,769,978
Equity securities	273,072		35,116		65,527		373,715
Other long-term investments (1)	23,639		58,134		48,655		130,428
Short-term investments	214,295		2,492		—		216,787
Total investments	1,725,905		27,791,846		973,157		30,490,908
Cash	269,582		—		—		269,582
Other assets	—		—		—		—
Assets related to separate accounts
Variable annuity	9,601,417		—		—		9,601,417
Variable universal life	562,817		—		—		562,817
Total assets measured at fair value on a recurring basis	$	12,159,721	$	27,791,846	$	973,157	$	40,924,724
Liabilities:
Annuity account balances (2)	$	—	$	—	$	129,468	$	129,468
Other liabilities (1)	19,187		27,250		611,437		657,874
Total liabilities measured at fair value on a recurring basis	$	19,187	$	27,250	$	740,905	$	787,342

(1) Includes certain freestanding and embedded derivatives.

(2) Represents liabilities related to fixed indexed annuities.

Schedule of valuation method for material financial instruments included in Level 3, as well as the unobservable inputs used in the valuation of those financial instruments

	Fair Value
	As of		Valuation	Unobservable	Range
	September 30, 2013		Technique	Input	(Weighted Average)
	(Dollars In Thousands)
Assets:
Other asset-backed securities	$	548,771	Discounted cash flow	Liquidity premium	0.69% - 1.32% (0.80%)
				Paydown rate	8.37% - 17.50% (12.45%)
Corporate bonds	192,580		Discounted cash flow	Spread over treasury	0.32% - 6.75% (2.89%)
Embedded derivatives -	77,835		Actuarial cash flow	Mortality	49% to 80% of 1994 MGDB table
GMWB(1)			model	Lapse	0% - 24%, depending on product/duration/funded status of guarantee
				Utilization	97% - 103%
				Nonperformance risk	0.19% - 1.31%
Liabilities:
Annuity account balances(2)	$	110,590	Actuarial cash flow	Asset earned rate	5.37%
			model	Expenses	$88 - $102 per policy
				Withdrawal rate	2.20%
				Mortality	49% to 80% of 1994 MGDB table
				Lapse	2.2% - 33.0%, depending on duration/surrender charge period
				Return on assets	1.50% - 1.85% depending on surrender charge period
				Nonperformance risk	0.19% - 1.31%
Embedded derivative - FIA	9,199		Actuarial cash flow	Expenses	$83 - $97 per policy
			model	Withdrawal rate	1.1% - 4.5% depending on duration and tax qualification
				Mortality	49% - 80% of 1994 MGDB table
				Lapse	2.5% - 40.0%, depending on duration/surrender charge period
				Nonperformance risk	0.19% - 1.31%

(1)The fair value for the GMWB embedded derivative is presented as a net asset for the purposes of this chart. Excludes modified coinsurance agreements.

(2)Represents account balance liabilities related to fixed indexed annuities.

	Fair Value
	As of		Valuation	Unobservable	Range
	December 31, 2012		Technique	Input	(Weighted Average)
	(Dollars In Thousands)
Assets:
Other asset-backed securities	$	596,143	Discounted cash flow	Liquidity premium	0.72% - 1.68% (1.29%)
				Paydown rate	8.51% - 18.10% (11.40%)
Other government-related securities	20,011		Discounted cash flow	Spread over treasury	(0.30%)
Corporate bonds	168,007		Discounted cash flow	Spread over treasury	0.92% - 7.75% (3.34%)
Liabilities:
Embedded derivatives - GMWB(1)	$	169,041	Actuarial cash flow model	Mortality	57% of 1994 MGDB table
				Lapse	0% - 24%, depending on product/duration/funded status of guarantee
				Utilization	93% - 100%
				Nonperformance risk	0.09% - 1.34%
Annuity account balances(2)	129,468		Actuarial cash flow model	Asset earned rate	5.81%
				Expenses	$ 88 - $108 per policy
				Withdrawal rate	2.20%
				Mortality	57% of 1994 MGDB table
				Lapse	2.2% - 45.0%, depending on duration/surrender charge period
				Return on assets	1.50% - 1.85% depending on surrender charge period
				Nonperformance risk	0.09% - 1.34%

(1)The fair value for the GMWB embedded derivative is presented as a net liability for the purposes of this chart. Excludes modified coinsurance agreements.

(2)Represents account balance liabilities related to fixed indexed annuities.

Schedule of reconciliation of the beginning and ending balances for fair value measurements, for which the Company has used significant unobservable inputs (Level 3)

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the three months ended September 30, 2013, for which the Company has used significant unobservable inputs (Level 3):

																															Total
																															Gains (losses)
			Total					Total																							included in
			Realized and Unrealized					Realized and Unrealized																							Earnings
			Gains					Losses																							related to
					Included in						Included in																				Instruments
					Other						Other												Transfers								still held at
	Beginning		Included in		Comprehensive			Included in			Comprehensive												in/out of						Ending		the Reporting
	Balance		Earnings		Income			Earnings			Income			Purchases		Sales			Issuances		Settlements		Level 3			Other			Balance		Date
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	14,062	$	—	$	1,310		$	—		$	—		$	—	$	(12	)	$	—	$	—	$	(15,333	)	$	11		$	38	$	—
Commercial mortgage-backed securities	—		—		—			—			—			—		—			—		—		—			—			—		—
Other asset-backed securities	576,396		—		52			—			(26,969		)	11,769		(12,085		)	—		—		—			(392		)	548,771		—
U.S. government-related securities	—		—		—			—			—			—		—			—		—		—			—			—		—
States, municipals, and political subdivisions	4,275		—		—			—			—			—		—			—		—		—			—			4,275		—
Other government-related securities	20,000		—		1			—			—			—		(20,000		)	—		—		—			(1		)	—		—
Corporate bonds	194,895		—		1,662			—			(3,513		)	11,002		(13,558		)	—		—		(3,385		)	385			187,488		—
Total fixed maturity securities - available-for-sale	809,628		—		3,025			—			(30,482		)	22,771		(45,655		)	—		—		(18,718		)	3			740,572		—
Fixed maturity securities - trading
Residential mortgage-backed securities	1,582		—		—			(1		)	—			—		(72		)	—		—		(1,494		)	(15		)	—		—
Commercial mortgage-backed securities	—		—		—			—			—			—		—			—		—		—			—			—		—
Other asset-backed securities	168,851		3,167		—			(1,080		)	—			16,394		(16,568		)	—		—		—			203			170,967		1,596
U.S. government-related securities	—		—		—			—			—			—		—			—		—		—			—			—		—
States, municipals and political subdivisions	3,500		—		—			(123		)	—			—		—			—		—		(3,377		)	—			—		—
Other government-related securities	—		—		—			—			—			—		—			—		—		—			—			—		—
Corporate bonds	5,092		—		—			(4		)	—			—		—			—		—		—			4			5,092		(4		)
Total fixed maturity securities - trading	179,025		3,167		—			(1,208		)	—			16,394		(16,640		)	—		—		(4,871		)	192			176,059		1,592
Total fixed maturity securities	988,653		3,167		3,025			(1,208		)	(30,482		)	39,165		(62,295		)	—		—		(23,589		)	195			916,631		1,592
Equity securities	65,527		—		—			—			—			—		—			—		—		—			—			65,527		—
Other long-term investments(1)	47,838		36,917		(1,750		)	—			—			—		—			—		—		—			—			83,005		35,167
Short-term investments	—		—		—			—			—			—		—			—		—		—			—			—		—
Total investments	1,102,018		40,084		1,275			(1,208		)	(30,482		)	39,165		(62,295		)	—		—		(23,589		)	195			1,065,163		36,759
Total assets measured at fair value on a recurring basis	$	1,102,018	$	40,084	$	1,275		$	(1,208	)	$	(30,482	)	$	39,165	$	(62,295	)	$	—	$	—	$	(23,589	)	$	195		$	1,065,163	$	36,759
Liabilities:
Annuity account balances(2)	$	114,614	$	—	$	(2,472	)	$	—		$	—		$	—	$	—		$	46	$	6,542	—			$	—		$	110,590	$	—
Other liabilities(1)	256,776		39,109		(13,056		)	—			—			—		—			—		—		—			—			230,723		26,053
Total liabilities measured at fair value on a recurring basis	$	371,390	$	39,109	$	(15,528	)	$	—		$	—		$	—	$	—		$	46	$	6,542	$	—		$	—		$	341,313	$	26,053

(1)Represents certain freestanding and embedded derivatives.

(2)Represents liabilities related to fixed indexed annuities.

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the three months ended September 30, 2012, for which the Company has used significant unobservable inputs (Level 3):

																														Total
																														Gains (losses)
			Total				Total																							included in
			Realized and Unrealized				Realized and Unrealized																							Earnings
			Gains				Losses																							related to
					Included in					Included in																				Instruments
					Other					Other												Transfers								still held at
	Beginning		Included in		Comprehensive		Included in			Comprehensive												in/out of						Ending		the Reporting
	Balance		Earnings		Income		Earnings			Income			Purchases		Sales			Issuances		Settlements		Level 3			Other			Balance		Date
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	4	$	—	$	—	$	—		$	—		$	—	$	—		$	—	$	—	$	—		$	—		$	4	$	—
Commercial mortgage-backed securities	—		—		—		—			—			—		—			—		—		—			—			—		—
Other asset-backed securities	584,641		45		11,462		—			(1,157		)	—		(5,200		)	—		—		—			(153		)	589,638		—
U.S. government-related securities	—		—		—		—			—			—		—			—		—		—			—			—		—
States, municipals, and political subdivisions	4,275		—		—		—			—			—		—			—		—		—			—			4,275		—
Other government-related securities	20,020		—				—			(11		)	—		—			—		—		—			(4		)	20,005		—
Corporate bonds	172,145		—		5,349		—			(221		)	—		(2,090		)	—		—		(26,802		)	122			148,503		—
Total fixed maturity securities - available-for-sale	781,085		45		16,811		—			(1,389		)	—		(7,290		)	—		—		(26,802		)	(35		)	762,425		—
Fixed maturity securities - trading
Residential mortgage-backed securities	—		—		—		—			—			—		—			—		—		—			—			—		—
Commercial mortgage-backed securities	—		—		—		—			—			—		—			—		—		—			—			—		—
Other asset-backed securities	65,059		2,972		—		(148		)	—			7,208		(1,442		)	—		—		—			413			74,062		2,823
U.S. government-related securities	—		—		—		—			—			—		—			—		—		—			—			—		—
States, municipals and political subdivisions	—		—		—		—			—			—		—			—		—		—			—			—		—
Other government-related securities	—		—		—		—			—			—		—			—		—		—			—			—		—
Corporate bonds	114		1		—		—			—			—		—			—		—					—			115		2
Total fixed maturity securities - trading	65,173		2,973		—		(148		)	—			7,208		(1,442		)	—		—		—			413			74,177		2,825
Total fixed maturity securities	846,258		3,018		16,811		(148		)	(1,389		)	7,208		(8,732		)	—		—		(26,802		)	378			836,602		2,825
Equity securities	69,795		8		—		—			(147		)	—		(4,295		)	—		—		—			—			65,361		—
Other long-term investments(1)	25,315		20,278		—		(34		)	—			—		—			—		—		—			—			45,559		20,244
Short-term investments	—		—		—		—			—			—		—			—		—		—			—			—		—
Total investments	941,368		23,304		16,811		(182		)	(1,536		)	7,208		(13,027		)	—		—		(26,802		)	378			947,522		23,069
Total assets measured at fair value on a recurring basis	$	941,368	$	23,304	$	16,811	$	(182	)	$	(1,536	)	$	7,208	$	(13,027	)	$	—	$	—	$	(26,802	)	$	378		$	947,522	$	23,069
Liabilities:
Annuity account balances(2)	$	134,597	$	—	$	—	$	(5,766	)	$	—		$	—	$	—		$	217	$	6,011	$	—		$	—		$	134,569	$	—
Other liabilities(1)	516,587		11,016		—		(112,779		)	—			—		—			—		—		—			—			618,350		(101,763		)
Total liabilities measured at fair value on a recurring basis	$	651,184	$	11,016	$	—	$	(118,545	)	$	—		$	—	$	—		$	217	$	6,011	$	—		$	—		$	752,919	$	(101,763	)

(1)Represents certain freestanding and embedded derivatives.

(2)Represents liabilities related to fixed indexed annuities.

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the nine months ended September 30, 2013, for which the Company has used significant unobservable inputs (Level 3):

																															Total
																															Gains (losses)
			Total					Total																							included in
			Realized and Unrealized					Realized and Unrealized																							Earnings
			Gains					Losses																							related to
					Included in						Included in																				Instruments
					Other						Other												Transfers								still held at
	Beginning		Included in		Comprehensive			Included in			Comprehensive												in/out of						Ending		the Reporting
	Balance		Earnings		Income			Earnings			Income			Purchases		Sales			Issuances		Settlements		Level 3			Other			Balance		Date
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	4	$	—	$	1,310		$	—		$	(337	)	$	14,349	$	(12	)	$	—	$	—	$	(15,287	)	$	11		$	38	$	—
Commercial mortgage-backed securities	—		—		—			—			—			—		—			—		—		—			—			—		—
Other asset-backed securities	596,143		—		43,808			—			(54,517		)	24,931		(62,471		)	—		—		1,227			(350		)	548,771		—
U.S. government-related securities	—		—		—			—			—			—		—			—		—		—			—			—		—
States, municipals, and political subdivisions	4,275		—		—			—			—			—		—			—		—		—			—			4,275		—
Other government-related securities	20,011		—		2			—			(3		)	—		(20,000		)	—		—		—			(10		)	—		—
Corporate bonds	167,892		116		2,673			—			(13,559		)	29,277		(58,742		)	—		—		58,945			886			187,488		—
Total fixed maturity securities - available-for-sale	788,325		116		47,793			—			(68,416		)	68,557		(141,225		)	—		—		44,885			537			740,572		—
Fixed maturity securities - trading
Residential mortgage-backed securities	—		—		—			(1		)	—			1,582		(72		)	—		—		(1,494		)	(15		)	—		—
Commercial mortgage-backed securities	—		—		—			—			—			—		—			—		—		—			—			—		—
Other asset-backed securities	70,535		7,964		—			(3,949		)	—			122,224		(29,344		)	—		—		2,210			1,327			170,967		4,814
U.S. government-related securities	—		—		—			—			—			—		—			—		—		—			—			—		—
States, municipals and political subdivisions	—		—		—			(123		)	—			3,500		—			—		—		(3,377		)	—			—		—
Other government-related securities	—		—		—			—			—			—		—			—		—		—			—			—		—
Corporate bonds	115		1		—			(27		)	—			—		(17		)	—		—		5,013			7			5,092		(4		)
Total fixed maturity securities - trading	70,650		7,965		—			(4,100		)	—			127,306		(29,433		)	—		—		2,352			1,319			176,059		4,810
Total fixed maturity securities	858,975		8,081		47,793			(4,100		)	(68,416		)	195,863		(170,658		)	—		—		47,237			1,856			916,631		4,810
Equity securities	65,527		—		—			—			—			—		—			—		—		—			—			65,527		—
Other long-term investments(1)	48,655		84,176		(15,733		)	—			—			—		—			—		—		—			(34,093		)	83,005		68,443
Short-term investments	—		—		—			—			—			—		—			—		—		—			—			—		—
Total investments	973,157		92,257		32,060			(4,100		)	(68,416		)	195,863		(170,658		)	—		—		47,237			(32,237		)	1,065,163		73,253
Total assets measured at fair value on a recurring basis	$	973,157	$	92,257	$	32,060		$	(4,100	)	$	(68,416	)	$	195,863	$	(170,658	)	$	—	$	—	$	47,237		$	(32,237	)	$	1,065,163	$	73,253
Liabilities:
Annuity account balances(2)	$	129,468	$	—	$	(6,159	)	$	—		$	—		$	—	$	—		$	247	$	25,284	$	—		$	—		$	110,590	$	—
Other liabilities(1)	611,437		277,319		(31,110		)	—			—			—		—			—		—		—			134,505			230,723		246,209
Total liabilities measured at fair value on a recurring basis	$	740,905	$	277,319	$	(37,269	)	$	—		$	—		$	—	$	—		$	247	$	25,284	$	—		$	134,505		$	341,313	$	246,209

(1)Represents certain freestanding and embedded derivatives.

(2)Represents liabilities related to fixed indexed annuities.

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the nine months ended September 30, 2012, for which the Company has used significant unobservable inputs (Level 3):

																													Total
																													Gains (losses)
			Total				Total																						included in
			Realized and Unrealized				Realized and Unrealized																						Earnings
			Gains				Losses																						related to
					Included in					Included in																			Instruments
					Other					Other												Transfers							still held at
	Beginning		Included in		Comprehensive		Included in			Comprehensive												in/out of					Ending		the Reporting
	Balance		Earnings		Income		Earnings			Income			Purchases		Sales			Issuances		Settlements		Level 3		Other			Balance		Date
	(Dollars In Thousands)
Assets:
Fixed maturity securities available-for-sale
Residential mortgage-backed securities	$	7	$	—	$	—	$	—		$	—		$	—	$	(3	)	$	—	$	—	$	—	$	—		$	4	$	—
Commercial mortgage-backed securities	—		—		—		—			—			—		—			—		—		—		—			—		—
Other asset-backed securities	614,813		339		15,981		—			(22,055		)	—		(19,050		)	—		—		—		(390		)	589,638		—
U.S. government-related securities	15,000		—		—		—			(1		)	—		(15,000		)	—		—		—		1			—		—
States, municipals, and political subdivisions	—		—		—		—			—			4,275		—			—		—		—		—			4,275		—
Other government-related securities	—		—		18		—			(27		)	20,023		—			—		—		—		(9		)	20,005		—
Corporate bonds	119,565		—		7,198		—			(2,131		)	4		(4,185		)	—		—		27,810		242			148,503		—
Total fixed maturity securities - available-for-sale	749,385		339		23,197		—			(24,214		)	24,302		(38,238		)	—		—		27,810		(156		)	762,425		—
Fixed maturity securities - trading
Residential mortgage-backed securities	—		—		—		—			—			—		—			—		—		—		—			—		—
Commercial mortgage-backed securities	—		—		—		—			—			—		—			—		—		—		—			—		—
Other asset-backed securities	28,343		3,450		—		(905		)	—			48,255		(6,516		)	—		—		—		1,435			74,062		2,545
U.S. government-related securities	—		—		—		—			—			—		—			—		—		—		—			—		—
States, municipals and political subdivisions	—		—		—		—			—			—		—			—		—		—		—			—		—
Other government-related securities	—		—		—		—			—			—		—			—		—		—		—			—		—
Corporate bonds	—		1		—		—			—			1		—			—		—		113		—			115		10
Total fixed maturity securities - trading	28,343		3,451		—		(905		)	—			48,256		(6,516		)	—		—		113		1,435			74,177		2,555
Total fixed maturity securities	777,728		3,790		23,197		(905		)	(24,214		)	72,558		(44,754		)	—		—		27,923		1,279			836,602		2,555
Equity securities	70,080		8		661		—			(1,097		)	4		(4,295		)	—		—		—		—			65,361		—
Other long-term investments(1)	19,103		33,951		—		(7,495		)	—			—		—			—		—		—		—			45,559		26,456
Short-term investments	—		—		—		—			—			—		—			—		—		—		—			—		—
Total investments	866,911		37,749		23,858		(8,400		)	(25,311		)	72,562		(49,049		)	—		—		27,923		1,279			947,522		29,011
Total assets measured at fair value on a recurring basis	$	866,911	$	37,749	$	23,858	$	(8,400	)	$	(25,311	)	$	72,562	$	(49,049	)	$	—	$	—	$	27,923	$	1,279		$	947,522	$	29,011
Liabilities:
Annuity account balances(2)	$	136,462	$	—	$	—	$	(9,983	)	$	—		$	—	$	—		$	645	$	12,521	$	—	$	—		$	134,569	$	—
Other liabilities(1)	437,613		67,565		—		(248,302		)	—			—		—			—		—		—		—			618,350		(180,737		)
Total liabilities measured at fair value on a recurring basis	$	574,075	$	67,565	$	—	$	(258,285	)	$	—		$	—	$	—		$	645	$	12,521	$	—	$	—		$	752,919	$	(180,737	)

(1)Represents certain freestanding and embedded derivatives.

(2)Represents liabilities related to fixed indexed annuities.

Schedule of the carrying amounts and estimated fair value of the Company's financial instruments

		As of
		September 30, 2013				December 31, 2012
	Fair Value	Carrying				Carrying
	Level	Amounts		Fair Values		Amounts		Fair Values
		(Dollars In Thousands)
Assets:
Mortgage loans on real estate	3	$	4,794,924	$	5,287,854	$	4,948,625	$	5,723,579
Policy loans	3	856,333		856,333		865,391		865,391
Fixed maturities, held-to-maturity(1)	3	350,000		341,797		300,000		319,163
Liabilities:
Stable value product account balances	3	$	2,531,262	$	2,535,865	$	2,510,559	$	2,534,094
Annuity account balances	3	10,431,938		10,074,996		10,658,463		10,525,702
Debt:
Non-recourse funding obligations(2)	3	$	1,491,900	$	1,392,932	$	1,446,900	$	1,357,290

Except as noted below, fair values were estimated using quoted market prices.

(1) Security purchased from unconsolidated subsidiary, Red Mountain LLC.

(2) Of this carrying amount $350 million, fair value of $325.1 million, as of September 30, 2013, and $300 million, fair value of $297.6 million, as of December 31, 2012,  relates to non-recourse funding obligations issued by Golden Gate V.