DEBT AND OTHER OBLIGATIONS

Debt and Subordinated Debt

Debt and subordinated debt are summarized as follows:



	As of
	June 30, 2018				December 31, 2017
	Outstanding Principal		Carrying Amounts		Outstanding Principal		Carrying Amounts
	(Dollars In Thousands)
Debt (year of issue):
Credit Facility	$	385,000	$	385,000	$	—	$	—
Capital lease obligation	1,501		1,501		1,682		1,682
6.40% Senior Notes (2007), due 2018	—		—		150,000		150,518
7.375% Senior Notes (2009), due 2019	400,000		426,195		400,000		435,806
8.45% Senior Notes (2009), due 2039	194,244		296,353		232,928		357,046
	$	980,745	$	1,109,049	$	784,610	$	945,052
Subordinated debt (year of issue):
5.35% Subordinated Debentures (2017), due 2052	$	500,000	$	495,358	$	500,000	$	495,289
3.55% Subordinated Funding Obligations (2018), due 2038	55,000		55,000		—		—
3.55% Subordinated Funding Obligations (2018), due 2038	55,000		55,000		—		—
	$	610,000	$	605,358	$	500,000	$	495,289

During the six months ended June 30, 2018, the Company repurchased and subsequently extinguished $59.2 million (par value - $38.7 million) of the Company's 8.45% Senior Notes due 2039. These repurchases resulted in a $1.5 million pre-tax gain for the Company. The gain is recorded in other income in the consolidated condensed statements of income.

During 2018, PLICO issued $110.0 million of Subordinated Funding Obligations at a rate of 3.55% due 2038. These obligations are non-recourse to the Company.

During 2017, the Company issued $500.0 million of its Subordinated Debentures due 2052. These Subordinated Debentures are carried on the Company's balance sheet net of the associated deferred issuance expenses of $4.8 million. The Company used the net proceeds from the offering to call and redeem, at par, the entire $150.0 million of 6.00% Subordinated Debentures due 2042 and $287.5 million of 6.25% Subordinated Debentures due 2042.

Under a revolving line of credit arrangement that was in effect until May 3, 2018 (the "2015 Credit Facility"), the Company had the ability to borrow on an unsecured basis up to an aggregate principal amount of $1.0 billion. The Company had the right in certain circumstances to request that the commitment under the 2015 Credit Facility be increased up to a maximum principal amount of $1.25 billion. Balances outstanding under the 2015 Credit Facility accrued interest at a rate equal to, at the option of the Borrowers, (i) LIBOR plus a spread based on the ratings of the Company’s Senior Debt, or (ii) the sum of (A) a rate equal to the highest of (x) the Administrative Agent’s Prime rate, (y) 0.50% above the Funds rate, or (z) the one-month LIBOR plus 1.00% and (B) a spread based on the ratings of the Company's Senior Debt. The 2015 Credit Facility also provided for a facility fee at a rate that varies with the ratings of the Company’s Senior Debt and that is calculated on the aggregate amount of commitments under the 2015 Credit Facility, whether used or unused. The annual facility fee rate is 0.125% of the aggregate principal amount. The 2015 Credit Facility provides that the Company is liable for the full amount of any obligations for borrowings or letters of credit, including those of PLICO, under the 2015 Credit Facility. The maturity date of the 2015 Credit Facility was February 2, 2020.

On May 3, 2018, the Company amended the 2015 Credit Facility (as amended, the "Credit Facility"). Under the Credit Facility, the Company has the ability to borrow on an unsecured basis up to an aggregate principal amount of $1.0 billion. The Company has the right in certain circumstances to request that the commitment under the Credit Facility be increased up to a maximum principal amount of $1.5 billion. Balances outstanding under the Credit Facility accrue interest at a rate equal to, at the option of the Borrowers, (i) LIBOR plus a spread based on the ratings of the Company’s Senior Debt, or (ii) the sum of (A) a rate equal to the highest of (x) the Administrative Agent’s Prime rate, (y) 0.50% above the Funds rate, or (z) the one-month LIBOR plus 1.00% and (B) a spread based on the ratings of the Company's Senior Debt. The Credit Facility also provided for a facility fee at a rate that varies with the ratings of the Company’s Senior Debt and that is calculated on the aggregate amount of commitments under the Credit Facility, whether used or unused. The annual facility fee rate is 0.125% of the aggregate principal amount. The Credit Facility provides that the Company is liable for the full amount of any obligations for borrowings or letters of credit, including those of PLICO, under the Credit Facility. The maturity date of the Credit Facility is May 3, 2023. The Company is not aware of any non-compliance with the financial debt covenants of the Credit Facility as of June 30, 2018. There was an outstanding balance of $385.0 million bearing interest at a rate of LIBOR plus 1.00% as of June 30, 2018.

Non-Recourse Funding Obligations

Non-recourse funding obligations outstanding as of June 30, 2018, on a consolidated basis, are shown in the following table:



Issuer	Outstanding Principal		Carrying Value⁽¹⁾		Maturity Year	Year-to-Date Weighted-Avg Interest Rate
	(Dollars In Thousands)
Golden Gate Captive Insurance Company⁽²⁾⁽³⁾	$	1,950,000	$	1,950,000	2039	4.75	%
Golden Gate II Captive Insurance Company	20,600		17,678		2052	4.74	%
Golden Gate V Vermont Captive Insurance Company⁽²⁾⁽³⁾	645,000		705,381		2037	5.12	%
MONY Life Insurance Company⁽³⁾	1,091		2,373		2024	6.19	%
Total	$	2,616,691	$	2,675,432

(1) Carrying values include premiums and discounts and do not represent unpaid principal balances.
(2) Obligations are issued to non-consolidated subsidiaries of the Company. These obligations collateralize certain held-to-maturity securities issued by wholly owned subsidiaries of PLICO.
(3) Fixed rate obligations

During the six months ended June 30, 2018, the Company and its affiliates repurchased $38.0 million of its outstanding non-recourse funding obligations, at a discount. These repurchases did not result in a material gain or loss for the Company.

Non-recourse funding obligations outstanding as of December 31, 2017, on a consolidated basis, are shown in the following table:



Issuer	Outstanding Principal		Carrying Value⁽¹⁾		Maturity Year	Year-to-Date Weighted-Avg Interest Rate
	(Dollars In Thousands)
Golden Gate Captive Insurance Company⁽²⁾⁽³⁾	$	2,014,000	$	2,014,000	2039	4.75	%
Golden Gate II Captive Insurance Company	58,600		49,787		2052	3.88	%
Golden Gate V Vermont Captive Insurance Company⁽²⁾⁽³⁾	620,000		681,285		2037	5.12	%
MONY Life Insurance Company⁽³⁾	1,091		2,405		2024	6.19	%
Total	$	2,693,691	$	2,747,477

(1) Carrying values include premiums and discounts and do not represent unpaid principal balances.
(2) Obligations are issued to non-consolidated subsidiaries of the Company. These obligations collateralize certain held-to-maturity securities issued by wholly owned subsidiaries of PLICO.
(3) Fixed rate obligations

Secured Financing Transactions

Repurchase Program Borrowings

While the Company anticipates that the cash flows of its operating subsidiaries will be sufficient to meet its investment commitments and operating cash needs in a normal credit market environment, the Company recognizes that investment commitments scheduled to be funded may, from time to time, exceed the funds then available. Therefore, the Company has established repurchase agreement programs for certain of its insurance subsidiaries to provide liquidity when needed. The Company expects that the rate received on its investments will equal or exceed its borrowing rate. Under this program, the Company may, from time to time, sell an investment security at a specific price and agree to repurchase that security at another specified price at a later date. These borrowings are typically for a term less than 90 days. The market value of securities to be repurchased is monitored and collateral levels are adjusted where appropriate to protect the counterparty against credit exposure. Cash received is invested in fixed maturity securities, and the agreements provided for net settlement in the event of default or on termination of the agreements. As of June 30, 2018, the fair value of securities pledged under the repurchase program was $41.5 million, and the repurchase obligation of $39.3 million was included in the Company’s consolidated condensed balance sheets (at an average borrowing rate of 227 basis points). During the six months ended June 30, 2018, the maximum balance outstanding at any one point in time related to these programs was $885.0 million. The average daily balance was $658.4 million (at an average borrowing rate of 162 basis points) during the six months ended June 30, 2018. As of December 31, 2017, the fair value of securities pledged under the repurchase program was $1,006.6 million, and the repurchase obligation of $885.0 million was included in the Company's consolidated condensed balance sheets (at an average borrowing rate of 142 basis points). During 2017, the maximum balance outstanding at any one point in time related to these programs was $988.5 million. The average daily balance was $624.7 million (at an average borrowing rate of 101 basis points) during the year ended December 31, 2017.

Securities Lending

The Company participates in securities lending, primarily as an investment yield enhancement, whereby securities that are held as investments are loaned out to third parties for short periods of time. The Company requires initial collateral of 102% of the market value of the loaned securities to be separately maintained. The loaned securities’ market value is monitored on a daily basis. As of June 30, 2018, securities with a market value of $59.4 million were loaned under this program. As collateral for the loaned securities, the Company receives short-term investments, which are recorded in “short-term investments” with a corresponding liability recorded in “secured financing liabilities” to account for its obligation to return the collateral. As of June 30, 2018, the fair value of the collateral related to this program was $62.8 million and the Company has an obligation to return $62.8 million of collateral to the securities borrowers.

The following table provides the amount by asset class of securities of collateral pledged for repurchase agreements and securities that have been loaned as part of securities lending transactions as of June 30, 2018 and December 31, 2017:

Repurchase Agreements, Securities Lending Transactions, and Repurchase-to-Maturity Transactions

Accounted for as Secured Borrowings



	Remaining Contractual Maturity of the Agreements
	As of June 30, 2018
	(Dollars In Thousands)
	Overnight and Continuous		Up to 30 days		30-90 days		Greater Than 90 days		Total
Repurchase agreements and repurchase-to-maturity transactions
U.S. Treasury and agency securities	$	—	$	41,498	$	—	$	—	$	41,498
Other asset-backed securities	—		—		—		—		—
Mortgage loans	—		—		—		—		—
Total repurchase agreements and repurchase-to-maturity transactions	—		41,498		—		—		41,498
Securities lending transactions
Corporate securities	54,068		—		—		—		54,068
Equity securities	5,210		—		—		—		5,210
Redeemable preferred stock	90		—		—		—		90
Other government related securities	14		—		—		—		14
Total securities lending transactions	59,382		—		—		—		59,382
Total securities	$	59,382	$	41,498	$	—	$	—	$	100,880

Repurchase Agreements, Securities Lending Transactions, and Repurchase-to-Maturity Transactions

Accounted for as Secured Borrowings



	Remaining Contractual Maturity of the Agreements
	As of December 31, 2017
	(Dollars In Thousands)
	Overnight and Continuous		Up to 30 days		30-90 days		Greater Than 90 days		Total
Repurchase agreements and repurchase-to-maturity transactions
U.S. Treasury and agency securities	$	307,633	$	—	$	—	$	—	$	307,633
Corporate securities	—		—		—		—		—
Mortgage loans	698,974		—		—		—		698,974
Total securities	$	1,006,607	$	—	$	—	$	—	$	1,006,607

Securities lending transactions
Corporate securities	$	118,817	$	—	$	—	$	—	$	118,817
Equity securities	5,699		—		—		—		5,699
Redeemable preferred stock	755		—		—		—		755
Total securities lending transactions	125,271		—		—		—		125,271
Total securities	$	1,131,878	$	—	$	—	$	—	$	1,131,878